The Government should consider SME development as an important part of its strategy to achieve the goals of national industrialisation and modernisation.—Photo tinnhanhchungkhoan

HCM CITY (Biz Hub)— Small and medium sized enterprises (SMEs) in Viet Nam should prepare a long-term business strategy as the economy gradually escapes from its stagnant situation, Tran Du Lich, a member of the National Assembly Economic Committee said yesterday.

He was speaking at a seminar on year-end business opportunities for SMEs held by banking information portal Laisuat.vn in collaboration with the HCM City Union of Business Associations.

The seminar was sponsored by Viet Nam Prosperity Bank (VPBank).

Lich said the expected inflation rate of 6-7 per cent and a stable exchange rate at the year-end would form important conditions for SMEs to build their business plans and set mid and long term targets.

SMEs should not become heavily dependent on commercial banks, he said.

Instead, the Government needs to issue policies to help the sector less depend on commercial banks and reduce uncertainties in accessing capital, he added.

For instance, it is necessary that credit guarantee funds or SMEs support funds are established as capital sources for the sector, Lich said.

He also said that the Government should consider SME development as an important part of its strategy to achieve the goals of national industrialisation and modernisation.

"SME development should also be seen as a measure to narrow the rich-poor gap created by the market economy," he said.

Building trust

Doan Anh Tuan, VPBank's director of Business Development – SME sector, said that one of the most important steps in helping firms source funds is to build a strong relationship between banks and businesses.

"Both banks and businesses need to be transparent in sharing information to create trust between the two sides," Tuan said.

He said his bank has offered many preferential credit programmes for SMEs. For instance, its SME Success short-term package, worth VND2 trillion, will grant loans at interest rates of 9-10 per cent until September 30. This is 2-3 per cent lower than other banks, he added.

The Small and Medium-sized Enterprise Finance Programme (SMEFP), another package from the bank that uses Japan International Cooperation Agency (JICA) funds, offers medium and long-term loans to SMEs, helping them invest in building factories, purchasing machines and installing production lines.

Loans under this package carry preferential interest rates of 11-12 per cent.

Besides, SMEs who have short-term capital demand for production and business plans can borrow Viet Nam dong loans with US dollar interest rate (6-7 per cent).

Tuan said his bank has set up four centres in HCM City's 1,6,7 and Phu Nhuan districts for the sole purpose of supporting SMEs.

By 2014, they will open 20 such centres throughout the country, he said.

Growth prospects

Talking about business opportunities for SMEs in the coming months, economist Dinh The Hien, director of the Institute for Applied Economics and Informatics Research, predicted that a recovery could begin in the middle of next year.

Industrial production would continue facing difficulties in the last months of this year, he said.

He said the construction and property sectors are likely to stagnate until next year, while basic commodity exports would recover fastest because of increased global demand.

Besides, plentiful credit at low interest rates will support its growth in the coming time, he said.

The commerce and services sector has the potential to recover in the remaining months and experience "good growth" next year, Hien said. To grasp both short and long term business opportunities, SMEs need to develop thorough management and financial capabilities, Hien added. — VNS