A worker operates production lines at Saigon Industry Corporation in HCM City. — VNA/VNS Photo An Hieu

HA NOI (Biz Hub) — The Ministry of Planning and Investment (MPI) organised a ceremony to introduce the small and medium-sized enterprise development fund in Ha Noi yesterday.

With charter capital of VND2 trillion (US$89.6 million), the establishment of the fund shows the determination of the Vietnamese Government, as well as the MPI, in mobilising sources to boost the private sector, creating a driving force for national economic development.

SMEs are the backbone and driving force of the economy, however, they have faced tremendous challenges such as an opaque business environment, a shortage of high-quality labourers and a lack of capital for start-ups and business expansion, Deputy Minister of Planning and Investment Dang Huy Dong said at the ceremony.

Hoang Thi Hong, director of the fund, said that the fund would support small and medium-sized enterprises (SMEs), which are in need of capital to implement their projects and production and business plans.

The fund will receive, manage and use funds from the State budget and other organisations and individuals at home and abroad. It will outline policies and implement international co-operation activities to support SMEs development.

The purpose of the fund is to enhance the competitiveness of enterprises through supporting them in developing competitive and eco-friendly products; investing in technical equipment and advanced technology; developing a support industry and improving corporate governance.

SMEs, which are established and operating in line with the country's regulations nationwide, are eligible to receive support from the fund. The fund gives commercial banks a mandate to loan to SMEs at a preferential interest rate of five per cent for short-term borrowing and seven per cent for medium and long-term credit.

At the ceremony, the fund also inked a co-operation agreement with mandated commercial banks in 2016. — VNS