Gov’t urged to develop legal framework for direct lending for SME development
The Government has been urged to develop a legal framework for the Small- and Medium-sized Enterprises (SMEs) Development Fund in terms of direct lending, in addition to trust and indirect lending services provided through commercial banks, to provide broader access to soft loans by SMEs.
Hanoi (VNA) - The Government has been urged to develop a legalframework for the Small- and Medium-sized Enterprises (SMEs) Development Fund interms of direct lending, in addition to trust and indirect lending servicesprovided through commercial banks, to provide broader access to soft loans by SMEs.
According to the Ministry of Planning and Investment, since the fund wasput into operation more than three years ago, it has helped SMEs enhance their operationaleffectiveness, increase profits, and create more jobs. Many firms have paid offloans early.
The fund was established by the Government in 2013 with a chartercapital of 2 trillion VND (86.7 million USD).
In response to COVID-19, last year the fund lowered its lending interestrates to 2.16 percent for short-term loans and 4 percent for medium- andlong-term ones to help pandemic-hit enterprises weather the storm.
To improve the fund’s effectiveness, UNDP Resident Representative inVietnam Caitlin Wiesen stressed the need to have a better understanding of thefinancial ecosystem for SMEs in Vietnam and a strategic role for a new lendingchannel to boost existing domestic funding.
Funding must come from both the public and private sectors to meet the ever-changingneeds of SMEs and it is, therefore, important to develop a strong, effective,and sustainable lending mechanism to remove credit barriers facing SMEs, shenoted.
SMEs account for about 98 percent of the more than 800,000 registered enterprisesin Vietnam. They create over 1 million new jobs, employ around 5 millionworkers, and make up some 45 percent of GDP and 31 percent of the State budget revenueannually./.
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Illustrative photo. (Source: VNA)
