Hanoi (VNA) – Hanoi is taking measuresto tackle difficulties facing local firms, especially newly established small-and medium-sized enterprises (SMEs).

Data of the municipal Department of Planning andInvestment show that businesses in the Vietnamese capital have developed inboth quantity and quality in recent years. 

Hanoi is currently home to about 260,000companies, ranking second in the country in terms of the number of businesses,and 97 percent of these firms are SMEs. More than 20,000 new companies havebeen set up annually in the last three years.

There is one company for every 38 localresidents on average, 3.7 times higher than the national average, statisticsshow.

However, there remain several issues posingchallenges to businesses’ operations. Only about 0.1 percent of local startupshave succeeded in attracting capital from investment funds.

Challengesto SMEs

Some economic experts blamed that fact partly onshortcomings in support for SMEs, saying that support programmes and policieshaven’t been implemented in a synchronous manner. Although the single-windowmechanism for handling administrative procedures has been deployed at multiplelevels, procedures still involve different departments and sectors, leading tothe slow handling of paperwork.

Additionally, firms still lose time and money inaccessing resources for production and business activities such as credit,land, market and support for setting up new companies.

A representative of the Vietnam AgriculturalFood and Products Import-Export Joint Stock Company said collateral is one ofthe biggest difficulties facing businesses when seeking loans. Cumbersomeborrowing procedures have also eroded many SMEs’ intention to look for banklending, forcing them to seek funding from “black” credit sources.

Banks need to take solutions to facilitateenterprises’, especially SMEs’, access to loans, he noted.

Experts said many SMEs have encountered difficultiesaccessing bank loans because most of them are small and lack concreteoperational plans. Low resilience to risks and macro-economic changes has alsoaffected their operational effectiveness, loan use efficiency and capacity ofloan repayment.

In particular, the financial capacity of manySMEs is still modest while they still lack financial information transparencyand collateral. These are the main reasons affecting their bank creditaccessibility, according to experts.

Hanoimoves to support startups

To help local businesses develop, the HanoiPeople’s Committee has issued a startup support plan to assist 500 startupprojects to develop and 150 startups to commercialise their products by 2025.Among the startups, at least 20 percent are hoped to successfully attractfunding from venture capital funds and carry out mergers or acquisitions worthsome 500 billion VND (nearly 21.5 million USD).

The cityalso aims to support the establishment of from 2-3 business incubators orstartup spaces, facilitate the formation of from 3-5 private startup investmentfunds and attract foreign funds to this field.

This plan wasadopted at the ninth meeting of the municipal People’s Council in early July.It was built on the basis of the Government’s Decision No. 844/QD-TTg, dated May18, 2016, which approved the national entrepreneurial ecosystem support planuntil 2025.

Support policies under the Hanoi scheme targetsindividuals and groups of individuals with startup projects; newly establishedSMEs; organisations supplying services, technical infrastructure andcommunications to startups; along with Vietnamese and foreign investment funds.

The plan looks to complete the localentrepreneurial ecosystem and create a favourable environment for the formationand development of businesses that can grow fast based on the optimisation ofintellectual property, technology and new business models. 

The city will tweak mechanisms and policies tosupport local entrepreneurial activities. In particular, it will assist newlyestablished firms to carry out communications, build their business culture,train human resources, equip themselves with entrepreneurial knowledge anddevelop infrastructure for their operations.-VNA