SME and Entrepreneurship Policy in Viet Nam

5. SME and entrepreneurship support programmes in Viet Nam

Abstract

This chapter describes and assesses national programmes supporting SMEs and entrepreneurship in Viet Nam in the areas of access to finance, innovation, internationalisation, public procurement, workforce skills, entrepreneurship education and women’s entrepreneurship. SME financing programmes, notably the SME Development Fund and the Credit Guarantee Fund, feature low take-up, calling for operational adjustments in their design and implementation. Innovation is a common policy target, but it has mostly focused on R&D support and technology promotion, while building innovation capabilities at the firm level has been overlooked. In the area of export policy, Viet Nam’s recent improvements in trade facilitation should be complemented with programmes improving the export-readiness of SMEs and their capacity to engage in e-commerce. Entrepreneurship education is starting to move its first steps in higher education, while there is still little going on at the primary and secondary level of education. Finally, support for women’s entrepreneurship has recently been strengthened, but it could be better mainstreamed by ensuring that women are adequately represented in all government SME and entrepreneurship programmes.

Debt finance programmes

Based on data from the World Bank Enterprise Survey, about one-quarter of Vietnamese SMEs consider access to finance the main obstacle to running their business, while about half of them report having a loan or a credit line from a financial institution (see also chapter 3). Other national sources report that only about 30% of SMEs have access to bank credit (Binh, 2019_[1]) and that up to 38% of SMEs are credit-rationed mostly because of lack of adequate collaterals (CIEM et al., 2016_[2]). The government has taken two main steps to improve the access of domestic SMEs to bank credit. First, credit institutions are encouraged to lend to SMEs through tailored loan products at preferential rates. Second, the government has set up the SME Development Fund (SMEDF) and the Credit Guarantee Fund (CGF). These two instruments are presented and assessed in this section.

The SME Development Fund (SMEDF)

The SMEDF is an important policy initiative, but has some drawbacks

The SMEDF was established under Prime Minister Decision No. 601/QD-TTg dated 17 April 2013, with an initial capitalisation of VND 2 trillion from the state budget, and became operational in April 2016. The Ministry of Planning and Investment (MPI) is responsible for its implementation.

Funding to SMEs from the SMEDF is largely channelled through partnering banks. The SMEDF has authorised the Viet Nam Development Bank (VDB), a public development bank, and four partner commercial banks to deliver the loans,1 with the Fund providing 80% of the loan amount (not to exceed VND 30 billion per project), and the company required to contribute at least 20% of the project cost in equity. The SMEDF loan can have a maturity of up to 7-years at interest rates capped below the market rates (e.g. 5% for short-term loans and 7% for medium and long-term loans, rather than the market rates of 8% to 10%). In this respect, there is a danger that the capped interest rates might discourage partnering commercial banks from exercising the SMEDF loan due to the higher-than-average cost of processing small business loans and, at the same time, lower-than-average margins on the SMEDF-backed loans. By the same token, although cost-sharing is a common requirement of subsidised credit programmes, the 20% matching-fund requirement could hinder the participation of cash-constrained small enterprises.

A further limitation of the SMEDF is that loans can only be applied to asset-based projects – that is to say, the Fund cannot be used to finance working capital – and that the lending bank is allowed to request hard collateral for up to 100% of the loan amount. While this is lower than the standard collateral requirement of commercial banks, which can be as high as 150%, many small businesses will still find it difficult to comply, unless the SMEDF loan is further backed by a government guarantee.

The selection criteria of the SMEDF include innovativeness (including new business models), employment creation, environmental savings, and evidence of good administrative/management practices. Partnering banks make their loan appraisal based on guidelines issued by the SMEDF, but they still must secure approval from the Fund for each loan, which makes the overall selection process quite cumbersome.

The SMEDF loan offers a simplified application process that can be submitted online at one of the partnering banks. Furthermore, the SMEDF operates a call centre to help SMEs complete the loan application form and, through an informal network of service providers, advise SMEs on how to develop a loan proposal. In 2017-2018, 1 600 SMEs availed of this service, although only very few of them applied for funding from the SMEDF.

Since its creation the SMEDF has not experienced high demand. By 2019, the Fund had supported only 14 SME loans for a total of VND 106.4 billion.2 Major issues have been low awareness of the Fund among SMEs and, as noted earlier, cumbersome approval procedures and strict eligibility requirements.

The SME Support Law might further restrict the client base of the SMEDF

Demand for the SMEDF is likely to be further affected by the implementation of the SME Support Law (Government Decree 39/2019/ND-CP of 10 May 2019), which restricts the SMEDF support to “innovative start-ups” and “SMEs participating in business clusters and value chains”. Prior to the SME Support Law, the SMEDF could finance loans from a broader range of SMEs, including co-operatives and household businesses3, which are no longer in line with the mandated priorities of the Fund. The implementing decree of the SME Support Law also authorises the SMEDF to engage in direct lending. In this case, the maximum loan size should not exceed 80% of the total investment capital of the financed project, up to a ceiling of VND 1 billion, while the interest rate should be no higher than 80% of the lowest interest rate available from commercial banks. 

The SMEDF needs to expand its activity and collect better data

Going forward, the SMEDF should clearly strive to increase its number of users, since the operating costs of managing a Fund that has only served 14 companies in four years is certainly higher than its economic and social benefits. In due course, it will also be important to produce data on the performance of the Fund, including the number of applicant SMEs (by sector of activity), the average loan size, the percentage of applications rejected (including, if possible, the reasons of rejection) and the rate and volume of loan defaults.

The Credit Guarantee Fund

The use of credit guarantee funds has been restrained by both demand and supply-side factors

Credit guarantees are one of the most common government policies to support SMEs’ access to financing (OECD, 2013_[3]). In Viet Nam, Decree No. 193/2001/QD-TTg provided for the creation of a network of credit guarantee funds to provide SMEs with extra security in order to meet the collateral requirements for bank financing. The Credit Guarantee Funds (CGFs) are operated through two channels: 1) the VDB with funding from the state budget; and 2) Local Guarantee Funds (LGFs) that are operated by local and city governments with funding from local budgets. Credit guarantees have been in place at the local level since 2001 and at the central level since 2009. Since 2009 the VDB is entrusted with overseeing both the central fund and the local funds. The total charter capital of Viet Nam’s credit guarantee funds is estimated at VND 1.5 trillion.

Viet Nam’s credit guarantee funds are not allowed to leverage the volume of credit guarantees beyond three times their total charter capital (up to VND 4.5 trillion in loan volume).4 However, evidence from other countries points to a leverage rate more often in the range of 5-7 times its capitalisation (European Commission, 2006), suggesting that there could be room for rising the leverage ratio to expand SME credit in Viet Nam.

Usage of the CGF has also been low; from 2001 to mid-2017, only 2 000 SME loans were backed by guarantees. In 2017, the total value of guaranteed loans was equivalent to 0.12% of total outstanding SME loans and to 0.03% of GDP, the last figure being much lower than in Thailand (over 1% of GDP) and Malaysia (1.5% of GDP) (NCIF, 2017, as cited in Dang and Chuc (2019_[4])). The scale of the LGFs is also very small, with only VND 250 billion in active status in mid-2019. One of the reasons behind the low use of credit guarantees in Viet Nam concerns the strict conditions for SMEs to receive a guarantee, especially in terms of mortgage assets. Another reason lies in the relatively high rate of non-performing loans: by the end of 2017, nearly 10% of the total amount of loans guaranteed by the CGFs was non-performing (Dang and Chuc, 2019, p. 9_[4]).

Commercial banks in Viet Nam are also often reluctant to accept the government credit guarantees, particularly at the local level, due to funding constraints of the local guarantee entities (i.e. banks are not confident the guarantees will be available in case of loan defaults) (OECD/ERIA, 2018_[5]). Under Decision 58/2013/QD-TTG, all local guarantee funds were required to have at least VND 30 billion in charter capital, but since most are capitalised from local government budgets, few actually meet this requirement (OECD/ERIA, 2018_[5]).5

Finally, essential to an effective guarantee scheme, is the presence of well-trained staff (European Commission, 2006_[6]), which is also a weakness in Viet Nam’s local funds (Dang and Chuc, 2019_[4]). It can take up to three months for a guarantee approval, whereas well-functioning credit guarantee schemes can process requests within one or two weeks.

Some operational aspects of Viet Nam’s CGF could be better aligned with the international experience

Some operational aspects of the Vietnamese CGF could also be tweaked. The fee for a CGF-backed loan guarantee is equivalent to 0.5% per year of the total loan plus interests, to be paid by the borrower, which is low compared to other similar international programmes. Furthermore, in Viet Nam, the guarantee covers up to 100% of the loan, which means that the CGF takes on the entire risk for default, whereas in most guarantee funds the coverage rate ranges between 50% and 80%, leaving the partnering bank to share part of the risk. A comparison with credit guarantee schemes in other countries indicates that Viet Nam is an outlier in these two important aspects (Table 5.1). Viet Nam would therefore be advised to reduce the coverage rate from 100% to 80% and to increase the guarantee fee to 1% or 2%, also taking into consideration other key features of well-designed credit guarantee schemes (see Box 5.1).

A cost-benefit analysis of the CGF could help the government better assess the real impact of this programme

The good performance of a credit guarantee programme clearly depends on the rate of non-performing loans, but also on other socioeconomic considerations such as additionality and externalities, including jobs created by the portfolio of assisted SMEs and contributions to tax revenues, which are essential considerations in a cost-benefit analysis of the entire scheme (European Commission, 2006_[6]). For example, the review of the Canadian Small Business Financing Programme (CSBFP) calculated the cost of programme administration and loan defaults over a nine-year period at CAD 986.7 million, compared to benefits of CAD 3.85 billion (Box 5.2). Performing a cost-benefit analysis of Viet Nam’s CGF might help allay the government’s aversion to losses from defaulting loans. The case of Ireland’s credit guarantee programme (Box 5.3) is also relevant for Viet Nam because it shows how an in-depth programme review can assist in detecting major bottlenecks in programme design and implementation and suggesting appropriate solutions.

Table 5.1. An international comparison of loan guarantee programmes

Country	Canada	Denmark	Netherlands	United States	Ireland	Viet Nam
Programme	Canada Small Business Financing Programme (CSBFP)	Vaekstkaution (Growth Guarantee Programme)	SME Credit Guarantee (BMKB)	7(a) Loan Guaranty Programme	SME Credit Guarantee Scheme	SME Credit Guarantee Scheme
Delivery agent	Innovation, Science and Economic Development Canada	Vækstfonden (Danish Government Growth Fund)	Netherlands Enterprise Agency	Small Business Administration (SBA)	Strategic Banking Corporation of Ireland (SBIC)	Ministry of Planning and Investment
Target Firms	(Non-farm) small businesses or start-ups with gross annual revenue of not more than CAD 10 million. Guarantee only applies to fixed asset loans, working capital lending not eligible for the guarantee.	SMEs with up to 250 employees in all sectors and with growth plans, plans to invest in new markets, pursue export orders, etc.	Firms up to 250 employees, turnover up to EUR 50 million. Special emphasis on innovative SMEs, start-ups, and established SMEs operating abroad.	Small businesses meeting the SBA definition.	SMEs with less than 250 employees, turnover of less than EUR 50 million, with inadequate collateral to borrow from a bank under normal lending conditions, or a business in a market, sector or technology perceived as higher risk.	Limited to innovative SMEs and start-ups; and SMEs in clusters and value chains; having no more than 200 employees registered with the state social insurance scheme and within thresholds set for total capital and/or total revenue of the preceding year.
Guarantee coverage	Up to 85%. Lenders are required to take security in the assets financed. Lender may also take personal guarantee.	75% of the loan loss after liquidation of any collateral and any other guarantees; 25% of the loan loss to be absorbed by the lending institution.	Up to 90%.	Up to 85% for loans up to USD 150 000; up to 75% for loans over USD 150 000.	Up to 80% on term loans, demand loans, performance bonds.	Up to 100% (including working capital and medium- to long-term capital); SME must have at least 20% of the required capital they wish to guarantee.
Delivery mechanism	Loans delivered through banking system. The small business applies for the loan from the bank, which does the due diligence. If government guarantee is required, the bank sends request to the CSBFP.	Loans delivered through financial institutions, which perform the credit assessment.	Loans delivered through participating banks. SME applies to the bank. Bank appraises the loan request, and applies to the BMKB for the guarantee.	Guarantee loans delivered through participating banks. SME applies to bank for a loan. Bank assesses loan application; sends request to the SBA; SBA checks the small business eligibility, sends guarantee agreement to the bank.	Loan processed through Bank of Ireland, Ulster Bank, or Allied Irish Banks; lender responsible for credit decision, makes request to the CGS for the guarantee.	Lending decision made by the participating bank. CGF also reviews the request for eligibility and coverage.
Maximum loan size	Up to CAD 1 million (with not more than CAD 350 000 for leasehold improvements and/or purchasing or improving new or used equipment).	DKK 2 million (EUR 268 000) Maximum for start-up loan is DKK 1 million (EUR 134 000).	EUR 1.5 million (Minimum loan – EUR 35 000) Maximum for start-ups is EUR 200 000 (no more than 3 years in business).	USD 5 million. Amount of guaranteed loans during any fiscal year not to exceed 115% of the programme authorisation limits.	Minimum loan size EUR 10 000; no more than EUR 1 million to any one borrower.	VND 2 billion.
Cost of loan	One-time registration fee of 2% of total amount of the loan (borrower to the lender) paid to ISED to offset programme costs; can be built into the total loan cost. Plus, a 1.25% annual administration fee included in the interest rate to the borrower.	One-time premium of 1.5% of the funding amount paid by the financial institution on behalf of the borrower. Plus, annual fee of 2.0% of the outstanding loan amount, paid by the borrower.	One-off commission of 3.9% to 5.85% of the credit amount; 5.5% to 8.35% for innovative SMEs (due to higher risk – both paid to the Ministry of Economic Affairs) (Commission is passed on by lenders to borrowers).	Premium of 2% of guaranteed portion of loans up to USD 150 000, 3.5% of first USD 1 million of guaranteed loan; 3.5% of guaranteed loan amount over USD 1 million. Plus, an annual fee of 0.55% on the balance of the guaranteed sum.	Maximum of 2% annual premium to the Government based on outstanding credit amount.	0.5% per annum of the total guaranteed loan and interest.
Interest rate	Maximum chargeable for a variable rate -lender’s prime lending rate plus 3%. Maximum chargeable fixed rate - single-family residential mortgage rate plus 3%.	Fixed by lender	Fixed by Government (usually equal to a low risk rate).	Fixed by lender but set at maximum of 7.75% to 10.25% (2019 rates), depending on the size and maturity of the loan (3.0% to 5.5% above prime base rate).	Set by lender based on risk.	Fixed by lender.
Length of loan	Up to 7 years for leasehold improvements; up to 10 years for equipment loan; up to 15 years for real property loan.	Up to 10 years	Maximum 6 years (but 12 years for property lending).	Maximum 7 years for working capital loan; 10 years for equipment loan; 25 years for real estate loan.	Maximum 7 years	Data not available.
Default rate	From 2008-2017, the default rate was 7.9% of outstanding loans; in 2016-2017, the default rate (claims to outstanding loan portfolio) was only 2.14%.	If portfolio loss is up to 26.7%, the Growth Guarantee covers 75% of the loss; if the portfolio loss is more than 26.7%, the guaranteed portion is decreased.	Not available	From 2006-2015, 1 in 6 loans defaulted (17.4% of loans). SBA requires lender to liquidate all business assets before asking the SBA to honour its guarantee.	13% projected (80% of the loss to be covered by the State equates to loss risk of 10.4% (default rate on the portfolio of guaranteed funds is 13%; beyond this loss rate, the State will not honour the guarantee of the bank).	Data not available.

Source: Information from programme websites.

Box 5.1. Key features of well-designed credit guarantee schemes

Eligibility criteria: Guarantee schemes should target SMEs through reasonable ceilings on turnover, number of employees, and/or size of the loan. However, restrictions on sectors or types of loans should be avoided.

Approval rules and procedures: Approval procedures should be streamlined and carried out within a period of two weeks.

Collateral and equity rules: Credit guarantee schemes should be allowed to require collateral, although subject to reasonable limits, and should be allowed to require minimum equity for riskier exposures.

Coverage ratios: Coverage ratios should ensure sufficient protection against default risk while maintaining strong incentives for effective loan origination and monitoring. Coverage ratios ranging from 50% to 80% are common, with ratios typically increasing with the maturity of the loans (lower for working capital loans, higher for investment loans) and decreasing with the age of company (higher for start-ups, lower for more established firms).

Fees: Fees should be risk-based and contribute to the financial sustainability of the scheme.

Payment rules and procedures: Payment rules on defaulted loans should take into account the effectiveness of the collateral and insolvency regimes. Schemes in developed countries can base payments on realised losses, but schemes in most emerging countries need to base payments on default events while ensuring incentives for effective debt collection.

Risk management: Strong risk management capacity is key to ensure that guarantees reach targeted borrowers and to ensure the financial sustainability of the scheme.

Evaluation mechanism: Comprehensive evaluation mechanisms are best practices to measure a credit guarantee scheme’s achievements in terms of outreach, additionality, and sustainability.

Supervision: Many credit guarantee schemes are supervised by central banks in order to ensure the soundness of their operations.

Risk weighting for banks’ prudential requirements: A well-designed and financially robust guarantee scheme should allow bank regulators to assign a lower risk weight to exposures that are covered by the guarantee.

Source: IFC (2011, p. 58_[7]), SME Finance Policy Guide, citing examples from Green (2003_[8]), “Credit Guarantee Schemes for Small Enterprises: An Effective Instrument to Promote Private Sector-Led Growth?” Working Paper No. 10, United Nations Industrial Development Organization, https://www.unido.org/sites/default/files/2007-11/18223_PSDseries10_0.pdf;

Youssef, Arvai, and Rocha (2011_[9]), “A Review of Credit Guarantee Schemes in the Middle East and North Africa,” World Bank, https://www.findevgateway.org/sites/default/files/mfg-en-paper-a-review-of-credit-guarantee-schemes-in-the-middle-east-and-north-africa-region-mar-2011.pdf.

Box 5.2. Measuring the cost-benefit of the Canada Small Business Financing Programme

The Canada Small Business Financing Programme (CSBFP) is a loan loss sharing programme designed to support access to financing for SMEs in partnership with the banking sector. Canada’s federal department of Innovation, Science and Economic Development (ISED), which manages the programme, conducts a comprehensive review every five years, including an evaluation of whether the programme is achieving its objectives and producing net benefits to the country. The most recent evaluation covers the fiscal years 2008/09 to 2016/17. The results demonstrate that the programme produced net social benefits of nearly CAD 4 billion over the nine-year evaluation period, with a net positive benefit of at least CAD 350 million annually.

The total costs of delivering the CSBFP include:

• Salaries and benefits of the ISED staff involved in the administration and management of the programme – CAD 26 million (average of CAD 2.9 million per year);

• Direct operating expenditures, including information management and technology, travel costs, supplies and contracting – CAD 4.4 million;

• Capital expenditures, including the purchase of information technology systems and other assets – CAD 0.7 million;

• Cost to ISED of loan defaults (payment of claims) – 11 378 claims on loan defaults totalling CAD 647.1 million (averaging CAD 71.9 million per year);

• Cost to lenders of loan defaults (loan losses) – CAD 107 million (averaging CAD 12 million per year).

The overall benefits of the programme attributable to incremental CSBFP lending (i.e. loans that would not have been made without the CSBFP) take into consideration:

• Macroeconomic impact of expenditures by borrowers using CSBFP loans (direct and indirect) – every dollar lent resulted in between 48 and 58 cents of additional value-added to the economy; and CAD 59.4 million to CAD 70.2 million in federal taxes on additional production generated through investments by CSBFP borrowers;

• Profits earned by lenders from interests on CSBFP loans – CAD 720 million (average of CAD 80 million per year);

• Employment creation by borrowers in additional salaries and wages paid – additional 163 000 full-time employees;

• Federal tax paid by borrowers on salaries and wages of employees as result of CSBFP loans – CAD 82 million (average of CAD 9 million per year);

• Registration and administration fees paid by borrowers to ISED – CAD 467 million (average of CAD 52 million per year).

The total present value of programme costs was, therefore, estimated at CAD 986.7 million, while the total present value of programme benefits was estimated at CAD 3.85 billion, thus generating a total benefit-cost ratio of nearly 5:1.

Source: ISED (Innovation, Science and Economic Development) (2019_[10]), “Canada Small Business Financing Program: Cost-Benefit Analysis, May 2019”, Ottawa, https://www.ic.gc.ca/eic/site/061.nsf/vwapj/Cost-Benefit_Analysis_2019_eng_Final-2.pdf/$file/Cost-Benefit_Analysis_2019_eng_Final-2.pdf/

Box 5.3. Evolution of the SME Guarantee Scheme, Republic of Ireland

Description of the approach

Ireland’s initial Credit Guarantee Scheme was established under the Credit Guarantee Act of 2012. SMEs eligible for the guarantee were either those lacking sufficient collateral for bank credit, or those in a growth/expansionary phase but perceived as higher risk due to their sectors, markets or business model.

The 2012 scheme guaranteed up to 75% of the unsecured loan amount (for loans of EUR 10 000 to EUR 1 million), but with the loan loss coverage to the banks capped at 10% of the annual guaranteed lending portfolio. The guaranteed portion of loans had a three-year term and carried an annual premium of 2% on the outstanding balance of the guaranteed loan to be paid by borrowers to the Department of Jobs, Enterprise and Innovation (DJEI). The premium was set to offset the administrative costs of the scheme and default losses incurred by the Government. SME borrowers submitted their loan application directly to a participating bank, which was solely responsible for making the credit decision and applying the credit guarantee only in cases where the borrower was not able to provide the necessary collateral or where it met the conditions of “higher risk”.

From October 2012 to June 2013, the scheme had approved only 47 loans amounting to EUR 5.9 million. In light of this much lower than projected performance, the government established a Steering Group to oversee a review process of the scheme. The Steering Group consisted of officials from the DJEI, the Department of Finance, the Central Bank, the Credit Review Office, the Department of Public Expenditure and Reform, and Enterprise Ireland. As a first step, the Steering Groups commissioned an independent evaluation of the scheme that included extensive consultations with banks, SME associations, chambers, business/industry associations, and government SME support agencies. The review report made 16 recommendations for changes to the scheme to increase take-up and support to participating lenders (First Choice Financial Services/AJS Financial Advice, 2013_[11]); the DJEI subsequently drafted amendments to the Credit Guarantee Bill that incorporated many of these recommendations. Following a further Regulatory Impact Analysis (RIA) of the Bill (DJEI, 2014_[12]), a revised SME Guarantee Scheme was approved in 2017 and launched in July 2018.

Success factors

The establishment of a Steering Group to review the performance of the scheme, including independent reviews and consultations with lending institutions and SME-related bodies, was a key factor in enabling the government to respond more effectively to its objective of making credit more available to SMEs.

From the launch of the new scheme in July 2018 to the end of 2019, 200 loans totalling EUR 37.639 million were approved, bringing the total number of guaranteed loans to 586 (value of EUR 93.214 million) since the inception of the scheme in 2012 (SBCI, 2020_[13]). By the end of 2019, total claims on the scheme (i.e. defaults) amounted to EUR 865 491. Just under EUR 2.4 million had been collected in premiums to cover the scheme’s administration costs and loan losses.

Obstacles and responses

The 2013 review process identified a number of problems limiting the performance of the initial credit guarantee scheme. One of the primary issues for lending institutions was inadequate risk sharing: i.e. guarantee coverage limited to 75% of the loan amount and the Government’s loan loss cap of 10% on the annual portfolio of guaranteed loans held by the bank. In response, the new scheme was made more attractive to the banks by increasing the guarantee coverage to 80% of the unsecured portion of the loan and raising the cap on the government’s loan loss to 13% of the aggregate value of the guaranteed loan portfolio. Furthermore, the term of three years for the guaranteed loan was deemed as being too short. In response, the term was extended to seven years.

Low awareness of the scheme among SMEs was also an initial reason for the low take-up. This was addressed through a schedule of promotional events and through the enhanced engagement of SME associations and business support organisations in promoting the scheme among members and clients. SMEs were also reluctant to make use of the scheme because of the requirement to supply a bank declaration stating that a loan request had been denied under normal lending conditions, fearing that this would affect their credit rating. In response, this requirement was removed from the scheme’s eligibility criteria. SMEs and their associations also complained that the scheme could only be applied to loans from banks and advocated for broader inclusion of non-bank lending institutions in the scheme. Consequently, since 2018 the scheme has allowed leasing companies and factoring firms to use the government guarantee.

Relevance to Viet Nam

The Ireland example illustrates the merits of undertaking independent reviews to understand why some programmes may underperform. Undertaking such a review of the Credit Guarantee Fund in Viet Nam could lead to improving some of its operational aspects and ultimately strengthening its performance.

Sources for further information

Department of Business, Enterprise and Innovation, Dublin (http://www.dbei.gov.ie).

The Strategic Banking Corporation of Ireland (SBCI) acting as operator of the SME Credit Guarantee Scheme (https://sbci.gov.ie/schemes/sme-credit-guarantee-scheme-cgs).

First Choice Financial Services/AJS Financial Advice (2013_[11]), “Review of the Temporary Partial Credit Guarantee Scheme 2012: Recommendations submitted to the Steering Committee appointed by the Department of Jobs, Enterprise and Innovation”, Dublin.

DJEI (2014_[12]), “Regulatory Impact Analysis, Credit Guarantee (Amendment) Bill 2014”, Department of Jobs, Enterprise and Innovation, Dublin.

Republic of Ireland (2017_[14]), “Credit Guarantee Scheme 2017”, Statutory Instruments, S.I. No. 70 of 2017, Dublin.

SBCI (2020_[13]), “4th Quarter Report of 2019 to the Minister for Business, Enterprise and Innovation detailing the analysis and performance of the SME Credit Guarantee Scheme at 31 December 2019”, Dublin, https://dbei.gov.ie/en/Publications/Publication-files/Q4-2019-Report-SME-Credit-Guarantee-Scheme.pdf/

Other policy developments in SME financing

Fintech is slowly being introduced in Viet Nam

Other developments to improve access to finance by Vietnamese SMEs are driven by international organisations lending to commercial banks for relending to SMEs. Notable, for example, is the Asian Development Bank’s (ADB) long-term loan of USD 300 million to the Commercial Bank for Investment and Development of Viet Nam.6 Among other things, this loan should contribute to the development of a new digital product to reach underserved SMEs in rural areas. The development of Fintech could play an important role in easing current constraints in SME financing. The recent launch of Finaxar in Viet Nam, a subsidiary of Singapore Finaxar, goes in this direction, as it is expected to enable quick online access to short-term working capital upon payment of a small fee.7

Equity finance initiatives

Equity finance for SMEs is at an early stage of development but is growing rapidly

Private equity finance has lagged behind in Viet Nam due to the government’s preference for traditional credit policies and the limited knowledge of equity finance among international donors (Klingler-Vidra, 2014_[15]). Viet Nam’s venture capital market started in 2004 with the establishment of IDG Ventures Viet Nam, which since then has invested in about 40 companies from different industries. Other venture capital funds have followed suit, although many others still prefer operating in the country from Singapore due to the weak legal and regulatory environment for private equity and venture capital investments in Viet Nam (Dao, 2016_[16]). For example, Viet Nam’s venture capital funds investing abroad need a special certificate, whose application and approval should take 14 days, but in practice can take up to 3-4 months. In addition, 6-12 months can lapse between the time of having an investment agreement and securing the adequate papers to process the capital transfer (Dao, 2016_[16]).

Additional policy measures, such as tax incentives, would help further develop equity finance for SMEs

In addition to refining the legal and regulatory framework for venture capital investments, additional policy measures are often required to incentivise private investors to make investments in high-risk start-ups and early-stage ventures. In many OECD countries, for example, governments have successfully introduced both front-end tax incentives (i.e. tax deductions on investments in seed and early-stage ventures) and back-end tax reliefs (i.e. favourable tax treatment of capital gains and losses on those investments) (OECD, 2013_[17]). The government could consider establishing such tax incentive schemes (see Box 5.4 for an example from the United Kingdom), as they would align with the government’s overall strategy to become a start-up-nation with a stronger base in technology and innovation.

Box 5.4. Tax incentives schemes for equity investments in SMEs in the United Kingdom

The UK government delivers three programmes providing tax incentives to encourage private investment in small and growing higher risk businesses. The Enterprise Investment Scheme (EIS), first launched in 1994, offers tax incentives to investors who purchase new shares in small higher risk trading companies. Private investors can invest up to GBP 1 million in qualifying shares and receive 30% of the cost of the investment as a credit against their income tax liability. In addition, the capital gains tax liability on disposal of an existing asset can be deferred if capital gains are reinvested in EIS shares within a certain period of time. If EIS shares are disposed of at a gain, profits are exempt from capital gains tax. If the investor incurs a loss, this may be set against income tax in some circumstances.

In 2012, the UK government introduced the Seed Enterprise Investment Scheme (SEIS), a second scheme offering a range of tax reliefs to investors in small, early-stage companies. Providing the shares are held for at least three years, the investor benefits from a tax credit of 50% of the share cost, up to GBP 100 000. The SEIS provides for a 50% exemption on capital gains that are reinvested in the SEIS. If SEIS shares are disposed of at a gain, the gain is exempt from capital gains tax. If the investor incurs a loss, this may be set against income tax in some circumstances.

The third programme, the Venture Capital Trust Scheme (VCT), launched in 1995, offers a relief against income tax at 30% of the investment cost, up to GBP 200 000, to incentivise individuals to make indirect investments, via intermediaries, into small and growing higher risk businesses. Investors buy shares in a VCT, which must fulfil a number of qualifying criteria including being listed on a primary stock exchange. The VCT then invests in qualifying companies, primarily through equity or quasi-equity instruments. The investor must hold their shares in the VCT for 5 years to qualify for the tax reliefs. Dividend payments and capital gains on the shares in the VCT are also exempt from the respective taxes.

Source: OECD (2015, p. 115_[1]), New approaches to SME and entrepreneurship financing – broadening the range of instruments, Paris.

A junior equity market has experienced rapid growth

A number of countries encourage the development of specialised trading platforms to satisfy the demand of SMEs for equity finance (OECD, 2015_[18]). While Viet Nam’s market capitalisation has grown significantly in recent years, it does not have yet such a platform. However, in 2009, the Ha Noi Stock Exchange – the second largest after the one in Ho-Chi-Minh City (HOSE) – established the Unlisted Public Company Market (UPCoM) which offers easier access to capital markets through lower listing and information disclosure requirements than those demanded in the two main stock exchanges. At the same time, inclusion on UPCoM facilitates visibility and access to equity capital for enterprises of different sizes and requires firms to improve transparency and corporate governance.

In 2017, the HNX started to categorise UPCoM-listed firms by size of capital in order to improve monitoring and supervision of the market. “UPCoM Large” refers to enterprises with registered/chartered capital of more than VND 1 trillion (about USD 43 million); “UPCoM Medium” are enterprises with registered/chartered capital of VND 300 billion to VND 1 trillion (USD 13 million to USD 43 million); and “UPCoM Small” are enterprises with registered/chartered capital of VND 10 billion to VND 300 billion (USD 430 000 to USD 13 million).8

The market capitalisation and number of firms on UPCoM has increased significantly in recent years. By the end of 2018, about 790 firms traded shares, thus exceeding the number of listed companies on HOSE and HNX.9 By the end of August 2019, there were 850 UPCoM-listed firms, the total volume of registered transactions exceeded 39.6 billion shares, and the market capitalisation had climbed to over VND 1 quadrillion.10

Overall, the creation of a junior equity market is a sensible policy which could ease the transition of fast-growing companies from the venture capital/private equity system to the public equity market. In doing so, it also offers an important exit strategy for early-stage venture capital investors. At the same time, the total number of companies in UPCoM appears to be very high given the stage of development of Viet Nam’s financial markets. This is partly the result of an entry threshold which is low by international standards and might inevitably reduce the level of scrutiny on companies accepted on this platform.11

This has led to concerns that UPCoM’s loose regulations, combined with a significant growth in listed firms and market capitalisation, could result in frauds due to the reduced ability of market regulators to oversee the quality of traded companies. As a step to increase transparency, improve market surveillance and better protect investors, HNX issued the new UPCoM Market Organisation and Management Regulation in 2017 (OECD, 2019_[19]). This regulation increased the information disclosure and corporate governance requirements for companies trading on UPCoM to make them closer to rules governing the HNX mainstream stock exchange.

Innovation support programmes

Viet Nam has issued a number of laws and policy programmes to support science, technology and innovation at the firm level, including the Science and Technology Law, the Technology Transfer Law and the Law on Intellectual Property Rights (see chapter 3 for more details). Of the 28 support programmes identified by the World Bank as either directly or indirectly targeting SMEs in Viet Nam,12 11 were categorised as focusing on innovation (World Bank, 2017_[22]). A number of government agencies have been established to encourage business innovation, such as the National Foundation for Science and Technology Development (NAFOSTED), the State Agency for Technology Innovation (SATI), and the National Agency for Technology Entrepreneurship and Commercialisation (NATEC).

The National Technology Innovation Programme to 2020 is the national flagship innovation programme

The National Technology Innovation Programme (NTIP) (Decision No. 667/QD-TTg dated 10 May 2011) is a major innovation programme administered by the Ministry of Science and Technology (MOST) to boost innovation through the application of science and technology. It aims to assist firms in research and development (R&D), product testing, training and hiring of experts in product design, as well as in the production of new products. From an ecosystem perspective, it also supports the establishment of technology incubators. Over the 2010-2015 period, the programme supported in total about 40 000 businesses and 40 business incubators (OECD/ERIA, 2018_[5]).

As part of the NTIP, the government launched the National Technology Innovation Fund (NATIF) with the aim of promoting access to finance for technology innovation. The NATIF supports activities to introduce innovative technology applications; commercialise the results of scientific research and technological development; and bring to the market new products and services that have high technological content. NATIF’s charter capital is about USD 50 million; in 2018, it provided funding for 79 projects and organised intellectual property (IP) training for nearly 2 000 people (AED, 2019_[23]).

Some aspects of the programme to certify Science and Technology Enterprises could be improved

The “Development of National Science and Technology Enterprises” programme provides guidance to firms to be recognised as science and technology enterprises (STEs). About 380 firms are certified by the government as STEs, with more firms in the process of becoming certified. Companies with the STE certification are eligible for support policies and incentives from the Vietnamese government (as per Decree No.13/2019/ND-CP), notably a corporate tax exemption for four years followed by a further 50% reduction for nine years in taxes on income generated from the development or sale of products attributed to R&D activities. Furthermore, STEs with mortgages are able to receive preferential loans from commercial banks with up to a 50% interest rate reduction and may get a further reduction or exemption on their water and land surface lease fees. They are also allowed to utilise facilities and equipment of government research labs and technology incubators with free priority access.

To be granted certification, a company must be able to create or apply scientific and technological results that have been evaluated by recognised agencies and must generate at least 30% of the total turnover from scientific and technological activity. If the minimum 30% of turnover condition is not met for a year, the tax incentive does not apply on that year. If the minimum threshold is not met for five consecutive years, the certification is withdrawn.

The STE programme is a valuable initiative although there are certain eligibility conditions, such as the requirement that 30% of the company turnover stems from scientific and technology-related work, which are difficult for enterprises to prove and for government to monitor. An alternative option would be to use other criteria to define STEs that are easier to measure, such as the share of the company workforce with a Science, Technology, Engineering or Mathematics (STEM) undergraduate or graduate degree or still the amount of R&D spending relative to total revenues.

The SME Support Law and the Supporting Industry Programme also prioritise innovation support

Although the SME Support Law is not primarily focused on innovation, certain incentives related to training and consultancy (on technical regulations and standards) specifically target innovative start-ups/SMEs and SMEs participating in global value chains. The law also states that organisations such as incubators and co-working spaces are entitled to reductions or exemptions from land rent, land usage fees and non-agricultural land use tax, as well as from corporate income taxes for a limited period of time. Furthermore, domestic SMEs operating in industrial parks or high-tech zones are eligible for reduced land prices.

The Programme on the Development of Supporting Industry (Decision No. 68/QD-TTg issued in January 2017) targets existing and potential suppliers of multinational enterprises in six specific industries (textiles and apparel, leather and footwear, electronics, automotive, metal products, and high-tech). Although it is not officially recognised as an innovation programme, it mostly consists of tax incentives encouraging R&D and technology transfer (see chapter 6 for more details).

There are some initial policy efforts to develop a national start-up ecosystem

In addition to fostering innovation in established businesses, more recently Viet Nam has also given priority to its start-up ecosystem. The main programme is Programme 844 (Decision 844/QD-TTg on “Supporting the National Innovative Start-up Ecosystem to 2025”), also known as the Initiative for the Start-up Ecosystem in Viet Nam (ISEV), and has three major goals:

• To improve the legal framework for start-ups;

• To create a national start-up portal that provides relevant information for innovative start-ups (e.g. technology, patents, standards, sources of finance, business models, events);

• To support 2 000 start-up projects, of which 600 become start-up firms, and of which 100 secure follow-on investments or are acquired by an incumbent firm for a total business value of VND 2 trillion (approximately USD 95 million).

The main ISEV activities focus on setting adequate policies and legal frameworks for start-ups and building capacity and networks for the stakeholders of the ecosystem. The programme has reached a number of milestones, such as the launch of the national start-up portal (https://startup.gov.vn); support to 14 start-up organisations with funding of VND 20 billion (approximately USD 1 million); and the organisation of Techfest, an annual national festival for innovative start-ups.

The Ministry of Science and Technology (MOST) is the main entity responsible for ISEV, although implementation on the ground is mostly delegated to the National Agency for Technology Entrepreneurship and Commercialisation (NATEC). NATEC has about 80 staff members, of which 30 work in five different policy divisions and around 50 work in centres that provide training of trainers, mostly to managers of business incubators.

Government-backed business incubators are an important part of the start-up ecosystem. They are selected for government support by a panel of experts, based on performance metrics related to the management of the business incubators and tenant firms. There are about 40 business incubators in Viet Nam, with 20-25 under government support every year. About one-third of the incubators receiving support are public entities, while the rest are privately operated. There is a general perception that private incubators perform better because they are often run by former entrepreneurs and investors, whereas public incubators are generally university-based and managed by professors with limited business experience. There is also significant heterogeneity across provinces in terms of the quality of incubators, which calls for measures to develop and monitor minimum quality standards.

Complementary to ISEV, the “Supporting students’ start-ups” programme (Decision No. 1665/QĐ-TTg of 30 October 2017), referred to as Programme 1665, also forms part of Viet Nam’s start-up policy. The two programmes are closely related, as Programme 1665 on student entrepreneurship is partly intended to support Programme 844 with relevant start-up projects and companies.

Viet Nam’s start-up ecosystem has also benefited from international donor funding in the past years. A prime example is the Viet Nam-Finland Innovation Partnership Programme (IPP), which ran from 2009 to 2018 and focused on supporting the infrastructure for innovative start-ups and the ability of start-ups to develop new products and services for international markets. An evaluation prepared for the Finnish Ministry for Foreign Affairs concluded that the IPP project performed relatively well in terms of impact, relevance, effectiveness and efficiency (Frisky and Anjoy, 2019_[24]).

More attention is needed to building innovation capabilities at the firm level

Viet Nam’s innovation policies and programmes have a strong technology and product development orientation. Most of them have a supply-led focus, as they seek to encourage SMEs to use new technologies and produce high-tech products and services (e.g. the NTIP and the STE programmes). However, most Vietnamese SMEs lack innovation capabilities, leaving room for policy efforts to focus on strengthening these capabilities in the small business population.

Box 5.5. Mittelstand-Digital, Germany

Description of the approach

“Mittelstand-Digital” is an initiative of the Federal Ministry of Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie, BMWi) that seeks to support SMEs in digitising, networking and introducing Industry 4.0 applications.

In total, there are 25 Mittelstand 4.0 Competence Centres nationwide that have learning and demonstration factories that offer information sessions and opportunities to learn how digital technologies can transform a business. Of these Competence Centres, 18 are regional and support SMEs in numerous digitisation issues, such as cloud computing, communications, trade, and processes. In addition to the regional centres, there are seven national Competence Centres, each one specialised in a dedicated area: Digital Crafts, Planning and Construction, eStandards, Usability, Textiles Network, IT Industry, and Communication. These specialised centres are supported by regional contact points and offer their support to companies all over Germany.

Factors for success

SMEs usually do not have dedicated ICT departments and may lack the financial resources to use external IT support companies. However, they gain from modernising their business processes through new software solutions, internet applications, and standardised e-business processes. Mittelstand-Digital can help SMEs to overcome barriers, such as lack of awareness, knowledge, and competence, and support their innovation capabilities through the implementation of modern businesses practices.

Obstacles and response

During the implementation of such a programme, a number of aspects need to be taken into account (OECD, 2016_[27]). First, Competence Centres have to translate information into the “language of SMEs” in order to have sufficient outreach. Second, the challenges of digitisation are varied, so the format of events (e.g. webinars, entrepreneurs’ breakfasts, weekend meetings) and publications need to be tailored to the recipient SMEs. Third, when advice is offered for free, SMEs may harbour the belief that “what costs nothing is worth nothing.” This needs to be overcome by proving that the information provided is actually of value and helpful.

Relevance for Viet Nam

A scheme in the spirit of Mittelstand-Digital could assist Vietnamese SMEs in raising their innovation capabilities by introducing ICT solutions. For example, SMEs producing traditional crafts could benefit from the creation of national competence centres similar to those on Digital Crafts or the Textile Network in Germany.

Sources of further information

OECD (2016_[27]), “Stimulating digital innovation for growth and inclusiveness: The role of policies for the successful diffusion of ICT”, OECD Digital Economy Papers, No. 256, OECD Publishing, Paris, https://doi.org/10.1787/5jlwqvhg3l31-en; https://www.mittelstand-digital.de.

For example, experiences from different countries indicate that helping SMEs to adopt ICT and digital solutions is an effective way of assisting the development of their innovation capabilities. The “Mittelstand-Digital” scheme from Germany is illustrative of an initiative that could be of inspiration to Viet Nam (Box 5.5). A second policy option would be innovation vouchers, a popular policy scheme that has been implemented in several countries (Ezell and Atkinson, 2011_[25]). The idea behind innovation vouchers is to provide SMEs with small grants to purchase technology or collaborate with external knowledge and technology providers, such as universities and research institutions (see Box 5.6 for an example from the Netherlands). Evidence on the causal impact of innovation vouchers on SME development points to positive long-term effects (Cornet, Vroomen and Van der Steeg, 2006_[26]).

Box 5.6. Innovation vouchers – The experience from the Netherlands

Description of the approach

The Innovation Vouchers programme in the Netherlands was initially proposed as part of a menu of innovation policy instruments in 2004. Since SMEs do not make sufficient use of knowledge that is available in the innovation system, the innovation vouchers provide an incentive to introduce SMEs to public research institutions.

Each voucher has a value ranging from EUR 2 500 (small) to EUR 7 500 (large) that can be used by an SME to secure the service of a public research institution to assist with an innovation-related question or problem. The issuing of the voucher serves two main purposes: 1) to empower SMEs to approach knowledge providers to solve their problems, and 2) to incentivise public knowledge providers to work with SMEs. The questions that SMEs address to a public research institution should be application-oriented, so that the knowledge can be practically applied to improve their products or operational processes. Up to 10 SMEs facing similar problems can pool vouchers and thereby increase the size of the project. A total of 3 000 large vouchers were made available in 2006 (OECD, 2008_[28]).

Given the small lump sum they provide, vouchers are geared mainly towards small-scale projects leading to product and process improvements rather than breakthrough product innovations.

Factors for success

An evaluation of the innovation voucher programme in the Netherlands found significant long-term benefits for participants (Balabay et al. 2020_[29]). Since the demand for vouchers exceeded the available supply, vouchers were allocated randomly through a lottery, which in turn offered the opportunity to evaluate the causal impact of the programme on participants through a randomised control trial (RCT). This exercise showed that 12 years after receiving the voucher, firms in the treatment group compared to firms in the control group had a higher business survival rate (+4%), were more likely to use the national R&D tax credit programme (+5%), had a higher level of R&D activities (+12% in terms of working hours) and had created more jobs (+12%). The positive effects started to materialise soon within 2 years from the lottery and persisted in the long run. In addition, there was a positive productivity effect on those SMEs that followed up the initial voucher by setting up a structural R&D activity.

Relevance for Viet Nam

Innovation vouchers are a low-cost policy with proven positive effects on the performance of SMEs. Viet Nam has a large number of SMEs with low innovation capability and low awareness of the productivity potential of new knowledge and technology. An innovation voucher scheme could help expose low-tech SMEs to business innovation for the first time.

Sources of further information

OECD (2008_[28]), A Review of Local Economic and Employment Development Policy Approaches in OECD Countries, Paris https://www.oecd.org/cfe/leed/42771735.pdf

Balabay et al. (2020_[29] forthcoming, to be published), “Crossing the bridge towards R&D and innovation: the long-term effect of Dutch innovation vouchers” (working paper). https://www.innovationgrowthlab.org/blog/long-term-impact-dutch-innovation-vouchers-back-future-randomised-controlled-trials#footnote1_x38j6ia

SME internationalisation programmes

The government of Viet Nam has supported trade facilitation in different ways, but trade promotion activities targeted at SMEs are still rare. Furthermore, there is no specific policy direction in the SME Support Law regarding the export development of SMEs, nor is there any reference to SMEs in the “Strategy on exports and imports for 2011-2020 with visions to 2030” (Prime Minister’s Decision 2471/QĐ-TTg, dated 28 December 2011). It can, therefore, be concluded that the objective of SME internationalisation, notably through export development, has not yet received sufficient attention in the government strategies of Viet Nam, which is perhaps surprising given the government’s emphasis on building stronger linkages between domestic companies and multinational enterprises (see chapter 6).

Trade promotion and trade facilitation initiatives

Trade promotion for SMEs needs to be strengthened

The Viet Nam Trade Promotion Agency (VIETRADE), an agency under the Ministry of Industry and Trade (MOIT), has responsibility for the country’s export promotion efforts. Formal trade promotion efforts in Viet Nam are relatively recent. In 2010, the Government developed its first National Trade Promotion Programme (NTPP) as a source of funding for industry associations, trade promotion agencies, and local governments to implement support activities to build the export capacity of enterprises.13 In 2018, the annual budget of the NTPP was VND 103 billion (about USD 4.3 million), which is not much given the size and export potential of Viet Nam. Since the creation of this programme, nearly 3 000 businesses have participated in trade promotion activities achieving almost USD 10 billion in export contracts (MOIT, 2019_[30]). In addition to supporting the participation of SMEs in international trade fairs and exhibitions, VIETRADE supports SMEs by providing access to export consultancy and business matchmaking opportunities.

Significant trade facilitation efforts are underway, but SMEs need to be more closely involved

Significant trade facilitation efforts are underway, largely supported by the USAID-funded (USD 21 million) five-year Trade Facilitation Programme (2018-2023) to help Viet Nam implement a risk-based approach to border clearance and improve efficiency of border procedures. One important component of this project has been the establishment of the National Single Window, an online one-stop shop for customs clearance that allows exporting and importing companies to complete required customs clearance documents electronically.

By the end of 2019, 13 government agencies had submitted 198 (out of a total of 250) administrative procedures on the NSW site. However, due to limited technical capacities, some ministries have been slow to integrate into the system, and programmes to support SMEs in using this facility have not yet been defined (OECD/ERIA, 2018_[5]). The General Department of Viet Nam Customs has delivered training on the NSW procedures and, going forward, would be recommended to ensure the specific targeting and inclusion of SMEs in this training. In addition, more widespread efforts are needed to promote usage by SMEs of the Viet Nam Trade Information Portal, a web-based database launched in 2017 to provide all traders with ease-of-access information on the regulatory requirements for exporting and importing.

Vietnamese SMEs would benefit from a comprehensive export-readiness programme

While trade facilitation and trade promotion efforts are key to building the export capacity of a country, it would also be important for Viet Nam to strengthen the export-readiness of SMEs through more intensive training and support programmes. Although VIETRADE reports that a variety of export-related training is available to new and small exporters, what appears to be missing is a co-ordinated and comprehensive export-readiness support programme. In Brazil, for example, the national export promotion agency has delivered for many years a standardised pre-qualification export-readiness programme for nascent and novice small exporters which has achieved good results and which could be of inspiration to Viet Nam (Box 5.7).

E-commerce policies

E-commerce support has recently been introduced, but requires complementary measures specifically targeting SMEs

Another policy mechanism for engaging more SMEs in international trade is through the promotion of e-commerce. In this area, a National E-Commerce Development Programme (2014-2020) was approved by the Prime Minister in 2014 and has been implemented through the National E-Commerce Master Plan 2016-2020. In addition to putting into place the legislation and mechanisms to facilitate the development of e-commerce (e.g. national e-commerce payment system, digital signatures for ensuring the security of e-commerce transactions, popularising the use of credit cards), the programme has also aimed to build an online sales solution to assist SMEs in implementing e-commerce strategies as well as to support the participation of Vietnamese firms in major e-commerce platforms. The objectives of the programme have been to encourage the start-up of e-commerce enterprises, facilitate the integration of e-commerce by existing enterprises, and develop credible cross-border e-marketplaces. The target is for 50% of domestic enterprises to have an Internet presence by 2020 and for business-to-business transactions to account for 30% of import-export turnover.

There are a number of obstacles that domestic SMEs would need to overcome to make these objectives achievable, such as the lack of adequate human resources, concerns about internet security and the safety of online payment systems, and the high logistical costs of delivery services. In addition, in order to grow their business online, SMEs would need to train their employees on online marketing tools, customer service and brand building, as well as to develop knowledge of how to make the best use of e-commerce platforms. At present, specific policy support for the use of e-commerce by SMEs is lacking and initiatives to increase the online capability of SMEs have been fragmented (OECD/ERIA, 2018_[5]). An exception has come from the Asian Development Bank (ADB), which in 2017 supported the launch of an e-commerce platform for SMEs in the Lower Mekong Region and the creation of a shipping service to help buyers arrange international shipping from this region.

Some interesting e-commerce initiatives have also been driven by the private sector, notably by the main international e-commerce platforms. For example, Alibaba has been a forerunner in the business-to-business e-commerce scene in Viet Nam by providing e-commerce support to about 500 exporters in 2012 and later by creating the Viet Nam Export Support Alliance in collaboration with its local partners (EVBN, 2018_[47]). In January 2019, VIETRADE also announced a partnership with Amazon Global Selling to boost exports and the brand strength of Vietnamese enterprises through e-commerce over the period 2019-2021. This partnership includes a global e-commerce export and brand development programme and the delivery of e-commerce training for Vietnamese enterprises.14

More generally, to succeed in online business, exporters also need to have quality and safety certifications to create confidence among foreign buyers. In this instance, it could be important for the National Productivity Development Programme of the Ministry of Science and Technology (MOST) to target SMEs with a focus on expanding the quality of their products to meet international standards.

Public procurement policies

Vietnamese legislation does not sufficiently involve SMEs in public procurement

Public procurement of goods and services has the potential to significantly expand market opportunities for SMEs. As a result, governments around the world have increasingly taken actions to give SMEs better access to public markets (OECD, 2018_[33]). This entails addressing the specific characteristics of government contracts that may adversely affect SMEs, such as the complexity of procedures or high technical and financial capacity requirements.

In Viet Nam, the public sector is a major market for the provision of goods and services. Between 2011 and 2015, capital investment from Viet Nam’s state budget accounted for about 29% of total investment in the economy, with roughly USD 25 billion spent on procurement, including by provincial and municipal governments and state-owned enterprises (SOEs).

Although public investments constitute a large fraction of total investments in the Vietnamese economy, policies involving public procurement to support SMEs are limited. Article 14 of the procurement law (Law on Bidding No. 43/2013/QH13 dated 26 November 2013) stipulates that “small-size enterprises” are entitled to preferential treatment in the selection of tenderers for the supply of “advisory services, non-advisory services, construction and instalment” and can be awarded additional points in the assessment of bids. Although Article 6 of a further decree on the implementation of the “Law on Bidding” states that construction contracts below VND 5 billion are reserved for SMEs,15 the procurement law does not set policy targets with regards to the percentage or volume of procurement contracts directed to SMEs. Similarly, there is no data or register with information on government contracts involving SMEs. All of this makes it difficult to assess the extent to which SMEs are actually recipients of government contracts.

Therefore, the development of a database to track the involvement of SMEs in public procurement would be a crucial first step towards building more evidence-based policies in this domain. In addition, since SOEs account for a large share of production in Viet Nam, the government could also consider developing specific targets and policy programmes to encourage SOEs to procure from SMEs.

Box 5.8. Procurement set-asides for small business – the United States

Every year, the US federal government purchases approximately USD 400 billion in goods and services from the private sector. The federal government stipulates that at least 23% of all federal government contracting dollars should be awarded to small businesses. Targeted goals are also established for subcategories of the small business sector:

• Women-owned small business – 5%

• Small disadvantaged business – 5%

• Service-disabled veteran-owned small business – 3%

• Small business in Historically Underutilised Business (HUB) Zones – 3%

In the United States, set-asides are used to help small businesses compete for and win federal contracts. When market research concludes that small businesses are available and able to perform the work or provide the products being procured by the government, those opportunities are “set aside” for them. There are different types of set-asides, some of which are open to all small businesses and others open only to small businesses meeting other additional criteria.

Set-asides based on contract value

Every federal government purchase with an anticipated value above the micro-purchase threshold of USD 3 500 and up to the Simplified Acquisition Threshold (SAT) of USD 150 000 is required to be automatically and exclusively set aside for small businesses. There must be at least two or more small businesses (Rule of Two) that are competitive in terms of market prices, quality and delivery for an automatic set-aside to take place. Contract opportunities above the SAT of USD 150 000 shall also be set aside if the Rule of Two is met.

Subcontracting requirement

Contract opportunities above USD 700 000, or above USD 1.5 million for construction contracts, awarded to larger companies must have small business subcontracting plans to the extent that there are subcontracting opportunities.

Sole-source programmes

In addition, there are sole-source development opportunities under the 8(a) Business Development Programme that allows sole-sourcing of federal contracts for HUB Zones, Service-Disabled Veteran-Owned Small Businesses, and Women-Owned Small Businesses.

Source: OECD (2018, p. 87_[34]), SMEs in Public Procurement: Practices and Strategies for Shared Benefits, https://www.oecd.org/fr/publications/smes-in-public-procurement-9789264307476-en.htm. Also see, Small Business Administration, https://www.sba.gov/contracting/government-contracting-programs/what-small-business-set-aside.

There are several policy options which Viet Nam could consider to enhance the access of domestic SMEs to government contracts

Viet Nam could also draw inspiration from existing international practice to learn on the different measures that can facilitate the participation of SMEs in public procurement. A common option, for example, is the use of procurement quotas (set-asides) or reserving contracts under a certain threshold value for SMEs (see the illustrative example from the United States in Box 5.8). Other measures include dividing contracts into smaller lots to make tenders more accessible to SMEs; reducing or simplifying the required documentation and procurement procedures; the use of e-procurement (since it increases the transparency of tendering opportunities); encouraging the involvement of SMEs as subcontractors in large contracts; training SMEs on how to apply for government contracts and public officials on how to draft calls more accessible for SMEs; and establishing a directory on SME products and services which can be consulted by procurement officials when issuing tender calls (OECD, 2008_[28]).

Workforce skills upgrading programmes

Public support for workplace-based training in SMEs is very limited

As shown in chapter 3, the Vietnamese labour market is challenged by a general shortage of skilled workers with practical training, mismatches between the demand and supply of skills, and insufficient consideration of the needs of employers in the design of technical and vocational education and training (TVET) programmes.

Support of targeted workplace-based training in SMEs should also receive more attention in Vietnamese legislation. The guidelines for the SME Support Law (Decree No. 39/2018/ND-CP dated 11 March 2018) state that SMEs are entitled to support for some types of training activities. In particular, the state budget shall cover at least 50% of the total expenses that SMEs incur in a training course in business administration;16 trainees in SMEs at the elementary TVET level (and for courses lasting no more than three months) are eligible for free tuition fees; and SMEs that provide the training premises may qualify for reimbursement of some of their training expenses.

However, as noted in chapter 3, Viet Nam’s current TVET system is geared more towards providing basic skills to labour market entrants and the unemployed than towards upgrading the skills of employed workers. Thus, Vietnamese SMEs lack a targeted programme that seeks to enhance the skills of their workers. Furthermore, SMEs find it difficult to commit to hiring TVET graduates, a common requirement for collaboration with TVET institutes, since most of their programmes are centred on short basic training courses that do not meet their real skills needs.

One way in which the national TVET system could become more attractive to SMEs is by supporting more demand-led, enterprise-based training to upgrade the skills of employed workers. The example of the Skillnet Ireland programme could serve as an example (Box 5.9). The inclusion of multinational enterprises in sector-specific learning networks could also enable SMEs to benefit from the transfer of knowledge of international standards, management practices and technology, and would align with the national policy target of linking domestic SMEs to global value chains.

Box 5.9. Public-private co-operation in workforce training - Skillnet Ireland

Description of the approach

Skillnet Ireland is a national agency responsible for the promotion and facilitation of enterprise-led workforce training. The agency supports and funds the creation of sector-specific learning networks of firms. A Skillnet Network is a collection of private sector businesses that collaborate to identify common skills and tailored training needs within their sector or region. Skillnet Ireland then co-ordinates the design, sourcing and delivery of the training in collaboration with industry training providers and higher educational institutions. The training networks are partly state-funded through the Department of Education and Training’s National Training Fund, and partly financed from network members’ contributions. In 2019, 70 Skillnet Learning Networks operated across sectors such as ICT, pharma, financial services, agriculture, retail and transport. Training was provided to over 70 000 workers. Of the 28 422 member companies, 93% were SMEs.

Factors for success

A major factor for success is that Skillnet produces value-added for member firms. Much of the training undertaken through the Skillnet Networks would not have been undertaken by employers in the absence of the programme and the vast majority of employers would not have found training of similar quality. One of the greatest advantages of the Skillnet model is that it reduces the administrative costs of training, which is particularly helpful for SMEs.

Obstacles and responses

The development and growth of strong Learning Networks require time and resources to establish the necessary infrastructure and processes. The establishment of Skillnet Ireland was guided by a clear financing model, supported by the state government, as well as clear procedures for setting up new networks, which were key to overcoming these challenges.

One of the obstacles for member companies, especially SMEs, consists in encouraging their employees to participate in the training. This requires strong communication about the benefits of upskilling for the mutual gain of both the business and the employee. SMEs may also have a low motivation to pay a contribution fee to the Network. This can be overcome by ensuring that the networks continue to add value to their business.

Relevance for Viet Nam

Viet Nam needs to strengthen workforce training in SMEs. Skillnet Ireland provides an example of a needs-driven training programme that is centred on SMEs and that hinges on a network approach to training delivery. This approach has become increasingly common among SMEs because it allows them to pool resources and access training of higher quality at lower per-capita costs, in addition to encouraging peer learning.

Sources for more information

Skillnet Ireland website: https://www.skillnetireland.ie

OECD (2019_[35]), OECD Skills Strategy 2019, Skills to Shape a Better Future, https://www.oecd.org/publications/oecd-skills-strategy-2019-9789264313835-en.htm

European Commission (2019_[36]), Skills for Smart Industrial Specialisation and Digital Transformation, https://www.clustercollaboration.eu/sites/default/files/news_attachment/skills_for_smart_industrial_specialisation_and_digital_transformation_report.pdf

Entrepreneurship education

Entrepreneurship education at primary and secondary levels of education is virtually lacking

The objective of entrepreneurship education is to instil, through the national education system, a positive view in the younger generations about the effects and possibilities related to entrepreneurial activity. It entails the suite of pedagogical activities to promote entrepreneurial skills, such as creativity, risk-taking, and leadership, as well as knowledge about the entrepreneurial process. Multiple tools are used in the teaching of entrepreneurship: classroom lectures, business games, the creation of real or virtual student business start-ups, business idea competitions, guest speakers, etc.

Entrepreneurial learning is not yet an integrated component of Viet Nam’s national educational system (OECD/ERIA, 2018_[5]). Entrepreneurial learning at the elementary level of the education system is not discernible and at the secondary level is evident mainly as an outcome of fragmented donor-funded initiatives, for example, the 5-day Young Entrepreneurs Adventure Camp for high school students co-organised by Viet Nam Young Entrepreneurs (an NGO) and US-based Babson College to nurture entrepreneurial mind-sets and connect the students with peers who share an interest in entrepreneurship.

Officials from the Ministry of Education and Training (MOET) have stated the importance of instilling the spirit of entrepreneurship in Vietnamese youth at an early age. In the early stages of the development of entrepreneurship education, the creation of a multi-level National Commission on Entrepreneurship and Education, as done in the Netherlands, can help identify a programmatic approach to developing a continual learning path for students from primary school through to the university level. From the analytical work of this Commission, the Dutch government launched an Action Plan for Entrepreneurship and Education that led to the introduction of entrepreneurship education programmes at various levels of the education system (see Box 5.10). A similar approach could be emulated by Viet Nam’s MOET.

Box 5.10. The National Entrepreneurship Education Programme - the Netherlands

Description of the approach

In 2000, the Dutch government launched the National Entrepreneurship Education Programme as part of its policy to create a more entrepreneurial society. The Ministry of Economic Affairs, in co-operation with the Ministry of Education, Culture and Science, established a broad-based, consultative Commission on Entrepreneurship and Education consisting of 16 people from different fields of education, employer associations, entrepreneurs (male and female) and multicultural organisations to plan the strategic integration of entrepreneurship at all levels of the education system. All levels of education were represented in the membership of the Commission. The Ministry of Economic Affairs served as its secretariat.

The Commission was mandated to develop a portfolio of good practices/projects in entrepreneurship, spanning all levels of education from primary school to university, and which would serve as examples that could be easily duplicated by other educational institutions. The ultimate objective was to develop a continual learning path from primary school to secondary school, vocational education and university, thereby creating a snowball-effect throughout the education system. To reach this goal, the Commission organised a series of meetings with experts and representatives from the different levels of education; completed an inventory of the existing good practice initiatives that fit into this learning path; and identified barriers faced by schools and universities in promoting entrepreneurship education.

The final outcome distinguished five grade/age appropriate phases in the entrepreneurial learning journey.

• First experiences with entrepreneurship (primary schools): Students are introduced to the notion of entrepreneurship as a life option. At this stage, students learn through play some general skills, such as working in groups/projects, orientation to production, and research.

• Consciousness of skills (lower secondary schools): Students gain an understanding of their own skills and talents.

• Creative applications and enrichment of experiences (upper secondary schools): Students are introduced to learning by experience and to elements of competition. This could involve mini-enterprise projects where students from secondary and higher vocational education run their own enterprise over the course of a year supported by a teacher and mentor (often an entrepreneur).

• Preparation and real start-up: At this stage, educational institutions raise interest in “the doing” of entrepreneurship. In higher education, this may mean support of a real start-up as part of the regular curriculum.

• Growth and innovation phase: In this final phase, support for start-up firms becomes more important. Higher education can provide supporting facilities (finance, personnel, knowledge). Co-operation with intermediaries, such as chambers of commerce and former students, can be very useful in supporting the transfer of knowledge and the overall enterprise growth.

To stimulate the broader application of entrepreneurship projects in the education system, the Dutch government approved a Subsidy Scheme on Entrepreneurship and Education to fund small pilot projects (e.g. seminars, training for teachers, etc.) and the development of learning instruments for entrepreneurship education in vocational institutions and universities.

From 2007-2011, the Ministry of Economic Affairs and the Ministry of Education, Culture and Science implemented the Action Programme for Entrepreneurship and Education, which continued the policy of subsidising educational institutions to integrate entrepreneurship in their programmes and encouraged the gathering and transfer of information on entrepreneurship education projects between educational institutions.

The government also supported the involvement of employers’ organisations in initiatives to bring entrepreneurship into education. Notable from this engagement was the development of an entrepreneurship module in upper secondary vocational education.

Success factors

Working on school and university curricula was a critical factor of success because it safeguarded the structural place of entrepreneurship in the education system and prevented the risk that projects would only have a temporary effect. Moreover, the build-up of a portfolio of good practices for every education level, to serve as examples for other institutions, helped ensure the diffusion of entrepreneurship education across different institutes. The introduction of the entrepreneurship module at the upper secondary vocational education level contributed to the realisation of TVET providers that entrepreneurship is a cross-sectoral topic and led to the inclusion of entrepreneurship courses in vocational education.

Obstacles and responses

The major barriers, as noted by Dutch officials and experts, involved giving entrepreneurship a structural place in the curricula of the different levels of the education system, changing the often negative culture towards entrepreneurship within the education sector (including entrepreneurship as a legitimate area of study), and training teachers who could teach students about entrepreneurship.

Relevance to Viet Nam

Viet Nam has not advanced a host of programmes and activities supporting entrepreneurship education. The creation of a National Entrepreneurship and Education Commission and the subsequent launch of a national entrepreneurship education programme could help promote a more strategic approach to entrepreneurial learning objectives and outcomes at all levels of the educational system.

Sources for further information

“Entrepreneurship education in the Netherlands”, prepared by Technopolis Group as part of the “Entrepreneurship 360 – Promoting entrepreneurial learning in primary and secondary education and in vocational education training project” commissioned by the European Commission (see: https://www.schooleducationgateway.eu/downloads/entrepreneurship/Netherlands_151022.pdf/

There is a stronger offer of entrepreneurship education at the university level, but this is not yet integrated into the national curriculum

The government has made it a priority to introduce entrepreneurship to higher education students. This is evident in the Prime Minister Decision No. 1665/QD-TTg dated 30 October 2017 approving the “Scheme for Supporting Students’ Start-ups to 2025” to equip students in educational and training establishments with entrepreneurship knowledge and skills. This scheme supports the development of educational materials for innovative start-ups in Viet Nam, training for university professors in the teaching of entrepreneurship, an annual Start-up Day to be held at every university in the country, incentives to encourage universities to promote a start-up culture among students, and funding for pilot models of strong university incubators in three universities.

In line with the Prime Minister’s Decision, the MOET introduced the “Supporting Student Entrepreneurship 2017-2020 with a Vision towards 2025” plan (Decision No. 1230/QD-BGDDT of 30 March 2018) with the intent to make entrepreneurial learning mandatory for every university student, regardless of major, and to provide opportunities for students to start businesses (e.g. start-up clubs, start-up events, start-up training support, entrepreneurship/incubator centres and co-working spaces). This plan also instructed all higher education institutions, including vocational schools, to have a plan for implementing entrepreneurship education by 2020.

As of 2020, some specific universities had launched entrepreneurship education initiatives, which were most often funded by international donor organisations. These included, for example, the Research and Incubating Centre at the National Economics University in Ha Noi and the Maker Innovation Space at the University of Da Nang. The government has also co-operated with international organisations to foster entrepreneurial learning initiatives, such as through the Viet Nam-Finland Innovation Partnership Programme (IPP)17 which trained 23 lecturers and staff from 13 Vietnamese universities, colleges, and accelerators on the promotion of entrepreneurial learning. However, even the main universities in Viet Nam have not yet built a full entrepreneurship curriculum for their students, at best offering discrete short-term courses in functional areas of business studies, such as marketing, management and finance with a primary focus on theoretical content delivered in a lecture format (Dao, 2018_[38]).

At the university level, Viet Nam may find the ASEAN Common Curriculum for Entrepreneurship a useful framework for designing an entrepreneurship education curriculum (AsiaSEED, 2012_[39]). Core subjects covered in the curriculum include: entrepreneurial leadership, business planning, business policy and strategy, operations management, human resource management, marketing, business creativity, commercial law, communications, financing, environmental studies, business start-up and information technology management. The curriculum approach follows a consultation-based learning methodology involving students, academics and SMEs, and allows for localised material in addition to the common content, with suggestions for teaching methods and learning activities.

It is also important to take a cross-disciplinary approach to entrepreneurship teaching to provide the opportunity for non-business students to gain knowledge about the entrepreneurial process and learn entrepreneurship skills. This is especially true for students in science and engineering degree programmes as well as for those in the arts and professional schools, since future entrepreneurs will come from all kinds of educational backgrounds, not only from business administration programmes.

There is some evidence of cross-disciplinary projects in Viet Nam supported by international donors. The United States Agency for International Development (USAID) together with Dow Viet Nam has been delivering a programme to bring engineering students into the entrepreneurship domain through an investor-style business plan and pitch competition: i.e. the Maker to Entrepreneur Programme (MEP): Venture Demo Day.18 The aim of MEP is to inspire students to apply innovation and entrepreneurship to community development problems, while helping young inventors to commercialise and scale their innovations. In addition, in 2019, 30 engineering faculty from Vietnamese universities were trained by Arizona State University on developing entrepreneurship lessons tailored to young engineers. These professors then mentored MEP venture teams competing at the Venture Demo Day to develop their engineering projects into viable products and prepare their pitches. Programmes such as this are a starting point for bringing entrepreneurial skills within the reach of engineering students and should be further extended.

Entrepreneurship education at the technical and vocational education and training (TVET) level needs further support

In response to the Prime Minister Decision No. 1665/QD-TTg of 30 October 2017, the Ministry of Labour, Invalids and Social Affairs (MOLISA), the line ministry responsible for TVET in Viet Nam, also proposed a strategic plan to integrate entrepreneurship education at vocational schools and colleges. This plan included teacher training, entrepreneurship training for students, and the development of related training materials and knowledge resources.

However, many TVET institutes have received limited guidance on how to infuse entrepreneurship in their existing curriculum or extracurricular activities or on how to develop linkages with the business community (Tien, Binh and Chuc, 2019_[40]). Furthermore, there is also an insufficient number of lecturers trained on entrepreneurial learning (Tien, Binh and Chuc, 2019_[40]). This situation should be addressed by enabling the technically-oriented instructors to participate in intensive training-of-trainer courses on the teaching of entrepreneurship course material, including on the selection of entrepreneurial teaching content, variation in teaching methods and methods of assessing students.

Although the government has committed VND 3 billion to support the national project to build the innovation and entrepreneurship ecosystem, the budget focuses mainly on large cities and key universities, while it has been difficult for vocational colleges to obtain approval for project funds (Tien, Binh and Chuc, 2019_[40]). In this regard, it would help if a specified percentage of central budget assistance would be earmarked for vocational colleges, with additional funding sources that could come from local governments.

Finally, the government of Viet Nam has used in the past the Know about Business (KAB) curriculum of the International Labour Organisation (ILO) to teach entrepreneurial skills to vocational students.19 KAB was first introduced in Viet Nam in 2005 with the training of 110 Master KAB Facilitators and the translation of training manuals in the local language for the delivery of a 120-hour course. MOLISA could explore the option of using the KAB programme as a core component of entrepreneurship education in the TVET system, in much the same way as the Egyptian Ministry of Education has successfully done (see Box 5.11).

Box 5.11. Implementation of the ILO’s Know About Business curriculum in Egypt’s TVET system

After a period of years with pilot projects, the Egyptian Ministry of Education has adopted KAB curriculum across the vocational education system. In 2016, the Ministry entered into a 3-year agreement with the ILO to roll-out the KAB programme to 2 000 technical secondary schools that would reach 1.6 million students across the country by 2019 (with project implementation funding from Global Affairs Canada, GIZ and USAID). The aim of the project is to promote an entrepreneurship culture, encourage self-employment as a career option, and create awareness among students of the opportunities for working in small enterprises. The KAB curriculum provides students with knowledge on starting an enterprise, but also prepares them to become better employees. The project includes training of TVET instructors in delivering the curriculum and providing career guidance for students wishing to practice their entrepreneurship skills. By 2018, 34 000 students in 175 technical secondary schools had participated in the KAB curriculum (ILO, 2019_[42]).

In addition, a number of university professors have been trained by the ILO as national KAB key facilitators, which included introduction to delivery of the online version of the KAB programme. Blended use of the online version with face-to-face training can reduce the number of classroom-based training hours and make the programme more accessible to a larger number of students. In 2014-15, for example, 31 400 undergraduates accessed the KAB online platform (ILO, 2015_[41]).

Sources: ILO (2015_[41]), ILO-Cairo 2014/2015 Annual Report, International Labour Office, Cairo; ILO (2019_[42]), In Pursuit of Equality & Prosperity in Egypt – 2018 Results, International Labour Office, Cairo

Women’s entrepreneurship programmes

The existing programme offering

Box 5.12. The approach of the Philippines to gender mainstreaming in government programmes and activities

The government of the Philippines has prioritised women’s entrepreneurship both by enacting gender-specific strategies and by mainstreaming gender concerns into broader statutes and regulations regarding SMEs. The Women’s Empowerment, Development and Gender Equality Plan 2013-2016 contained an entire chapter on women in SMEs, outlining a series of strategies to promote and support women’s entrepreneurship. In addition, the National Economic Development Authority and the Philippine Commission on Women published guidelines to ensure the gender responsiveness of all government projects and programmes.

As a result, each ministry has been requested to develop a Gender and Development (GAD) Plan to ensure the participation of women in their programmes and activities. In their annual programme monitoring reports, each ministry is also required to produce statistics on the participation of women in their activity (e.g. share of programme recipients/beneficiaries) and the attached budget expenditures. With respect to SME policy, for example, the Micro, Small and Medium Enterprise (MSME) Development Plan 2011-2016 included several provisions targeted at women entrepreneurs and set out the indicators to collect data on women’s participation in SME programmes.

Key economic ministries have also established women’s empowerment focal points, such as the Women’s Desk at the Department of Trade and Industry (DTI). At the local level, one-stop Women’s Enterprise Development Desks have been set up in several municipalities and the Negosyo (business support) centres are mandated by the law to encourage women’s entrepreneurship and are regularly monitored on whether they achieve this goal.

Source: OECD (2017_[44]), Strengthening Women’s Entrepreneurship in ASEAN: Towards increasing women’s participation in economic activity, OECD, Paris.

Viet Nam has introduced a National Strategy on Gender Equality which would benefit from stronger co‑ordination

The promotion of women’s entrepreneurship has become an important government target in many countries. In Viet Nam, the National Strategy on Gender Equality 2011-2020 has the target of increasing the share of SMEs owned by women to at least 35% of the total by 2020. This strategy outlined a number of solutions for increasing women’s participation in entrepreneurship, including ensuring conditions for women’s full and equal access to economic resources (e.g. credit, land and market information), training and capacity building.

Ministries and other government bodies were instructed to participate in the implementation of the Gender Equality Strategy within the scope of their assigned functions, including formulating and evaluating annual and five-year action plans. However, no specific entity was identified as responsible for planning, co-ordinating and evaluating the specific actions of the Strategy. The best way to support coherent policy implementation is usually to designate a single government body responsible for co-ordinating and streamlining efforts related to women’s entrepreneurship development (OECD, 2012_[43]; OECD, 2017_[44]). In the case of Viet Nam, such a focal point could be in the Agency for Enterprise Development (AED), which has a mandate for co-ordinating SME policies and programmes, but does not currently have a focus on women-owned SMEs. The example from the Philippines, where each ministry is required to develop a Gender and Development Action Plan and report on its results, demonstrates how this could be achieved (Box 5.12).

Women’s entrepreneurship support is currently mostly the outcome of international donor initiatives

Viet Nam is to be commended for including a definition of woman-owned SMEs in the SME Support Law (i.e. one in which one or more women own at least 51% of its charter capital). However, the only specific provision for women-owned SMEs in the SME Support Law is a 100% subsidy for training expenses related to business administration. By the same token, the AED does not have any specific programme targeting women entrepreneurs, depending instead on support for women’s entrepreneurship development from the Viet Nam Women Entrepreneurs Council (VWEC), the Viet Nam Women’s Union, and NGOs. It follows that women’s entrepreneurship is currently mostly supported through international donor funding in Viet Nam. Notable initiatives include:

• The USAID Governance for Inclusive Growth initiative, a grant to the Viet Nam Association for Women Entrepreneurs in 2018 to organise training programmes to promote innovative business start-ups among women entrepreneurs and strengthen the network of women entrepreneurs.

• The Netherlands-funded “Enhancing Opportunities for Women’s Enterprises” 2016-2020 project, a partnership with the Viet Nam Women’s Union to support rural women in entrepreneurship.

• The Global Affairs Canada-funded Women’s Initiative for Start-ups and Entrepreneurship 2018-2025 Programme, which supports women entrepreneurs and women-led start-ups with consultancy, training, mentoring, networking, and access to capital and markets.

• The partnership of the US Embassy American Centre in Ha Noi with the Viet Nam Women’s Union and the Viet Nam Women’s Academy to deliver the “Start-up Smart for Women” training course for women entrepreneurs in 16 provinces in northern Viet Nam.

• The ILO Gender and Entrepreneurship Together (GET Ahead) training project for women in business in Viet Nam, which has trained Vietnamese trainers in the GET Ahead methodology to deliver the training.20

• The Australian Aid’s Investing in Women Initiative 2012-2020 (AUD 4 million), a partnership with the MPI, which seeks to improve women’s economic participation and build markets for women, including by encouraging investment in women-owned SMEs.

Apart from these donor-funded initiatives, the project “Supporting women in starting a business in the period 2017-2025” (Project 939), initiated by the Viet Nam Women’s Union and approved through Prime Minister’s Decision in June 2017, proposes to provide support to 20 000 women’s start-ups and the establishment of 1 200 women-led or women-managed co-operatives. This project encompasses a series of activities, including entrepreneurship skills training courses, matching fairs for women to exchange and learn, trade promotion, incentives for women to develop business ideas, and support for completing business plans and accessing resources to realise the plans. The Prime Minister’s Decision stated that funding for the project would come from the state budget, but would be complemented with funding from local governments. Governments in certain provinces have followed through providing resources to support the implementation of the project in their jurisdictions.21 In the first year of project implementation, more than 8 600 women started a businesses. To August 2019, the project had received more than 35 670 business ideas from women entrepreneurs, and Women’s Unions at all levels provided training and instruction for 33 465 women.22

The creation of an Expert Panel could help advance policy reform in women’s entrepreneurship development

Further development of women’s entrepreneurship would be greatly assisted by more specific and accessible support policies. Of particular importance would be the inclusion of women-owned SMEs in the programmes implemented under the SME Support Law. To facilitate this process, the AED could establish a Women’s Entrepreneurship Development Expert Panel, which could consist of experts from the private sector and civil society from across the country, including successful women entrepreneurs, representatives from key women entrepreneurs associations, researchers, business development service provides and key international partner organisations. The aim of the Panel would be to identify gaps in services and support measures for women entrepreneurs in Viet Nam and to propose appropriate solutions. An outcome from the Panel discussions could be, for example, a draft policy framework to promote women’s entrepreneurship development which could be consulted with relevant ministries, agencies, and international donor organisations and which could lead to an agreed Action Plan with targeted programme deliverables.

Main needs of women entrepreneurs in Viet Nam

The VWEC has recently undertaken a needs-assessment of women-owned SMEs in Viet Nam, identifying access to finance, access to markets and business networks, and access to information and knowledge as the main needs and policy gaps affecting women’s entrepreneurship (VWEC, 2018_[45]).

Access to financial resources

The International Finance Corporation (IFC) estimates the financing gap for women-owned SMEs in Viet Nam (difference between the supply and demand for financing) at about VND 27 trillion, or USD 1.19 billion (IFC, 2017, p. 51_[46]). Women entrepreneurs in the VWEC (2018_[45]) study reported facing obstacles due to inappropriate loan application packages and collateral requirements, unsuitable loan terms, lack of collateral, lack of information about available capital resources, weak negotiation skills in borrowing, and lack of support from the spouse/family (necessary because women are required to have their spouse co-sign their loans).23 The report concluded that credit institutions in Viet Nam should develop loan products suitable to women-owned enterprises through simplified application processes, flexible credit terms and maturities, and a tailored credit rating framework.

Banks in a number of countries have been successful in designing special loan products for women entrepreneurs. A model example is the Inclusive Lending for Aspiring Women Entrepreneurs (ILAW) Programme of the Development Bank of the Philippines, which has a dedicated financing window for women. Often these loan programmes will include a capacity building component. In the case of the ILAW programme, mentoring and coaching is provided to the loan clients by members of the Women’s Business Council Philippines (Box 5.13). Similarly, the Women Entrepreneurs Financing Programme (WEFP) of the SME Bank Malaysia requires applicants to attend the Leaders Acceleration Training Programme (LEAP) organised by the Bank’s training, consultancy and research arm. This training aims to improve the competencies of women entrepreneurs, while providing an opportunity for the bank to assess the applicant’s ability to manage a business. Once the loan is granted, the SME Bank continues to provide business coaching to the women entrepreneurs to help them expand their business.

Box 5.13. The Inclusive Lending for Aspiring Women Entrepreneurs (ILAW) Programme of the Development Bank of the Philippines

In early 2015, the Development Bank of the Philippines created the Inclusive Lending for Aspiring Women Entrepreneurs (ILAW) Business Loans Programme, a lending window to provide financial support to women entrepreneurs and help them grow their businesses beyond micro-credit. This initiative was inspired by the Women’s Business Council Philippines (WomenBizPH) in response to a recommendation of the APEC Women and Economy Forum that a gender lens be adopted in establishing financial support and training for women’s businesses.

The ILAW programme includes simplified lending procedures, flexible collateral policies, and customised repayment schedules (with terms not to exceed ten years) for women entrepreneurs. It also co-operates with WomenBizPH to offer mentoring and advice to ILAW borrowers. Eligible businesses must be woman-owned and women-directed with business assets not exceeding PHP 100 million (about USD 1.9 million) and can also include co-operatives in which women are the majority of members. Applications from start-ups are considered on a case-by-case basis.

The minimum loan amount of PHP 300 000 (about USD 6 000) can cover up to 90% of the project costs and can be used for working capital, financing of confirmed purchase orders and letters of credit, acquisition of fixed assets or the purchase of a franchise. The loan duration can extend for up to a 7-year term.

Source: “Inclusive Lending for Aspiring Women (ILAW) Entrepreneurs Program Business Loan” brochure at: https://www.dbp.ph/wp-content/uploads/2018/10/ilaw.pdf/

Efforts of Vietnamese banks to adopt approaches specific to women-owned SMEs and design tailored loan packages is evident. For example, the VPBank, with support from the IFC, was one of the first in the country to do so. Within the first year of launching the programme, the VPBank lent USD 600 million to 2 000 women entrepreneurs, accounting for 25% of its SME client roster.24 The IFC expects to provide an additional USD 150 million in loans to Vietnamese banks for financing women-owned SMEs by 2020, and another USD 200 million by 2025.25 This continued support from the IFC to encourage private banks in Viet Nam to be more inclusive of women entrepreneurs – e.g. through the IFC Gender Finance Programme and the World Bank-IFC Women Entrepreneurs Finance Initiative/We-Fi26 – could make a difference in improving women’s access to finance and changing the lending behaviour of banks. To make these international efforts more sustainable, Viet Nam’s public financial institutions, such as the Viet Nam Development Bank (VDB), could design similar loan products that specifically target women-owned SMEs.

Access to markets and business networks

On the matter of accessing markets and business networks, women entrepreneurs in Viet Nam prioritised assistance on trade promotion, value chain integration, market information, and referrals to local and foreign associations (VWEC, 2018_[45]). In particular, women entrepreneurs expressed the need for a trade promotion programme developed specifically for them, which would include participation in trade fairs and product-introduction events where women entrepreneurs could meet potential buyers. To respond to this need, VIETRADE could consider designing a dedicated programme for women exporters, such as the Canadian Business Women in International Trade (BWIT) Service (Box 5.14) or the Malaysian Women Exporters Development Programme (Box 5.15).

Box 5.14. Business Women in International Trade (BWIT) Service - Canada

The Business Women in International Trade (BWIT) Service is designed to accelerate the internationalisation of export-ready and export-active woman-owned businesses by providing targeted products and services. The BWIT is part of the Canadian Trade Commissioners Service (TCS). Through the 161 cities worldwide where TCS offices are located, the key goal of the BWIT programme is to help spur the growth of women-owned businesses by linking them with international business opportunities.

Specifically, the BWIT Service organises the following activities:

• Annual women-focused trade missions and one-to-one business matching meetings where Canadian women entrepreneurs can meet with women-owned businesses in other countries or with corporations interested in buying from women.

• Offer of tailored products to assist women entrepreneurs, such as the BWIT LinkedIn Group, the BWIT newsletter, monthly email updates, and a special directory listing of women-owned businesses that facilitates contact with procurement professionals worldwide.

• Assistance to women entrepreneurs in accessing the supplier diversity programmes of major corporations that source products and services from women-owned certified businesses, both by leading women-focused trade missions to major supplier diversity events and by working closely with women’s enterprise organisations and supplier diversity certification bodies.

• Linkages to export financing opportunities, such as to the “Women in Trade Investment Programme” of Canada’s Export Development Corporation, which helps Canadian women entrepreneurs expand beyond national borders.

Source: Trade Commissioner Service website, Business Women in International Trade, https://www.tradecommissioner.gc.ca/businesswomen-femmesdaffaires/index.aspx?lang=eng/

Box 5.15. MATRADE Women Exporters Development Programme, Malaysia

MATRADE launched the Women Exporters Development Programme (WEDP) in 2005 with the aim of increasing the number of women exporters. The programme is specifically tailored for new or occasional exporters with limited exporting experience but the willingness and capacity to develop the skills to become a successful exporter.

To be eligible for the programme, the enterprise must be at least 51% equity-owned by a woman or group of women, have a woman as chief executive officer or managing director, and meet the Malaysian definition of SME. Selected women-owned SMEs must have at least three years of operation and a certain level of local market dominance, with preference given to businesses involved in technology-driven and knowledge-based industries. In addition, businesses must be export-ready (i.e. in terms of having a product or service with export potential and the capacity to cater for export demand), willing to dedicate the time and resources of two staff members in the programme, have an export market plan, and agree to participate in the compulsory training courses before engaging in any export promotional activities.

The programme provides business coaching, market immersions, networking and mentoring sessions, as well as leadership and entrepreneurial development training. Companies in the programme also receive grants that help defray the costs of participating in international trade fairs, seminars and workshops organised by MATRADE worldwide.

MATRADE issues an annual invitation for participation and selects 12 women entrepreneurs for each intake to complete the three-year cycle of the programme. Participants are entitled to select three MATRADE export promotional activities each year from a menu of international trade exhibitions, trade and investment missions, and individual business missions.

By 2017, 128 women-owned SMEs had benefited from the WEDP programme. By the same year, women exporters accounted for 14% of the 19 000 companies in the MATRADE register.

Source: Women’s Exporters Development Programme (WEDP) at: http://www.matrade.gov.my/en/malaysian-exporters/services-for-exporters/exporters-development/new-exporters-development/.

Access to information and knowledge

On the matter of accessing information and knowledge, women entrepreneurs expressed a need for information on possible partners, output markets and legal consultancy services, as well as for knowledge development on corporate governance, marketing, financial management and quality management (VWEC, 2018_[45]). Women entrepreneurs indicated that this knowledge could be delivered through training courses (with a strong preference for online training), counselling and mentoring, business linkages and the formation of associations and clubs of women entrepreneurs.

Conclusions and policy recommendations

This chapter has covered a large number of SME and entrepreneurship programme areas, notably access to finance, innovation, internationalisation, public procurement, workforce skills, entrepreneurship education, and women’s entrepreneurship. Public support for SME finance is channelled mostly through the SME Development Fund and the Credit Guarantee Fund. However, the take-up of these programmes by SMEs and the banking system is low, calling for some adjustments in their operational arrangements. Venture capital and equity markets are moving their first steps and could be further assisted through a more conducive legal and regulatory framework and the introduction of tax incentives to encourage investments in high-potential start-ups and SMEs.

Innovation support is a common target of business support programmes, with a major focus on science and technology-driven enterprises and, increasingly, on the start-up ecosystem. By contrast, insufficient programme support is directed to building innovation capabilities at the firm level and to strengthening the capacity of SMEs to absorb external technologies. In the area of trade policy, the government has made important strides to improve the trade facilitation regime and to direct resources to export promotion activity, but more efforts are needed to train SMEs in export-related skills and online trading, including the use of e-commerce platforms.

Similar to other countries, Viet Nam’s training policies have privileged labour market entrants and the unemployed, whereas the skills upgrading of current workers, especially in SMEs, has been overlooked. Viet Nam could, therefore, launch a new training and advisory programme aimed at the enhancement of workforce skills and labour productivity in SMEs. The government is also committed to making entrepreneurship a mandatory requirement in Viet Nam’s universities, with significant programme activity underway. On the other hand, efforts at the elementary, secondary and vocational levels of education are at a very incipient phase and in need of capacity building and budget support.

Until recently, programme efforts to support women’s entrepreneurship have been driven and funded by international donors. However, the recent project “Supporting women in starting a business in the period 2017-2025” (Project 939) has important targets and, if well-funded, could have an important impact on women’s entrepreneurship. What is currently lacking, however, is an integrated national framework for women’s entrepreneurship development and a mechanism for the co-ordination of support activities. The AED could play this co-ordination role and, with the co-operation and collaboration of other stakeholders, elaborate a more integrated strategy for women’s entrepreneurship promotion.

Based on this analysis, the following policy recommendations are formulated to strengthen SME and entrepreneurship support programmes in Viet Nam.

Policy recommendations on SME and entrepreneurship support programmes

Debt finance

• Undertake an in-depth assessment of the SME Development Fund (SMEDF) and the Credit Guarantee Fund (GCF), inclusive of questionnaires to SMEs and partnering banks, to single out the main causes behind their low use.

• Monitor the performance of the SMEDF by collecting data on the number of loan applications (by sector of activity and purpose of the loan), the average loan size, the percentage of applications rejected and approved, the reasons for loan rejections, and the loan default rates.

• Decrease the coverage rate of the CGF from 100% to about 80% to promote risk-sharing with partnering banks, and increase the annual premium fee for the credit guarantee from 0.5% to 1-2% (of the total guaranteed loan and interest) in order to promote sustainability of the Fund.

Equity finance

• Consider introducing front- and back-end tax incentives to prompt individual investors and venture capital funds to invest in innovative start-ups and growth-oriented SMEs.

• Improve the working of the domestic junior equity market (UPCoM) by strengthening investor protection and increasing capital requirements for firms trading in this market.

SME innovation

• Complement supply-led programmes supporting R&D and technology-based enterprises with interventions, such as innovation vouchers, that aim to improve the innovation capacity of SMEs through skills upgrading and ICT adoption.

• Increase the budget to the National Agency for Technology Entrepreneurship and Commercialisation (NATEC) to work on skills upgrading in business incubators, including by developing national quality standards and putting in place a monitoring and evaluation system.

SME internationalisation

• Raise awareness among SMEs of the Viet Nam Trade Information Portal and the National Single Window to increase their usage of these trade facilitation mechanisms.

• Develop an export-readiness training programme targeting potential and novice SME exporters.

• Target SMEs in the National Productivity Development Programme of the Ministry of Science and Technology to help them meet international quality standards, thereby increasing their chances to integrate global value chains.

• Initiate a wide-scale intervention to orient SMEs in the use of e-commerce as an export trade channel.

Public procurement

• Develop a strategy to support SMEs through public procurement by setting targets for the share of public procurement contracts to be awarded to SMEs, establishing set-asides, encouraging state-owned enterprises to procure from SMEs, and developing a database to track the allocation of government contracts to SMEs.

Workforce skills upgrading

• Support more generously within-company training with a view to enhancing the average labour productivity of SME workforces; for example, by implementing a demand-driven programme aimed at the upgrading of workforce skills in SMEs.

• Facilitate the involvement of multinational enterprises in SME workforce training programmes to enable the transfer of international standards, management practices and technology, and to align with the policy target of linking local SMEs to global value chains.

Entrepreneurship education

• Establish a National Commission on Entrepreneurship and Education to develop an action plan for the integration of entrepreneurial learning across the different levels of the educational system, beginning with primary level through to university.

• Promote the use by Vietnamese universities of the ASEAN Common Core Curriculum for Entrepreneurship as a guide to develop a full entrepreneurship programme for university students.

• Encourage a cross-disciplinary approach in the delivery of entrepreneurship courses to university students by allowing non-business students to choose entrepreneurship electives, with particular emphasis on engineering, science and arts students.

• Allocate a specified percentage of entrepreneurship education budget assistance for the integration of entrepreneurship education in vocational colleges.

Women’s entrepreneurship

• Establish a government focal point for women’s entrepreneurship development in the Agency for Enterprise Development, with the mandate to co-ordinate SME policies targeting women-owned SMEs.

• Establish a Women’s Entrepreneurship Development Expert Panel, comprised of experts from the private sector and civil society, to identify gaps in support measures for women entrepreneurs and propose solutions.

• Ensure that women-owned businesses are adequately represented in all government SME and entrepreneurship programmes, including those under the framework of the SME Support Law.

• Develop new loan products in national development banks to address the constraints faced by women-owned SMEs in access to credit.

• Design a dedicated exporter development programme for women-owned SMEs which would encompass export-readiness training, business matchmaking, opportunities to participate in international trade missions, and access to export finance solutions.

References

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[24] Ezell, S.J.; Atkinson, R.D. (2011), International benchmarking of countries’ policies and programs supporting SME manufacturers, Information Technology and Innovation Foundation (ITIF), Washington, DC, https://www.itif.org/files/2011-sme-manufacturing-tech-programss-new.pdf.

[12] First Choice Financial Services/AJS Financial Advice (2013), Review of the Temporary Partial Credit Guarantee Scheme 2012: Recommendations submitted to the Steering Committee appointed by the Department of Jobs, Enterprise and Innovation, Dublin.

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[7] IFC (2011), SME Finance Policy Guide. International Finance Corporation, Washington, DC.

[42] ILO (2019), In Pursuit of Equality & Prosperity in Egypt – 2018 Results. International Labour Office, Cairo.

[41] ILO (2015), ILO-Cairo 2014/2015 Annual Report. International Labour Office, Cairo.

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[15] Klingler-Vidra, R. (2014), “Building a venture capital market in Vietnam: diffusion of a neoliberal market strategy to a socialist state”, Asian Studies Review, Vol. 38/4, pp. 582-600.

[29] MOIT (2019), Vietnam Import and Export Report 2018. Ministry of Industry and Trade, Ha Noi.

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[32] OECD (2018), SMEs in Public Procurement: Practices and Strategies for Shared Benefits, OECD Publishing, Paris, https://www.oecd.org/fr/publications/smes-in-public-procurement-9789264307476-en.htm.

[34] OECD (2018), SMEs in Public Procurement: Practices and Strategies for Shared Benefits, OECD Publishing, Paris, https://www.oecd.org/fr/publications/smes-in-public-procurement-9789264307476-en.htm.

[44] OECD (2017), Strengthening Women’s Entrepreneurship in ASEAN: Towards increasing women’s participation in economic activity, OECD Publishing, Paris. https://www.oecd.org/southeast-asia/regional-programme/Strengthening_Womens_Entrepreneurship_ASEAN.pdf

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[17] OECD (2013), Policies for seed and early stage finance: Summary of the 2012 OECD Financing Questionnaire, OECD Publishing, Paris, https://one.oecd.org/document/DSTI/IND(2013)5/en/pdf.

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Notes

← 1.  The four partner commercial banks are the Commercial Bank for Foreign Trade of Viet Nam (VietcomBank), the Bank for Investment and Development of Viet Nam (BIDV), the Viet Nam Prosperity Bank (VPBank) and the Ho Chi Minh City Development Bank (HDBank).

← 2.  Information on the use of SMEDF comes from the Fund’s internal report of 2019.

← 3.  As per the MPI Circular No. 13/2015/TT-BKHDT dated 28 October 2015 outlining the activity of the SMEDF.

← 4.  As per Decree 34/2018/ND-CP on the establishment and operation of Credit Guarantee Funds for Small and Medium Sized Enterprises.

← 5.  In 2018, the government increased the charter capital requirement for a local guarantee fund to VND 100 billion, to be provided from provincial budgets, which is likely to put a further strain on cash-constrained provinces (Decree No. 34/2018/ND-CP).

← 6.  “ADB provides $300 million loan to BIDV to support SMEs in Viet Nam”, News Release, 12 December 2018, Asian Development Bank (ADB), https://www.adb.org/news/adb-provides-300-million-loan-bidv-support-smes-viet-nam/. 

← 7.  “Fintech-driven lending to alleviate SME financing gap”, Viet Nam Investment Review, 22 July 2019, https://www.vir.com.vn/fintech-driven-lending-to-alleviate-sme-financing-gap-69416.html/.

← 8.  Based on VND-USD exchange rates of May 2020.

← 9.  “More UPCoM firms pose market management issues”, Viet Nam News, 22 November 2018 (https://vietnamnews.vn/economy/480565/more-upcom-firms-poses-market-management-issues.html)

← 10.  “Market capitalization of UPCoM exceeds VND 1 quadrillion”, Saigon Online, 9 September 2019 (https://sggpnews.org.vn/business/market-capitalization-of-upcom-market-exceeds-vnd1-quadrillion-83468.html)

← 11.  For example, although the UK is clearly at a different level of capital market development, the entry threshold in the domestic junior equity market (AIM) is GBP 6 million, more than 17 times the entry level threshold in UPCoM.

← 12.  “Directly” implies that SMEs were the explicit target firms, whereas “indirectly” implies the programmes were open for any size of firm.

← 13.  Implementing Decision of the Prime Minister No. 72/2010/QD-TTg dated 15 November 2010 on National Trade Promotion Programme.

← 14.  Further information on the Amazon initiative is available at: “Amazon Global Selling sets up specialized team in Viet Nam”, The Saigon Times, 18 October 2019, https://english.thesaigontimes.vn/72128/amazon-global-selling-sets-up-specialized-team-in-vietnam.html/.

← 15.  Decree No. 63/2014/ND-CP dated 24 June 2014 detailing a number of articles of the Law on Bidding regarding selection of contractors.

← 16.  SMEs in disadvantaged areas and women-owned SMEs are eligible for free tuition fees on business administration training.

← 17.  Between 2014 and 2018, the Viet Nam-Finland IPP had a budget of EUR 11 million to promote the development of entrepreneurship and a start-up ecosystem in Viet Nam (OECD/ERIA, 2018_[5]).

← 18.  “Bringing entrepreneurship competition to engineering students”, Vietnam Investment Review, 26 November 2019, https://www.vir.com.vn/bringing-entrepreneurship-competition-to-engineering-students-72050.html.

← 19.  Know About Business factsheet, ILO, https://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/publication/wcms_159163.pdf.

← 20.  A useful lesson from the results of the GET Ahead programme is that business development training tailored to the needs and experiences of women, i.e. in conjunction with a gendered perspective, has stronger benefits for women entrepreneurs than offering general business training through the enhancement of empowerment and confidence (Huis et al., 2019_[48]).

← 21.  See: “Plan to implement the project ‘Supporting women to start a business in the period 2017-2015’ in the province of Thai Binh”, 26/02/2018, https://english.thaibinh.gov.vn/Policy%20of%20Thai%20Binh/plan-to-implement-the-project-supporting-women-to-start-a-business-period-20172025-in-the-province-of-thai-binh-55.html/.

← 22.  Viet Nam Women’s Union website, http://hoilhpn.org.vn/NewsDetail.asp?Catid=67&NewsId=31217&lang=EN/.

← 23.  The lack of hard collateral required by banks to support business loans is one of the major barriers to the development of women-owned SMEs in Viet Nam. Women are disadvantaged in this respect because, although the Land Use Rights Certificate (LURC) Law clearly states that both women and men have equal rights and opportunities to the access of land use and rights, women’s names are most likely not included on the LURC, which is held in the man’s name only (IFC, 2017_[47]). Revisions to the Land Law have addressed this issue by requiring the name of both spouses on land certificates, but due to lack of information or adherence to cultural practices, certificates have rarely been changed. Consequently, if a married women entrepreneur wants to borrow money for her business, she must provide the bank with an approval from her male spouse to collateralise the loan.

← 24.  “Women Entrepreneurs in Vietnam Get a Fair Shot with Financing”, August 2018, International Finance Corporation, https://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+events/news/impact-stories/vietnam-banking-on-women-entrepreneurs.

← 25.  “Increasing Opportunities for Women in Vietnam: Key Facts and Challenges – Country Overview”, IFC, December 2018, https://www.ifc.org/wps/wcm/connect/e3d8e495-e048-4f82-9f63-3e545c5254fb/201812-Increasing-Opportunities-for-Women-in-Vietnam.pdf?MOD=AJPERES/.

← 26.  The IFC has provided more than USD 400 million in financing to banks for relending to women-owned SMEs through the Global Finance Programme. Through the Women Entrepreneurs Finance Initiative (We-Fi), the World Bank/IFC issued a USD 100 million loan to the Orient Commercial Bank in 2019, which will make at least half of that loan amount available to women-owned or women-managed SMEs.