Government Incentives for SMEs in Vietnam – 2 New Circulars
The government recently issued two regulations to help and incentivize small and medium-sized enterprises (SMEs): Circular No 06/2019/TT/BKHDT on network of consultants for SMEs and Circular No 05/2019/TT/BKHDT on subsides for training courses for women-owned SMEs went into effect May 12.
The consultant network is defined as a group of consultants and consultancies specialized in a broad range of fields to meet the needs of SMEs, recognized by regulatory agencies for supporting SMEs.
SMEs play a major role in Vietnam’s economy and account for 98 percent of all enterprises with approximately 40 percent of GDP. While the government has made a number of reforms, SMEs continue to face challenges relating to credit, human resources, market access, and competition with foreign firms.
The latest incentives will further allow for a thriving environment for SMEs given their importance. However, the government will need to continue to provide support and reforms to SMEs if it wants to meet its target of one million firms by 2020 from the current 600,000.
Circular 6 – consulting support for SMEs
Issued by the Ministry of Planning and Investment, Circular 6 gives guidelines and instructions on rules around the network of consultants providing advice to SMEs and support through a network of consultants.
The government has prescribed certain criteria for companies that can avail subsidized support through the network of consultants. SMEs, as per the law, are defined as micro, small ,and medium-sized enterprises having no more than 200 employees registered with the state social insurance scheme and with a total capital not exceeding US$4.4 million (100 billion VND) a year.
To avail the consulting services and subsidies, an SME must submit a dossier that includes:
- A copy of the business registration certificate; and
- A consulting service agreement with the business and consultant belonging to the counselor network.
SMEs can then avail the following subsidies:
- Micro businesses can avail a 100 percent subsidy but no more than US$128 (3 million VND) a year;
- Small enterprises are entitled a subsidy of 30 percent of the consultancy contract value but not exceeding US$213 (5 million VND) a year; and
- Medium enterprises are entitled to avail a subsidy of 10 percent of the contract value but not more than US$426 (10 million VND a year.
The government is also expected to launch an online platform for organizations and individuals to register and be automatically admitted to the consultant network.
SMEs will then be able to look up information on the consultant network, including the name, registration number, and other details on the websites of the National Portal as well as the local ministry websites, such as the Government Inspectorate.
If an individual wants to apply and be a part of the consultant network, he or she needs to submit a CV, training certificate, experience record, and other supporting documents. For a consulting organization, it needs to submit an establishment license, experience files, and any relevant documents by regulatory bodies. The relevant authority at the local ministry will then consider the application and publish the results on its website within 10 working days.
Circular 5 – training incentives for women-owned SMEs
As per Circular No 5, the government will provide subsidies for Human Resources of SMEs owned by women. A women-owned SME as defined by the government is one or more women who own at least 51 percent of its charter capital. Details of the circular are below:
- The government will provide 100 percent subsidy for expenses for training in entrepreneurship, business administration, and advanced business administration for women at women-owned SMEs;
- A 100 percent subsidy of expenses in training courses for employees of SMEs located in extremely disadvantaged areas as per Decree No 118.2015/ND-CP; and
- A subsidy of at least 50 percent of expenses for organizing a training course in entrepreneurship and business administration.
The government will then open accounts for SMEs to join online training courses.