- Green Growth
- Your Consultant
Has the Enterprise Development Fund been formed pursuant to Decree 56/2009/ND-CP to support small- and medium-sized enterprises (SMEs)?
This Enterprise Development Fund is a financial organisation specially designed to support SMEs. Unlike the Credit Guarantee Fund, the Enterprise Development Fund is a centrally governed body whose functions are lending SMEs at preferential rates, directly assisting them or both following specific supportive criteria in a certain period of time in which the state wants SMEs in particular areas to spur growth.
How will the fund source investment capital?
We propose the fund source capital from the central budget and partly from aid given by domestic and foreign organisations. At this time, foreign donors have diverse programmes to back SMEs. However, such financial sources remain scattered due to the lack of a specialised body whose core functions are to assist SMEs. Hence, the fund coming into existence will help attract financial aids from diverse sources to support firms.
From its debut nearly two decades ago, credit guarantee funds have been operating less effectively due to capital shortages. Will the Enterprise Development Fund face a similar situation?
In fact, sourcing capital for the fund is not easy. Credit guarantee funds are founded by localities and fed with local budget. Some localities face difficulties in balancing their receipts and expenditures, so they have little funding to feed credit guarantee funds, whereas these funds do not get support from banks and firms in their areas.
The Enterprise Development Fund is a centrally governed body with branch offices in different locations and is fed by central budget, so that difficulties in sourcing capital would be less.
How will SMEs be supported?
Whether the fund supplies SMEs with preferential loans, allocates fund to firms or both is still under consideration. In my view, SMEs should be supported through getting either preferential loans or capital allocation, but clear criteria must be in place referring to who will benefit from preferential loans and who can get capital allocation.