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NEW UPDATES Asean Affairs   4  November 2015  

HCM City seeks to boost SMEs

 Developing small and medium-sized enterprises (SMEs) is one of the ways to increase the private sector's contribution to the city's economic growth, economists told a conference held in the city last week.

They said the private sector, especially SMEs, has made a major contribution to the city's growth in recent decades, but still requires support from the Government to fulfill its potential and participate in the country's integration process.

According to the city Department of Planning and Investment, the non-state economic sector's contribution to the city economy has been rising consistently, going up from 50.6 per cent in 2010 to 58 per cent last year.

The private sector mainly including SMEs alone accounted for 60 per cent of the city's GDP annually.

Dr Nguyen Tan Phat of the HCM City National University said, "Despite significantly contributing to the city economy the private sector will face huge hurdles in the coming years when the city and whole country integrate with the global economy.

"This is because a majority of the private sector is made up of SMEs."

Dr Huynh Van Minh, chairman of the HCM City Union of Business Associations, concurred with Phat, saying the biggest difficulties SMEs face are a shortage of capital and skilled human resources.

"Despite the banking sector's efforts to lower them, lending interest rates are still too high and beyond the repayment capacity of many SMEs."

Dr Ha Thi Thieu Dao of the Banking University of HCM City said, "Although SMEs are really in need of funds, they cannot get bank loans because they cannot get guarantees from the Credit Guarantee Fund due to many reasons.

"One of the reasons is the that fund is afraid of risk.

"Another reason is that 30 per cent of SMEs do not know about the existence of the Credit Guarantee Fund. Consequently, in nearly a decade (2007-2014) only 24 out of 150,000 SMEs operating in the city received guarantees from the fund to get bank loans."

Tran Viet Anh, vice chairman of the Plastics and Rubber Association, said supporting SMEs is vital for ensuring the city's strong economic development.

The economists also suggested some other measures to help develop the city economy.

Some called for preventing transfer pricing fraud by some foreign companies.

Tran Thi Nga, deputy director of the Taxation Department, said: "The Viet Nam Tax Authority has already established a Transfer Pricing Inspection Department. The city also has a plan to set up a transfer pricing inspection office."

Most delegates agreed on the need to focus on industrial production, ensuring domestic firms are ready to cope with the influx of foreign businesses.

Anh said: "Local manufacturing enterprises now account for only 39 per cent of the city's total number. This is too low compared with the city's economic scale especially when it is required to grow strongly to adapt to the country's accession to free trade agreements and the Trans-Pacific Partnership (TPP)."

Dr Nguyen Chi Hai of the HCM City University of Economics and Law said the city should earmark a large amount for developing its technical infrastructure.

Good technical infrastructure would boost domestic manufacturing, he added.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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