Average Proportion of Enterprises by Size in the Period 2000-2009 (Source: General Statistics Office)

Low management level, outdated equipment due to small capital scale, at the same time, competitiveness and competitive pressure are still low.

From 2000 to present

The year 2000 is a major milestone in analyzing the development of small and medium enterprises because this is the year the Enterprise Law came into effect. The birth of the Enterprise Law has had positive impacts on our country's economy, especially in the government's view of economic sectors. Enterprises in different economic sectors are equal in the business environment, this is a profound change in our country's economic thinking. Along with that fair recognition, a more open and convenient economic environment promotes the development of non-state enterprises. With the criteria for evaluating small and medium enterprises in Decree No. 90/2001/ND-CP - small and medium enterprises are production and business establishments with capital of no more than 10 billion VND or an average annual number of employees of no more than 300 people - most non-state enterprises are small and medium enterprises. According to the General Statistics Office, the number of enterprises classified by capital size during the period from 2000 - 2008 is shown in Table 2.1.

Table 2.1 Number of enterprises classified by capital size

Year

Total number of businesses	Large Enterprise		Medium Enterprise		Small Business
Total number of businesses	Quantity	Proportion 2 (%)	Quantity	Proportion (%)	Quantity	Proportion (%)
Year 2000	42,288	1,390	3.29	3.334	7.88	37,564	88.83
Year 2001	51,680	1,618	3.13	3,943	7.63	46,119	89.24
Year 2002	62,908	1,980	3.15	4,915	7.81	56,013	89.04

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2 Proportion calculated on total number of annual enterprises.

2003

72,012	2,289	3.18	5,622	7.81	64.101	89.01
2004	91,756	2,822	3.08	6,993	7.62	81,941	89.30
2005	112,950	3,350	2.97	8,336	7.38	101,264	89.65
2006	131,318	3,858	2.94	9,780	7.45	117,680	89.61
2007	155,771	5,618	3.61	13,365	8.58	136,788	87.81
Year 2008	205,689	7,537	3.66	20,349	9.89	177,803	86.44
Year 2009	248.85	9,157	3.68	24,934	10.02	214.76	86.30
Proportion average	-	-	3,269		8,207		88.52

(Source: General Statistics Office)

Large Enterprise

Medium Enterprise

Small Business

Figure 2.1 Average proportion of enterprises classified by size in the period 2000-2009 (Source: General Statistics Office)

The number of small enterprises accounts for an average proportion of about 88% of the number of enterprises in the economy, while the proportion of medium-sized enterprises is about 8%. Thus, if including small and medium-sized enterprises, the average proportion

The proportion of this group of enterprises in the total number of enterprises in our country's economy is up to 96.7%. Commercial enterprises account for a large proportion of the total number of small and medium-sized enterprises.

Table 2.2 Proportion of small and medium-sized commercial enterprises to total number of enterprises in the economy in the period 2000-2008

Year

Total number of businesses	In there
Total number of businesses	Number of small and medium sized commercial enterprises	Percentage (%)
Year 2000	42,288	17,172	40.61
Year 2001	51,680	20,311	39.30
Year 2002	62,908	24,303	38.63
2003	72,012	27,855	38.68
2004	91,756	35,451	38.64
2005	112,950	43,906	38.87
2006	131,318	51,636	39.32
2007	155,771	60,275	38.69
Year 2008	205,689	79,701	38.75
Average proportion		-	39.05

(Source: General Statistics Office)

The number of commercial enterprises accounts for 39.05% of the total number of enterprises nationwide. Due to the characteristics of small and medium-sized commercial enterprises that depend greatly on the purchasing power of the population, commercial enterprises are often concentrated in urban areas, in which the number of commercial enterprises concentrated in densely populated cities accounts for a large proportion.

large. Therefore, commercial enterprises grow rapidly in big cities such as Hanoi, Hai Phong, Ho Chi Minh City.

Table 2.3 Number of VVN-sized enterprises in large urban areas (Hanoi,

Hai Phong, Ho Chi Minh City

Year

Number of SMEs nationwide	Number of VVN enterprises in the area Hanoi, Hai Phong, Ho Chi Minh City area	Proportion 3
Year 2000	40,898	13,631	33.33
Year 2001	50,062	18,253	36.46
Year 2002	60,928	24,444	40.12
2003	69,723	29,822	42.77
2004	88,934	39,872	44.83
2005	109,600	50,826	46.37
2006	127,460	60,264	47.28
2007	150.153	71,141	47.38
Year 2008	198,152	98,302	49.61
Average proportion			43.13

(Source: General Statistics Office)

Major metropolitan areas Other areas

Figure 2.2 Proportion of medium-sized enterprises in large urban areas (Hanoi,

Hai Phong, Ho Chi Minh City) out of the total number of Vietnamese enterprises nationwide

(Source: General Statistics Office)

3 Proportion calculated on total number of SMEs nationwide

The rate of commercial enterprises in large urban areas (Hanoi, Hai Phong, Ho Chi Minh City) is increasing, which proves that small and medium scale is really suitable for the commercial sector in urban areas.

Not only growing in quantity, small and medium-sized commercial enterprises also expand in business fields. In addition to the development of traditional commercial fields, commercial enterprises also develop with new fields that have never existed before, especially in service provision activities. At the same time, there is a new trend forming in the development of small and medium-sized commercial enterprises, which is to shift from specializing in business items to general commercial activities. This further affirms that small and medium-sized commercial enterprises are very responsive, quickly adapt to the market economy, diversify business items to limit risks.

2.1.1.2 The role of small and medium-sized commercial enterprises in the Vietnamese economy

Since 2000, when the Enterprise Law came into effect, the number of small and medium-sized enterprises has increased rapidly, of which commercial enterprises account for a large proportion. The growth rate in the number of commercial enterprises from 2000 to 2008 has reached over 110%. If 2000 is taken as the base year, the number of small and medium-sized commercial enterprises has increased to 464.13%. This data shows that the volume of small and medium-sized commercial enterprises accounts for a large proportion of the economy and is increasing rapidly. This affirms the important role of small and medium-sized commercial enterprises in the sustainable development of the Vietnamese economy. The role of small and medium-sized enterprises in the economy can be divided into two main groups: economic development and social development.

Table 2.4 Growth rate of the number of small and medium-sized commercial enterprises in the period 2000-2008

Year

Number of small and medium sized commercial enterprises	Annual growth rate (compared to previous year)	Growth rate compared to 2000
Year 2000	17,172	100.00	100.00
Year 2001	20,311	118.28	118.28
Year 2002	24,303	119.65	141.53
2003	27,855	114.62	162.21
2004	35,451	127.27	206.45
2005	43,906	123.85	255.68
2006	51,636	117.61	300.70
2007	60,275	116.73	351.01
Year 2008	79,701	132.23	464.13

(Source: General Statistics Office)

Economic development

Channel for mobilizing idle capital in the population: With the advantage of being small, easy to disperse, easy to penetrate into the nooks and crannies of the economy, the initial investment capital is not much, easy to mobilize capital based on relatives and friends. Small and medium-sized commercial enterprises are an effective means of mobilizing and using idle loans in the population and turning it into investment capital that benefits investors - capital owners as well as brings benefits to society. Idle capital in the population is considered a very large source of capital, mobilizing this capital, small and medium-sized commercial enterprises have contributed to the optimal use of local resources.

Creating economic linkages: Thanks to the easy formation and start-up characteristics of small and medium-sized enterprises, their flexibility and ease of transformation have helped small and medium-sized commercial enterprises and large enterprises create effective linkages. Small and medium-sized enterprises play an important role in acting as satellites and supporting large enterprises.

Contribution to the State budget: Small and medium-sized commercial enterprises contribute significantly to the State budget. Although the tax paid by small and medium-sized commercial enterprises to the State budget is not much, it has increased annually at a fairly large rate. This further affirms the contribution and position of small and medium-sized commercial enterprises in the overall economic development of the country.

Table 2.5 Taxes paid by small and medium enterprises to the State budget

Year

Total tax paid to the state budget (billion VND)	Tax amount paid to the state budget by VVN commercial enterprises (billion VND)	Proportion of total tax paid to the State budget	Annual growth rate	Growth rate compared to 2000
Year 2000	60,736	12,940	21.31	100.00	100.00
Year 2001	86,401	21,583	24.98	166.79	166.79
Year 2002	109,590	27,831	25.40	128.95	215.08
2003	110,200	25,595	23.23	91.97	197.80
2004	141,896	28,919	20.38	112.99	223.48
2005	161,611	37,390	23.14	129.29	288.95
2006	191,888	40,249	20.98	107.64	311.04
2007	219,804	55,924	25.44	138.95	432.18
Year 2008	289,182	69,298	23.96	123.91	535.53
Average	-	-	23.20	122.28	-

(Source: General Statistics Office)

Tax paid to the State budget by small and medium-sized commercial enterprises

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

Tax amount paid to the state budget by VVN commercial enterprises

Figure 2.3 Taxes paid by small and medium-sized commercial enterprises to the State budget (Source: General Statistics Office)

Social development: In addition to their role in economic development, small and medium enterprises also play an important role in social development, especially in creating jobs and increasing income for workers, especially unskilled and low-skilled workers. Unskilled and low-skilled workers are common characteristics of the majority of the Vietnamese workforce, especially in rural areas. Small and medium-sized commercial enterprises attract workers not only to create jobs for many workers but also to contribute to solving social problems and contributing to equitable development among different regions.

Table 2.6 Number of employees in small and medium-sized commercial enterprises

Year

Number of employees in all enterprises

Number of employees in VVN Enterprise

Proportion of total labor force (%)

Annual growth rate of number of employees in SMEs

2000

3,536,998

361,013

10.21

100.00

2001