Improving access to bank credit capital for small and medium enterprises in Phu Tho province

The Government needs to continue directing ministries, branches and localities to synchronously implement policies to support SMEs as stipulated in the Law on Support for SMEs No. 04/2017/QH14. Relevant ministries and agencies need to urgently review the entire legal system on investment, business, land, construction, housing and policies to improve the investment and business environment, support enterprises, and consider synchronization with the Law on Support for SMEs. In particular, it is necessary to focus on synchronizing regulations on registration of secured transactions for secured assets attached to land according to the provisions of Joint Circular No. 09/2016/TTLT-BTP-BTNMT dated June 23, 2016. In addition, it is necessary to complete policies on guarantees for SMEs to borrow capital in a way that is consistent with reality, ensuring the harmony of interests of all parties involved and demonstrating the role of the State in supporting SMEs through this tool.

Second, strengthen the organization and improve the quality of training courses and knowledge training for SMEs.

The Government also needs to implement training and consulting programs to improve management capacity for SMEs. These programs should be organized regularly and widely for entrepreneurs and those holding management positions in SMEs. Learning methods and materials need to be innovated and updated with modern knowledge, suitable for the context and requirements of international economic integration. In particular, the Government needs to develop and implement a national strategy on financial training for SMEs. OECD (2015) has proposed a set of financial training topics aimed at providing knowledge and skills for SME leaders such as:

- Building and planning corporate financial management;

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- Interact with financial service providers and evaluate appropriate financial products and services;

- Identify financial service providers or investors, meet their requirements and access funding;

- Financial risk management;

- Analyze the financial situation of the enterprise;

- General understanding of finance such as understanding of interest rates, inflation, exchange rates and the impact of these factors on savings, investment or business revenue.

The above topics aim to address the financial training needs of the majority of SMEs. However, each target group has different training needs. To do this, the Government needs to develop a policy framework, establish management organizations and develop appropriate training programs and content for each target group.

Third, research and establish a State Venture Capital Fund, and have mechanisms and policies to encourage other capital sources to invest in SMEs.

Establish a State Venture Capital Fund to support capital for enterprises, especially newly established enterprises. To effectively implement this content, Vietnam should refer to the experience of countries that have established State Venture Capital Funds (Appendix 8) . Currently, due to difficulties in balancing the budget, using investment capital from the budget to establish this Fund is difficult to implement. However, it is still possible to establish a Venture Capital Fund through the use of capital recovered from divestment from state-owned enterprises. In principle, capital recovered from divestment from state-owned enterprises still needs to continue to be reinvested, because only then can the economic role of the State continue to be affirmed and consolidated. If this capital continues to be reinvested in construction in other state-owned enterprises, the efficiency may not be high. However, if this capital is used to form Venture Capital Funds to support the start-up process, it will be

bring high efficiency, because using the State Venture Capital Fund to support start-up activities will increase confidence for start-up businesses, thereby stimulating investors to invest capital.

At the same time, it is necessary to have preferential policies for financial investment funds, venture capital funds, and promote business mergers and acquisitions to improve business quality and resolve urgent difficulties for SMEs at risk of bankruptcy that need external resources to recover.

Fourth, continue to maintain macroeconomic stability, stabilize the monetary market, resolve bad debt, lower lending interest rates, etc.

When the macro economy is stable, SMEs will have a favorable environment for long-term orientation, limit business risks and have easier access to bank credit. At the same time, a stable macro economy also helps commercial banks stabilize lending rates and feel more secure in granting credit, especially to SMEs that are vulnerable to market fluctuations. Continue to issue and promote policies to stimulate consumption, maintain tax exemption and reduction policies for SMEs so that SMEs have enough time to recover from difficulties, and increase the capital absorption capacity of enterprises.

3.3.2. For the State Bank

- The State Bank needs to review and improve the legal framework for lending by credit institutions to reduce cumbersome procedures that are not suitable to reality, creating conditions for SMEs to access bank credit capital to serve production and business activities, while simplifying loan procedures, creating favorable conditions for SMEs to access bank credit capital while still meeting the requirements of state management of lending activities of credit institutions. Expand the subjects that benefit from preferential credit mechanisms and policies, especially SMEs.

- In addition to managing interest rates in the direction of maintaining stable interest rates, the State Bank needs to increase incentives to support SMEs in accessing bank credit capital with low interest rates, helping SMEs determine capital costs, feel secure in production and business, and boldly invest in new projects. Encourage commercial banks to apply the form of enterprise credit assessment to expand unsecured loans for SMEs with feasible investment projects/business plans, and restructure previous high-interest loans. There should be policies to encourage commercial banks with high SME credit balance ratios, especially encouraging commercial banks to provide credit to SMEs that are priority subjects for development support from the Government, providing credit to industries and fields that are potential and advantageous for Phu Tho province.

- The State Bank of Vietnam needs to continue organizing and promoting the achievements of the business-bank connection program. Further mobilize the participation of bank branches and SMEs in the area. At the same time, it is necessary to widely disseminate information to all SMEs so that they can grasp information about the program. The State Bank of Vietnam, Phu Tho province branch, should organize the business-bank connection program quarterly instead of once a year as it is now to promptly address the capital needs of SMEs.

- The State Bank of Vietnam needs to continue to have more effective plans and policies for handling bad debts to help commercial banks have a direction in supporting loans for SMEs, support commercial banks in adjusting credit structures towards SMEs, encourage commercial banks to increase the provision of services related to supporting SMEs in business development such as financial consulting, establishing and managing investment projects/business production plans, etc., thereby improving SMEs' ability to access bank credit capital.

- The State Bank needs to promote cooperation with international financial institutions to carry out credit granting and credit guarantee activities for SMEs in Vietnam.

Nam. When having credit capital, the State Bank can authorize commercial banks to provide credit to SMEs in Vietnam in general and in Phu Tho province in particular with low interest rates.

3.3.3. For Phu Tho province

Firstly, Phu Tho province needs to review and research to fully and appropriately apply the policies, mechanisms and mechanisms issued by the State for SMEs.

Departments and branches need to synchronously deploy support solutions for SMEs to access preferential lending programs of the central government, especially focusing on interest rate support programs and preferential loans for important projects in the province. At the same time, it is necessary to develop strategic orientations for SME development in each period, closely linked to the overall planning and socio-economic development plan of the province, each industry, sector and each economic region.

Phu Tho province needs to have policies to encourage and establish a number of consulting centers and direct support services for SMEs to minimize business risks and help SMEs improve their access to bank credit. Coordinate with universities and research centers in Phu Tho province to develop support programs and consulting for the development of SMEs, promote research activities and transfer of new technologies to SMEs.

Second, continue to promote the improvement of infrastructure of industrial parks, industrial clusters, and craft villages; increase the capital absorption capacity of SMEs. In the coming time, Phu Tho province needs to focus on planning and investing in infrastructure of industrial parks, industrial clusters, and traditional craft villages, and form new industrial parks and clusters in Ha Hoa, Lam Thao, Phu Ninh districts and Phu Tho town to create land funds for SMEs to be present.

by production and business; invest in construction of waste treatment and environmental protection works, especially in Thuy Van, Phu Ha, Trung Ha industrial parks, Dong Lang and Bach Hac industrial clusters,... prioritize investment in infrastructure of high-tech parks.

Increase the capital absorption capacity of SMEs by supporting SMEs to overcome difficulties such as stimulus policies to resolve business inventories, support SMEs to innovate technology, conduct trade promotion, market research, product promotion, focus on solving factors related to infrastructure conditions to facilitate SMEs' projects to come into operation soon, continue to improve the business environment, create qualitative changes in administrative procedure reform, improve the quality of human resources, strengthen and improve the efficiency and effectiveness of state management in the field of investment and business to attract more and more investors to Phu Tho province.

Third, establish a credit guarantee fund for small and medium enterprises in Phu Tho province.

Phu Tho province needs to quickly establish a Credit Guarantee Fund for SMEs to improve SMEs' access to bank credit capital, and unblock capital flows in the event of insufficient collateral. At the same time, there needs to be a mechanism for sharing and exchanging information among entities so that the Guarantee Fund can access information on guaranteed loans, which is also a way to monitor loans. Then, expand this information network to other channels such as tax authorities, the State Bank of Vietnam, the Department of Planning and Investment, business associations, etc. to reduce risks in guarantee activities.

Fourth, build a coordination and cooperation mechanism between state management agencies and commercial banks.

Phu Tho province needs to build a mechanism for close coordination and cooperation between commercial banks, the provincial State Bank, the Department of Planning and Investment, tax authorities and associations.

enterprises,... in exchanging information about SMEs, on that basis helping commercial banks to evaluate, credit rating and select SMEs for more favorable credit granting.

Fifth, effectively implement the propaganda of policies to small and medium enterprises, and promote the bridging role of business associations.

Phu Tho province needs to continue to strengthen the propaganda and dissemination of policies to support SMEs widely on mass media so that SMEs know and promote their rights. Periodically organize dialogues between local leaders, departments, branches and sectors with representatives of SMEs and business associations to listen to the opinions and feedback of SMEs, thereby promptly handling difficulties and obstacles in the business process of SMEs. Implement well the plan to organize dialogues with enterprises: Provincial leaders periodically dialogue with enterprises twice a year; District, city and town leaders dialogue with enterprises 4 times a year [46].

To help SMEs develop, associations need to implement the following solutions: Encourage SMEs to join the association through useful programs; regularly organize training courses, disseminate knowledge related to borrowing skills, organize seminars and events to act as a bridge between businesses and banks; pay attention to member SMEs in the association, especially in introducing preferential loan programs to support production and business to businesses; business associations need to build and review a list of reputable member SMEs with good financial potential to introduce to commercial banks for credit approval,...

Strengthen the activities of business associations to help SMEs such as providing information, Party and State policies and mechanisms for SMEs, market information to help SMEs access and better seek financial resources through trade promotion cooperation; deploying

projects, cooperation programs, helping SMEs improve their competitiveness domestically and internationally; promoting and introducing the image and brand of enterprises, expanding the organization of market surveys; mobilizing funding, organizing support links in the business community, gradually advising Phu Tho province to build a system of economic policies and mechanisms to remove difficulties for SMEs, creating favorable conditions for development and soon integrating the province's SMEs with countries in the region and internationally.

Improving access to bank credit capital for small and medium enterprises in Phu Tho province - 23

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