Some Basic Issues on Financial Support Policy to Enhance Export Capacity of Small and Medium Enterprises

favored. Thanks to that, the enterprise brings foreign currency revenue to the country, increasing accumulation for the enterprise itself.

Contribute to creating a synchronous market system

Participating in production, trade or service business, SMEs contribute to the development of not only the output market of goods and services, but also the market of production input factors: loan capital market, production materials market, labor market, technology market... These markets become vibrant due to the large number of SMEs, distributed widely in all regions, operating in most industries and fields of the economy. The activities of SMEs also increase competitive pressure in the markets, creating momentum for development. In particular, it promotes the development of local markets, especially in remote, poor and backward areas.

Creating conditions for entrepreneurs to grow

Starting with a small amount of capital, the business path is not very favorable, but on the contrary, it is also a practice step for entrepreneurs to learn, accumulate knowledge and experience. In fact, many entrepreneurs have grown from their initial small businesses.

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1.2. Some basic issues on financial support policies to enhance the export capacity of SMEs

1.2.1. Criteria for assessing the export capacity of SMEs

Some Basic Issues on Financial Support Policy to Enhance Export Capacity of Small and Medium Enterprises

First of all, the export capacity of an enterprise is reflected in the quality of human resources with criteria such as the number of employees, average age, average salary, number of employees performing import-export business operations and export marketing. Whether the enterprise's export activities create new jobs or not and whether the level of employees is improved through export activities or not.

Second, it is the criteria of financial management. The export capacity of an enterprise is reflected in the management of capital sources for export, the ability to access capital sources for export and the management of risks in payment.

Third is the criterion of production and business scale, specifically the ability to meet large orders from partners in accordance with requirements on quality, deadline, etc.

Fourth, it is the criteria of technology and production lines. A business with good export capacity is a business that always regularly invests in innovation and technological improvement as well as creativity and research to improve export business activities.

Fifth, one of the basic factors that create the export capacity of an enterprise is the issue of quality management with standards and certifications such as ISO 9000, ISO 22000, ISO 14000, HACCP...

Sixth, the most important criterion is product quality. The product is the center of the whole business and the export strategy. The product itself must be good, competitive, and meet the standards required by the market and customers to have a place in the market and be accepted by foreign partners.

Finally , after-sales service is reflected in support services for import customers, added values, thereby increasing the competitiveness of enterprises, creating trust and long-term relationships with foreign customers.[2]

1.2.2. Some financial support policies to improve export capacity for SMEs

1.2.2.1. Support policy through tax

Tax is a compulsory contribution, stipulated by the State into law for people and economic organizations to pay into the State budget in certain periods, in order to meet the spending needs of the State apparatus. In other words, tax is a form of mobilization, redistribution of social products, national income created by economic organizations and people to form a centralized monetary fund to meet the spending needs of the State. Tax is both a financial measure to mobilize revenue for the budget, create investment capital, guide and regulate production, business, and export, and is also a component of the national fiscal policy. In financial policies to support exports for small and medium enterprises, tax is one of the most important tools, especially in the current integration trend. Tax has become an indispensable part of the foreign policy of each country through

through agreements on preferential tariffs between countries, through the implementation of regulations on taxes, subsidies and anti-subsidies of the WTO, regional and world organizations...

Tariffs are the only protection tool for domestic production that does not violate WTO regulations. Tax payment is the obligation of each organization and individual, this is considered an expense, increasing the financial burden for businesses. To support businesses to reduce difficulties as well as improve export capacity, countries often give many incentives to businesses in general and export production businesses in particular through incentives such as tax exemption, reduction, extension of tax payment, and tax refund for export goods.


* Export tax, import tax

Export and import tax is an indirect tax levied on commercial and non-commercial goods that are allowed to be exported and imported across a country's borders. Export tax is an important measure in a country's general economic policy and foreign policy in particular. Its basic task is to regulate import and export activities, thereby regulating the market. In addition, import and export tax brings revenue to the State budget. In addition, this is also an important measure to manage foreign trade activities, contributing to the implementation of foreign economic policy, ensuring economic and technological safety of the country, and solving economic and financial development goals.

Export and import taxes will be added to the price of the product, so if the tax is reduced, the low tax rate will help businesses reduce the selling price of the product, which is a special advantage of export goods. Import and export taxes not only affect the price of the imported and exported goods themselves but also affect the price of related goods, the supply and demand of those goods in the market, thereby guiding domestic consumption, aiming to increase the level of raw material processing of export enterprises. This is demonstrated by imposing high export taxes on unprocessed products and lower,

even not taxing processed products. Thus, it is possible to increase the added value of exported raw materials, thereby creating more jobs and income for the economy. Through the import-export tariff, the State encourages or restricts the import and export of specific items to suit the general economic development situation and the production and export activities of enterprises in particular.

In addition to export tax policies, many countries also offer tax incentives for imported inputs for the production of export goods. Raw materials and semi-finished products for export are not subject to import tax or are subject to low tax as well as tax exemption, reduction, and refund for export enterprises producing goods. This is one of the competitive advantages in terms of price for export products, which is especially meaningful for SMEs participating in export.


* Value added tax

Value added tax is a type of indirect tax calculated on the added value of goods and services arising at each stage from production, circulation to consumption. According to this concept, value added tax is a factor that constitutes the selling price of goods and services.

In VAT, only the first seller of goods (or services) must pay VAT on the entire sales revenue (or service provision). The seller of goods (or services) in the next stages of the goods (or services) must only pay tax on the added value. VAT is the only tax collected in small segments in the production and circulation of goods (or services) from the first stage to the consumer when closing an economic cycle. Therefore, the advantage of VAT is to avoid the case of duplicate taxes as in the case of turnover tax. This is important, it will create conditions to encourage export activities, promote production and business, stimulate competition, equalize, without distinguishing between enterprises at the first, middle or last stage of the production and business process. The scope of application of VAT is very large, covering all goods

goods and services, therefore, the application of VAT is very necessary and suitable for the market mechanism, bringing rapid and stable economic growth.

For exported goods, VAT increases the price of input materials, thereby increasing the price of exported goods. Based on that reality, VAT incentives will partly reduce the burden of costs and risks for exporting enterprises. The application of VAT rates creates favorable conditions for support for goods encouraged for export. Enterprises participating in the production of export goods can also share profits with exporting enterprises through VAT refund regulations, thereby exporting enterprises are willing to buy goods in large quantities or at higher prices without fear of losing on prices.

* Special consumption tax (SCT)

Special consumption tax is an indirect tax levied on certain goods and services that are not really necessary for the essential needs of the people, do not encourage production, consumption or need to save, and guide reasonable consumption. The characteristic of special consumption tax is that it is only collected on certain goods and services and is only collected once at the production stage or when imported. The tax rate is often higher than other taxes because it regulates income, guides consumption and protects domestic goods. Therefore, manufacturers, importers and consumers must consider when investing or importing goods subject to special consumption tax.

Some incentives on special consumption tax such as special consumption tax reduction, tax deduction, special consumption tax exemption for some input materials for export production have partly contributed to promoting export activities, improving the competitiveness of export goods for enterprises. Goods produced by production establishments, exported goods, goods sold, processed for export processing zones, goods brought abroad to participate in fairs and exhibitions, goods sold by production establishments or entrusted to production establishments for export under economic contracts, goods temporarily imported for re-export during the period when import tax is not yet payable are not subject to special consumption tax. Temporarily imported goods that have paid special consumption tax when re-exported will be refunded special consumption tax corresponding to the amount of re-exported goods. Tax

Special VAT on raw materials for export processing will be refunded when finished products are exported.

* Corporate income tax (CIT)

Corporate income tax is a direct tax levied on the income of organizations and individuals producing and trading goods and services with taxable income. Corporate income tax is considered a positive contribution of enterprises to the State budget to redistribute income and ensure social equity. At the same time, corporate income tax is also an important tool to contribute to encouraging and promoting production and business development in the direction of planning, strategy and comprehensive development of the country. Corporate income tax performs the function of regulating socio-economic activities in each period of economic development. Reasonable regulations on corporate income tax create favorable conditions and a stable business environment, timely support for enterprises, especially incentives for newly established small and medium enterprises. Exemption and reduction of corporate income tax for newly established enterprises have encouraged investors to invest in establishing enterprises, participating in production and trading of export goods as well as reducing the financial burden for small and medium enterprises in difficult times.


1.2.2.2. Policies to support capital for export production

a) Investment policies

* Venture capital fund

Venture capital funds are funds that provide financial capital to private companies in the form of equity or quasi-equity investments with a medium-term (3-5 years). The stake in the investee company can be a minority or a majority. The investment objective is to seek a higher-than-average capital return. This return becomes real after the investment is sold to a securities dealer or to the public. In addition to providing capital, venture capital managers advise and guide the investee companies to the next stage of growth and prepare the company for transfer to other shareholders. This advice is an important and unique feature of venture capital. In particular, investors

Investors have a position on the board of directors of the investee company, thereby influencing the development of the investee company.

In short, venture capital is a patient and high-risk equity investment in new, highly innovative or high-growth businesses. The key element in the venture capital process is private investors.

Venture capital is a bridge for capital circulation between investors and businesses, especially SMEs. When businesses need capital but do not have collateral to borrow from banks, non-bank capital sources such as venture capital funds are extremely important. On the other hand, by investing capital, investors are entitled to support the company's operations, so the investment fund and the business share success as well as risks.

Instead of lending, venture capitalists provide capital to gain ownership of a certain amount of shares in the business in which they invest financially, hoping that a successful equity investment will offset the risks and failures of other investments and, in addition, can earn investment profits. By providing long-term equity capital to SMEs not listed on the stock exchange, venture capital funds are established to help businesses expand production and actively participate in export activities. Not only that, venture funds, through the investment and cooperation process, also leave behind lessons, experiences, secrets, management skills, and business development ideas, helping businesses improve their competitiveness in the international arena. It can be said that this is a new but very effective capital channel and has a positive and quick effect on SMEs, helping these businesses improve their access to credit, creating more opportunities for development and expanding exports.

* Development Support Fund

The Development Support Fund is a financial institution established with the function of mobilizing medium and long-term capital, receiving and managing State capital sources for development investment credit (including domestic and foreign capital) to implement the State's development support policy, especially export targets. Activities

The main activities of the development support fund are medium and long-term loans, loans under government agreements, post-investment interest rate support, investment credit guarantees, re-lending to investment projects using ODA capital, short-term credit to support exports, receiving allocations and entrusted loans ...

One of the important functions of the development support fund is to subsidize and support export promotion, which is a financial incentive that the State gives to exporters when they promote export. Subsidies are implemented in direct and indirect forms, aiming to encourage enterprises to produce and trade in exports, seek and expand markets and increase the competitiveness of export goods.

To meet the requirements of the current global economic integration process, direct export support measures such as export bonuses, export subsidies, loss compensation, export rewards , etc. are increasingly being reduced or even completely banned. On the contrary, indirect subsidies are being used more widely, flexibly and flexibly. Activities such as full or partial support of bank loan interest rates, low interest rates for domestic exporters or foreign partners, trade promotion support, and expansion of export markets can be mentioned here. These preferential policies demonstrate the State's policies and guidelines in promoting export activities, creating conditions for SMEs to access preferential capital sources, improving production capacity, import-export business, contributing to creating a competitive advantage for the whole country in the world market. However, without proper direction, subsidies through export support funds can lead to market distortion, limit the initiative and positivity of businesses, and be ineffective in terms of finance and budget.

The WTO's view is not to encourage but not to completely prohibit. The Agreement on Subsidies and Countervailing Measures (SCM) provides three types of subsidies: Red Box - Yellow Box - Green Box or the Agreement on Agricultural Products (AoA) provides the Amber Box - Blue Box - Green Box corresponding to three levels: Prohibited - Allowed but subject to complaint - Allowed.

b) Financial and credit policies

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