They think they are good at business and have valuable experience after many years of doing business, but they lack management knowledge to make the company operate more effectively. They are both business managers and directly involved in production, so their level of management expertise is not high. The separation of departments is not specific, and department managers are not assigned clear tasks.
Low skill level of workers . Hiring highly skilled workers requires a large cost that not all small and medium enterprises can afford. Moreover, when these enterprises need to improve the professional skills of their employees, the main obstacle is also financial problems. This also makes many skilled workers not want to work for SMEs because they do not have many opportunities to improve their qualifications and working skills. Therefore, enterprises often have difficulty in implementing large business ideas, or large investment projects, public investment projects due to lack of resources.
Low technological capacity due to insufficient financial capacity for research and development, these enterprises face many difficulties in investing in new technology, especially technology requiring large investment capital. This affects productivity, quality and efficiency, limiting competitiveness in the market.
Poor market access, especially foreign markets . The main reason is that SMEs are often newly established businesses, have no financial capacity for marketing activities and do not have many traditional customers. In addition, the market size of these businesses is often limited to the local area, expanding to new markets is very difficult. SMEs are very flexible in the volatile business environment but also have to bear many business risks. These businesses do not have economies of scale and often do not have relationships with banks or financial institutions, so they often have difficulty borrowing capital to maintain production and business activities or receiving help from local authorities if they encounter difficulties. These businesses also do not have the ability to expand.
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market without experienced staff... In general, the number of Vietnamese SMEs is increasing day by day, but many Vietnamese SMEs also go bankrupt.
3. The role of SMEs in socio-economic development
In Vietnam as well as many other countries in the world, the activities of SMEs play a very important role in promoting socio-economic development.
3.1. On economic aspects
Firstly, SMEs contribute to boosting economic growth rate, increasing GDP.
Like SMEs in all countries, Vietnamese SMEs provide the market with a variety of goods to meet domestic production and consumption needs such as equipment and components needed for consumer goods manufacturing and handicraft industries as well as other consumer goods. According to statistics in recent years, Vietnamese SMEs have contributed from 23 - 26% of the country's gross domestic product (GDP) 1 . In addition, Vietnamese SMEs also provide most of the products for many traditional industries that attract a lot of labor such as rattan, handicrafts, footwear, etc. The expansion and development of Vietnamese SMEs will contribute significantly to increasing GDP.
Second, SMEs attract capital and exploit available resources in the population.
Investment capital is a basic factor in the production process. Capital is the basic factor to exploit and coordinate other production factors such as labor, land, technology and management to create profits for business owners. Capital plays a huge role in investing in equipment, improving technology, vocational training, improving workers' skills as well as the management level of business owners. However, a paradox today is that while many businesses are seriously lacking capital, there is still a lot of idle capital in the population but it cannot be mobilized. When the credit policy of the Government and banks has not really created trust for people with idle capital in the population, many Vietnamese SMEs have directly contacted the people and mobilized capital for business, or the people with money themselves have invested in business, established businesses.
1 www.sggp.org.vn/daututaichinh/2007/8/117294/
In that aspect, SMEs play a huge role in mobilizing capital for economic development.
Third, SMEs contribute to increasing economic restructuring.
The development of SMEs will lead to the transformation of the economic structure in all aspects of economic regions, economic sectors and economic components. This is especially important for rural, mountainous, remote and isolated areas. When businesses are established in these areas, it will contribute to reducing the proportion of agriculture and increasing the proportion of industry and services, while contributing to creating jobs and reducing income gaps between residential areas. When SMEs are born more and more and together with the growth of this group of businesses, it forces other economic components to consolidate and operate more effectively in order to stand firm in the market. Furthermore, the fact that SMEs operate in many fields will contribute to diversifying industries and promoting the development of industry structure.
Fourth, SMEs will contribute to making the economy develop more stably and effectively.
Due to the characteristics of this type of enterprise being quite flexible and sensitive to market fluctuations, it has an advantage in shifting to business lines that bring higher profits. On the other hand, the emergence of these SMEs also increases competition in the economy. The establishment and operation of these enterprises will reduce monopoly, forcing other enterprises to compete in order to survive and develop. Under the pressure of fierce competition, weak enterprises will be eliminated or forced to cooperate with other enterprises. Basically, this always requires enterprises to innovate, increase productivity, improve product quality and reduce product costs.
Fifth, Vietnamese SMEs actively contribute to the state budget.
Encouraging and guiding the development of SMEs will increase the contribution rate to the State budget. The State budget has a decisive influence on the development of the entire economy and society. Through the formation and use of
State budget, the State regulates the distribution of economic resources, builds infrastructure, ensures fairness in distribution and performs its functions.
Sixth, SMEs will be the basis for forming large enterprises.
The growth of SMEs in terms of scale and quality will form large enterprises and global economic groups. Some countries have also demonstrated this, specifically Japan. Even Japan's leading groups were initially just small companies operating in a certain field. Later, thanks to building their own development strategies and having the support of the Government, these companies expanded to the world, helping Japan become an economic superpower. In addition, with a large number of enterprises participating in the market, easy and simple conditions for entry, more and more enterprises are born. In addition, inefficient businesses will merge together to become larger businesses to survive and develop. With a larger scale, large businesses have more opportunities to access new markets due to advantages in capital, human resources, etc.
3.2. On social aspects
Create jobs for workers, contributing to reducing unemployment rate.
Every year, Vietnam has about 1.4 million people joining the labor force. Therefore, the problem of job creation becomes a burning issue for agencies and sectors. The emergence and development of SMEs will contribute to attracting idle labor to participate in the production process. SMEs have created many new jobs with high growth rates. Excluding individual business households, the SME sector accounts for 7% of the labor force in economic sectors, or 20% of the non-agricultural labor force, or 82.5% of the labor force in the enterprise sector. Including individual business households, the SME sector accounts for about
19% of the workforce works in all economic sectors. 2
In the past four years, it is estimated that newly established SMEs and individual business households have created about 1.6 to 2 million new jobs, bringing the total number of employees working in enterprises to 1,845,200 people, approximately equal to the total number of employees working in the country.
2 http://www.ciem.org.vn
jobs in state-owned enterprises. This comes from the characteristics of enterprises with little capital and operating mainly in labor-intensive industries. With a small scale and low cost of creating a job, Vietnamese SMEs are playing an important role in creating and increasing jobs for the economy, contributing to reducing unemployment and enhancing social stability.
After participating in production activities at these enterprises, individuals have the opportunity to improve their skills and expertise through training programs of the enterprises. Obviously, these enterprises not only attract workers but also gradually improve the quality of their workforce. This issue is increasingly of concern to the State because improving the quality of human resources will meet the needs of international economic integration, bringing the Vietnamese economy to a new position.
Increase people's income, contribute to poverty reduction, and achieve social justice
When a part of the population has jobs, it means that people have income to serve their daily life, the local government will reduce the social burden in subsidy. People with stable jobs will limit the emergence of social evils, contributing to building a healthy cultural lifestyle. Moreover, the development of SMEs in urban and rural areas will contribute to reducing the gap between the population, reducing the gap between rich and poor in society. Increasing people's income not only improves people's living standards but also makes life less risky, especially in areas with difficult natural conditions, greatly affected by natural disasters.
Facilitating the development of entrepreneurial talent
Encouraging the establishment of SMEs will encourage individuals with good business ideas to enter the market. In a context of fierce competition, this will form and develop a team of dynamic entrepreneurs. These individuals, tested and selected through practice, will be typical and excellent faces in managing SMEs. This is a necessary force to contribute to promoting the development of production and business activities in Vietnam.
II. GOVERNMENT'S FINANCIAL AND MONETARY POLICIES FOR THE DEVELOPMENT OF SME'S
Financial and monetary policies are tools of macroeconomic policy, or more broadly, tools of macroeconomic policy include financial policy, monetary policy, income policy, and foreign economic policy, helping to manage economic activities at the macro level. Financial and monetary policies are considered policies of policies, a part of policies is a system of many different policies. These two policies exist independently and complement each other. Financial and monetary policies have a great impact on the social life and economic activities of the country, they are often used by governments of developed countries to achieve goals of output growth, employment and price stability. In times of recession, slow growth, high unemployment, excess capital capacity, etc., the government will implement measures to reduce interest rates, expand bank credit, reduce tax rates and increase government spending, thereby expanding spending and encouraging growth. On the contrary, when there is high inflation, governments of developed countries often raise interest rates, restrict bank credit, set higher tax rates, reduce government spending and even control wages and prices, in order to reduce total spending.
Financial and monetary policies are one of the important tools for the Government to conduct macroeconomic regulation of the economy. The nature of these policies is that the Government uses two important tools, financial tools and monetary tools, to encourage or restrict investment from all classes of people and organizations in society in order to create more and more wealth for society. In a market economy, financial and monetary policies are the center of the policy system. Therefore, this policy has a strong and decisive impact on the development of the non-state economic sector in particular and SMEs in general.
1. Financial policy
Currently, in the media, the term financial policy is used with inconsistent content. There are cases where financial policy is used as fiscal policy, but there are also cases where fiscal policy is used as fiscal policy.
Financial policy is considered to include fiscal policy, monetary policy, exchange rate policy... meaning national financial policy (Financial Policy).
To avoid confusion and to be consistent with the scope of the research topic, the term financial policy is referred to as financial policy in the narrow sense - that is, fiscal policy. With such a limitation of the term, financial policy is understood as a policy related to adjustments in state budget revenue and expenditure activities, the structure of budget revenue and expenditure and the relationship between them to direct the economy towards the desired macroeconomic goals.
The main instruments of fiscal policy are government spending on consumption and investment; direct and indirect taxes and other revenues - of which the main revenue is tax revenue; and transfers.
Fiscal policy mainly and directly causes changes in the goods market - in the short term. Through budget adjustments in terms of revenue sources, expenditure sources and the structure of both revenue and expenditure sources, fiscal policy has impacted and changed the aggregate demand (AD) of the economy, changed the equilibrium conditions of the goods market, thereby changing the price level, employment, output of the economy, directing the economy towards the desired goal. Because it mainly affects the aggregate demand of the economy, fiscal policy mainly causes short-term changes in the economy, but it can also cause medium- and long-term impacts. Through tax policy, financial policy can indirectly affect investment by affecting concentrated activities - attracting capital, changing sources and flows of investment capital, investment objects and environment... Or, the operation of financial policy can indirectly affect the monetary market, changing the total demand for money, thereby changing the interest rate level - significantly affecting investment activities... And thus, financial policy can affect and change the input factors of production, changing the production capacity limit of the economy...
On the revenue side, fiscal policy is mainly reflected in tax policy and other revenue policies (revenue from the sale and lease of assets owned by the state).