52
to 40.35% in 2010 - the highest level. However,
compared to the other two sectors, the state
budget contribution to private sector revenue
is low and tends to decrease. This represents a
share of private sector revenue that generated less
copper than other regions. The cause may be that
private sector enterprises are entitled to more tax
incentives than others, but may also be affected
by poor corporate governance.
The existence and causes
Firstly,
the private sector mainly consists of
small and micro enterprises, household economy
with weak financial potential. In working activity,
less than 2% are large enterprises; 2% are medium
enterprises; The remaining 96% are small and
micro enterprises. In addition, businesses in this
area are affected by the economic recession as well
as global financial crisis due to weak financial
potential, unsustainable.
Secondly,
the private sector is difficult to access
loans. Although there has been improvement, the
characteristics of the business are small, weak,
mainly based on short-term loans. Therefore,
the mobilization of capital from other sources of
funds in this area is also difficult. For commercial
banks, only about 36% of SMEs have access to
loans from commercial banks in 2016, which have
very low borrowing limits, only 6 percentage
points higher than 2011-2015 (30%). Average
loan balance of SMEs in the period 2011-2015
and 2016 accounts for only about 25% of the total
outstanding loans of the whole economy. The
number of enterprises having access to credit from
the SME Development Fund is not much. In 2016,
there were 20 businesses submitted applications
but only 3 businesses were approved for loans.
The reason is that the coordination between the
fund, the trustees of the trust and the enterprise
is not good, so prolonging the time in the process
of reviewing loan applications.
Thirdly,
resulting the level of machinery and
equipment is backward, science and technology
are slowly innovated, the private sectors’s labor
productivity and, labor efficiency are low.
About 5% of SMEs use hand tools to produce;
0.9% of SMEs use manual machines; 20% of
SMEs use electrical machinery. In recent years,
the Government has developed policy tools for
innovation in Science, Technology and Industry:
(i) Establishment of National Technological
Innovation Fund in line with inter-ministerial
Circular No. 120/2014/TTLT-BTC-BKHCN dated
August 25
th
, 2014 between Ministry of Finance
and Ministry of Science and Technology; (ii)The
55 million of USD for Vietnam Innovation Project
has been implemented since 2013 to support
the improvement of technology capacity and
technological innovation of SMEs; (iii) Vietnam
Venture Fund supports the private sector to
develop innovative business models. Enterprises
will be provided non-refundable funds up to 49%
of total project investment.
Thanks to the support of the Government,
machinery and equipment has also been
renovated. About 83.3% of the machines have
a technical age of less than 10 years; 14.2% of
machinery has a technical age of 10-20 years;
2.3% of machinery has a technical age of more
than 20 years. In addition, 83% of SMEs selected
new investments in machinery and equipment;
15.7% of SMEs buy used machines. The rate of
enterprises introducing new products rapidly
increased from 4% (2013) to 23.8% (2015). Despite
significant improvements, in general the private
sector is still using backward technology for 2-3
generations compared to the rest of the world.
Low productivity, high labor cost (Vietnam’s
labor productivity tends to decrease from 5.2% in
the period 2002-2007 to 3.3% in the period 2008-
2014...).
Fourthly,
the private sector has little access to
the export market, much of it concentrated in the
domestic market. Only 3% of micro enterprises,
4% of small enterprises and nearly 9% of medium
enterprises have customers who are individuals
or enterprises in foreign countries. 36% of the
enterprises are involved in the production
network (including direct and indirect exports),
Taxesandpayments tothestatebudgetof the
private sector have increased significantly
in the period 2005-2014, from 18.56% in
2005 to 40.35% in 2010 - the highest level.
However, compared to the other two sectors,
the state budget contribution to private
sector revenue is low and tends to decrease.
