New projects ramp up SME benefits
As domestic small and medium-sized enterprises retain a large thirst for capital supply, foreign institutions are pouring support into those able to bounce back in 2022.
Validus, TTC Group, and Do Ventures last week established a joint venture to deepen financial inclusion for small and medium-sized enterprises (SMEs). Nikhilesh Goel, co-founder and group CEO of digital financing platform Validus, said SMEs can increase their resiliency and recovery by ensuring that they have adequate cash flow to support business activities as the recovery picks up and new projects are kick-started.
“This will be a key driver in enabling them to capitalise on opportunities as access to short-term liquidity is critical in hiring new employees, procuring of raw materials and inventory, and supporting execution. Working capital will help them to proactively build capabilities to adapt to changing situations,” Goel added.
Validus intends to continue to extend its core product offerings, including supply chain financing products and working capital products tailored to the needs of the local market.
“Additionally, we will be working on bespoke products to offer to our venture partners’ ecosystems. We are also building innovative products in partnership with other digital platforms within this ecosystem that are driven by data-points extending across areas including procurement, trade, and logistics, among others,” Goel shared.
Among them, TTC boasts a large ecosystem of SMEs across the energy, real estate, sugarcane, and hospitality industries in Vietnam. Meanwhile, Do Ventures has deep expertise in the emerging fintech landscape. Thus, the cooperation will benefit from these synergies with portfolio companies under Do Ventures.
Last week, the US Agency for International Development (USAID) and the Ministry of Planning and Investment (MPI) established a new project aimed at increasing the competitiveness of Vietnamese SMEs. The 5-year, $36-million initiative was initially announced in August during a visit to Vietnam by US Vice President Kamala Harris. The initiative will be carried out in collaboration with the MPI’s Enterprise Development Agency.
“This new project is USAID’s flagship effort to help Vietnam harness its entrepreneurial spirit in facilitating a dynamic, Vietnam-led transformation of the private sector into one that can compete globally, and provide more equal opportunity for all,” said USAID mission director Ann Marie Yastishock.
Also in January, the Asian Development Bank (ADB) signed a loan agreement with Tien Phong Commercial Joint Stock Bank (TPB) for a $25 million loan to help women-owned smaller enterprises in the country.
The loan comes with a $750,000 grant for technical support to enable TPB better meet the demands of WSMEs. TPB will use the grant to expand its capacity to lend to women-owned businesses, add staff, and market its services to female borrowers. It will also allow TPB to analyse the underserved female-led business market using digital systems.
SMEs contribute significantly to Vietnam’s economic development, accounting for 40 per cent of GDP and 60 per cent of total employment in 2018. However, new technology, networking, market connections, and a lack of access to management training and skills development opportunities are all obstacles to continuous and sustained growth for smaller enterprises.
Goel from Validus said that the inflow of support coming from international organisations, both monetary and developmental, will be positive in the long term because these support initiatives are geared towards building capability for Vietnamese SMEs. The support is targeted at ensuring preparedness and adequate resources for recovery and will give SMEs the boost that they need to pursue this growth.