On August 11, the Government approved the draft Law on SME Development for submission to the National Assembly at its second session of the 16th legislature, replacing the proposed amendments to the Law on Support for Small and Medium-sized Enterprises.

Under Resolution 68, Vietnam's private sector currently comprises about 1 million enterprises and more than 5 million household businesses, contributing around 50 percent of GDP, more than 30 percent of state budget revenue, and employing approximately 82 percent of the workforce. 

The resolution targets 2 million operating enterprises by 2030, while also fostering large private companies capable of participating in global value chains.

Eight years of "support"

Looking back at the eight years since the 2017 Law on Support for SMEs took effect, it cannot be said that this sector lacks support policies.

According to the Vietnam Association of Small and Medium Enterprises, nearly a decade has seen the issuance of eight decrees, around 20 circulars, and numerous policies covering credit, taxation, land access, training, consultancy and innovation.

Yet only 35-45 percent of SMEs are aware of these support policies, while fewer than 15 percent have actually benefited from them, excluding tax incentives and training programs.

The gap between policy and reality is particularly evident in two resources that are critical for business expansion: capital and land.

98% of businesses receive only 20% of credit

According to the Vietnam Business White Book, outstanding loans to SMEs reached VND3.65 quadrillion by the end of 2025, up 223 percent from 2017. However, this represented only about 20 percent of total outstanding credit in the economy.

This is notable given that SMEs account for around 98 percent of all operating businesses. Of course, 98 percent of enterprises does not necessarily mean they should receive the same proportion of total lending, as companies vary significantly in size, financing needs and borrowing capacity.

According to VCCI, 93.5 percent of bank loans require collateral, while 75.5 percent of businesses say they cannot obtain financing without pledged assets.

As a result, many SMEs find themselves trapped in a vicious cycle: they need financing to accumulate assets, but they must first possess assets to qualify for financing.

Meanwhile, the institutions created to address this financing gap have had only limited impact.

By the end of 2025, the SME Development Fund had approved loans totaling just VND1.554 trillion, of which VND1.194 trillion had been disbursed as planned. Outstanding guarantees provided by local credit guarantee funds totaled only VND99.6 billion as of August 2024, according to research by Dr. Ha Huy Ngoc, director of the Center for Strategy and Policy at the Vietnam Institute of Economics and World Economy.

One reason is the requirement that these funds preserve their capital, making them reluctant to provide guarantees. Funds established to share lending risks with businesses that struggle to access bank credit have little room to accept risk themselves.

Land access remains major obstacle

A similar challenge exists with land. Current regulations require industrial parks to reserve at least 5 hectares or 3 percent of their total land area for lease to eligible users, including SMEs, for production facilities.

However, the VCCI's Provincial Competitiveness Index (PCI) survey found that the proportion of businesses reporting no difficulties in accessing land or expanding business premises fell from 55 percent in 2021 to just 33 percent in 2024.

From support to development

Renaming the legislation from the Law on Support for SMEs to the Law on SME Development also changes how policy success should be measured.

The focus should no longer be on the number of support programs, training courses or businesses receiving assistance, but on whether businesses actually grow.

After the law has been implemented for some time, policymakers should ask: How many micro-enterprises have become small businesses? How many small businesses have grown into medium-sized enterprises? Has access to capital and production sites improved?

Resolution 68 targets 2 million enterprises by 2030, compared with roughly 1 million today. 

Le Minh Nghia, chair of the Vietnam Financial Consulting Association, noted that Vietnam currently has about one enterprise for every 100 people, compared with around one for every 10 people in Singapore and one for every 6.6 people in South Korea.

This gap suggests Vietnam still has substantial room to increase the number of businesses. However, the goal is not simply to create more enterprises, but also to help existing ones grow.

Tu Giang