On August 11, the government approved the dossier for the proposed Law on Small and Medium-sized Enterprise Development for submission to the National Assembly at the second session of its 16th tenure, replacing an earlier proposal to amend the Law on Support for SMEs.

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

The resolution targets around 2 million operating businesses by 2030, while also seeking to foster large private enterprises capable of participating in global value chains.

Doubling the number of businesses from around 1 million to 2 million within five years is already an ambitious goal. But there is another challenge: enabling existing businesses to accumulate capital, expand production and grow.

The word "development" in the proposed law's new name should therefore be measured against that ability to grow.

Eight years of 'support'

Looking back at eight years of implementing the 2017 Law on Support for SMEs, it would be difficult to argue that the sector has lacked policies.

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

Yet only around 35-45% of businesses are aware of available support policies, while fewer than 15% have actually benefited from them, excluding tax and training measures.

The gap between policy and reality is particularly evident in two resources essential for any business seeking to expand: capital and land.

98% of businesses, 20% of credit

According to the Vietnam Business White Paper, outstanding credit to SMEs reached approximately VND3.65 quadrillion (US$138.4 billion) by the end of 2025, up 223% from 2017, but still accounting for only around 20% of total outstanding credit across the economy.

That proportion is notable given that SMEs account for around 98% of operating businesses.

Of course, representing 98% of all businesses does not mean SMEs should receive an equivalent share of credit. Companies vary considerably in scale, financing requirements and their ability to absorb capital.

According to the Vietnam Chamber of Commerce and Industry (VCCI), 93.5% of loans require collateral, while 75.5% of businesses say they cannot obtain loans without it.

Small businesses can therefore become trapped in a vicious cycle: they need capital to accumulate assets, but they first need assets to secure the capital.

Meanwhile, instruments established to close this financing gap have yet to make a significant impact.

By the end of 2025, the SME Development Fund had approved loans totaling only around VND1.554 trillion (US$58.9 million), of which approximately VND1.194 trillion (US$45.3 million) had been disbursed according to schedule.

Outstanding loans backed by local credit guarantee funds stood at just VND99.6 billion (US$3.8 million) as of August 2024, according to research by Dr. Ha Huy Ngoc, director of the Center for Strategy and Policy at the Vietnam and World Economy Institute.

One reason is the requirement for these funds to "preserve capital," which can make them reluctant to provide guarantees.

The funds were created to share risks associated with businesses that struggle to secure conventional loans, yet they themselves have limited room to accept that risk.

Businesses still struggle to access land

A similar problem exists with land.

Current policy requires at least five hectares or 3% of the land in industrial parks to be reserved for eligible tenants, including SMEs, to use as production premises.

Yet VCCI's Provincial Competitiveness Index survey shows that the proportion of businesses reporting no difficulties in accessing land or expanding their business premises fell from 55% in 2021 to just 33% in 2024.

Having a policy that reserves land, therefore, does not necessarily mean businesses can easily secure premises for production and commercial activities.

For SMEs, land and capital are also closely intertwined.

Without suitable premises, factories and assets that qualify as collateral, borrowing becomes difficult. Without access to financing, businesses lack the resources to invest in premises and production facilities.

From support to development

Changing the legislation from a Law on Support for SMEs to a Law on SME Development also calls for a different way of evaluating policy outcomes.

The question should not simply be how many programs or training courses have been organized, or how many businesses have received support. More importantly, policymakers need to ask whether those businesses have actually grown.

After the law has been implemented for a period, how many microenterprises have become small businesses? How many small businesses have grown into medium-sized enterprises? And how much has their access to financing and business premises improved?

Resolution 68 sets a target of around 2 million businesses by 2030, compared with roughly 1 million today.

According to Dr. Le Minh Nghia, chairman of the Vietnam Financial Consultants Association, Vietnam currently has roughly one business for every 100 people. By comparison, Singapore has around one for every 10 people, while South Korea has one for every 6.6 people.

The gap suggests Vietnam still has considerable room to increase its number of businesses.

But the objective is not simply to create more companies. It is also to establish conditions that allow existing businesses to become larger.

With around 98% of Vietnamese businesses classified as small or medium-sized, the implementation of Resolution 68 will depend substantially on whether the new Law on SME Development can clear a path for this vast segment of the private sector.

Access to capital and land will be two of its clearest tests.

The proposed law has already moved from "support" to "development" in name. The more important question is whether today's small businesses will have a genuine opportunity to become tomorrow's larger enterprises.

Tu Giang