Better capital mobilization for small enterprises and startups needed

Vietnam has a large network of small businesses and startups that play an important role in its economy, but they face different difficulties in mobilizing capital and require support in terms of legal framework and mechanisms.

There are currently some 3,000 startups in Vietnam, including three “unicorns”. Investment in the country’s startups increased last year, to an unprecedented $1.3 billion or more.

Law No. 04/2017/QH14 on supporting small and medium-sized enterprises (SMEs) is in place, as is Decree No. 38/2018/ND-CP detailing Law No. 04, which contains regulations on principles, contents, and resources to support SMEs and the responsibilities of agencies, organizations, and individuals involved in supporting SMEs.

For startups, Vietnam also has Directive No. 09/CT-TTg in 2020 from the Prime Minister, which is a foundation for promoting the founding and operation of innovative startups.

Despite the efforts made, small businesses and startups still face difficulties in attracting investment capital to get started or expand production.

It has been suggested that Vietnam learn from the US’s experience in promoting investment in small businesses and startups.

Firstly, there needs to be a suitable legal framework as well as clear policies on capital mobilization. Secondly, policymakers should boost the development and increase the role of investment funds. And lastly, there should be more exchanges between regulatory authorities, market participants, and the business community.