The Development of Small and Medium Enterprises in Vietnam

1. Definition of SME in Vietnam

From 2001 to 2009, the definition of SME is said in Decree 90/2001 ND-CP as follow:
SME is an independent business establishment with registered capital not exceeding 10 billion VND (about US $600,000) or annual average number of permanent workers not exceeding 300.

From 2009 until now, the definition of SME is said in Decree 56/2009/ND-CP as follow:
Small and medium-sized enterprises are business establishments that have registered their business according to law and are divided into three levels: very small, small and medium according to the sizes of their total capital (equivalent to the total assets identified in an enterprise’s accounting balance sheet) or the average annual number of laborers (total capital is the priority criterion), concretely as follows:

Very small enterprises Small-sized enterprises Medium-sized enterprises
Number of laborers Total capital Number of laborers Total capital Number of laborers
I. Agriculture, forestry and fishery 10 persons or fewer VND 20 billion or less Between over 10 persons and 200 persons Between over VND 20 billion and VND 100 billion Between over 200 persons and 300 persons
II. Industry and construction 10 persons or fewer VND 20 billion or less Between over 10 persons and 200 persons Between over VND 20 billion and VND 100 billion Between over 200 persons and 300 persons
III. Trade and service 10 persons or fewer VND 10 billion or less Between over 10 persons and 50 persons Between over VND 10 billion and VND 50 billion Between over 50 persons and 100 persons

2. Statistics on SME

There is no exact data indicating the number of SME in Vietnam but researches shows SME account for 97% of total number of enterprises in Vietnam. SME use 50.1% of the labor force and contribute over 40% to the GDP.

Number of new enterprise for each year continued to grow in the last 10 years. In 2000, there were 14 453 newly established enterprises, this number was estimated to be more than 7 times larger in 2010. Until December 2010, the total number of enterprise in Vietnam was about 520,000.

newly-established-enterprises

Newly established enterprises from 2000 to 2010

Enterprises in the private sector play an important role in economy growth. Private enterprises contribute to Vietnam GDP the most in recent years. The table below shows contribution of public sector, private sector and FDI to GDP from 2000 to 2009.

gdp-fdi-contribution

Private sector contribution to GDP in comparison with FDI and Public sector (%)

From 2000 to 2005, private sector’s contribution fluctuated around 38% and 39%. The lowest point was in 2004 with 38.67% , just 0.3% lower than the highest contributor-public sector. From 2005 to 2009, contribution of the private sector continued to grow and has led among the 3 sectors. In 2009, private sector reached 41.08% which is about 5% more than public sector and more than 20% higher than FDI.

China – Vietnam SME Trade Exchange and Cooperation Seminar, Beijing 2010.

Join the Conversation

1 Comment

  1. Do we have to bring in from India, skilled and unskilled laborers to Vietnam for execution of projects?

Leave a comment

Your email address will not be published. Required fields are marked *