''Small and medium'' but important to the economy

By early 2025, the country will have more than 940,000 operating enterprises, along with nearly 30,000 cooperatives and more than 5 million business households. This is a remarkable development compared to the number of operating units 20 years ago (2004): 92,000 enterprises.

In January 2025, more than 33,400 enterprises were newly established or returned to operation, an increase of 15.0% over the same period last year, of which nearly 10,700 establishments were newly registered with a total capital of about VND 94,100 billion and a total number of more than 81,500 employees.

It is noteworthy that nearly 98% of enterprises operating in our country are small and medium-sized with a total capital of 16.6 million billion VND, or nearly 30% of the total capital of the entire enterprise sector. With such a large proportion, the small and medium-sized enterprise sector plays a very important role in the economy.

What is a small and medium enterprise?

Article 4 of the Law on Support for Small and Medium Enterprises 2017 defines: Small and medium enterprises include micro-enterprises, small enterprises and medium-sized enterprises, with an average number of employees participating in social insurance of no more than 200 people per year and meeting one of two criteria: total capital of no more than VND 100 billion, total revenue of the previous year of no more than VND 300 billion.

Micro-enterprises have no more than 10 employees and total annual revenue of no more than 3 billion VND or total annual capital of no more than 3 billion VND.

Small enterprises have no more than 50 - 100 employees and total annual revenue no more than 50 - 100 billion VND or total annual capital no more than 20 billion VND.

Medium-sized enterprises have no more than 100 - 200 employees and total annual revenue no more than 200 - 300 billion VND or total annual capital no more than 100 billion VND.

“Small is Beautiful” is a general expression to indicate the superiority of small and medium-sized enterprises in every economy in the world. This expression comes from the work of the same name by German economist EF Schumacher, one of the 100 most influential books on economics in the world since World War II.

In Schumacher's view, "small beautiful" businesses have an advantage over large businesses in terms of sustainability and human development - they make inexpensive products that are accessible and usable by many people.

Small-scale businesses have small profits, but they create jobs and income for workers in conditions that large businesses "ignore", thanks to which "no one is left behind".

“Small and beautiful” businesses play an important role in every country but especially in developing countries.

In Vietnam, the small and medium-sized enterprise sector contributes nearly 40% of the gross domestic product (GDP), creates 5.5 million jobs (compared to 9.8 million workers of large enterprises), plays an important role in the policy of hunger eradication and poverty reduction, and improves workers' income. This is the main force exploiting niche markets that large corporations and enterprises are not interested in, mobilizing maximum resources among the people to serve socio-economic development.

Due to their small size and flexible operations, small and medium-sized enterprises are suitable places to apply innovative and creative ideas. They are also an important link in the supply chain of multinational corporations through the form of providing raw materials, logistics services or product processing.

Large enterprises are often concentrated mainly in cities and large industrial zones, "water flows to low places", so there will be an imbalance in economic, cultural and social development between urban and rural areas, between regions. Therefore, small and medium enterprises play an important role in creating a balance in the level of development between regions and sustainable socio-economic development. Small and medium enterprises in rural areas attract many seasonal workers during the off-season, gradually shifting agricultural workers to industrial or service jobs, implementing the motto "leaving agriculture but not leaving home".

The small and medium enterprise sector often focuses on industries and fields that exploit local advantages such as agricultural products, tourism, and traditional craft villages.

However, small and medium enterprises in Vietnam are still young, have not accumulated much capital, knowledge, technology and experience, business traditions, and face many difficulties and barriers on the path to sustainable development. The number of small and medium enterprises participating in the market is on a downward trend - in January 2025, 58,300 enterprises left the market.

Enterprises in this area have small capital, mainly under 10 billion VND, limited capital mobilization capacity, outdated technology, low management level, and lack of professionalism... Most enterprises operate in a fragmented manner, focusing mainly on the trade and service sector, the proportion of enterprises participating in production is very limited, and the speed of scale transformation is slow.

One of the difficult problems of this group is the difficulty in accessing bank loans due to the inability to ensure collateral conditions because business owners often use their houses as company headquarters, and personal assets and business assets are not clearly separated.

In order to remove barriers and difficulties, and create maximum conditions for small and medium-sized enterprises to make breakthroughs, in Directive No. 10/CT-TTg, the Prime Minister requested: Prioritize the allocation of resources to support the development of small and medium-sized enterprises, focusing on supporting creative startups, improving competitiveness in participating in the value chain; digital transformation, green transformation, developing new business models; promoting technology application, innovation and digital transformation.

One of the key tasks is to perfect policies and laws, reform administrative procedures, and create a favorable and equal investment and business environment for small and medium enterprises.

With an overwhelming number, an important role and constant efforts, once receiving maximum support in terms of capital and innovation in mechanisms, small and medium enterprises will make a very important contribution to GDP growth reaching 8% in 2025 and 10% of GDP or more in the following years.

(According to Tin Tuc Newspaper)

Source: https://baoyenbai.com.vn/12/348175/Nho-va-vua-nhung-quan-trong-voi-nen-kinh-te.aspx