Draft decree seeks to overhaul Small and Medium Enterprise Development Fund

Draft decree seeks to overhaul Small and Medium Enterprise Development Fund

The move aims not only to complete the legal framework but also to restructure a key policy instrument amid the new development phase of Việt Nam’s private sector.

Workers at a handicraft business in Nghệ An Province. — VNA/VNS Photo Vũ Sinh

Việt Nam is moving to strengthen support for small businesses and start-ups as the Ministry of Finance drafts a new decree to overhaul the organisation and operation of the Small and Medium Enterprise Development Fund, replacing two existing decrees to improve the legal framework, widen access to capital and streamline lending through simpler and more digital procedures.

Under the draft decree, the Fund’s minimum charter capital would rise fivefold from VNĐ2 trillion (US$76 million) to VNĐ10 trillion ($380 million). Of the total, VNĐ5 trillion would be earmarked for loans to small and medium-sized enterprises, VNĐ2.5 trillion for start-ups and innovation projects and VNĐ2.5 trillion for investment in local and private investment funds.

The proposed changes would also broaden eligibility to include household businesses and individual business operators, recognising their role as job creators and economic shock absorbers. For direct lending, loans could cover up to 80 per cent of a project’s total investment. Caps would be set at VNĐ150 billion for SMEs and VNĐ5 billion for household and individual businesses, with loan terms of up to seven years.

The SMEDF is expected to operate more like a policy-based financial institution guided by market principles. Lending rates would be pegged at 80 per cent of the lowest commercial lending rate, aiming to reduce borrowing costs while maintaining financial discipline. Officials said the effectiveness of the reform will hinge on strong implementation, improved risk management and tighter oversight. If successful, the overhaul could help unlock more medium- and long-term capital for the private sector and support sustainable economic growth. 

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