THE GOVERNMENT

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Objectives

Developing small- and medium-sized enterprises (SMEs) is an important task in the strategy for socio-economic development and acceleration of the national industrialization and modernization.

The State encourages and creates favorable conditions for SMEs to bring into play their activeness and creativeness, raise their managerial capability, develop sciences, technologies and human resources, expand their cooperative ties with enterprises of other forms and increase the business results as well as competitiveness on the market; develop production and business, create jobs and improve the laborers� life.

Article 2.- Scope of regulation

SMEs shall enjoy preferential treatment policies according to current legislation. This Decree prescribes more support policies for SMEs and SME development promotion organizations to meet the socio-economic development requirements and accelerate the national industrialization and modernization.

Article 3.- Definition of SMEs

SMEs are independent production and business establishments, which make business registration according to the current law provisions, each with registered capital not exceeding VND 10 billion or annual labor not exceeding 300 people.

On the basis of the concrete socio-economic situation of each branch or locality, in the course of implementing the support measures and programs, both or either of the above-mentioned criteria on capital and labor may be applied in a flexible manner.

Article 4.- Subjects of application

This Decree shall apply to SMEs, including:

- Enterprises set up and operating under the Enterprise Law;

- Enterprises set up and operating under the State Enterprise Law;

- Cooperatives set up and operating under the Cooperative Law;

- Business households making registration under the Government�s Decree No.02/2000/ND-CP of February 3, 2000 on business registration.

Article 5.- Support program

The State�s program on support for SMEs (called support program for short) is a target program for SMEs, based on the orientation of prioritizing the socio-economic development and the development of branches and localities which need encouragement. This support program shall be incorporated in the annual and five-year plans to be decided by the Prime Minister or presidents of the People�s Committees of the provinces and centrally-run cities.

The support program covers: objectives, categories of SMEs classified according to their business lines and operation fields and locations, contents and sources of support, plans and measures on mechanisms and policies, and organization of implementation. To attach importance and give priority to support for those SMEs managed by businesswomen.

Chapter II

SUPPORT POLICIES

Article 6.- Investment encouragement

1. The Government shall encourage investment by applying financial and credit measures in a certain period of time to those SMEs which invest in a number of trades and branches, including the traditional ones, and in localities which need the encouragement.

2. The Government encourages financial institutions, enterprises and entities to contribute investment capital to SMEs.

Article 7.- Establishment of credit guarantee fund for SMEs

To set up a credit guarantee fund for SMEs in order to provide them guarantee when they fail to acquire enough properties for mortgage or pledge to borrow capital from credit institutions.

The Finance Ministry shall assume the prime responsibility and coordinate with concerned agencies in drawing up a scheme on organization and the Regulation on operation of the credit guarantee fund for SMEs and submit them to the Prime Minister for decision.

Article 8.- Production ground

Based on the socio-economic development planning as well as planning and plans on the use of land in the provinces and cities, already approved by the Prime Minister, the presidents of the People�s Committees of the provinces and centrally-run cities shall create favorable conditions for SMEs to have proper production ground; direct the reservation of land fund and implementation of promotion policies for the construction of industrial parks and clusters for SMEs to have grounds to build their production establishments or move from urban centers to outlying regions, ensuring the environmental landscape.

SMEs shall enjoy preferential treatment policies regarding land lease, transfer and mortgage as well as other land use-related rights prescribed by law.

Article 9.- Markets and raising of competitiveness

1. The ministries, branches and People�s Committees of the provinces and centrally-run cities shall direct and create conditions for SMEs to gain access to information on markets and goods� prices and assist them to expand markets and sell their products.

2. Localities shall assist SMEs in exhibiting, introducing, advertising and marketing their potential products, thereby creating conditions for them to expand the markets.

3. The Government shall create conditions for SMEs to participate in goods supply and service provision under the plans on goods procurement with State budget sources; the ministries, branches and localities shall work out plans to give priority on goods ordering and quota-regulated goods orders to SMEs which produce goods and/or provide services, ensuring the quality and meeting their requirements.

4. The Government encourages the development of industrial sub-contracting form and the enhancement of the relationship between SMEs and other enterprises in cooperation on the production of goods, components, accessories and spare parts as well as construction contracting..., in order to promote technological transfer, expand product outlets and raise the competitiveness of SMEs.

5. Through the support programs, the Government shall create conditions for SMEs to renovate technologies, equipment and machinery, develop new products and modernize management, with a view to raising the quality of their commodity products and competitiveness on the market.

Article 10.- On export promotion

1. The State encourages SMEs to boost export and creates conditions for them to cooperate with foreign partners, expand goods and service export markets. Through the export promotion-support program, the State shall partially support SMEs� expenses for survey, study, exchange and cooperation activities and participation in fairs and exhibitions to introduce their products and probe foreign markets. Such financial support shall be covered by the Export Support Fund.

2. The ministries and branches shall create favorable conditions for SMEs to take part in the State�s export programs.

Article 11.- On information, consultancy and human resource training

1. The Government, ministries, branches and local People�s Committees shall supply necessary information on publications and Internet to SMEs and, through the Ministry of Planning and Investment (the Department for SME Development), coordinate with relevant agencies and socio-professional organizations in supporting SMEs.

2. The Government shall provide financial support for consultancy and human resource training to SMEs through training support programs. The fund in support of training shall be covered by the State budget portion for education and training.

3. The Government encourages domestic and overseas organizations to support SMEs with the provision of information, consultancy and human resource training.

4. The Government encourages the establishment of quot;SME nurseriesquot; in order to guide and train businessmen in the initial steps of setting up enterprises.

Chapter III

SME DEVELOPMENT PROMOTION ORGANIZATIONS

Article 12.- Establishment of the Department for SME Development

To set up the Department for SME Development under the Ministry of Planning and Investment, which shall assist the Minister of Planning and Investment in performing the function of State management over SME development promotion.

Article 13.- The Department for SME Development shall have the following major tasks and powers:

1. To assist the Minister of Planning and Investment in orientating the SME promotion work: elaborating or participating in the elaboration of policies and legal documents on SME development promotion, and submitting them to the competent levels for promulgation; summing up the elaboration of support programs, making detailed lists of SMEs according to their business lines and operation fields and locations and contents of support; coordinating, guiding and inspecting the implementation of support programs after they are approved.

2. To organize training so as to improve the capabilities of personnel in SME support organizations and foster their operational skills in the promotion of SME development.

3. To effect international cooperation on SME development promotion through balancing resources and calling for outside capital sources to support SMEs.

4. To coordinate with relevant agencies and organizations in supplying necessary information to SMEs.

5. To coordinate with relevant SME-support promotion agencies and organizations in providing technical consultancy, approaching advanced technologies and equipment, guiding and organizing training courses on technical operation and management as well as enterprise management.

6. To submit biannual sum-up reports on development of SMEs as well as on to be-solved matters to the Minister of Planning and Investment for further submission to the Prime Minister.

7. To perform the task of standing secretary of the SME Development Promotion Council.

8. To carry out other State management activities regarding the SMEs development promotion, assigned by the Minister of Planning and Investment.

Article 14.- Organizational structure and operation regulation of the Department for SME Development

1. The Minister of Planning and Investment shall specify tasks, powers and organizational apparatus of the Department for SME Development. The staff and fund for operation of the Department for SME Development shall be decided by the Minister of Planning and Investment after reaching agreement with the Minister-Chairman of the Government Commission for Organization and Personnel and the Finance Minister in the spirit of employing staff of the Ministry of Planning and Investment in the course of its reorganization, ensuring that the Department�s apparatus is simple, efficient and meets the requirements of speeding up the SME development promotion in the new situation.

2. The fund for operations of the Department for SME Development shall be allocated by the State budget and incorporated in the Ministry of Planning and Investment�s annual State budget estimates.

Article 15.- Establishment of the SME Development Promotion Council

1. To set up the SME Development Promotion Council, which shall advise the Prime Minister on mechanisms and policies to encourage development of SMEs. The Council�s members shall operate on a part-time basis. The Prime Minister shall decide on the Council�s functions, tasks and membership at the proposal of its chairman.

2. The membership of the SME Development Promotion Council includes:

- Its chairman being the Minister of Planning and Investment.

- Its Standing Secretary being the director of the Department for SME Development.

- Representatives of the Ministries of: Planning and Investment; Industry; Finance; Agriculture and Rural Development; Construction; Communications and Transport; Trade; Science, Technology and Environment; Education and Training; Labor, War Invalids and Social Affairs; and Justice.

- Representatives of the People�s Committees of Hanoi, Ho Chi Minh City, Hai Phong and Da Nang cities.

- Representatives of Vietnam Chamber of Commerce and Industry, Central Council of the Union of Vietnamese Cooperatives and a number of enterprise associations.

- A number of economic, scientific, technological and training experts.

3. The Council�s working regulations shall be decided by its chairman.

4. The fund for operation of the Council shall be incorporated in the fund of the Department for SME Development.

Article 16.- Establishment of the SME Technical Support Centers

The Ministry of Planning and Investment shall set up the SME Technical Support Centers (under the Department for SME Development) in Hanoi, Ho Chi Minh City and Da Nang city.

The SME Technical Support Centers are the public-service units with revenues, which have the function of advising the Department for SME Development and at the same time acting as the major consultants on technological and technical matters, renovation of equipment, guidance for technical management and maintenance of equipment, creating conditions for SMEs to approach new technologies and equipment.

The Ministry of Planning and Investment shall elaborate a scheme on organization and issue the Regulation on operation of these centers after reaching agreement with the Government Commission for Organization and Personnel and relevant agencies.

Article 17.- Promotion of SMEs in localities

The People�s Committees of the provinces and centrally-run cities shall promote the development of SMEs in their respective localities with the following major tasks:

- Orientating the SME promotion work; elaborating or participating in the elaboration of legal documents guiding the implementation of the Government�s, the Prime Minister�s and the Ministry of Planning and Investment�s regulations on the promotion of SMEs in localities. Summing up and elaborating the SME support programs; coordinating, guiding and inspecting the implementation of support programs after the approval thereof.

- Once every six months, making and sending the sum-up reports to the Ministry of Planning and Investment on situation of development of SMEs as well as problems to be settled.

- Coordinating with relevant ministries, branches and organizations in promoting the development of SMEs in their respective localities according to current regulations.

Article 18.- SME-supporting organizations

1. The Government encourages the establishment and consolidation of SME-supporting organizations under the agencies, socio-political organizations and socio-professional organizations in order to practically and efficiently implement the support programs.

2. The Government encourages and creates conditions for SMEs to join the existing enterprise associations and set up new associations and clubs of enterprises with a view to carrying out activities, including the attraction of overseas resources in order to provide practical and direct support with services on information, marketing for market expansion, training, technologies... to SMEs, thereby raising their production and business efficiency.

3. The ministries, branches and local People�s Committees shall have to regularly meet with SMEs and handle problems arising in their production and business activities; organize the collection of opinions of enterprise associations in the course of drafting legal documents related to SMEs.

4. The enterprise associations and clubs shall be organized and operate according to law provisions.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 19.- Implementation effect

This Decree takes effect 15 days after its signing.

Article 20.- Implementation responsibility

1. The Ministry of Planning and Investment shall coordinate with the relevant ministries, branches and agencies in carrying out the follow-up jobs, guiding, monitoring and urging the implementation of this Decree and reporting to the Prime Minister on the implementation situation as well as newly-arising problems for settlement.

2. The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government and the presidents of the People�s Committees of the provinces and centrally-cities shall have to implement this Decree.

On behalf of the Government
Prime Minister
PHAN VAN KHAI

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