What are the regulations on the program for subsidy on interest rate applicable to small and medium enterprises through commercial banks in Vietnam?
- What are the regulations on the funding source and the promulgation of guidance on policies to support interest rates applicable to small and medium enterprises in Vietnam?
- What are the regulations on the program for subsidy on interest rate through commercial banks in Vietnam?
- What are the principles for assistance for small and medium enterprises in Vietnam?
What are the regulations on the funding source and the promulgation of guidance on policies to support interest rates applicable to small and medium enterprises in Vietnam?
The promulgation of policies to support interest rates applicable to small and medium enterprises (SMEs):
Pursuant to Section 2 of Official Dispatch No. 7853/BKHDT-PTDN in 2022, guiding the promulgation of policies to support interest rates applicable to SMEs as follows:
- Innovative start-up SMEs and SMEs participating in industry clusters and value chains are the two key support objects specified in the Law on Assistance for SME to promote economic restructuring to in-depth development, based on on innovation;
At the same time, strengthen connectivity between economic regions, support Vietnamese businesses to participate more deeply in regional and global value chains. The policy of interest rate support for these two subjects has been stipulated in the Law on Assistance for SMEs, however, after nearly 5 years of promulgation of the Law, the policy has not been concretized for implementation.
- At the same time, this policy is also different from the policy of providing subsidy on interest rate for enterprises, cooperatives and business households in the socio-economic recovery and development program expected to be implemented in 2 years of 2022 and 2023 according to Resolution No. 43/2022/QH15, Decree No. 31/2022/ND-CP on interest rate support from the state budget for loans of enterprises, cooperatives and business households.
Therefore, continuing to improve the legal basis to be able to implement this policy in the near future is necessary and contributes to the realization of the support policy specified in the Law on Assistance for SMEs in practice.
Funding sources for implementing interest rate support policies for small and medium enterprises:
- Clause 6, Article 5 of the 2019 Law on Public Investment of Vietnam stipulates the subjects of public investment as follows: Investment in granting subsidies to offset preferential lending interest rates; making equity contribution to the charter capital of policy banks and state off-budget financial funds; providing investment support for other policy beneficiaries under the Prime Minister’s decisions.
Pursuant to the provisions of Article 40 of Decree No. 40/2020/ND-CP detailing the implementation of several articles of the Law on Public Investment, the grant of capital used for offsetting interest rates of commercial banks subject to public investment is specified in the law.
- Pursuant to the provisions of Clause 4, Article 81 of the 2019 Law on Public Investment of Vietnam, the Ministry of Finance has the duty: "Preside over recommending competent authorities to adopt or adopt, within its jurisdiction, regulations on managing, paying and making final accounts of costs incurred from projects using public investment capital”.
At the same time, based on the provisions of Clause 2, Article 26 of the 2015 Law on State Budget of Vietnam, the Ministry of Finance has the duty: “Establish principles, criteria, and limits on allocation of recurrent expenditures of state budget; policies, standards, and limits on budget expenditures, mechanism for state budget – finance management, accounting, payment, statement of state budget, and list of state budget entries; regulations on reporting and financial transparency; submit them to the government for promulgation in order to be uniformly applied nationwide".
Therefore, the Ministry of Finance is the agency assigned to guide the management, payment and settlement of the interest rate support program from the state budget for the interest rate difference to implement the lending policy to support SMEs according to Decree No. 80/2021/ND-CP is consistent with current legal regulations.
- According to current regulations, at the beginning of each 5-year medium-term public investment plan period, the Ministry of Planning and Investment will summarize and submit to competent authorities for approval, allocate capital sources and capital plans when there are sufficient legal grounds, regulations on the order, procedures, implementation mechanism, after identifying the needs of the above task. In each medium-term public investment planning period, the central budget arranges a provision to handle arising cases but the source cannot be arranged.
Therefore, after the policy guiding mechanism for subsidy on interest rate was completed and based on the need to compensate for the difference in interest rates for loans to support SMEs through commercial banks at that time, the Ministry of Planning and Investment will coordinate with the Ministry of Finance to report to the Government to submit to the National Assembly for consideration and regulation on the use of the central budget reserve of the medium-term public investment plan.
What are the regulations on the program for subsidy on interest rate applicable to small and medium enterprises through commercial banks in Vietnam?
What are the regulations on the program for subsidy on interest rate through commercial banks in Vietnam?
According to the provisions of Section 3 of Official Dispatch No. 7853/BKHDT-PTDN in 2022 on the program for subsidy on interest rate through commercial banks as follows:
The Ministry of Planning and Investment proposes to supplement public investment estimates to make definitive payments to commercial banks that have implemented the state's policy credit programs before but has not been paid by the state budget, specifically:
- Providing subsidy on interest rate to reduce losses in agriculture
+ For policies on granting subsidy on loan interest rate from December 31, 2020 and earlier: The relevant Prime Minister's Decisions do not stipulate the arrangement of development investment capital for implementation of providing subsidy on interest rate. At the same time, the Prime Minister assigned the Ministry of Finance to be responsible for guiding and implementing the grant of subsidy on interest rate according to the provisions of these Decisions.
Therefore, the Ministry of Planning and Investment has not had enough basis to report to the competent authority to allocate public investment capital to provide subsidy on interest rate to commercial banks that make loans under this program.
+ For subsidy on interest rate policies that are expected to arise in the period 2021-2025: Decision No. 68/2013/QD-TTg of the Prime Minister on support policies to reduce losses in agriculture stipulated "The State budget only supports interest rates and provides differences of interest rates for loans that have signed loan contracts at commercial banks before December 31, 2020", so there is no basis for the grant of subsidy on interest rate in the period 2021-2025.
- Subsidy on interest rate for upgrading and building new fishing vessels
The allocation of sources of development investment spending to implement the policy of subsidy on interest rate is specified in Decree No. 17/2018/ND-CP and takes effect from January 1, 2018.
Therefore, the allocation of public investment capital to compensate for interest arising before January 1, 2018 is unfounded.
According to the provisions of Clause 19, Article 1 of Decree No. 17/2018/ND-CP: “Credit agreements for construction or upgrading of vessels as prescribed in Clause 1 Article 4 shall be concluded up to December 31, 2017. In case a loan is disbursed after December 31, 2018, the lending interest rate shall be paid according to specific agreements entered into between the commercial banks and borrowers in conformity with applicable law regulations.”
Therefore, only loans with credit contracts signed by the end of December 31, 2017 will be considered for interest compensation according to regulations.
On that basis, the Ministry of Planning and Investment will report to the competent authority for consideration and allocation of public investment capital to offset the interest (must be provided with subsidy) arising from January 1, 2018 for the contracts that have been signed until December 31, 2017. However, at present, the State Bank has not separated the loans according to the above-mentioned phases, so there is not enough basis to arrange compensation for this program.
- Subsidy on interest rates on social housing loans
According to the provisions of Article 4 of Decision No. 18/2018/QD-TTg, the grant of subsidy on interest rate for commercial banks is only applicable in the period 2016-2020. However, in the period of 2016-2020, commercial banks have not yet disbursed loans according to the above program, so the compensation in the period of 2021-2025 is unfounded for commercial banks (except for the Bank for Agriculture and Rural Development, it is expected that in 2020 there will be provided with subsidy).
- Granting subsidy on interest rate for afforestation development loans
Point a, Clause 4, Article 10 of Decree No. 75/2015/ND-CP stipulates: The Ministry of Finance is responsible for allocating budgets to implement the policies specified in this Decree. Therefore, the allocation of public investment capital to implement compensation is unfounded.
- Providing subsidy on loan interest rate to support fast and sustainable poverty reduction for 61 poor districts
Resolution No. 30a/2008/NQ-CP related guiding documents do not have regulations on allocating development investment capital to provide subsidy on interest rate for commercial banks. Therefore, there is no basis for allocating public investment capital to provide subsidy on interest rate for commercial banks.
- Granting subsidy on loan interest rate to support the implementation of production reorganization and ownership conversion for sugar companies and factories
Decision No. 28/2004/QD-TTg and related guiding documents do not have regulations on allocating development investment capital to provide subsidy on interest rate for commercial banks. Therefore, there is no basis for allocating public investment capital to provide subsidy on interest rate for commercial banks.
What are the principles for assistance for small and medium enterprises in Vietnam?
Pursuant to Article 4 of Decree No. 80/2021/ND-CP on this content as follows:
- On the basis of available resources and order of priority in each period, assisting organizations shall decide the quantity of SMEs eligible for assistance following these principles:
+ First come, first served;
+ Women-owned SMEs, SMEs with high female employments and SMEs that are social enterprises shall be given priority as prescribed by law.
- In case an SME satisfies conditions for different levels of assistance specified in this Decree and relevant regulations of law, it may choose the most favorable assistance.
- In addition to assistance provided separately for micro-enterprises and SMEs specified in this Decree, general assistance for SMEs shall also be provided for micro-enterprises and SMEs that satisfy the conditions specified in this Decree.
- SMEs that are converted from household businesses, startups, SMEs participating in industry clusters, value chains shall be eligible for the assistance specified in Chapter IV and Chapter III of this Decree if they are not repeated.
- On the basis of their functions, duties and capacity, assisting organizations shall directly provide assistance or cooperate with capable organizations and individuals in providing assistance for eligible SMEs.
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