TO IMPROVE THE VALUE OF FIXED ASSETS FACTOR IN SMALL

CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS

5.1 TO IMPROVE THE VALUE OF FIXED ASSETS FACTOR IN SMALL

To improve fixed asset factors, while helping businesses invested in current assets for SMEs, especially small businesses are using obsolete machinery and

technology, so the cost of production increased making the product cost increases which will take advantage of price competition. In addition, SMEs are using obsolete machinery and technology, which also makes low production capacity, low quality products. However, the renewal and modernization of technology is not easy for SMEs because of two reasons: the first is, the lack of working capital;

the second is, the business has yet to assess the effectiveness of investments so they do not dare to venture. Therefore, to improve fixed asset factors in SMEs, the thesis proposes some solutions as following:

The Initial Development Plan for SMEs by the Ministry of Planning and Investment has launched general framework for SME support policies from 2006 - 2010, however, international experience shows that, due to the limited carrying characteristics of the SME sector as well as interdisciplinary nature, mix of SME support policies, in addition to the general legal framework for the development activity of the enterprise, should have policies, specific institutional (can be quantified) to assist SMEs.

There should have policies to support SMEs to access financing sources in accordance with the conditions of SMEs: Status of high rising interest rates creates difficulties for the business community in general, particularly the SME sector where capital is limited. Therefore, it is necessary to have solutions helping SMEs access to finance source more favorable, specifically some solution are presented as follows:

+ Cooperation with international credit financial institutions to implement operations CGFs for SMEs: This is an activity to promote. In the process of international economic integration, SMEs will become more involved in import

and export activities, which requires businesses to have a greater financial resources, but this is one of the weaknesses of copies of SMEs. While access to credit in the country is difficult because local banks themselves also have limited financial capacity. Therefore, the expansion of cooperation with foreign CIs and guarantee credit international financial institutions for SMEs is an effective way.

The international financial institutions as the International Finance Corporation (IFC), Development Fund for Small and Medium Enterprise (SMEDF) of the European Community, Rural Development Fund (RDF) of the World Bank and Development Assistance Fund (JBIC) of the Japan International Cooperation Bank, United States Agency for Internation development - USAID ... often have credit capital sources entrusted to the poor development countries with low interest rates to support SMEs.

Therefore, the State Bank should strengthen cooperation with these organizations to take advantage of credit sources such trusts. When there are credit sources, the State Bank may entrust banks conduct lending support to SMEs in general and Vietnam in Ho Chi Minh City in particular with preferential interest rates.

+ Having mechanisms that support technological innovation, enhance technical skills for SMEs: The government should have partial support mechanisms (%) branding costs, the registration and protection certification of product quality, environment-friendly certification, production certification process (ISO...) for SMEs. Research, directives issued by the Prime Minister on promoting the implementation of mechanisms and policies to support SMEs and technical advancements, innovation and investment equipment, capacity building and technology transfer technology. Promulgate policies and financial mechanisms to

encourage businesses to invest in science and technology activities, consider raising the level of support from the state budget must not exceed 50% of total funding for implementation research innovations technology SMEs, amend the provisions relating to the allocation and settlement procedures for funding assistance. Development Fund for Science and Technology in the country every year to spend part of the expenses (as a percentage) support SMEs innovation, enhanced technology capabilities.

+ There should be policies to support SME access to markets, expansion of business: building research documents on mechanisms to encourage SME participation in the provision of public services products such as bailiffs the service dealer agency, private notary...; editing, additional samples of tender documents, which encourages SMEs to participate in the bidding offer consulting services goods and services. Research proposals specified minimum percentage (%) of SMEs are involved in the promotion of domestic commercial market, the national trade promotion.

+ Helping SMEs develop skilled human resources: The authorities should develop training plans, manage and use funds supported from the state budget to implement business management training for SMEs; Integrating, emphasizing on SME objects in national programs in terms of job creation.

+ Continuing innovation for declaration and payment of tax procedures in accordance with the characteristics of SMEs, create favorable conditions for business, just anti-tax losses. Facilitating SMEs use audit services, to make public finances every year now.

+ Because the CGF is a non-profit organization so the state should have a financial mechanism to encourage commercial banks, organization, association and enterprises to contribute capital into the CGFs, these organizations will be exempt from corporate income tax at the rate of between of equity to total business operating capital.

5.2 TO IMPROVE THE ENTERPRISE BUSINESS SECTOR FACOTR IN SMALL AND MEDIUM-SIZED ENTERPRISES

The factors of the enterprise business sector have the second strongly effecting needs for SMEs credit guarantee (behind the factor value of fixed assets). Hence, to improve this factor in the near future, thesis proposes some solutions to the following:

Continue to improve the general legal framework for enterprises of all economic sectors, especially SMEs to equal development. At the same time, creating the most favorable conditions for enterprises to enter the market and boost production business. Specifically, the complete legal provisions in areas such as:

Market entry, investment procedures: Business Law, Investment Law, the Law on Cooperatives... In the coming time, Vietnam will focus and thrive in the number of SMEs based on platform to encourage people to set up businesses and encourage individual private business switch to operate as an enterprise company under the business law. In parallel with the development of strength of the effect of strengthening the legal system and business; Construction complete legal system will help SMEs improve competitiveness, investment intensive business healthy, effective and transparent.

+ The regulations in the land sector, production layout sector, Construction sector:

Currently, many government business enterprises (GBEs) are allocated but not used effectively, the land fallow or used for improper purposes, while SMEs (mainly in the private sector) to face many difficulties in finding business premises with huge costs. Even enterprises, the production site to complete all the necessary procedures for issuance of land use right certificates to mortgage, pledge also requires much time, effort and money silver. Therefore, in order to facilitate SMEs in accessing land and land use rights can be used as collateral or pledged loans from banks, the authorities should focus on solving some of the problems such as renewal procedures for land allocation, land lease certificates of land use rights, the administrative procedures related to land use towards reform of administrative procedures; establishing systems of land registration offices nationwide uniform; formation system planning, land use planning to ensure the stability, certainty, openness and transparency to meet the requirements of the land use, and help the state land management through the identification land use;

system construction land development, solve problems arising in clearance, compensation, resettlement and land compensation for the land area used for the wrong purposes, inefficient, wasting soil.

The cost of land leasing is expensive, which is difficult to access to clean land, complex procedures for compensating Land clearance, which SMEs spent must cost and are difficult to produce stable business. Beside transparent planning processes, land access procedures (general business) to study incentives enacted (the land use levies, land rents and investment credit support) to encourage businesses to invest in infrastructure construction zones, industrial clusters for SMEs.

Researching about the issue of guideline document specifying financial investment incentives in terms of land is to support SMEs with production facilities, business relocation pollutants from urban and residential areas; allow transfer of land use rights from land into production and trading of residential and commercial land for the purpose of selling and cover moving expenses.

+ Completing the tax system: Tax system in Vietnam has improved a lot in recent years to ensure fairness in the state budget obligations. However, some taxes are still many shortcomings, not synchronized. Especially the corporate income tax regulations still many eligible expenses of the business but not legal, corporate status purchase invoices are still affecting the determination of costs deductible from corporate income tax. As for the enterprises operating in the import, the current determination of good codes to be applied business income tax is more difficult, the inconsistencies between the application code every customs offices and businesses have spent a lot of time and money now.

+ Completing accounting system, financial Currently SMEs have a separate accounting regime applicable (Decree No. 48/2006 dated August 14^th, 2006).

However, over a period of application, the accounting regime have revealed a number of limitations need to continue to improve as: The provisions of the two accounting regimes (one for SMEs and other businesses create an overlap when applied criteria determined by the size of the business is not clear, uniform, and no constraints when selecting enterprise accounting system to apply; accounting regime applicable to SMEs slow to change in accordance with the development of economy as well as integration requirements should not meet the demand for useful information using various objects; accounting job accounting system this is

not simple and saves time as thinking of researchers, accountants editor mode and back it placed on accountants more pressure due to too much detail because of the lack of scientific study and practice of the accounting system and accounting system financial reporting is built with rigidity just does not satisfy the information needs of the users, both lack the continuity in implementation corporate accounting when there is a change in scale operations.

State departments and agencies at all levels need to recognize the huge role of SMEs to have drastically guidance in establishing the CGFs to support SMEs’s business sector access to bank credit capital sources.

The attention of the local authorities, departments, facilitate and enable the SMEs’

operations to develop and the CGFs expand its credit guarantee scale.

Refining the business environment of the business sector, is to create a equity business environment for among enterprises. Promoting innovation and improving the efficiency of public administration is the basic condition for the development of the business sector in general and SMEs in particular.

In addition, the economic situation in our country is currently in a very difficult situation, bad debts of the banking system is high; therefore, the backs tend to tighten credit, and thus the enterprises do not have capital for business activities leading to narrow production or mass bankruptcy. Therefore, although this is a difficult period for businesses and banks in general, but it is a golden opportunity for the CGFs can promote his role (the bridge between SMEs with banks). But

"one hand clapping is not a word", so the State should have stronger policies to support the CGFs during this period, namely:

+ Establish a special fund is to compensate somewhat losses during the operation of the CGFs, to encourage these CGFs come "strongly" over the issue of guarantee for SMEs. Note: The government should compensate the ratio of definite percentage (%), should not reimburse 100% to avoid moral risks.

+ Suggest certain criteria, and if any CGFs achieves the criteria, the CGFs will get some appropriate rewards based on proposed mechanisms, such as reducing taxes for 3 years, and the State will provide more money to increase basic capital of the CGFs...

5.3 RESEARCH LIMITATIONS AND SUGGESTIONS FOR FUTURE RESEARCHES

Research sample is extremely important for the quality of information in quantitative research. If the sample size is small, the reliability of the information is poor. Due to the number of SMEs in Vietnam is very large (According to results of the review of business by General Statistics Officer, from 01/01/2012, the number of businesses in the country were 541,103, excluding 92,710 businesses that cannot be verified, then the total number of the whole enterprise economy is 448 393. Of the total number of enterprises, SMEs account for about 97%). This study only surveyed 243 enterprises, so the reliability of information is not high.

Moreover, due to the limits on research conditions such as time and cost, this study only focuses on business units within Ho Chi Minh City. Therefore, this may not reflect the true state of needs for credit guarantee in other local. This is a direction for further research.

Research methodology implemented in this topic is convenience sampling method, with small sample size and uneven distribution between the groups. If you can get a larger number of samples and sampling methods combined with probabilistic sampling method in proportion, the research results will be deeper and more truthful.

For future researches, the number of SMEs accessing the CGFs in Ho Chi Minh City or in Vietnam can be increased, and the subject may extend toward determining needs for credit guarantee of SMEs in Vietnam, or one can apply quantitative model of performance of the CGFs in Vietnam for a more comprehensive research.

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APPENDIX

APPENDIX 1: QUESTIONNAIRE

Dear Sir/Madam,

I am performing a scientific research "The factors affecting needs for credit guarantee of SMEs in Ho Chi Minh City". I am looking forward to your opinion through the following questionnaire. For me, all your comments are useful, and I have no idea what is the correct opinion, and what opinion is wrong? All your answers are valuable to the study, and they are for use of the study only. I appreciate your sincere collaboration.

Answering the question by double click in the box  then tick  Click OK. With 1: Strongly Disagree; 2: Disagree; 3: Neutral; 4: Agree; 5: Strongly Agree

Your company needs are credit guarantee?

□

^Yes

□

^No

You can attend training credit guarantee funds held by the agency?

□

^Yes

□

^No

Please indicate your level of agreement by circling the appropriate level of signage as follows

• Strongly Disagree: Check 1.

• Strongly Agree: Check 5.

• The other level, check 2, 3, 4 respectively.

Strongly Disagree Disagree Neutral Agree Strongly Agree

1. The different enterprises operate in different sectors, the enterprises’ needs for credit guarantee are different

1 2 3 4 5

2. Agriculture, Forestry and Fisheries have the needs for credit guarantee to meet the demand for production capital for export product.

1 2 3 4 5

3. The construction industry needs for credit guarantee to meet the demand for capital for basic construction investment.

1 2 3 4 5

4. Trade and service sectors have needs for credit

guarantee to have a favorable working capital. 1 2 3 4 5

5. Industries have needs for credit guarantee to meet

the demand for capital for investment in new facilities. 1 2 3 4 5

6. Transport sector have needs for credit guarantee to

strengthen vehicles to meet customer needs. 1 2 3 4 5

7. The private enterprises usually have simple organizational structure, produce and trade of traditional goods and services, simple and small-scale operations than the other enterprises operating in different sectors should have higher capital needs.

1 2 3 4 5

8. The CGFs are positive to support significantly SMEs in accessing bank credit sources, which helps SMEs

1 2 3 4 5

reduce significantly business costs for small businesses.

9. The CGFs provide needs for credit guarantee

diversity for small scale enterprises. 1 2 3 4 5

10. The companies with smaller scale, shorter operating time having needs for the issuance of credit guarantee from the CGFs have to face with higher financing costs.

1 2 3 4 5

11. The enterprises can fully use its own capital without

bank loans during business production process. 1 2 3 4 5

12. The time now active in 5 years can finance their

business with their own capital to less demand for loans 1 2 3 4 5

13. The enterprises whose operating time is over 10 years can finance their business with their own capital, there is no needs for loans.

1 2 3 4 5

14. The newly established enterprises have needs for more loans than the enterprises that have long operating time

1 2 3 4 5

15. SMEs always have enough collateral or pledged for

bank loans. 1 2 3 4 5

16. The issuance of credit guarantee for SMEs without

collateral for bank loans is necessary for the current SMEs. 1 2 3 4 5

17. The CGFs issue the credit guarantee for SMEs to

solve the shortage of collateral of the SMEs. 1 2 3 4 5

18. The banks always focus on the scale of fixed assets

of the enterprises. 1 2 3 4 5

19. The private enterprises usually have practical needs for credit guarantee in expanding business production

在文檔中 THE FACTORS AFFECTING NEEDS FOR CREDIT GUARANTEE OF SMALL AND MEDIUM ENTERPRISES (SMES) IN HO CHI MINH CITY (頁 82-141)