The Ministry of Finance (MoF) in Vietnam is advocating for new measures that will allow small and medium-sized enterprises (SMEs) to utilize digital assets as collateral for bank loans. This initiative aims to enhance access to capital for SMEs and technology startups, which have been struggling amidst existing financing challenges.
Proposed Changes to Loan Collateral Regulations
The initiative is part of a draft for a revised Law on Support for SMEs, currently open for public consultation. The MoF’s plan seeks to broaden the range of permissible collateral beyond traditional assets like real estate.
New Forms of Collateral
- Digital assets
- Virtual assets
- Intellectual property rights
- Intangible assets
This innovative framework will enable SMEs to secure loans against future assets and various legal property rights, aligning with Vietnamese law. The government intends to unlock resources for the private economic sector, following the guidance of the Politburo’s Resolution 68-NQ/TW, which recognizes the private sector’s critical role in the national economy.
Current State of SME Financing
Despite being the backbone of the economy, SMEs face significant hurdles in accessing bank credit. As reported, they represent more than 98% of all enterprises in Vietnam. However, their share of outstanding loans is only about 20% of the total banking sector credit.
Challenges Faced by SMEs
The MoF has identified several key obstacles:
- Lack of eligible collateral
- Limited financial transparency
- Small capital scale
- Weak risk resilience
Many startups possess valuable technology or intellectual property but lack tangible assets typically required by banks.
Incentives for Sustainable Development
The draft law also includes incentives for businesses focused on sustainability and innovation. SMEs engaged in eco-friendly projects could benefit from:
- Preferential access to credit guarantees
- Concessional financing
- Interest-rate support for green initiatives
Additional incentives include tax breaks for environmental initiatives and mechanisms to accelerate asset depreciation for projects promoting energy efficiency. Furthermore, enterprises may receive support for consultancy and compliance with environmental, social, and governance (ESG) standards.
Efficiency of Existing Support Mechanisms
While the MoF noted that existing programs such as credit guarantee funds and the SME Development Fund exist, their efficacy has been suboptimal. The proposed changes are aimed at bridging the gap between SMEs and necessary financial resources, ensuring a more vibrant economic landscape for innovative and sustainable businesses in Vietnam.
