DECREE 80 ON SUPPORT FOR SMALL AND MEDIUM-SIZED ENTERPRISES

LEGAL UPDATE

On 26 August 2021, the Government promulgated Decree 80/2021/ND-CP (Decree 80), guiding and detailing some provisions of the Law on Support for Small and Medium-Sized Enterprises (Law on SME). Decree 80 entered into force on 15 October 2021. It replaces Decree 39/2018/ND-CP (Decree 39).

In general, the support levels for small and medium-sized enterprises (SMEs) have significantly increased under Decree 80. The Government is encouraging the development of SMEs through more favourable policies.

In this update, we would like to set out some of the notable changes for your information.

1. Support Principles

Decree 80 stipulates the order of how SMEs qualify for support based on the following principles:

• First come, first served; and

• Woman-owned SMEs[1], SMEs with a high percentage of female employees[2] and social SMEs[3].

Accordingly, SMEs shall be supported in order of the time of submission of the application dossiers for support. If the application dossiers are submitted at the same time, woman-owned SMEs, SMEs with a high percentage of female employees and social SMEs shall be prioritised. In comparison to Decree 39, social SMEs have been added to the subjects of priority for support.

Furthermore, Decree 80 states that if an SME satisfies conditions for different levels of support specified in Decree 80 or other regulations of the relevant law, the SME may choose the most favourable one. Moreover, SMEs that satisfy the support conditions can qualify for the general support for SMEs as well as the specific support corresponding to their scale (i.e. micro-enterprises, small enterprises or medium enterprises).

2. Determination of SMEs’ Business Sectors

Similar to Decree 39, SMEs are classified by size based on the number of employees participating in the social insurance scheme, total revenue or total capital value in registered business sectors. However, one of the differences between Decree 80 and Decree 39 are the criteria to determine the business sectors of SMEs. If an SME engages in many business sectors, the business sector with the highest revenue or the highest number of employees will be decisive under Decree 39. In contrast, based on Decree 80, the business sector of an SME will be determined based on the main business line registered with the business registration authorities. It seems now easier to determine the business sectors of an SME.

3. Technology

Technology support is a noteworthy new policy of Decree 80 which was not covered in Decree 39.

SMEs can be supported up to

• 50% of the value of a digital transformation consulting contract, but not exceeding the following amounts per contract per annum:

  - VND50 million for a small enterprise; and

  - VND100 million for a medium enterprise;

• 50% of the cost of leasing or buying digital solutions for automation or improvement of the business efficiency, but not exceeding the following amounts per annum:

  - VND20 million for a micro-enterprise;

  - VND50 million for a small enterprise; and

  - VND100 million for a medium enterprise;

• 50% of the value of the consulting contract for the establishment of intellectual property (IP) rights, management and development of products and services with protected IP rights, but not exceeding VND100 million  per contract per annum for an SME; and

• 50% of the contract value for technology transfer, but not exceeding VND100 million per contract per annum for an SME.

4. Consulting

Compared to Decree 39, Decree 80 describes in detail the scope of consulting services provided by a consultant network.[4] These services include human resources, finance, production, sales, markets, internal management and other services related to the business operation of an SME (except administrative procedures and legal consultancy).

Under Decree 80, the level of support for SMEs has significantly increased with respect to the percentage as well as the amount.

Micro-enterprises can be supported for 100% of the contract value for the following maximum amounts per contract per enterprise on an annual basis: VND50 million or VND70 million for a woman-owned micro-enterprise, a micro-enterprise with a high percentage of female employees, or a social micro-enterprise. The maximum amount under Decree 39 was up to VND3 million annually per micro-enterprise. 

Small enterprises can be supported up to 50% of the contract value with the following maximum annual amounts per enterprise: VND100 million or VND150 million for a woman-owned small enterprise, a small enterprise with a high percentage of female employees, or a small social enterprise. The maximum support rate and the amount under Decree 39 were up to 30%, with a maximum of VND5 million annually per small enterprise. 

Medium enterprises can be supported up to 30% of the contract value with the following maximum annual amounts per enterprise: VND150 million or VND200 million for a woman-owned medium enterprise, a medium enterprise with a high percentage of female employees, or a medium social enterprise. The maximum support rate and the amount under Decree 39 were 10% and VND10 million annually per medium enterprise. 

5. Human Resources Development

In addition to the increase of the support level for offline training, Decree 80 supplements online training for startups and business administration into the support policy for human resources development in SMEs. SMEs can freely access and join lectures on the online training systems of the Ministry of Planning and Investment, the provincial People’s Committees as well as online training courses, or have direct interaction with other SMEs via existing teaching tools on smart devices such as. Zoom, Microsoft Teams, Google Classroom. An online State’s training channel where SMEs could access, learn and collect information did not exist before. The fact that such a learning channel has been added shows that the Government of Vietnam is going digital and pays more attention to training human resources. However, it is not yet clear how this digital channel will run in practice. Further clarification would need to be provided in guiding documents.

6. Interest Rate

Another noteworthy point of Decree 80 is the support policy on interest rates for innovative startup SMEs and SMEs participating in industry clusters and value chains. The determination of an industry cluster or a value chain and the selection of its participating SMEs that qualify for support shall be based on the criteria stipulated in Decree 80. These SMEs will be supported by the State budget with subsidised interest rates when obtaining medium and long-term loans from credit institutions to carry out their production and business plans. The interest rate difference paid from the State budget for loans granted by credit institutions will be maximum 2% per year.

For more information, please contact:

Mark Oakley / Managing Partner

mark.oakley@acsvlegal.com

Phuong Huynh / Senior Associate

phuong.huynh@acsvlegal.com

Phuong Nguyen / Junior Associate

phuong.nguyen@acsvlegal.com

[1]  A woman-owned SME means an SME with 51% or more of the charter capital is owned by one or more women, and at least one holds a managerial position in the SME.

[2]  An SME with a high percentage of female employees means an SME that has at least 50% of the total employees being female if it has fewer than 100 employees, or at least 30% of the total employees being female if it has at least 100 employees.

[3] A social SME means an SME satisfying the following criteria: (a) it is registered in accordance with the Law on Enterprises; (b) its operational objective is to resolve social or environmental issues in the interests of the community, and (c) it uses at least 51% of its total annual after-tax profit to conduct re-investment for the purpose of implementing the registered objectives.

[4] A consultant network means a collection of counselling organisations and individuals who are specialised in various fields that are appropriate for the needs of SMEs, and are recognised by relevant Ministries and ministerial agencies on the basis of satisfying published criteria.

© 2021 ACS Legal Vietnam Company Limited – All rights reserved

This legal update is not an advice and should not be treated as such.

Download pdf: Decree 80 on Support for Small and Medium-Sized Enterprises

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