The government is about to have a 2,000 billion VND investment fund for startups to borrow

Deputy Prime Minister Vuong Dinh Hue chaired a meeting with a number of ministries and branches to contribute ideas to the Government's Decree on the organization and operation of the Small and Medium Enterprise Development Fund.

To lend and finance small and medium-sized enterprises in creative startups, small and medium-sized enterprises participating in industry clusters and value chains, the Government has decided to establish a non-budgetary State financial fund to invest capital in startups.

The investment fund operates not for profit, established by the Prime Minister.

The Fund will also receive and manage loans, grants, aid, contributions, and trusts from organizations and individuals to support small and medium-sized enterprises.

The Government's investment fund is expected to have a capital of 2,000 billion VND. Illustrative photo.

According to the draft Decree being developed by the Ministry of Planning and Investment (MPI), the charter capital provided by the State budget for the fund is VND2,000 billion. The loan conditions are that small and medium-sized enterprises start up creatively, participate in industry clusters and value chains and have effective production and business plans.

Small and medium enterprises wishing to borrow must also ensure that their equity capital is at least 20% of the total investment capital of the project; have the ability to repay the loan and meet the regulations on loan guarantees as prescribed by law.

The fund's lending interest rate shall not exceed 80% of the lowest commercial lending interest rate, based on a comparison of lending interest rates of commercial banks with over 50% State-owned capital. Lending interest rates are divided into different levels, determined by loan term, field of operation or credit rating of the enterprise (if any).

At the meeting, Deputy Prime Minister Vuong Dinh Hue emphasized that the draft Decree must ensure the preservation and development of State capital. He agreed with the comments of the ministries, stipulating that the fund is under the Ministry of Planning and Investment, operating under the model of a single-member limited liability company with 100% of the charter capital held by the State.

The fund's organizational structure includes a management board and part-time members. However, the Deputy Prime Minister suggested that the Ministry of Planning and Investment invite economic experts and scientists with knowledge in many different fields to join the fund's management board, ensuring efficiency and professionalism in appraisal and decision-making for loans and funding.

Deputy Prime Minister Vuong Dinh Hue also agreed that the fund should apply the method of lending and direct funding, rather than entrusting loans to small and medium-sized enterprises through commercial banks.

In response to concerns from ministries and sectors about clarifying the authority and responsibility for lending decisions, especially in the field of innovation with many risks and capital losses, the Deputy Prime Minister requested the Ministry of Planning and Investment to continue to develop strict regulations on lending subjects, procedures, order, and authority of the fund management board, to increase transparency, and minimize risks when lending and financing.

Request the Ministry of Planning and Investment to complete the draft Decree and submit it to the Government for comments and promulgation by the end of the third quarter.