Lawmakers discussed the draft law at a group meeting on October 17. Small and medium-sized enterprises account for more than 95% of all businesses in the country and play an important role in employment, but their internal capacity remains limited.
They warned that poorly designed policy could turn incentives into subsidies and weaken companies’ motivation to grow.
Support cannot cover a company’s entire life cycle
Nguyen Huu Nghia, Vietnam’s State Auditor General, said government support is necessary, especially when new businesses enter the market. It must follow market principles and have clear time limits.
“The state cannot support a business throughout its entire life cycle,” he said. A program should specify when a company graduates from support and when the state stops providing assistance. Protecting a company from its establishment until it closes or leaves the market would effectively create a subsidy and weaken its incentive to grow independently.
Nghia proposed three principles: companies should develop through their own efforts, every form of support should have a fixed duration, and assistance should follow market rules.
The paradox of creating more jobs and losing support
Nguyen Huu Toan, deputy chairman of the Economic and Financial Committee, said the law should help companies grow and expand. He pointed to Article 4, which sets a limit of fewer than 300 employees alongside a revenue or capital condition.
“If a company creates 500 jobs while having the same revenue and capital, why should it lose access to support?” Toan asked.
He said handicraft and weaving businesses that provide jobs for hundreds of people deserve support. A 300-worker ceiling could discourage hiring for fear of losing incentives. Toan proposed removing the upper employee limit and using revenue and capital as the criteria.
Nguyen Danh Tu, a full-time member of the National Assembly’s Committee on Law and Justice, warned that the draft no longer requires the calculation to include workers who pay social insurance contributions. Without employment contracts and social insurance records, companies could report fewer than 300 workers by using uninsured temporary labor.
Tu also noted the instability of using only the previous year’s figures. A company could receive a multi-year benefit such as a five-year land-rent exemption, lose it after a small improvement, and regain it after a later decline. He proposed an assessment period or transition mechanism.
Incentives should be tied to practical results
Toan called for practical support tools. He cited a proposed corporate income tax exemption during the first three years after incorporation, but most small and medium-sized businesses operate at a loss or have not yet made a profit in their early years.
“The exemption should apply for three years from the time the company makes a profit and has taxable income,” Toan said.
In his view, a tax incentive becomes a useful source of reinvestment funds only after a company becomes profitable, helping it accumulate resources for growth.
Sources: Dân Trí
