Current Educational Research 3:5(2020)
Available online at www.educationalresearch.in
The Effects of Small and Medium Enterprises to Economic Growth,
the Case Study In HCMC, Vietnam
*
Van Pham Thanh, Nguyen Tat Thanh University
Thu Phan Thi, Southern Sub-Institute for Fisheries Economic and Planning
Vu Nguyen Lam,
Abstract:
This paper is the empirical evidence of the relationship of the small and medium enterprises (SME) and
economic growth with the case study in Ho Chi Minh City (HCMC) between 1995 and 2019. The research
results evaluated the important role of human capital at SMEs measured by variables including the amount
of labor per SME, the labor quality measured by the average years of schooling of labour and the proportion
of labour allocated by the level of education. This paper uses four methods such as Ordinary Least Squares
regression (OLS), ROBUST regression, Heteroskedastic linear regression (HLR) and RIDGE regression to
estimate the impacts to economic growth. The result shows that the human capital has a positive role to
influence growth than both the labour size and physical capital of SMEs.
Keywords: Small and Medium Enterprises, SME, Economic Growth, HCMC, Labour.
1. Introduction
SMEs play a role in labour settlement and are important to the domestic economy of developed countries
(Cravo, 2010). Besides, SMEs also contribute to the government‟s budget through tax payment. The SME
sector use majority of the domestic labour force, so Wennekers and Thurik (1999) consider this to become a
channel to fulfill the aspirations of individual entrepreneurship. According to some studies, the SMEs have a
positive influence on economic growth, typically as follows: Carree and Thurik (1998) believed that the
higher employment rate of SMEs led to the strong increasing of the production output of European countries
in the early 1990s; moreover, the researches of Keilbach (2004) and Mueller (2007) also showed that the
positive impacts of SMEs on economic growth in the other developed countries bases on the
entrepreneurship rate.
But there are also studies showing the negative impact of SMEs on economic growth rate. For example, the
study of Van Stel & et al. (2005) showed the negative effect of entrepreneurship rate of SMEs on economic
growth in developing countries. In addition, institutional factors and human resources are identified to be the
cause of this problem (Baumol, 1990; Dias and McDermott, 2006).
The small and medium enterprises have a very important position in the economy of each country, every
region, even the countries with high level of development. In the trend of integration and globalization
nowadays, many countries are paying the attention to support their SMEs to maximize of using resources
and support to encourage them to become large enterprises, increasing the competitiveness of products.
In recent years, the study on SMEs and economic growth is increasing attention. Due to its importance, this
field is also the target of international and national development agencies that provide supports for small and
medium enterprises, especially in developing countries. But the majority of researches about the influence of
SMEs to economic growth mainly abroad. And there are few and rather scarce experimental studies in
Vietnam.
While, in the period 2010-2017, in Vietnam the private sector contributes about 12.4% per year to the state
budget, equivalent to over 60% of gross domestic production (GDP). In which, small and medium
enterprises account for 98.1% of total available enterprises, contributing about 45% of GDP, 31% of budget
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Thu Phan Thi et al. / The Effects of Small and Medium Enterprises to Economic Growth, the Case Study In HCMC, Vietnam
and creating jobs for more than 5 million employees (Le Duy B nh, 2017). Of which, Ho Chi Minh City
(HCMC) has 202,004 small and medium enterprises, approximate 97.96% of whole city (GSO, 2019) and it
is the highest in the country which about 31.94% (Ministry of Planning and Investment, 2019). This
suggests that SMEs play a very important position not only in the country's economic growth but also with
HCMC.
Therefore, developed to provide empirical evidence on the impact of the SME sector on domestic economic
growth, with a case study in Ho Chi Minh City. Because this is the economic and financial center of
Vietnam. The purpose of this paper is to understand the impact of the following factors: (1) Quantity of
SMEs; (2) capital of SMEs; (3) average number of employees per enterprise; Factors related to the quality of
human resources, such as (4) the average of years of schooling of employees in SME, (5) the proportion of
labor in SME by educated level and (6) trade openness variables. By researching many aspects related to
SMEs, it is important to identify policies and related solutions to support SMEs' development, thereby
promoting economic growth.
2. Literatures review
2.1. The theory of economic growth
The origins of economic growth have been studied and published by many economists. There are many
different definitions of economic growth but we can generally define economic growth as follows:
According to the World Bank (1991) “economic growth is an increase in quantity of main critical that
characterize an economic state, first of all is the gross domestic product. Either economic growth is the
annual percentage increase in real GDP or real GDP per capita in the long run (Begg, 1991), or this increase
is expressed in scale and speed (Nguyen Dinh Cu , 2012). From the results of the development process of
economic theories tested in the world, the factors affecting economic growth are as follows:
Adam Smith (1776) said that the yield value relied heavily on the role of labor rather than wealth or money
(labor value theory). Supplementing and developing the above arguments, Marshall (1890) launched the
Neoclassical economic growth model marked by "The principles of Economics” in 1890. He confirmed the
role of technological advances. Not deny the role of Labour, but Marshall (1890) said that labor can be
replaced by capital. And he introduced two development perspectives: development by width (capital gains
per unit) and development in depth (increased capital efficiency). These theories continue to be perfected by
the model of Harrod – Domar with an emphasis on the role of capital in growth, or Barro with the theory of
human capital.
In many studies, capital factor is considered to be the most influential factor in economic growth. Smith
(1776) argues that the increase in accumulation and capital investment in production increase the labor
productivity of society. Meanwhile, creating new knowledge is really a factor that creates miraculous growth
for the economy Aghion and Howitt (1992). According to Lewis (1954), the source of economic growth is
the Effective using of redundant labor in the agricultural sector. Through a two-region model, labor factors
affect to industrial growth, economic growth models of Solow (1956), Kaldor (1961) showed that based on
the advancement of science and technology and high-quality human resources that will increase the
competitiveness of the economy.
Solow (1956) pointed out that if economic growth is only based on capital and labour which can lead to
short-term economic growth, consistent with the early stages of industrialization. Therefore, the total factor
productivity is really the platform to economic growth in the long-term. If Solow (1956) refers to simple
labor or raw labour affecting economic growth, the economists who follow the growth theory or endogenous
growth believes that labor will not enough to explain the long-term growth or difference in income per
capita among countries. In the study of Mankiw et al. (1992) has referred to qualified labor, skills and
experience, called human capital in Solow's growth model. If the human capital is a commodity that cannot
be substituted and excluded, the difference in growth among countries is due to human capital, effective
labour source including individual employees ' abilities, skills and knowledge.
According to Barro (1991) the difference in economic growth among countries is explained greatly by the
difference not only in terms of investment performance but also the difference in knowledge and human
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Thu Phan Thi et al. / The Effects of Small and Medium Enterprises to Economic Growth, the Case Study In HCMC, Vietnam
capital. The models of Lucas (1988), Romer (1990) and Becker and Associates (1990) also show that human
capital has an impact on economic growth. Or such as Barro (2001) also argues that human capital facilitates
the absorption of superior technologies and creates growth through stimulation of technological innovation.
In addition, education levels are proven to play an important role in stimulating both the absorption of
superior technologies and innovation, especially for small and medium enterprises, in oder to stimulate
economic growth (Griffith et al., 2004).
The influence of SMEs on economic growth
Acs (1992) determined that small enterprises play an important role in the economy by acting as an agent
that changes their business operations. It is also the source of significant innovation, promoting the
development of the industry and creating new jobs. Some other researchers have also argued that small and
medium enterprises are vital growth determinations that have been overlooked in the new classical growth
framework (Audretsch and Keilbach, 2004); Audretsch, 2007). Furthermore, Solow (2007) recognized
private business is an important force that promotes a combination of knowledge and the productivity of
aggregate factors. It can narrow the gap between specific parts of technological knowledge and innovation
through the creation of new companies. In addition, Willis (2011) also agreed that the establishment of small
businesses has an major role to promote the prosperity of the economy. Because, it helps to increase the
competition of emerging industries, which encourage economic growth and innovation in many sectors. The
establishment of many new businesses created a lot of jobs. The establishment of many SMEs have created
millions of jobs around the world (Kelley et al., 2011).
In recent years, many studies have shown that small businesses play a very important role in economic
development and operations. Starting a new business in the economy creates a driving force for the
development of the communal economy. festivals of many countries in the world (Verzat and Bachelet,
2006). Particularly in Vietnam, the role of small and medium-sized enterprises is increasingly recognized by
the society by making a significant contribution to the country's economy, with GDP accounting for about
45% of the country's GDP, annually collected. More than 90% of new workers are employed. Small
businesses are the backbone of the private sector, creating jobs and contributing taxes to the government and
improving infrastructure (Nguyen Anh Tuan, 2006).
In the context of developed countries, Audretsch and Thurik (2001) argue that a "developed economy" based
on small businesses has emerged due to telecommunications innovation, microprocessor revolution and
lifetime of low-cost but highly-skilled (mostly) competition in Eastern Europe and Asia. In developed
countries, small and medium-sized businesses can be a factor in generating economic growth based on new
technologies. For example, Audretsch and Keilbach (2004) and Mueller (2007) measured the reliability level
using start-up rates and found the positive impact of business capital on growth in Germany. Or, the research
of Dias and McDermott (2006) in addition to assessing modern economic growth depends not only on
human capital and institutions but also on the role of enterprises. As businesses grow, more production leads
to more human capital formation.
In the studies of SME's influence on economic growth, the level of education of labor in SME is very
important, which increases the process of promotion of technology and adoption of new initiatives, which
have a positive impact on growth (Nelson and Phelps, 1966). Or in the research about small and medium
enterprises affecting Brazilian economic growth, Túlio A. Cravo (2010) determined that average school year
of Labor have a positive effect on growth. However, the labor size of SME per total official workforce in
production, and the labor rate in SME allocation according to the level of education has a negative effect on
Brazil's economic growth in period 1980 – 2004.
Asola and Alani (2005) studied the impact of human resources on economic growth in Nigeria, based on
health and education factors: Adult literacy, life expectancy, source capital investment, labor growth, and the
dependent variable, the GDP growth rate of the period 1982 to 2005, indicated that only adult literacy had an
impact on economic growth. Or Hanushek and Woessmann (2012) studied with cognitive skills and years of
schooling to assess human resources for economic growth. The results show that only the average number of
years of schooling has an impact on economic growth.
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Thu Phan Thi et al. / The Effects of Small and Medium Enterprises to Economic Growth, the Case Study In HCMC, Vietnam
VCCI and USAID (2016a) assess that 97.6% of businesses operating in Vietnam are SMEs. These
businesses are constantly striving to contribute to economic growth. The evidence is that this enterprise
sector contributes 45% to GDP and nearly 50% to total annual budget revenue. In addition, the role of SMEs
in creating new jobs, social security and poverty reduction has always been recognized. VCCI and USAID
(2015, 2016b) also provide the characteristics of SMEs. Accordingly, the majority of Vietnam's SMEs have
come up from the model of business production and small individuals. The general education level of SME
owners is relatively high and comes from a variety of backgrounds. The report also noted that SMEs faced
many difficulties in reaching out to international markets and were still in the domestic market due to
limitations in equity, technology and human resources.
Or according to a study in Vietnam (Nguyen Ngoc Hung, 2016) shows that the labor growth factor has an
immediate and opposite effect on GDP growth. The reason that Vietnam has difficulties in solving the
problem. creating jobs when population growth is high while economic growth does not meet people's
employment needs. In contrast, the adult literacy factor has an immediate and positive effect on Vietnam's
GDP growth between 1990 and 2013. This has further confirmed knowledge enhancement for human
development and economic development.
Trade openness and economic growth
The studies of Adam Smith (1776) and David Ricardo (1817) confirm that trade opinion has a positive
impact on economic growth. Subsequently, there have been many empirical studies (Edwards, 1992; Frankel
and Romer, 1999; and Romain and Karen, 2001) prove similarly. The openness of the economy increases
imports and exports of goods and services and improves domestic technology. Therefore, the manufacturing
process can be more efficient and productivity be increased. Consequently, the growth of open economies is
faster than countries with closed economy.
2.2. Data and methodology
Bases on classical and neoclassical economic growth theory of, Smith (1776), Ricardo (1817), Solow (1956)
and Mankiw et al. (1992) and previous empirical studies mentioned above, in this paper to estimate the
impact of factors related to SME on HCMC's economic growth, the authors used the model (1) as follows:
Y = βo + β1lnSMER + β2lnShool + β3lnSMEH + β4lnK + β5OPEN
(1)
Inside:
βo: original coefficient
β1....5: Estimated coefficient of the independent variables
Each country will have its own definitions and criteria to classify SMEs in accordance with economic
conditions and operating environment. In Vietnam, SMEs are regulated by the government in Decree No.
39/2018 / ND-CP signed by the Prime Minister on March 11, 2018, detailing articles of the law on
supporting small and medium enterpries. Accordingly, SMEs are classified by size including micro
enterprises, small enterprises, medium enterprises, and the labour source of SME is lower than 200
employees. The data used in this paper is provided by the General Statistics of Vietnam about economic
growth and data related to SME of HCMC in 25 years from 1995-2019, built as follows:
-
Y: The natural logarithm of annual GDP of HCMC.
-
LnSMER: The amount of SME employees, measured by the natural logarithm of average number of
employees per SME (labour size <200 employees).
-
LnSMEH: The natural logarithms of ratio of employees working in SMEs classify by technical and
professional qualifications. The formula for SMEH is as follows:
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Thu Phan Thi et al. / The Effects of Small and Medium Enterprises to Economic Growth, the Case Study In HCMC, Vietnam
-
In which, Ei is the number of employees of SMEs classified by each type of education level; Si is the
classification score for each level of education (specifically: 1 = Untrained; 2 = Elementary level; 3 =
Intermediate level; 4 = College level; 5 = University level; 6 = Postgraduate) E is the total number of
employees of SMEs. SMEH is calculated using natural logarithms.
-
LnK: Capital of small and medium enterprises, calculated by natural logarithms of K.
-
School: The average years of schooling of employees in SMEs.
-
Open: International trade openness, measured by the natural logarithm of the total value of exports and
imports of HCMC.
-
The data is processed by Excel software and analyzed by four regression methods including Ordinary
least squares (OLS), regression ROBUST; Heteroskedastic linear regression (HLR) and RIDGE
regression by Stata Version16 and R software.
3. Results and Discussion
3.1. Situation of SMEs in Ho Chi Minh City
3.1.1. Economic role of Ho Chi Minh City
Ho Chi Minh City (HCMC) is located in the Southeastern main economic region with an area of 2,095,230
km2 and a population of 8,993,082 people, accounting for 0.6% of the area and 9.35% of the population
nationwide. HCMC plays a leading role in the region's socio-economic development strategy, and for the
whole country. That is an economic, financial, commercial, service, cultural, and tourism hub and the largest
center of country on education, science and technology. The economy of HCMC always reaches a high
growth rate, in the period of 1995-2019 an average of 15.48% per year. It is the locality with the largest
contribution, accounting for 23.9% of the country's GDP, ranking the first among 64 provinces and cities.
By 2019, the total import-export turnover of the country reached 517.26 billion USD. Of which, export
value is 264.19 billion USD and import value is 253.07 billion USD (General Department of Vietnam
Customs, 2020). Particularly in HCMC, the total import-export turnover of the enterprise sector reached
93,555 billion USD (accounting for 18.09% of the whole country), with an increasing trend every year. In
particularly, the export value reached 42,157 billion USD (accounting for 15.96% of the country). The main
export items include computers, products and electronic components; garments, footwear; agro-forestryfishery products. The import value reached US $ 51,398 billion (accounting for 20.31% of the whole
country). The main import items are computers, products and electronic components; Machinery,
equipment, tools and spare parts; cloth (HCMC Statistical Office, 2019).
3.1.2 Stature of small and medium enterprises in Ho Chi Minh City
Currently, the enterprise sector has the largest contribution to the development scale of the economy,
accounting for over 70% of the city's Gross regional domestic product(HCMC Statistical Office, 2019b). In
recent years, SMEs have increased in number and accounted for a high proportion of the total number of
existing businesses. The number of SMEs of HCM is the highest in the country, with 228,267/714,755
enterprises (accounted for 31.94 ), by 1.59 times the number of SMEs in Hanoi and higher than other mail
economic areas such as
ng Nai, B nh D ng, B
a–
ng T u (Ministry of lanning and Investment,
2019). The rate of SMEs always reaches over 90% of the total number of available enterprises in the city.
Specifically, the number of SMEs is growing strongly, increasing from 2,649 enterprises (in 1995) to
202,004/206,203 enterprises (in 2017), equivalent to 97.96% of the total enterprises in the city; and
203,901/228,267 enterprises, equivalent to 89.93% in 2019 (HCMC Statistical Office, 2019b).
3.2. Result discussion
Table 1: Statistical results describing the variables 1995 - 2019
Variable
GDP
gGDP
Obs.
25
25
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Mean
442,732
0.166
Std. Dev.
427,992
0.061
Min
36,975
0.083
Max
1,349,890
0.304
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Thu Phan Thi et al. / The Effects of Small and Medium Enterprises to Economic Growth, the Case Study In HCMC, Vietnam
SME
Labor
School
Capital
XM
25
25
25
25
25
73,119
1,194,549
7.204
1,636,942
157,322
69,887
519,318
1.311
2,080,948
164,745
2,612
354,724
4.830
43,352
5,505
203,901
1,865,206
8.900
8,192,435
533,425
Source: Calculated from the data
In the period of 1995 - 2019, the indicators in Table 1 are shown as follows:

The average economic growth rate (gGDP) is 16.6% per year, of which the highest is 30.4% in 2008
and the lowest is 8.3% in 2019;

Because it is a local in which convergence of commerce and services; industrial production and
education, Ho Chi Minh City attracts a large number of workers. The city's average number of SMEs
are about 73,119 units each year, the highest is 203,901 enterprises in 2019, accounting for nearly 90%
of the whole city. Therefore, the average number of SME employees also accounts for a large
proportion of the total working labor of HCMC is 35.1%, an average of 1,194,549 people.

The average number of years going to school of workers at SME is 7.2 years (Table 1). The average
percentage of employees in SMEs at each educational level is calculated as follows: untrained rate:
84.3%; primary level: 4.8%; intermediate level: 3.4%; college degree: 1.9%; University: 4.7%; and
postgraduate: 0.8%. Over the past 25 years, the proportion of trained workers in SMEs in HCMC has
improved and tends to be trained at all levels from elementary to tertiary level increasing year by year
(GSO, 2019).
Table 2: The result of estimate regression models
Variable
(1)
LnSMEH
LnSMER
LnSME
LnK
School
Open
_cons
OLS
(2)
2.2688*
0.0060
-0.9886**
0.0030
-0.5214*
0.0960
0.1872**
0.0220
0.2917
0.2270
0.1165
0.1860
13.2910***
0.0010
ROBUST
(3)
2.33147**
0.028
-1.0052**
0.043
-0.542
0.2000
0.19176**
0.023
0.31849
0.328
0.09417
0.423
13.4977**
0.013
HLR
(4)
2.94648***
0.0000
-0.8795***
0.0000
-0.7535***
0.0000
0.25298***
0.0040
0.54417***
0.0000
0.08281*
0.0750
12.3383***
0.0000
RIDGE
(5)
3.0375***
0.0005
-0.2725***
0.0000
0.0699***
0.0000
0.1533**
0.0218
0.0925***
0.0007
0.1562**
0.0212
6.0837***
0.0009
Noted: * p< 0.1; ** p< 0.05; *** p<0.01
The results of the characteristics related to SMEs are shown in Table 2. In particular, the authors use four
regression methods including OLS (shown in column 2), ROBUST (column 3), HLR regression (column 4)
and regression RIDGE (column 5) to assess the impact of SMEs on economic growth of HCMC.
Specifically, in Table 2 as follows:
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
Regarding the factor of LnSMEH, shown in the first two rows of Table 2. Regression coefficients of
LnSMEH are positive and significant impact on growth in all models, those are 2.2688 (OLS); 2.33147
(ROBUST); 2.94648 (HLR) and 3.0375 (RIDGE).

The results for quantity of labour (LnSMER) are showed in lines 3 to 4. The LnSMER regression
coefficients are negative and significant in all models including -0,9886 (OLS); -1.0052 (ROBUST); 0.8795 (HLR) and -0.2725 (RIDGE). The result of four estimators support the idea that the labour size
of the SME sector is not positively related with economy growth of HCMC.

The estimate result of quantity of SME with LnSME are showed in lines 5 and 6. The regression
coefficients of LnSMER are negative in the first three models -0.5214 (OLS), -0.542 (ROBUST), 0.7535 (HLR), of which, only are there significant effect in OLS and HLR models only. But there is
positive and significant coefficient in RIDGE model with 0.0699.

Regarding the capital elements of the SMEs (LNK), the regression coefficients of all models are
positive, respectively, 0.1872 (OLS); 0.19176 (ROBUST); 0.25298 (HLR) and 0.1533 (RIDGE). All
estimated coefficients have a significant positive effect on economic growth.

Regarding the year of schooling of labour variable (School), there are significant positive impact in two
models only, including -0.54417 (HLR) and 0.0925 (RIDGE).

Finally, the International trade openness factor (Open) only has a significant effect on economic growth
in the two models: 0.08281 (HLR) and 0.1562 (RIDGE).
Generally, result of the RIDGE regression model is the most reliable because this is non-linear regression
and fixes multiline phenomena in data. For that reason, finally, we choose the RIDGE model to determine
the impacts of SME on economic growth. Thus, the RIDGE regression results show that, in six research
elements, the LnSMEH factor has the strongest impact on HCMC's economic growth, an increase of 1%
quality of labour will increase the GDP 3.03%. Secondly, the average number of employees per enterprise
(LnSMER), an increase of 1% quantity of labour per enterprise will decrease the GDP 0.27%; Thirdly, the
trade open rate (OPEN) increase 1% will increase the growth 0,156%; Fourthly, an increase of 1% of
enterprise capital (LnK) will increase the growth 0,153%; Fifthly, an increase of 1% of ratio of educated
labour per total SME‟s employees (School) will increase the GDP 0.092%; Lastly, an increase of 1% of
average labour per SME (LnSME) will increase the GDP 0.07%. So, all of variables have a statistically
significant positive impact, except for the variables LnSMER. This proves that the factors relating to the
quality of SME become quite important to promote the economic growth of HCMC, especially the rising
rate of training and technical expertise, the more the decision on economic growth. The estimate coefficient
of the LnSMER has a negative effect, which clearly indicates that the scaling of labor in SMEs has reduced
labor productivity, it leads to the negative impact on the growth of the economy. This is also quite true in
fact, because of most the employees of SME who have untrained levels are too high to 84.3% (GSO, 2019).
Therefore, the economic growth based on the scale of cheap labor is no longer effective.
4. Conclusion and recommendation
The above analysis shows that HCMC is the leading economy of Vietnam with the contribution of 23.9% of
the country's GDP; contributing 18.09% of total import-export turnover. The enterprise sector is
approximately 228,267 enterprises, is identified as having the largest contribution to the size of the city
economy, accounting for over 70% of GDP (Ministry of Planning and Investment, 2019). While the number
of SMEs accounted for 89.93% of total companies in 2019 (HCMC Statistical Office, 2019b). Thus, we can
see the important role of SMEs in HCMC's growth in the period 1995-2019.
This Paper shows that the factors relating to the quality of labor are far more important and
decisive contribution to the HCMC‟s economic growth. Even more, the results of the study show that the
role of human capital, especially high-knowledge workers even more prevail than the physical capital.
However, the SME of HCMC is still limited in the reception and implementation of new technologies. But
the untrained workforce is still too high. In the long term, with a growing tendency to rely more on
knowledge, the economic development based on low-quality labor will no longer be effective. Meanwhile,
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HCMC's SMEs would be difficult to compete with the country's enterprises without proper investment in
high-quality human resources. Therefore, the workforce must be trained to become skilled workers, then to
the workforce with the education level at the college level, the university upwards. Hence, not only the
SME-employers but even the HCMC government should also be responsible for providing training facilities
and programs to support vocational training for labor. These educational solutions are important as indirect
means to promote the growth of the economy of HCMC.
Following innovation, business belief is also considered a strong motivation with the decision decisions on
capital accumulation and investment. The accumulation of capital is also seen to be as quite important so
that SMEs are driven to R&D to find and create motivation to help businesses development and economic
growth. In recent years, the Government of Vietnam has been more concerned with the development of
private enterprise sector, such as the issuance of Decree No. 56/2009/ND-CP on supporting the development
of small and medium enterprises or Decree No. 58/2013/QD-TTg of the Prime Minister issued the
regulations on Establishment, organization and operation of Credit guarantee Fund for small and medium
enterprises. Through the above decrees, the Government line ministries have endeavored to solve capital
difficulties of SME, which is specific in policies, and law.
On the one hand, the above viewpoint shows the state's interest in the need to access capital for business
development. However, Le Duy Binh (2017) said that Vietnam's SME met many barriers in the process of
becoming a large enterprise. HCMC's SME accounts for quite a large number. On the other hand, VCCI
(2016b) also reviews that the scale of small capital does not help SMEs to take advantage of the scale,
exploit new technologies, and improve competitiveness, connecting to the global value chain. Especially in
the year 2020 when the SAR-COVID-19 epidemic occurred, the forecast of the likelihood of the bankruptcy
of the SME was enormous. Therefore, the government needs to adjust and regulate policies related to
supporting SMEs. And the HCMC government also needs to take direct support for SMEs to overcome
difficulties consistent with the current situation to contribute to the city's economic growth.
In short, in order to change the model of economic growth based on SMEs, it is necessary to rely on the
fundamental technical labour, capital and science-technology platform; continuing to reform institutional,
education and policy, budget allocation mechanisms for human development and technology science.
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