A research study submitted in partial fulfillment of the requirement for the degree of Master of Administration, School of Management

Research studies project report (M.B.A) - Asian Institute of Technology, 1999

Vietnam's economy had achieved many successes since it turned from a central planning mechanism to a free market economy. The successes had been easily recorgnized as the high growth rate of gross domestic product (GDP), increased export and import, soaring foreign direct investment FDI, a controllable inflation rate, improved living standards of its people, and the like. However, recently, the economy has started to slow down. Many problems make the government head ache such as the growth rate of GDP is declining, unemployment is increasing, income gap and imbalance become bigger and bigger between rural and urban areas, the FDI is declining, or export and import grow at negative rate. These issues imply that it is time for the government to have another deeper reform to boost its economy for the sustainable development. From that point of view, promotion and development of small and medium enterprises (SMEs) could be one of the promising solutions to solve the problems. However, this has not yet been realised by the government. That is why the SMEs' position is still weak in the national economy. They receive little support from the government. This led they are meeting a lot of troubles in their businesses. Of these troubles, financing issue is the most important and obvious one to development of the SMEs at present. Therefor, this research study will try to look at the issue in the hope of making some proposed solutions to improve the situation. With that common objective the research will cover some sub-objectives as follows. At first, it will introduce overall overview about the economy to help us understand the situation of the economy and the need for the promotion of SMEs in Vietnam. Then the research will review the position of SMEs in the economy, as well as the importance of external finance to them. At the same time, it examines sources of funds for the SMEs in general. After that the research study will identify difficulties in the SMEs' financing in Vietnam. Also, it will identify the existing sources of funds for the SMEs in the economy. Next, it will find out the reasons for the difficulty in different points of view. When the reasons have been found, recommendations will be suggested to improve the situation.