Overall Partner:

Ministry of Planning and Investment (MPI)

Implementation Partners:

Agency for SME Development (ASMED) under MPI

Vietnamese Chamber of Commerce and Industry (VCCI)

Vietnamese Academy of Science and Technology-Institute of Materials Science (VAST-IMS)

People’s Committees of the selected pilot provinces

Location:

Hanoi, An Giang, Dak Lak, Hung Yen, Quang Nam, HCM City

Commitment:

€ 8.3 million

Commencement:

May 2005

Vietnam's development strategy aims to achieve an effective economic growth. Its success depends to a large degree on the development of the private sector, which consists mainly of SMEs. Since around 2000, the reform of the private sector has accelerated markedly and initiated a rapid growth of private small and medium enterprises. However, Vietnam's integration into the world market and particularly the country's scheduled entry into the WTO in 2005, requires to further accelerate the reform process. This includes extensive adjustments of the legal and institutional framework and a consistent strengthening of the competitiveness of the still new private industrial sector.

A major problem is that the Vietnamese private sector, and small and medium enterprises in particular, is not yet sufficiently competitive. As a result, most companies cannot yet withstand the competitive pressure resulting from liberalization and the opening to the world market. Major problems continue to exist in relation to inconsistencies in the legal framework for SME, as well as in the implementation and enforcement of policies and laws, in particular at the provincial level. The competitiveness of many Vietnamese products is still low, also due to limited availability of specialized services assisting companies to meet the requirements of international markets.

Objective/Target Group

The overall objective of the SME Promotion Programme is to improve the competitiveness of private small and medium enterprises in Vietnam. It aims at creating an enabling environment for SME development, and at improving the relevant framework conditions for SME development at the national and local level. It pursues this aim through 4 closely integrated components: SME policy and investment climate, local economic development, competitiveness of selected sectors, and material testing and other specialized technical services. In order to achieve tangible and measurable impacts, the Programme focuses on 4 pilot provinces as well as on selected agro-industrial value chains, and aims at supporting the consistent implementation of reforms at the provincial level.

The Programme cooperates with a wide range of partner organizations on the Vietnamese side, beyond the partners mentioned above, with some of the key agents in policy reform, such as the CIEM, the Prime Minister Research Commission and the Ministry of Justice, as well as a broad array of public and private organizations and service providers.

Other instruments of German Development Cooperation provide essential contributions to the Programme, in particular with respect to the provision of qualified human resources and training opportunities. The Programme also integrates development partnerships with the international business community (through PPP). A close coordination is maintained with the international donor community and the government-donor coordination mechanisms.

Implementation

Component 1 - SME Policy/Enabling Environment focuses on supporting key reform actors in creating an enabling business and investment climate. To this end, it improves mechanisms for the preparation of laws and other legal documents (e.g. by better assessing the likely impact of legal reforms), strengthening the dialogue between the stakeholders of the public and private sector, and supporting a consistent implementation of reforms.

This will lead to better preparation and implementation of selected policies and laws for the private sector, and thus to an improved legal framework for SME at the provincial and national level.

Component 2 - Local Economic Development aims at supporting the implementation of reforms and an effective improvement of the investment conditions at provincial level. It will advise on the consistent implementation of the legal framework (e.g. in the rolling out of the Unified Enterprise Law), strengthening the dialogue between local Governments and the private sector, creating mechanisms for investment promotion and business start-up, and supporting the development of institutional and personnel capacities at the provincial level.

This leads to an improved investment climate at provincial level, i.e. more efficient and business-friendly administrative procedures, and improved promotional programmes and services for SME. Ultimately, the effect will be higher investment and more competitive companies, and thus economic growth and employment.

Component 3 - Competitiveness of selected Sub-sectors/Value Chains focuses on the agro-industrial sub-sector, specifically the fruits and vegetables value chain, as well as agro-industrial value chains/clusters identified in the pilot provinces. Its aim is to improve the institutional and policy framework for these sectors, to strengthen specialized sector-specific business development services, and to build linkages between local companies and the national and international market.

This will lead to improved institutional capacity and cooperation linkages in the sub-sector, better market access, and as a result to an increase in the value added created locally, to higher industrial output and exports, and thus higher income.

Component 4 - Material Testing and advanced Technical Services advises on the development of new services, resp. the adaptation of existing services to the requirements of SME. The main focus is on developing new and complex services in the area of material testing (e.g. failure and lifetime analysis and preventive maintenance). It will also build up new services in quality and environmental management and social standards, in particular based on the demand of the agro-industrial value chains and the provinces supported under the Programme.

This will lead to an improved institutional capacity and a services network of providers, and thus an improved offer of specialized services. Enterprises, which have better access to demand-oriented and specialized services, will be better prepared to meet international technical and management standards and will improve their access to international markets.

1. Business Environment; 2. Local Economic Development;3. Value Chain Development;4. Material Testing for SMEs;5. Programme Documents;6. Photo Gallery


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