Strategy for An Enabling Environment for SME & Private Sector Development

GTZ Vietnam

Strategy for An Enabling Environment for SME & Private Sector Development

GTZ Vietnam

Le Duy BinhThe SEPneT-Workshop

Haikou, China - Nov. 2004

Private Sector in Viet Nam – Important Milestones

1986: First step of 1986: First step of DoiDoi MoiMoi (Reform): (Reform): household economy/ cooperative reformhousehold economy/ cooperative reform1990: private enterprise and company laws1990: private enterprise and company laws1992: revision of the Constitution to 1992: revision of the Constitution to recognize the private sectorrecognize the private sector2000: Enterprise Law2000: Enterprise Law2001 (Apr.): Socio2001 (Apr.): Socio--economic economic DevDev’’tt StrategyStrategy2001 (Nov): further revision of Constitution2001 (Nov): further revision of Constitution2002 (March): Resolution of the CPV2002 (March): Resolution of the CPV2002 (May): Comprehensive Poverty 2002 (May): Comprehensive Poverty Reduction and Growth Strategy (CPRGS)Reduction and Growth Strategy (CPRGS)2003: Land Law, Decree on Associations2003: Land Law, Decree on Associations2004: Bankruptcy Law, Competition Law2004: Bankruptcy Law, Competition LawTo come: Common Investment Law; Unified To come: Common Investment Law; Unified Enterprise Law Enterprise Law

2.5 mil. HH businesses

>130.000 private enterprises

Created approx. 2 mio. new jobs

20

04

0.85 mil. HH Businesses

100 registered private

enterprises

19

90

Gov’t SME Decree in Nov 2001

‘86

‘96

‘91

‘01

‘03

started its supports to SMEs and PS dev’t in Vietnam

right from early days of reform

Consistency b/w Vietnam’s Dev’t Strategy and German Dev’t Cooperation Strategy

Social Economic Dev’t Strategy2001 – 2010(April 2001)

Comprehensive Poverty Reduction & Growth Strategy (CPRGS) May 2002

Economic Reform & Development of the Market Economy (WIRAM)

Objective: Social Progress Oriented Economic Growth & Poverty Reduction through Strengthening a Socialist Oriented Market Economy:

Concrete Objectives:• Economic growth, particularly in remote areas• Economic restructuring: reforms in the field of

SOE, budget mgm’t, trade liberalization, banking• Enabling business env’t, SME dev’t• Human resource dev’t• Administrative Reform• Development of different markets (services,

property, financial, etc..) & market institutions

Objective: Living conditions are improved and sufficient employment and income opportunities for the people are created through socially oriented and sustainableeconomic development.

3 Pillars:• Economic reform: consistent regulatory &

policy framework for a social market economy• SME Promotion and financial sector dev’t• Vocational training

Our Overall Objective: Improvement in Competitiveness of Private SMEs in Vietnam

SME Policy/Enabling Environment

for Business

LED/ Outreach to theProvincial

Level

Specific BusinessDevelopment

Services & Value ChainDev’t Enhancing market orientation and

sustainability of business services built up under the project

Creating the momentum for an approach of Local Economic Development

Building relations with key stakeholders (policy makers, donors, business community)

Building cooperation relations with the international business community (PPP)

OUR APPROACH IN

Our 5 Pillars in the Strategy for an Enabling Biz Env’t

Direct Policy Advices

Direct Advicesto the making

of the laws (through

short & longterm experts)

e.g. Enterprise Law, Investment

Law,SME Action Plan, etc…

Strengtheningof Business

Law Making Capacity

Introduction of RIA

Exposing lawmakers to int’l

best practices &norms

Training of lawMakers

Institutional Capacity

Strengthening

Strengthening Public

Consultation in Biz Laws

Improvement of consultation

methods

StrengtheningPolicy advocacy

role ofBMOs & VCCI,

Innovative Consultation

methods (e.g.

Internet-based)

Support to Implementation

of Biz Laws/ SME Progm.

Policy Dialogue

Cooperation with mass media

Support to Implemention of Gov’t’s SME &PS programs

Focus on ProvincialBiz Env’t

Make EnablingBiz Env’t

an integralpart of LED effort

Support to lawimplementation

in provinces

Provincial PS Action Plan

Objective: An Improved Business Environment for Private SMEs

A Strong Strategic Partner Network Ensures a Higher Chance of Success

We are Creating a Strong Partner Networks (Gov’t

Think-Thank, Advisory Board, Business Association, Local Authorities, other Donors…)

Business Associations

ProvincialAuthorities

Mass MediaOther DonorsProjects

Focus: Market and Policy ResearchAwareness Creation

The Legal Environment For

BUSINESS DEVELOPMENT BUSINESS DEVELOPMENT BUSINESS DEVELOPMENT SERVICES IN VIETNAMSERVICES IN VIETNAMSERVICES IN VIETNAM

With Focus On Intellectual Property, Accounting &

Auditing, and Training Services

Approach of the studyApproach of the studyFocus on legal constraints affecting the development of the BDS marketConducted in cooperation with CIEM (policy think tank), Vision (consultancy company) and VCCI (Chamber of Commerce)Covering 7 services in the first phase and 3 services in the second

Findings on Legal Constraints on

IP Services

Report on LOE Implementation

Directive bythe Prime Minister

Imple-mentation& follow

-up

An Example of Success: Enabling Environment for BDS

An Example of Success: Enabling Environment for BDS in Intelectual Property Services (cont.)

Action by Ministry of Science:

A Decree is being drafted to reduce the # of required certificates to one and ease

entry conditions (deadline: Dec. 2004)

Directive by PM:“….Ministry of Science & Env’t shall replace

IP representative certificate requirement

with business conditions…”

LOE Implementation

Report recommends:“…Number of IP Representative

Certificates required shouldbe reduced or replaced

with business conditions”

BDS Research Report:“…IP service providers

must have min. 2 members with IP agent certificates

(very difficult to obtain)…”

New Initiatives for a Better Investment Climate for Private Sector

Unified Enterprise LawUnified Enterprise Law, and Common Investment Law

With Strong Participation

from Domestic andForeign Business

Association (e.g. GBA, EuroCham,

Young Biz Asso.)

Regulatory Impact Assessment with

Assessment ofEnterprise Law with

Internet Based Forum For

Policy Consultation

Example: Implementation of RIA

Donor Coordination

Approaches to Support the Development of an Enabling

Environment for Small Enterprises

Country Report: Viet Nam

German Technical Cooperation

Bilateral Partnerships with a number of projects:• UNDP

• Swisscontact

• IFC/ Mekong Private Sector Development Facility

• EBIC (EU)

Presentation of Study co-hosted by GTZ and ADB Input into the Work of the

International Committee of Donor Agencies on SME Development

Active Role in Partnership Group for SME Promotion

Some of our studies have been extensively used by ADB SME Roadmap

Key Lessons LearntBe demand- oriented and flexible to meet the real needs of partners. Be well-informed about the reform agenda of the Government and try to find way to supports.Choose the right partner for the intended intervention and objectiveStrengthen the ownership of partners organizations in the activity. Be persistent. Changes in policy and regulations may take time.

For additional information, please visit: www.sme-gtz.org.vn

or write to us at: corinna.kuesel@gtz.de or duybinh@sme-gtz.org.vn;

For additional information, please visit: www.sme-gtz.org.vn

or write to us at: corinna.kuesel@gtz.de or duybinh@sme-gtz.org.vn;