Strategy for An Enabling Environment for SME & Private Sector Development GTZ Vietnam Le Duy Binh The SEPneT-Workshop Haikou, China - Nov. 2004
86 91 96 01 03 Private Sector in Viet Nam Important Milestones 1986: First step of Doi Moi (Reform): household economy/ cooperative reform 1990: private enterprise and company laws 1992: revision of the Constitution to recognize the private sector 2000: Enterprise Law 2001 (Apr.): Socio-economic Dev t Strategy 2001 (Nov): further revision of Constitution 2002 (March): Resolution of the CPV 2002 (May): Comprehensive Poverty Reduction and Growth Strategy (CPRGS) 2003: Land Law, Decree on Associations 2004: Bankruptcy Law, Competition Law To come: Common Investment Law; Unified Enterprise Law Gov t SME Decree in Nov 2001 0.85 mil. HH Businesses 100 registered private enterprises started its supports to SMEs and PS dev t in Vietnam right from early days of reform 2.5 mil. HH businesses >130.000 private enterprises Created approx. 2 mio. new jobs 1990 2004
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 sustainable economic 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 Building relations with key stakeholders (policy makers, donors, business community) Creating the momentum for an approach of Local Economic Development SME Policy/ Enabling Environment for Business OUR APPROACH IN LED/ Outreach to the Provincial Level Building cooperation relations with the international business community (PPP) Specific Business Development Services & Value Chain Dev t Enhancing market orientation and sustainability of business services built up under the project
Our 5 Pillars in the Strategy for an Enabling Biz Env t Direct Policy Advices Direct Advices to the making of the laws (through short & long term experts) e.g. Enterprise Law, Investment Law, SME Action Plan, etc Strengthening of Business Law Making Capacity Introduction of RIA Exposing law makers to int l best practices & norms Training of law Makers Institutional Capacity Strengthening Strengthening Public Consultation in Biz Laws Improvement of consultation methods Strengthening Policy advocacy role of BMOs & 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 Provincial Biz Env t Make Enabling Biz Env t an integral part of LED effort Support to law implementation 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 Provincial Authorities Other Donors Projects Mass Media
An Example of Success: Enabling Environment for BDS Focus: Market and Policy Research Awareness Creation The Legal Environment For BUSINESS DEVELOPMENT SERVICES IN VIETNAM With Focus On Intellectual Property, Accounting & Auditing, and Training Services Approach of the study Focus on legal constraints affecting the development of the BDS market Conducted 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 by the Prime Minister Implementation & follow -up
An Example of Success: Enabling Environment for BDS in Intelectual Property Services (cont.) BDS Research Report: IP service providers must have min. 2 members with IP agent certificates (very difficult to obtain) LOE Implementation Report recommends: Number of IP Representative Certificates required should be reduced or replaced with business conditions Directive by PM:.Ministry of Science & Env t shall replace IP representative certificate requirement with business conditions 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)
New Initiatives for a Better Investment Climate for Private Sector Unified Enterprise Law, and Common Investment Law Regulatory Impact Assessment with Assessment of Enterprise Law with Internet Based Forum For Policy Consultation With Strong Participation from Domestic and Foreign Business Association (e.g. GBA, EuroCham, Young Biz Asso.)
Example: Implementation of RIA
Donor Coordination 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 Some of our studies have been extensively used by ADB SME Roadmap Active Role in Partnership Group for SME Promotion German Technical Cooperation Approaches to Support the Development of an Enabling Environment for Small Enterprises Country Report: Viet Nam Input into the Work of the International Committee of Donor Agencies on SME Development
Key Lessons Learnt Be 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 objective Strengthen 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 or write to to us us at: at: corinna.kuesel@gtz.de duybinh@sme-gtz.org.vn; or or