Enabling Env t for SME Promotion and Private Sector

Enabling Env’t for SME Promotion and Private Sector Development GTZ Vietnam Presentation at Sept Network Workshop Haikou, China - Nov. 2004

n n ‘ 91 n ‘ 96 n n ‘ 01 n n n ‘ 03 n n n 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 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 2004 ‘ 86 0. 85 mil. HH Businesses 1990 Private Sector in Viet Nam – Important Milestones

Our Overall Objective: Improvement in Competitiveness of Private SMEs in Vietnam Creating the momentum for an approach of Local Economic Development Building relations with key stakeholders (policy makers, donors, business community) SME Policy/ Enabling Environment for Business LED/ Outreach to the Provincial Level OUR APPROACH IN Specific Business Development Services & Value Chain Building cooperation relations with Dev’t Enhancing market orientation and the international business community (PPP) 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 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…) Other Donors Projects Mass Media Business Associations Provincial Authorities

An Example of Success: Enabling Environment for BDS Focus: Market and Policy Research Awareness Creation Approach of the study The Legal Environment For n BUSINESS DEVELOPMENT SERVICES IN VIETNAM n With Focus On Intellectual Property, Accounting & Auditing, and Training Services n Findings on Legal Constraints on IP Services 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 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: Directive by PM: “…Number of IP Representative “…. Ministry of Science Certificates required should & Env’t shall replace be reduced or replaced IP representative with business conditions” 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 Law Common Investment Law Regulatory Impact Assessment with Assessment of Enterprise Law with Internet Based With Strong Participation Forum For from Domestic and Policy Consultation Foreign Business Association (e. g. GBA, Euro. Cham, Young Biz Asso. )

Example: Implementation of RIA

Donor Coordination Bilateral Partnerships with a number of projects: Active Role in Partnership Group for SME Promotion German Technical Cooperation • UNDP • Swisscontact • IFC/ Mekong Private Sector Development Facility • EBIC (EU) Approaches to Support the Development of an Enabling Environment for Small Enterprises Presentation of Study co-hosted by GTZ and ADB in January 2003 Some of our studies have been extensively used by ADB SME Roadmap 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 write to us at: corinna. kuesel@gtz. de binh. le@gtz. de; or