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

Private Sector in Viet Nam – Important Milestones 1986: First step of Doi Moi (Reform): household economy/ cooperative reform 1986: First step of Doi Moi (Reform): household economy/ cooperative reform 1990: private enterprise and company laws 1990: private enterprise and company laws 1992: revision of the Constitution to recognize the private sector 1992: revision of the Constitution to recognize the private sector 2000: Enterprise Law 2000: Enterprise Law 2001 (Apr.): Socio-economic Dev’t Strategy 2001 (Apr.): Socio-economic Dev’t Strategy 2001 (Nov): further revision of Constitution 2001 (Nov): further revision of Constitution 2002 (March): Resolution of the CPV 2002 (March): Resolution of the CPV 2002 (May): Comprehensive Poverty Reduction and Growth Strategy (CPRGS) 2002 (May): Comprehensive Poverty Reduction and Growth Strategy (CPRGS) 2003: Land Law, Decree on Associations 2003: Land Law, Decree on Associations 2004: Bankruptcy Law, Competition Law 2004: Bankruptcy Law, Competition Law To come: Common Investment Law; Unified Enterprise Law To come: Common Investment Law; Unified Enterprise Law 2.5 mil. HH businesses > private enterprises Created approx. 2 mio. new jobs mil. HH Businesses 100 registered private enterprises 1990 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

Our Overall Objective: Improvement in Competitiveness of Private SMEs in Vietnam SME Policy/ Enabling Environment for Business LED/ Outreach to the Provincial Level Specific Business Development Services & Value Chain Dev’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 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

We are Creating a Strong Partner Networks (Gov’t Think-Thank, Advisory Board, Business Association, Local Authorities, other Donors…) Business Associations Other Donors Projects Provincial Authorities Mass Media A Strong Strategic Partner Network Ensures a Higher Chance of Success

Focus: Market and Policy Research Awareness Creation 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 Imple- mentation & follow -up An Example of Success: Enabling Environment for BDS

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…” An Example of Success: Enabling Environment for BDS in Intelectual Property Services (cont.) LOE Implementation Report recommends: “…Number of IP Representative Certificates required should be 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)…”

With Strong Participation from Domestic and Foreign Business Association (e.g. GBA, EuroCham, Young Biz Asso.) Unified Enterprise Law Unified Enterprise Law, and Common Investment Law New Initiatives for a Better Investment Climate for Private Sector Regulatory Impact Assessment with Assessment of Enterprise 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 in January 2003 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 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.

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