ADB helps Vietnam’s SMEs develop

The bank approved the loan for the first phase of the Second Small and Medium-Sized

Enterprises Development Programme on October 18. It follows a previous ADB loan for an initial reform program that has slashed the time needed to register a business, and resulted in a sharp rise in the number of new enterprises and private sector jobs.

SMEs make up the large majority of all registered enterprises in Vietnam and most new jobs in the last decade were created by the sector.

“The priority of the Vietnamese Government to sustain high economic growth to create productive jobs for around 1.7 million new workers each year, and growing SMEs is an essential part of its development strategy,” said Edimon Ginting, Senior Economist in the ADB’s Southeast Asia Department.

The latest loan from the ADB’s concessional Asian Development Fund has a 24-year term including a grace period of 8 years, and an annual interest rate of 1 per cent.

* Also on October 18, the ADB announced a $1 million technical assistance (TA) grant from the bank to help increase efficiency in road transport administration and attract investment in Vietnam’s rapidly expanding road transport network.

The grant, sourced from the Japan Fund for Poverty Reduction and funded by the Government of Japan, will provide the Ministry of Transport and its support agencies with guidelines to strengthen institutional and financial arrangements, operation and maintenance, and general governance.

A plan will be developed to improve the medium- and long-term enhancement of the Vietnam Expressway Management Administration, and real-time advisory support for Ministry of Transport officials will also be provided.

Funding for road projects will be enhanced through the TA. An assessment will be made of the funding for the Vietnam North-South Expressway Project, a massive road development estimated at $17.9 billion and covering 1,811 kilometers of expressway stretching from Hanoi to Can Tho down the eastern side of Vietnam.

The TA will create guidelines to improve the cost effectiveness of road projects by reducing life-cycle costs and improving the sustainability of expressways, as well as national and local roads.

Guidelines will also be developed to strengthen the governance of State-owned enterprises under the Ministry of Transport involved in ADB financed projects.

The Vietnamese Government will contribute $150,000 towards the TA’s estimated total cost of $1.15 million, and the Ministry of Transport will be the executing agency for the TA, which is due to be completed in August 2011.