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Loan Signed Supporting Enhanced Business Environment in Viet Nam

HANOI, VIET NAM (16 January 2007) - ADB and the Government of Viet Nam signed an agreement today for a US$20 million loan for the second phase of a two-part project in Viet Nam to foster a business climate more conducive to the growth of small- and medium-sized enterprises (SMEs).

Le Duc Thuy, Governor, State Bank of Viet Nam signed the agreement on behalf of the Government of Viet Nam. Signing on behalf of the Asian Development Bank was Ayumi Konishi, ADB's Country Director for Viet Nam. Other senior officials witnessed the signing.

The SME Development Program Cluster is designed to promote a conducive business environment by adopting market-friendly practices and eliminating policy bias against SMEs. The first phrase of the loan of $60 million was approved by ADB in October 2004 and has achieved concrete results, particularly, among others, in areas related to the New Enterprise Law. The law removed a major impediment to enterprise growth by rationalizing the system of registration and licensing.

The second part of the SME Development Program Cluster, backed by the $20 million, will build upon the achievements of the first period. It will focus on enhancing the policy and regulatory framework for SME development; boosting SMEs' access to financial and other resources; and improvements in the regulatory frameworks for industrial and technical standards.

"This is an important program in the context of Viet Nam's liberalization reforms, especially as it levels the playing field for private sector enterprises."says Mr. Konishi.

ADB has been serving as a co-chair for the SME Working Group, which provides a forum for consultation and coordination among the various government agencies, donors, and other stakeholders.

ADB's loan, from its concessional Asian Development Fund, carries a 24-year term, including a grace period of eight years. Interest is charged at 1% per annum during the grace period and 1.5% per annum subsequently. Agence Francaise de Developpement of France and KfW Entwicklungsbank of Germany are proposing cofinancing for the second subprogram of Euro13 million and Euro6 million, respectively.

The Ministry of Planning and Investment will be executing agency for the second phase, which is planned for completion in July 2008.

ADB, headquartered in Manila, is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 66 members - 47 from the region.

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