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ADB and Japan to Assist Small and Medium Enterprises and Development of Labor Skills

Hanoi, Viet Nam (25 July 2008) – Agreements were signed today for two technical assistance grants to help Viet Nam prepare the second small and medium-sized enterprises (SME) development program and skills enhancement project. The grants in the total amount of $1.1 million are financed from the Japan Special Fund, funded by the Government of Japan.

At a ceremony held at the State Bank of Viet Nam (SBV), Deputy Governor Nguyen Van Binh of SBV, Vice Minister Dam Huu Dac of the Ministry of Labor, Invalids and Social Affairs and ADB Country Director for Viet Nam Mr. Ayumi Konishi signed the agreements in the presence of Mr. Kazuhiro Iryu representing the Embassy of Japan.

In recent years, Viet Nam has undertaken a number of commendable reforms to improve the business environment for SMEs including the establishment of a policy framework for SME development for 2006-2010, simplification of business registration and licensing systems, and improvement in SMEs’ access to land, finance, and technologies. These reforms were supported by the first SME development program.

The new technical assistant grant of $500,000 will help prepare the second SME development program to build on the first SME development program with the aim to accelerating further improvements in business environment in Viet Nam. A package of policies will be formulated for implementation during 2008-2010 based on Viet Nam’s five-year SME development plan. An assessment will also be made of constraints to further private sector growth.

Another technical assistance of $600,000 will formulate a “skills enhancement project,” which aims at enhancing vocational skills training to better respond to the demand for skilled workers in key industries in the industry and service sectors. Viet Nam’s vocational education and training system needs substantial improvements to offer higher level skills training with greater private sector participation. The technical assistance will specifically

• assess graduates of vocational training institutions to examine the relevance of training they have received to the labor market needs
• identify critical issues in upgrading skills training levels
• formulate a long-term strategy to improve training of skilled workers though better management of the institutions, improvements in training quality, and an increase in the total number of graduates from vocational training institutions
• design a project that addresses key constraints and projected labor market needs

“These technical assistance grants are very timely as Viet Nam strives to becoming a middle income country” says Mr. Konishi. “They will prepare two very important projects to be supported by much larger loan assistance in the near future. Viet Nam needs to keep growing despite current economic difficulties, and the development of SMEs and the availability of skilled labor force are important prerequisites for the country’s economic success.”

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2007, it approved $10.1 billion of loans, $673 million of grant projects, and technical assistance amounting to $243 million.

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