Bhutan: Micro, Small, and Medium-Sized Enterprise Sector Development Program (former Small and Medium Enterprise/Micro Enterprise Development Program)

Sovereign Project | 39221-022

Summary

ADB is supporting the development of micro-, small-, and medium-sized businesses in Bhutan. The project will help establish an integrated policy, strategy and institutional framework for the development of these enterprises, improve the business environment, and increase access to finance.

Latest Project Documents

Project Results

 

1,900

small and medium-sized enterprise loan accounts opened or end borrowers reached

The results data reported above are limited to ADB's core sectors, as defined under Strategy 2020 and tracked through indicators in the ADB Results Framework. For definitions of results indicators, please see the ADB Results Framework Indicators Definition.


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Project Name Micro, Small, and Medium-Sized Enterprise Sector Development Program (former Small and Medium Enterprise/Micro Enterprise Development Program)
Project Number 39221-022
Country Bhutan
Project Status Closed
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 0088-BHU: Micro, Small, and Medium-Sized Enterprise Sector Development Program (former Small and Medium Enterprise/Micro Enterprise Development Program)
Asian Development Fund US$ 6.00 million
Grant 0089-BHU: Micro, Small, and Medium-Sized Enterprise Sector Development Project (former Small and Medium Enterprise/Micro Enterprise Devt Project)
Asian Development Fund US$ 8.30 million
Strategic Agendas Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector

Industry and trade - Small and medium enterprise development

Gender Equity and Mainstreaming Some gender elements
Description The overall objective of the proposed MSME SDP is to promote the expansion and growth of a vibrant MSME sector and encourage private sector development for broad-based, sustainable economic growth and employment. To achieve this goal, the MSME SDP will consist of a program grant to address policy reforms and strengthening of the enabling environment; and a project grant, to provide the required funding otherwise not available from the domestic market due to market failure. The Program objectives include (i) establishing an integrated policy, strategy, and institutional framework for MSME development; (ii) enhancing business laws and regulations to facilitate MSME operations; (iii) increasing access to market-based finance; and (iv) strengthening business support infrastructure.
Project Rationale and Linkage to Country/Regional Strategy In line with the Government's strategic priorities for national development, the MSME SDP is proposed to support the promotion of the MSME sector, address the constraints of MSME development, generate employment opportunities, and enhance overall economic growth. The MSME SDP design also complements the Government's sector development priorities, in which the private sector is expected to play a vital role as the engine of economic growth. The MSME SDP is fully consistent with the priority focus of the ADB's country strategy and complements ADB's ongoing interventions to promote good governance, the development of the financial sector, and capacity development of the key financial institution for MSME financing. In addition to the MSME SDP design being complementary with ongoing assistance funded by other development partners, considerable synergy is expected as a result of program implementation.
Impact

A vibrant and expanding MSME sector leading to accelerated private sector development for broadbased,

sustainable economic growth

Project Outcome
Description of Outcome Improved enabling environment for doing business and greater access to key resources
Progress Toward Outcome

The project achieved two of its outcome indicators and partially achieved the third objective. Bhutan's financial sector continued to strengthen and its private sector continued to gain larger share of the bank credit during the program's life.

By 2012, loans to MSMEs made up 35% of BDBL's loan portfolio which exceeded the outcome indicator of 25%. Borrowers were primarily in agriculture, services and tourism, forestry, and trade. BDBL''s greater emphasis on MSMEs were achieved without undermining the quality of credit. Nonperforming loan ratio fell from 15% in 2006 to 8% in 2012 suggesting that new focus on MSMEs is sustainable.

CSF assistance of 275 exceeded its expected outcome of 250.

However, business formalization was partially achieved. Despite improvement in the number of days required to register a business fell from 62 in 2006 to 36 in 2012, it still fell short of the original target of 30.

Although not originally included as outcome indicators, Bhutan's financial sector has strengthened and private sector lending increased during program/project implementation.

Implementation Progress
Description of Project Outputs

1. Establishment of a coordinated policy, strategy, and institutional framework for MSME development

2. Enhanced business laws and regulations

3. Increased access to market-based finance

4. Strengthened business support infrastructure

Status of Implementation Progress (Outputs, Activities, and Issues) The program/project has achieved 11 of its 12 output performance targets and partially accomplished the twelfth despite the over two years delay in implementation. It also accomplished these outputs with a modest budget of $15 million and adhered to an efficient process. Bhutan's MSME division served as a central administrator and centralized coordination not only with ADB but also between the agencies in Bhutan that participated in the program.
Geographical Location Bhutan
Safeguard Categories
Environment FI
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services Not applicable
Procurement The Program grant proceeds will be disbursed for a broad range of imports, subject to a list of ineligible items. All procurement of goods and services produced in, and originating from, ADB member countries will be made with due consideration to economy and efficiency, in accordance with standard Government procedures and normal private sector commercial practices acceptable to ADB.
Responsible ADB Officer Anqian Huang
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Ministry of FinanceRoyal Government of Bhutan
Thimphu, Bhutan
Attention: Director
Timetable
Concept Clearance 15 Jul 2003
Fact Finding 16 Apr 2007 to 27 Apr 2007
MRM 02 Aug 2007
Approval 21 Nov 2007
Last Review Mission -
PDS Creation Date 20 Apr 2009
Last PDS Update 30 Sep 2014

Grant 0088-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
21 Nov 2007 19 Feb 2008 16 May 2008 31 Dec 2010 30 Nov 2012 21 Dec 2012
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 6.00 Cumulative Contract Awards
ADB 6.00 21 Nov 2007 6.00 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 21 Nov 2007 6.00 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

Grant 0089-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
21 Nov 2007 19 Feb 2008 16 May 2008 30 Jun 2012 31 Mar 2013 29 Sep 2014
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 8.30 Cumulative Contract Awards
ADB 8.30 21 Nov 2007 8.25 0.00 99%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 21 Nov 2007 8.25 0.00 99%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory
Title Document Type Document Date
Micro, Small, and Medium-Sized Enterprise Sector Development Program Project/Program Completion Reports Sep 2013
Micro, Small, and Medium-Sized Enterprise Sector Development Program Progress Reports on Tranche Releases Nov 2012
Micro, Small, and Medium-Sized Enterprise Sector Development Program: Grant Consultant Report - Amendment of the Companies Act of the Kingdom of Bhutan, 2000 Documents Produced Under Grant/Loans/TA Oct 2012
Micro, Small, and Medium-Sized Enterprise Sector Development Program: Grant Consultant's Report - Component 4 Documents Produced Under Grant/Loans/TA Aug 2012
Micro, Small, and Medium-Sized Enterprise Sector Development Program: Grant Consultant's Report - Component 3 Documents Produced Under Grant/Loans/TA Aug 2012
Micro, Small, and Medium-Sized Enterprise Sector Development Program: Grant Consultant Report - Component 1 Documents Produced Under Grant/Loans/TA Dec 2011
Micro, Small, and Medium-Sized Enterprise Sector Development Program Progress Reports on Tranche Releases Aug 2011
Grant Agreement (Special Operations) for Micro, Small, and Medium-Sized Enterprise Sector Development Program Grant Agreement Feb 2008
Grant Agreement for Micro, Small, and Medium-Sized Enterprise Sector Development Program Grant Agreement Feb 2008
Project Agreement for Micro, Small, and Medium-Sized Enterprise Sector Development Program Project/Program Agreement Feb 2008
Proposed Asian Development Fund Grant: Micro, Small, and Medium-Sized Enterprise Sector Development Program Procurement Plans Oct 2007
Micro, Small, and Medium-Sized Enterprise Sector Development Program Reports and Recommendations of the President Oct 2007
Micro, Small, and Medium-Sized Enterprise Sector Development Program Design and Monitoring Frameworks Aug 2007

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation
Title Document Type Document Date
Bhutan: Micro, Small, and Medium-Sized Enterprise Sector Development Program Validations of Project Completion Reports Jun 2014

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