Regional: Enhancing Border Trade Services and Rules for Small and Medium-Sized Enterprises (SMEs)

Sovereign Project | 43076-012

Summary

The impact of this TA will be improved trade efficiency in the region resulting in a measurable increase in trade flows, with SME border trade values increasing by 15% by 2014. Its outcome will be increased depth and diversity of information and financial services available to SME traders, to be measured by the availability of at least two new financial products for border traders and the expansion of credit volumes for SMEs by up to 20% by 2012. This outcome will be due to (i) better information on the potential client market of SME border traders in terms of their business activities and needs; (ii) removal of policy and regulatory barriers, as appropriate and negotiated by governments; and (iii) introduction of new financing and information products by financial institutions and others in value chains who are providing services to SME border traders.

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Project Name Enhancing Border Trade Services and Rules for Small and Medium-Sized Enterprises (SMEs)
Project Number 43076-012
Country Regional
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7380-REG: Enhancing Border Trade Services and Rules for Small and Medium-Sized Enterprises (SMEs)
Regional Cooperation and Integration Fund US$ 1.50 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Partnerships
Private sector development
Sector / Subsector Finance - Inclusive finance - Small and medium enterprise finance and leasing
Gender Equity and Mainstreaming
Description The impact of this TA will be improved trade efficiency in the region resulting in a measurable increase in trade flows, with SME border trade values increasing by 15% by 2014. Its outcome will be increased depth and diversity of information and financial services available to SME traders, to be measured by the availability of at least two new financial products for border traders and the expansion of credit volumes for SMEs by up to 20% by 2012. This outcome will be due to (i) better information on the potential client market of SME border traders in terms of their business activities and needs; (ii) removal of policy and regulatory barriers, as appropriate and negotiated by governments; and (iii) introduction of new financing and information products by financial institutions and others in value chains who are providing services to SME border traders. The study results will be discussed with the participating countries, possibly as part of the regional cooperation meetings that take place on a regular basis.
Project Rationale and Linkage to Country/Regional Strategy Both the CAREC and GMS strategies have a clear core element of trade facilitation, including improvements in border trade as well as support for regional economic cooperation. The overall objective of CAREC trade policy provides for improved trade openness and integration to improve development and reduce poverty. The GMS pillars include (i) strengthening connectivity and facilitating cross-border movement and tourism, and (ii) integrating national markets to promote economic efficiency and private sector development. Both agreements note the importance of developing economic corridors, of which key border locations are an essential part. The PRC CPS (2008-2010) provides for continuing institutional reforms in the financial sector and SME development (pps 14-15). The Mongolia COBP (2008-2010) notes the importance of support to private sector development and trade engagement with PRC under regional cooperation.
Impact To improve trade efficiency in the region resulting in greater trade flows, as measurable by SME border trader values increasing by 15% by 2014.
Project Outcome
Description of Outcome To increase depth and diversity of information and financial services available to SME traders, to be measures by at least two new financial products available for border traders and expansion of up to 20% credit volumes for SMEs by 2012.
Progress Toward Outcome

Consulting firm selected.

Contract negotiation completed and contract has been signed.

Implementation Progress
Description of Project Outputs

Analysis of a dataset created from the surveys of key border sites.

2. Recommendations on policy and regulatory changes to increase SME access to finance

3. Recommendations supported by banks, financial institutions, and other SME service providers on new

financial product options for SME border traders

4. Recommendations on policy and regulatory changes in nonfinancial areas to enhance trade efficiency and information access for SME border traders

Status of Implementation Progress (Outputs, Activities, and Issues)

Consultants initiated preparation work as of 1 July 2010. They conducted desk research and were fielded in August 2010 to prepare for the inception workshop.

During the Inception Period, 7 August to 15 September 2010, the Consultant Team:

Undertook field visits to two major border crossing locations, one each along the PRC-Vietnam and PRC-Mongolia borders;

Held initial meetings with concerned key government agencies, private sector organizations and other key stakeholder group representatives in the PRC and Mongolia;

Conducted Inception Workshop for Consultant Team members to review TA implementation work plans, approach and methodology in Nanning, PRC;

Identified priority border crossing point locations along the PRC-Vietnam and PRC-Mongolia borders for inclusion in the SME Border Trade Survey (BTS);

Completed interviews and discussions with prospective survey services providers in Vietnam and the PRC;

Developed a detailed design and plan for implementing the SME BTS; and

Finalized arrangements, including corresponding draft documents, and timetable for the selection and recruitment of survey services providers in Vietnam, the PRC and Mongolia.

At the end of the inception period, an Inception Report was delivered. The report detailed potential locations of the survey sites. They are:

PRC: Erlian, Inner Mongolia Autonomous Region and MON: Zamyn-Uud, Dornogobi

PRC:Ganqimaodao, Bayonnaer, IMAR and MON: Gashuun Sukhait, Omnogobi

PRC:Pingxiang, Guangxi and Vietnam:Lang Son

PRC: Dongxing, Guangxi and Vietnam:Mong Cai

PRC:Long Bang, Guangxi and Vietnam:Cao Bang

Additionally the report detailed proposed methodology and approach for conducting the SME Limited-Scope Survey (LSS).

Inception Workshop

An Inception Workshop was held in Nanning, Guangxi Zhuang Autonomous Region from 16-21 August 2010. This planning workshop was attended by all members of the Consultant Team. Following a detailed TA orientation, Team members undertook a thorough review of TA implementation work plans, timelines, approach and methodology for carrying out each component of work. Topics covered include: a presentation on the current border trade environment and key constraints limiting SMEsability to engage in cross-border trade; discussions relating to survey methodology for the planned SME BTS; a presentation on financial sector constraints for SMEs; and findings from the PRC experience on factors affecting SME border trade. Furthermore the workshop provided an opportunity to meet with key government stakeholders whose support would be essential for the succes of the project.

The SME Border Trade Surveys were completed in January 2011 in Mongolia and completed in early February 2011 in Vietnam. The LSS interviews have commenced in both countries and are expected to be completed by the end of February in Mongolia and by end-February/early March in Vietnam. The subcontract agreement with the CAND Group, the PRC survey services provider, was approved by ADB and executed in mid-January 2011. The translation work of the survey instruments into Chinese language and the recruitment and training of enumerators was completed at the end of January. The SME BTS and the LSS interviews in PRC commenced in early February and are expected to be completed by mid to late March 2011.

The initial results of the survey work were presented in a series of seminar/workshops events in Mongolia, Vietnam, and PRC beginning June 2011; through which detailed feedback was solicited from a wide range of public and private sector stakeholders. The dissemination meeting was organized to seek views of stakeholders in both countries on the findings and recommendations of ADB consultants regarding the results of the BTS and verify the initial conclusions.

Going forward, there will be continued dialogue with government counterparts in developing solutions to address the barriers that were highlighted in the surveys; initiate planning for the second wave of seminars to promote analysis/dissemination and related training activities.

The results of the survey work and those which emerge from ongoing seminar/workshop events together will provide a structured take-offpoint for critical research/analysis and training activities for the remaining term of project; and the eventual development of targeted and prioritized recommendations designed to address critical policy/institutional constraints to enhanced SME involvement in border trade networks.

The consultants submitted a draft Interim Progress Report on activities carried out from June 2011. During June-December 2011, eight national and regional seminars were held on the results of the SME BTS. Consultants and analysis of the LSS. These activities had more than 285 participants from the stakeholders of the borders and the capital cities. In Mongolia, a national seminar was held in Ulaanbaatar and a workshop in Zamyn Uud. Given the BTS results that most of the traders and small and medium enterprises in Mongolia operate from the capital city, the national seminar effectively covered also those trading at the Gashuun Sukhait border while the Zamyn Uud workshop took care of the larger trade with PRC.

In PRC, the workshops/seminars were held in Kunming, Yunnan province covering the border of Hekou (with Lao Cai in Viet Nam), and in Nanning, Guangxi Autonomous Region covering the borders of Pingxiang (with Lang Son in Viet Nam), Dongxing (with Mong Cai in Viet Nam), and Longbang (with Cao Bang in Viet Nam). A national seminar in Beijing was held in July 11, 2011 where national officials were the participants. The workshop/seminar held in Lang Son border covered the 4 borders of Viet Nam with PRC together with national officials from Hanoi in attendance. A separate workshop/seminar was held in Hohhot, Inner Mongolia PRC on October 11, 2011 covering the borders of Erlian and Guanqimaodao with Mongolia.

The workshops/seminars managed to draw in (varying across the countries) the private sector in the proceedings. On the other hand, the national seminar in PRC held in Beijing focused mainly on policy issues and thus the participation was principally government agencies. The results of the earlier meetings before the national seminar provided the feedback from the private sector (traders, SMEs, banks) which were reported at the national seminar.

The consultants prepared an internal report on fee structure (tariffs imposed on cargo movement), transport costs, information system, and training following on the results of the BTS focusing on Mongolia.

The consultants undertook in October 2011 an intensive research mission to visit the countries, meet with finance officials and private financial institutions, and examine the regulatory environment and related constraints to more robust SME participation in border trade financing networks. They met with a range of financial sector and SME counterparts, and selected host country officials, to discuss and analyze key constraints to and potential innovative institutional responses to effectively and sustainably address the financing needs of SMEs engaged in border trading activities.

Nine workshops have been conducted during March and June 2012, three consecutive workshops in each country. Each of the 3 workshops had specific objectives and distinct target groups. Workshop 1 was to disseminate the implications from the BTS and LSS surveys on SME financial access, and the results of the mission of the Access to Finance Expert to Mongolia and Viet Nam. Workshop 2 was to foment a proactive discussion of and provide initial training related to a range of financial products and services to support SME cross-border trade. Workshop 3 was to address and provide effective e outreach support on the broader non-financial constraints to SME cross-border trade expansion. Thus the participants to Workshop 1 were mostly public and private sector agencies (both finance and non-finance areas); those in Workshop 2 were financial organizations and financial regulatory agencies; and those in Workshop 3 were government and non-government organizations with broader cross-border interests which included beyond financing issues. An interim progress report was submitted in May 2012.

The final workshops were held in Viet Nam on 13 July 2012, Mongolia on 18 September 2012, and PRC on 20 September 2012. The final workshops sought each government's feedback on findings and recommendations on enhancing cross-border trade services and rules for SMEs, to determine the succeeding policy and program directions, and to define the government's and AD's roles in the process. A regional workshop to be participated by three countries is proposed to discuss common and bilateral issues.

The regional workshops originally scheduled in the second half of 2012 has been delayed due to government transition in Mongolia, preparation of action plan of recommendations in Viet Nam, and difficulty in fulfilling the convenience of participating coutries, and now scheduled on 23-24 May 2013 in Beijing.

Geographical Location Border sites Mongolia-PRC, Vietnam-PRC
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation A key activity under the R-PATA is stakeholder engagement. Frequent seminars and workshops have been conducted to help understand better the principal obstacles facing local economies engaging in cross-border trade.
Business Opportunities
Consulting Services Firm has been engaged
Responsible ADB Officer Craig Sugden
Responsible ADB Department East Asia Department
Responsible ADB Division Public Mgt, Financial Sector and Regional Coop Division, EARD
Executing Agencies
Asian Development Bank6 ADB Avenue, Mandaluyong
Metro Manila, Philippines
P.O. Box 789, 1099 Manila,
Philippines
Timetable
Concept Clearance 21 Apr 2009
Fact Finding 18 Feb 2009 to 19 Feb 2009
MRM -
Approval 18 Nov 2009
Last Review Mission -
PDS Creation Date 09 May 2009
Last PDS Update 21 Mar 2013

TA 7380-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
18 Nov 2009 - 18 Nov 2009 28 Apr 2012 30 Sep 2013 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,500,000.00 0.00 85,000.00 0.00 0.00 0.00 1,585,000.00 18 Nov 2009 1,334,795.82

Safeguard Documents

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Evaluation Documents

See also: Independent Evaluation

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