Regional: Strategies to Support Small and Medium-Sized Enterprises in the People's Republic of China and Mongolia

Sovereign Project | 47339-001 Status: Active

Summary

The goal of the TA is to improve empirically-based policies that underpin the dynamism of SMEs. Specifically the TA will address the following development issues:

a. Private sector development. SMEs constitute the majority of enterprises in the PRC and Mongolia. They are also important sources of employment. In Mongolia, SMEs account for approximately 50% of employment. In the PRC, they also contribute the majority (75%) of employment in the private sector. Thus SMEs play an important role in generating employment and their well-being affects the dynamism of the whole economy. Yet the business environments in both countries are still not fully conducive for SMEs. This TA would also examine constraints on SME growth, either externally imposed or seemingly self-chosen.

Latest Project Documents

None currently available.

Consulting Notices See also: CMS

No notices are currently available for this project.

Procurement Notices See also: Operational Procurement

No notices are currently available for this project.

Procurement Documents

None currently available.


Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

 
Project Name Strategies to Support Small and Medium-Sized Enterprises in the People's Republic of China and Mongolia
Project Number 47339-001
Country Regional
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8600-REG: Strategies to Support Small and Medium Enterprises in the People's Republic of China and Mongolia
Technical Assistance Special Fund US$ 225,000.00
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
Description

The goal of the TA is to improve empirically-based policies that underpin the dynamism of SMEs. Specifically the TA will address the following development issues:

a. Private sector development. SMEs constitute the majority of enterprises in the PRC and Mongolia. They are also important sources of employment. In Mongolia, SMEs account for approximately 50% of employment. In the PRC, they also contribute the majority (75%) of employment in the private sector. Thus SMEs play an important role in generating employment and their well-being affects the dynamism of the whole economy. Yet the business environments in both countries are still not fully conducive for SMEs. This TA would also examine constraints on SME growth, either externally imposed or seemingly self-chosen.

b. Inclusive financing. Today, SMEs in Asia still have much less access to finance. The gap of SME financing in East Asia, of which the PRC constitutes a significant share, is estimated to range from $700 to $850 billion. The PRC government has adopted a range of measures to address these challenges for SMEs, especially towards increasing their access to finance. However, so far small PRC firms still access credit less frequently than the larger firms, and also at much higher costs. In Mongolia, SMEs access to credit is relatively better, but they face high interest rates and much higher collateral requirements than in other regions. More disconcertingly, evidence suggests that financial constraints lead to lower levels of investments by SMEs than larger firms, especially in the PRC. This entails significant repercussions, since the health and dynamism of the private sector depend on precisely these private investments.

c. Structural transformation and productivity. Structural transformation of the economy has led to the emergence of the tertiary (services) sector as the main contributor of employment in the PRC (36%) and Mongolia (55%) by 2012. Services also created the bulk of value-added in both countries. Supporting the growth of the services sector has the added benefit of greener growth, as services are typically less energy-intensive as manufacturing. Yet compared to Organisation for Economic Co-operation and Development (OECD) countries, the productivity of the services sector is still low in PRC (approximately 10% of OECD levels) and Mongolia (less than 5% of OECD levels). Efforts to improve overall productivity in both countries would necessarily require efficiency and productivity improvements in the services sector, where SMEs can play a critical role.

d. Gender equity. Participation of women in the ownership and of small firms in the PRC (64%) and Mongolia (65%) is higher than average. Thus, enhancing the growth of SMEs would also contribute significantly to gender inclusiveness of growth. Policies to support this goal would benefit from better data on the skills needs and gaps of the SMEs, especially in the services sector.

Project Rationale and Linkage to Country/Regional Strategy

The PRC''s Twelfth Five-Year Plan 2011-2015 acknowledges the importance of a dynamic private sector and supports economic transformation towards a more innovation-driven, consumption-based growth model. Support for the government reform priorities is reflected in the objectives of ADB''s Country Partnership Strategy (CPS) 2011-2015. Similarly, the Mongolia CPS stressed the importance of boosting the country's competitiveness, especially through private sector development. In this regard, SMEs could play an important role in providing employment, given that the employment-generation of Mongolia's current growth-model is low. The Mongolian Government has approved "SME development program 2014-2016" on 18 September 2013. This document defines the public policy of the development of SMEs.

This TA is aligned with the objectives of the CPS of both the PRC and Mongolia to pursue inclusive growth and foster balanced development, a target to which improved SME development will contribute. Better data about the SME sector would improve and enhance policy inputs for future comprehensive development strategies. A more robust and dynamic SME growth can play a leading role in promoting the transition towards more inclusive economic development.

Impact Strengthened empirically-based policies pertaining to SMEs

Project Outcome

Description of Outcome Availability of better information on SMEs to improve analysis and policy-making, especially for the tertiary sector and in the areas of SME financing and productivity
Progress Toward Outcome It will be evaluated when the project is completed.
Implementation Progress
Description of Project Outputs

Policy brief(s) on SME development in the PRC and MON

Comprehensive ADB-OECD study on the priorities of SME policy reforms to promote inclusive financing and inclusive growth in the PRC

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

Consultant was engaged and submitted the first batch of outputs. Draft for Mongolian case study is completed.

ADB signed a MOU with State Intellectual Property Office (SIPO) to conduct a survey on small and medium sized enterprises (SMEs), especially in the area of innovation and intellectual property activities. The project aims to provide better inputs for SME polices through better data and high-quality empirically-based studies.

In addition, ADB signed a MOU with China Development Research Foundation to support the activity of building a website which aims to collect data pertaining SME development.

The TA will be completed on 30 September 2016 as scheduled, and will be financially closed on 31 December 2016.

Geographical Location

Summary of Environmental and Social Aspects

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Relevant stakeholders were closely consulted during project design.
During Project Implementation Relevant stakeholders will be closely consulted during project implementation.

Business Opportunities

Consulting Services Implementing the TA will require 7 person-months of national consultant services and 1.5 person-months of international consultant services to assist the ADB-OECD team. The consultancy requirements are: (i) up to three national SME specialists (6 person-months, intermittent); (ii) one national graphics design/lay-out editor (1 person-month, intermittent); and (iii) one international copy editor (1 person-month, intermittent). Provision for international resource persons is also included. All consultants will be engaged as individual consultants by ADB in accordance with the Guidelines on the Use of Consultants (2013, as amended from time to time).
Procurement The survey of SMEs in the PRC will be conducted by the National Bureau of Statistics (NBS) of the PRC. ADB will institute a framework of partnership with the NBS for the survey. The NBS is the only institution with access and ability to implement such surveys in the PRC.

Responsible Staff

Responsible ADB Officer Khor, Niny
Responsible ADB Department East Asia Department
Responsible ADB Division PRC Resident Mission
Executing Agencies
Asian Development Bank
6 ADB Avenue,
Mandaluyong City 1550, Philippines

Timetable

Concept Clearance -
Fact Finding -
MRM -
Approval 10 Dec 2013
Last Review Mission -
Last PDS Update 27 Sep 2016

TA 8600-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Dec 2013 - 10 Dec 2013 31 Mar 2016 30 Sep 2016 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
225,000.00 0.00 0.00 0.00 0.00 0.00 225,000.00 10 Dec 2013 155,162.33

None currently available.

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.