The Asian Development Bank says it is extending US$40 million equivalent to Vietnam to introduce reforms that untangle a knot of red tape and make doing business simpler and quicker for small and medium-sized enterprises (SMEs).
ADB said Monday that it approved the loan for the first phase of the Second Small and Medium-Sized Enterprises Development Program on the same day.
The loan follows an earlier ADB loan for an initial reform program that has helped slash the time needed to register a business, and supported a sharp rise in new enterprises and private sector jobs, according to the Manila-based bank.
“The priority for the Government of Vietnam is to sustain high economic growth to create productive jobs for around 1.7 million new workers each year, and growing SMEs is an essential part of its development strategy," Edimon Ginting, senior economist in ADB’s Southeast Asia Department, said in Monday’s announcement.
The bank said the release of fresh funds for the latest program follows the achievement of key reform milestones by the Vietnamese government. These include steps to develop a comprehensive policy to address constraints to trade and competition, as well as measures to simplify and streamline business procedures, the introduction of a pilot e-customs program in 10 provinces, and the introduction of a web-based national business registration system.
“The reform supported under the program is targeting a significant cost savings from simpler business procedures, and a doubling in the number of newly registered enterprises over the next four years,” Mr. Ginting said in the statement.
The latest loan from ADB’s concessional Asian Development Fund has a 24-year term including a grace period of 8 years, with an annual interest charge of 1%, rising to 1.5% for the balance of the term. A second phase of the program will provide support to continue reforms to improve business competitiveness, and access to finance for SMEs.
The Ministry of Planning and Investment is the executing agency for the full program with the target completion date yet to be finalized, according to ADB.
