Strengthening enabling environment for private sector competitiveness

Created 21 December 2017
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The key binding constraints in the enabling environment in Vietnam that cut across sectors relate to skills management capabilities, innovation, and standards.
Competitiveness is key for enterprises in increasing global competition.
 
With this being said, if more linkages are to be established, it will enhance the competitiveness of Vietnamese firms. While Vietnamese firms do innovate, it seems this innovation appears to rarely relate to new products or technologies. Innovation also seems to rely on less investment in inputs and licensed knowledge than in some competing Asian countries, and there is scope to incentivize firms to dedicate more resources to research & development (R&D), the licensing of foreign technologies, etc. 
 
Competitiveness is key for enterprises in increasing global competition.
Competitiveness is key for enterprises in increasing global competition.
Multiple small and medium enterprise (SME) programs already exist in Vietnam that try to address some of these horizontal constraints in the enabling environment. Thus the need for an Inter-ministerial Committee that effectively coordinates and facilitates the addressing of horizontal constraints, is paramount. However, the in-depth analysis indicated scope for improvements – both in design and implementation - of these programs for increased effectiveness and impact. Following are the key systemic issues that pervade across programs which the government can address as it finalizes the SME policy and gears up for implementation:

Firstly, some of the SME support programs aim to achieve similar objectives but are initiated and implemented by different ministries. For example, there can be overlaps in innovation program trainings offered as a sub-program (or activity) by the various innovation-related and MOST-pioneered programs. Where programs have overlaps with another program, a corollary issue relates to targeting and selecting SME beneficiaries. As such, it would be important to analyze targeting and selection strategies of these different overlapping programs to avoid redundancy on program coverage and issues of under-coverage in other areas. SME-specific incentives can then be developed around that objective. Consolidating these programs also implies addressing overlaps in the functions of SME units of the different line ministries and agencies concerned with SME development.

Secondly, an analysis of the programs based on the life cycle stages of firms find that SMEs on the start-up stage are not fully benefitting from SME support programs. Programs focusing on this target group (and address their constraints) have to be considered (e.g., market access programs, financial access programs). Some of the ‘missing’ access to finance programs for start-up firms that can be implemented include crowdfunding platforms, seed/start-up funds, and angel investor networks. Even at the growth and established stages, some of the ‘missing’ critical support programs relate to enhancing firm capability, including trainings related to enhancing global managerial skills, mentorship programs (e.g., linking Vietnamese overseas with locals), and business development services.

And finally, many of the programs have M&E related target indicators. However as mentioned, there are issues such as incomplete identification of output and/or outcome targets, as well as lack of M&E implementation guidelines/plans. For targets, there should be clear intermediate/output targets and identified outcomes. As part of M&E, it is worthwhile to generate client feedback of SME support programs to understand whether SMEs find the programs useful and effective and to support improvement of program results. In general, a clear reporting/monitoring mechanism attached in the design phase of the program can ensure transparency, accountability and oversight.
 
Source: Hanoi Times
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