A healthy level of private investment is essential for Viet Nam to achieve the 7%–8% annual economic growth rate and the 8 million new jobs it has targeted under the Socio-Economic Development Strategy, 2011–2020. Increasingly, such contribution is expected to come from the domestic private sector, largely composed of small and medium−sized enterprises (SMEs).

To help foster greater SME development, the Asian Development Bank (ADB) approved the Second Small and Medium-Sized Enterprises Development Program (SMEDPL2) in October 2010. The program included 2 single−tranche subprograms that overall sought to increase the contribution of SMEs and the private sector to achieving sustainable high economic growth. Subprogram 1 was approved together with SMEDPL2 for a loan of $40 million. Subprogram 2 was approved in October 2013 for a loan of $50 million.

To achieve the expected outcome of an improved business environment to support more competitive SMEs and the private sector, the program delivered 4 outputs: (i) enhanced policy and planning framework for SME development, (ii) improved efficiency of administrative systems for SME development and operations, (iii) strengthened regulatory framework for competition policy, and (iv) enhanced SME access to finance.

Subprogram 1 enabled the government to implement legislative reforms such as the Law on Science and Technology, Decree 59/2009, and Resolution 22, which created a conducive business environment for SMEs. To ensure legislative reform effectiveness, the Law on Laws was amended and the regulatory impact assessment (RIA) mechanism was strengthened.

Subprogram 1 also promoted greater transparency in government administration of businesses and supported the initial development of a regulatory framework to facilitate SME access to financing through the passage of legislation allowing the State Bank of Viet Nam to work with credit institutions for short- and medium-term lending to SMEs. The Unlisted Public Companies Market for the trading of securities of unlisted companies was also created, with pilot operations undertaken by the Hanoi Stock Exchange.

Building on earlier progress, subprogram 2 supported the institutionalization of regulatory and policy reforms in government. Gender equality measures were set out in the National SME Development Plan, 2011–2016. Preparation of the 2011 SME White Paper to inform sector policy development was assisted. Capacity building of provincial registrars on the national business registration system was undertaken. Women entrepreneurs’ access to finance was enhanced, with the Viet Nam Women’s Union supporting access to credit for over 286,000 women entrepreneurs.

Successful delivery of outputs enabled the program to achieve its expected outcome. Particularly, it was able to facilitate the reduction of bureaucracy in business registration and regulation, and this was indicated in Viet Nam’s improved global ranking for ease of doing business. It was able to reinforce government plans for SME development and support policy and regulatory reforms in this area. While delays were encountered during implementation, the momentum for reforms continued even after program close.

ADB’s Southeast Asia Department rated the program successful. The Agency for Enterprise Development of the Ministry of Planning and Investment was the executing agency. Several ministries and government institutions served as implementing agencies.