Bradford Phillips, country director of the Asian Development Bank in Vietnam and Le Duc Thuy governor of the State Bank of Vietnam formally signed a credit loan contract totalling US$60 million in the first loan subprogram on November 9 morning to create a business climate to support the development of small and medium-sized enterprises (SMEs) in Vietnam.
As the ADB committed in October, it will carry out a three-year loan package project with the funding of almost US$100 million for developing SMEs support programme. The project loan is divided into two back-to-back subprograms. The first subprogram, to be undertaken from November 2004 to May 2006, will be financed by a US$60 million loan from ADB’s concessional Asian Development Fund (ADF). The loan carries a 24-year term with a grace period of eight years, with interest is set at 1% per annum during the grace period and 1.5% per annum thereafter.
The project, ADB’s first policy loan in Vietnam specifically designed to promote an enabling environment for the SME sector, will undertake intergovernmental coordination and stakeholder consultation to systematically identify and resolve constraints facing business.
The project will enhance the policy and regulatory framework, improve SMEs’ access to finance and land use rights, and help increase their access to domestic and international markets by improving industrial and technical standards.
In Vietnam, the government and financers community all agreed that Vietnamese SMEs is the motivation to boost the economic growth and create jobs for local workers. Recently, the Vietnamese government has actively undertaken the important measures to further boost the development of SMEs by issuing Decree 90, creating the regulatory framework to support the development for these enterprises.
In the aim to support the implementation of the SMEs support programme, ADB has cooperated with the Danish government and Swedish government to grant a non-refundable aid totalling US$1.4 million for the Vietnamese government.
The project will be co-financed by the Agence Francaise de Development with 25 million euro (about US$29.8 million), and Kreditanstalt fur Wiederauflbau (Germany) with 20 million euro (US$23.8 million).
The first subprogram of the project is expected to be completed in May 2006. After the first subprogram ends successfully and depending on the budget source of ADB, the bank will continue to carry out the second subprogram with the funding of US$40 million.