Coordination has been mentioned more and more by donors and beneficiaries, particularly in a cross-cutting area such as small and medium enterprises (SME) development where the Vietnamese Government is paying increased attention. This paper will take a snapshot of the overall picture of SME development in Vietnam and how donors are assisting the government in this process. In addition, the author analyzes the legal and institutional framework for donor coordination and what has been done by the Agency for SME Development (ASMED) in the field. Thinking how better coordination and cooperation among donors and between donors and the government could be achieved in SME development in Vietnam, policy recommendations are made for both government and donors to avoid possible overlapping, to fill the gap and to bring about the best efficiency.
Trang 1The term "small and medium enterprises"
(SMEs) was first mentioned in Vietnam only a
decade or so ago Yet interest in this area from
all stakeholders government agencies, civil
societies, business people and donors has
dramatically increased over this short period of
time, given the importance of SMEs to the national
economy The trend has been similarly observed in
the international and regional economic contexts in
the late 20thand early 21stcenturies
The development of SMEs has resulted in a pressing need for the government to create a legal
framework for them, a set of policies that truly
depict the very nature of the sector and soundly
address its difficulties in development, and at the
same time establish jointly with the private sector
a system of SME support institutions These efforts are to ensure SMEs receive at least as many incentives as large enterprises do in conducting business and that they do not suffer from disadvantages due to their characteristics, such as a smaller workforce and capital
A large number of bilateral and multilateral donors have been active in Vietnam during the last
15 years and have increasingly been involved in all aspects of Vietnam's socio-economic development Unlike other areas where support can more easily supplement each other, due to the cross-cutting nature of SMEs in terms of needs, sectors, localities, and differences in the social and economic contexts, different technical approaches
ABSTRACT Coordination has been mentioned more and more by donors and beneficiaries, particularly in
a cross-cutting area such as small and medium enterprises (SME) development where the Vietnamese Government is paying increased attention This paper will take a snapshot of the overall picture of SME development in Vietnam and how donors are assisting the government
in this process In addition, the author analyzes the legal and institutional framework for donor coordination and what has been done by the Agency for SME Development (ASMED) in the field Thinking how better coordination and cooperation among donors and between donors and the government could be achieved in SME development in Vietnam, policy recommendations are made for both government and donors to avoid possible overlapping,
to fill the gap and to bring about the best efficiency.
Key words: donor coordination, SMEs, ASMED.
How Can It Be Strengthened?
Nguyen Hoa Cuong
Mr Nguyen Hoa Cuong is a Deputy Director (in-charge) of the International Cooperation Division, the Agency for SME Development (ASMED), Ministry of Planning and Investment (MPI)
Trang 2have been used Hence, delivering assistance to
SMEs that avoids overlaps, converges approaches
and iden-tifies best practice has posed a challenge
for donors Therefore, the need for more effective
donor coordination has become increasingly
important
In Vietnam, there is a regulatory framework for donor coordination and there are also different
coordination forums set up by government
agencies and the donor community The Agency
for SME Development (ASMED) was established
as the "focal point/coordinator in SME support"
Apart from the Decree on SME development, the
recentlyapproved SME Development Plan 2006
-2010 aligns government and donor objectives
further and ensures that donor and corresponding
national resources go where the highest demand is
reported These factors are actively contributing to
efforts in donor coordination for the efficiency of
intervention in SME development
Apart from the Introduction and References, this paper is structured into three sections Section
1 describes the role of Vietnamese SMEs in the
national economy and their performance in recent
years, and analyzes outstanding issues in SME
development Section 2 looks at what has taken
place in donor coordination in the field Section 3
provides recommendations for improving the
process in the years to come
1 SME development in Vietnam
1.1 SMEs' role in Vietnam's economy
The economic renovation (doi moi) process
initiated in Vietnam in 1986 brought about not only
new basic institutions of a market economy but
also the gradual untying of the private sector The
amended Constitution (1992) had for the first time
affirmed the important role of the private sector in
the national economy At that time the term "small
and medium enterprise" began to be mentioned in
Vietnam But it was not until late 1999, when the Enterprise Law was approved, that the business community could make its real breakthrough: the surge in the number of SMEs throughout the country
Government Decree 90/2001/ND-CP (Decree 90), promulgated in November 2001, provided for
the first time an official definition of an SME as "a
business establishment with registered capital of
no more than VND 10 billion (equivalent to USD 630,000) or with an annual average workforce of
no more than 300 employees", and stipulated
incentive policies and support measures specifically designed for SMEs The Comprehensive Poverty Reduction and Growth Strategy (CPRGS) finalized in May 2002 took it one step further by defining the role of SMEs as
"contributing to the growth of the national economy, job creation, poverty alleviation and hunger eradication".
Vietnam's first SME Development Plan 2006
- 2010 clearly stated the importance of SMEs in economic development and laid out an action plan for government agencies in the context of Vietnam deepening economic integration, particularly World Trade Organization (WTO) accession
In Vietnam, the SME sector has actively contributed to employment and income generation
at low cost for the additional one and half million people entering the labor force annually, not to mention its role in maintaining the high mobility of the labor market Apart from being a dynamic sector in the economy, SMEs play an important role in narrowing the development gap among localities, between urban and rural areas, and helps preserve traditional craft sectors where large-scale industrial production is inefficient SMEs have also been good partners of foreign-invested enter-prises in support industries and other types of subcontracting
As at the end of March 20071, the total number of registered enterprises in Vietnam
Trang 3reached nearly 270,000, meaning that more than
100 new entrepreneurs took their first step into the
marketplace every day, of which some 97% were
SMEs Statistics show that the SME sector
accounts for around 26% of the country's
workforce, generates 26% of total GDP, and
contributes 31% of total industrial production and
78% of total retail revenue2
As in many other developing countries, SMEs in Vietnam are characterized by internal and
external constraints such as shortages of capital,
appropriate technology, advanced management
skills, and efficient business linkages and
representation; difficulties in accessing factor
markets; and others Therefore, it is difficult to
cover all SME needs under a single support
intervention or to gain immediate results As a
result, the government and donors in Vietnam have
been gradually shifting their attention and efforts
to a "sector-wide approach" (SWAp) The SME
Development Plan 2006 - 2010 also provides the
framework necessary for the planning and
implementation of a SWAp in the field of SME
development
1.2 Outstanding issues in SME
development
Before the government identified its own national and provincial SME support institutions,
the business community had launched
self-support systems that included mostly informal
entrepreneur groups or clubs as well as
commercial relationships with independent service
providers and commercially-run affiliates of
business associations in training, consultancy and
facilitation Presently, some 200 major business
associations3 are active as demand-driven
supporting entities that help member enterprises in
facilitating relationships with each other, in
supporting same-sector partners, in creating a
common and highly representative voice4, in
advocating policy changes, and so on Among
these, the Vietnam Chamber of Commerce and
Industry (VCCI), the Hanoi and Ho Chi Minh City Union of Associations of Industries and Commerce (HUAIC), the Young Entrepreneurs Association (YEA) and others are among the most prominent For the government's part, the ASMED under the Ministry of Planning and Investment (MPI) was established in 2002 as a result of Decree 90 and was authorized to be the focal body for all SME development policies and the overseer of implementation of all government-funded SME support programs as well as the counterpart in Official Development Assistance (ODA) projects and programs in the field
Under Decree 90, a high-level advisory body
to the Prime Minister on SME development - the SME Promotion Council - is chaired by the Minister for Planning and Investment and draws its membership from 12 Deputy Minister-level officials, major city/province authorities and associations/professional organizations ASMED
is the Secretariat of the Council The Provincial Departments of Planning and Investment were also assigned to be the focal agency for local SME development, covering policy works, support programs and periodical updates on local SME status
These government focal points at different level of authority indeed need intensive capacity building before they can (and actually must) "catch up" with the whole matrix of business supporters and can contribute to the differentiation of support service provision within a network of SME support institutions The network contains those providing sector-based support such as the Provincial Industries Agency under the Ministry of Industry, the Agricultural Encouragement Center under the Ministry of Agriculture and Rural Development, the Trade Promotion Agency under Ministry of Trade, and others, or services of a more generic nature, such as those provided by universities Table 1 illustrates the present situation of different SME support institutions While institutions in
Trang 4Table 1: Groups of SME support institutions in Vietnam
public-private representation
monitoring, provision of information on business regulations for SMEs and similar responsibilities in business registration, SOE restructuring, domestic investment encouragement, government agency for coordination and facilitation, does not get involved in direct service provision, except
in regulatory information
I Departments of Planning
and Investment at provincial level
Provincial SME policy at local level, support programs
at local level and monitoring of SMEs and needs at localities, local level policy coordination, does not get involved in BDS
or financial service provision
Government Agencies
Provincial and National
Provincial Industrial Promotion Agencies Provincial Investment Promotion Agencies Agriculture Encouragement Center of the Ministry of Agriculture and Rural Development
Trade Promotion Agency under the Ministry
of Trade Technical Assistance Centers, ASMED/MPI All agencies in this category provide services to SMEs
provincial
Of a general nature (VCCI, Young Entrepreneurs, etc.) or sector specific
Provision of BDS and advocacy functions
Providers and Financial Institutions
Throughout the country
Training and consulting companies, independent consultants in BDS provision State owned and joint stock banks and leasing companies in financial service provision
Research Institutions
Throughout the country
Provision of BDS to SMEs, through some SME Offices or Centers, but mostly via their members acting as freelance consultants for SMEs
Trang 5Group I are responsible for policies and the
facili-tation of market development in SME services,
institutions in Groups II to V have functions
vary-ing from advocacy to business development
serv-ice (BDS) and financial servserv-ice provision
For a longer vision and stronger commitment from the government, the SME Development Plan
placed clear emphasis on the State's creation of "a
sound policy, legal and institutional environment
that ensures fair competition for SMEs so as to
mobilize all internal and external resources for
development investment" The Plan also stressed
the importance of awareness raising for all-level
authorities on the role of SMEs and stated a legal
binding where "SME development objectives are
also to be integrated into national goals and
specific socio-economic goals of every region and
locality" In addition, the support from the
government is expected to be shifted to indirect
support over a period of time
The SME Development Plan has come up with ten major tasks in SME development in the
coming years, with seven groups of measures to be
taken by line ministries: MPI, the Ministry of
Finance, the State Bank of Vietnam, the Ministry
of Science and Technology, the Ministry of Natural
Resources and Environment, and others
SME support work has developed, to some extent, heterogeneously based both on
supply-driven and demand-supply-driven ways Small enterprises
do not want to buy services until there is no other
solution, and if they do they try to buy familiar,
simple products first To this end, demand-driven
human resources training on request has been
by far much more popular than, say, quality
management consultancy Many providers
compete in providing supply-driven training
services without thinking of moving into other
business areas such as developing customized
solutions Presently, the commonly available
support services from domestic providers are
training, partial consulting, marketing, and so on
Looked at from another angle, in order to maintain a sustainable rate of growth in the economy in view of the diminishing contributions from the under-equitization state-owned enterprise sector, the emerging SME sector, with the majority coming from private sector, have to fulfill the higher-than-ever expectations of the government, the people and the international community One of the most fundamental ways for the sector to best utilize the resources it receives is through better coordination
1.3 Other issues
Among other significant issues is the SME definition as per Decree 905 It can be observed that the definition issue continues to be a concern in developing countries The reason for this is that the SME definition determines whether information on SMEs can be collected and used efficiently in the policymaking process targeting at developing, and particularly providing, SME suport (promotion) programs and reforming the business environment in the country
Another remaining issue is that Vietnam's statistics on the number of businesses are collected from various sources, leading to discrepancies The number of registered enterprises (sole proprietorships, partnerships and shareholding companies) is collected/consolidated by the Business Information Center (BIC) under ASMED and reported by provincial DPIs However, the system does not yet include sufficient information
on the number of dissolved enterprises The General Statistics Office (GSO) reports about 60%6 of the figure obtained by the BIC The General Department of Taxation (GDT) is a custodian of the records of tax registrations, which are collected through its provincial tax offices The number of enterprises reported by GDT normally falls between those reported by the BIC and GSO Additionally, there is approximately three million economic households that have
Trang 6semi-formal status Although market entry in
Vietnam has improved tremendously, bankruptcy
proceedings are still complicated and not too well
accepted socially7 The government has made
significant efforts in encouraging the formalization
of semi-formal economic households, without
jeopardizing their potential for employment
creation Nevertheless, market entry and exit
conditions, the way enterprises are taxed, social
insurance and security burdens that would accrue
to fully formalized businesses are sensitive policy
decisions, and without appropriate information
about SMEs such decisions are even more difficult
to take
Meanwhile, the SME sector unceasingly develops The Prime Minister expects that Vietnam
will have some 500,000 enterprises by the year
2010 Serving this, many SMEs will be much more
difficult for government agencies if they do not
have a sound strategic orientation, prepare well at
least in-synch with the growth of the enterprise
population, and focus their efforts according to
targeted policies
2 The donor community and SME
development in Vietnam
2.1 The diversified donor community
In recent years Vietnam has become one of the major ODArecipients with an average annual
commitment of around USD 2.8 billion between
1993 and 20068, including loans and grant
programs Major multilateral funding agencies
include the World Bank (WB), the International
Monetary Fund (IMF), the Asian Development
Bank (ADB), the International Finance
Corporation (IFC), the United Nations
Development Program (UNDP), and the European
Union (EU), and executing agencies such as the
United Nations Industrial Development
Organization (UNIDO), the International Labor
Organization (ILO), and the International
Trade Center Active bilateral donors are Australia/AusAID, Canada/CIDA, Denmark/ DANIDA, France/AFD, Finland, Germany/GTZ-KfW, Italy, Japan/JICA-JBIC, SNV/Netherlands, Norway/NORAD, Sweden/SIDA, Switzerland/ SDC-SECO, the United Kingdom/DFID and the United States/USAID Multi-donor trust funds such as MPDF and international non-government organizations such as Oxfam (Quebec/UK/Hong Kong/Belgium) etc are also active in Vietnam Donors have various objectives when funding interventions, including those focusing on SME support They also differ in the implementation modalities they employ in Vietnam These two differences result in the need for coordination, although there is a discernible willingness among donors to try to converge around common objectives and similar implementation modalities Over the last few years most donors have been in transition from the donor-execution modality to a more or less national-execution modality In most projects/programs, donors used
to play a greater role and responsibility, including detailed planning, financial management, recruitment of project staff, etc Projects could be implemented quickly with full donor support but were sometimes criticized for using large amounts
of resources for international consultants, and qualified as "hard-liners", "inefficient" and " unsatisfactory" (by local beneficiaries) for not being demand-driven Nowadays, donors are moving away from directly planning a project's detailed activities and trying to strike a balance between their interests and the needs of beneficiaries,
as proposed by local stakeholders Countries and international organizations are more and more withdrawing their representatives' authority (communicated by their signature for funds disbursement) and giving their Vietnamese counterpart agencies more ownership in terms of financial management, but they have retained their cost norms and salary levels and maintained
Trang 7independent, external auditing This modality
has not been too successful unless the local
counterparts have had the capacity for
implementation, including transparent procedures
that would ensure accountability In most cases,
national execution has improved ownership in
many ways and the sustainability of projects has
been better ensured
Over recent years the donors have brought into Vietnam the concept, the awareness and the
lessons of experience about supporting SMEs - an
issue of great interest to either developed or
developing economies over dozens of years
By supporting different interests, donors vary significantly and can be categorized under a
number of categories and sub-categories, such as
technical approach, location, counterparts,
beneficiaries and sector9 The first and foremost
categorization for donor interventions in Vietnam
is by their technical approaches Most
interventions can be classified as "business
enabling environment", "access to BDS", or
"access to finance" Under these broad categories,
interventions either come under some
sub-categories such as direct support to policies
through dialogue facilitation and research,
institutional capacity building and policy based
lending, or a mixture10
It is worth nothing that, for Vietnam, only a few best practices from donors' technical
inter-vention can facilitate SME development due
to its cross-cutting nature and the characteristics of
individual economic sectors
An interesting shift in recent years can be observed with respect to the "locations" or "levels"
where donors have been positioning their
inter-ventions In the 1990s, most donors preferred
to deliver their support at central levels and were
most likely to be found in the capital of Hanoi
Starting from 2000, a significant number of donors
have launched interventions in local levels
(provinces) This is in line with the priorities of the government, in that policy formulation should be supported with policy implementation and this mostly happens in provinces in Vietnam As a result of the shift in focus more towards policy implementation, the coordination of the "location"
of interventions has gained in importance This is best done at the stage when interventions are formulated and requires up-front locality-specific research to be conducted jointly by donors, the government and local stakeholders In addition to this, some donors, especially bilateral ones and more commercially-oriented interventions, focus more on urban areas where a large number of enterprises can help grow bilateral trade and investment cooperation and where fast-growing firms can receive support and play the role of
"economic locomotive" and tug the surrounding areas Some others, especially NGOs, focus on rural areas with a wide range of beneficiaries and contribute to poverty reduction and hunger alleviation efforts in the most needed and critical areas, not to mention in integrated programs to give support to the disadvantaged beneficiaries such as women and farmers
Some particular interest from the inter-national community does exist in terms of a specific region of Vietnam More NGOs prefer to work in northern, mountainous areas and north-central Vietnam Bilateral technological support is popular in the south Meanwhile, gender-specific support is mostly based in central Vietnam Regions with clusters have also attracted some level of interest from recent interventions Main offices of programs providing support with credit facilities are primarily located in the two biggest cities of Hanoi and Ho Chi Minh City, although their interventions are nationwide through their partnerships with Vietnamese financial institutions
Because most donor projects involve capacity building elements, a large number of
Trang 8projects entirely focus on or have some components
that focus on capacity building for the SME
support system, including government agencies at
all levels (ASMED, provincial people's committees,
DPIs), business associations and service providers
Specialized organizations such as commercial
banks and universities/institutes receive technical
assistance channeled through specific schemes/
components in some integrated programs11 As a
result, the selection of government counterpart
agencies for donor-funded projects in Vietnam is
rather diversified For many years, VCCI and the
Central Institute for Economic Management
(CIEM) have been preferred by donors because of
their capacity in implementing their respective
professional works as well as in handling multiple
projects ASMED, since its establishment, has
been recognized as the "right" government focal
point in SME development issues and has become
the more common counterpart in SME/PSD
projects Currently, each of these three
organi-zations acts as partner in 14% of all
projects in the SME/PSD field Other projects
chose a wide range of Vietnamese counterpart
agencies/implementing agencies such as
ministries/governmental agencies, business
associations, mass organizations and so on12
Most of the projects' direct beneficiaries are the private sector or SMEs Many projects
explicitly address or have a clear title
incorporating "private sector" or "SME",
while others provide support to more closely
defined/targeted beneficiaries such as women
entrepreneurs, small export companies, ceramics
households, pro-poor growth, etc
In line with the trend to move towards policy implementation at local levels, SME donors have
also started focusing on sector-specific schemes
such as cluster development, subcontracting
issues, local economic development and, at a
broader level, on value - chain development
2.2 Donor coordination: legal and institu-tional frameworks and what has been done?
Donor coordination in Vietnam has largely been regulated by the followings legal provisions (Box 1)
It is worth noting that these documents have covered donor coordination but generally aim to enhance the effectiveness of every single inter-vention rather than to consolidate interinter-ventions The SME Development Plan 2006 - 2010 consolidated many efforts to make a unified national strategy in all issues related to SMEs The Plan, which plays its role in SME development much like the role of the CPRGS in Vietnam's socio-economic development, is expected to set a common framework for donor intervention Similar to the case in SME development, the regulatory framework for donor coordination is at
a preliminary level Furthermore, coordination
is closely related to the goodwill of partners what-ever the regulatory framework may dictate and is difficult to successfully manage
From an institutional framework angle, the Consultative Group (CG) meetings bring together twice a year participants from the Vietnamese Government and representatives of about 50 bilateral and multilateral donors to Vietnam These meetings provide a forum for discussions between the government, represented by senior officials from key government bodies including MPI, the Ministry of Finance, and the State Bank of Vietnam, and its development partners on economic policy issues, strategies for reducing poverty, and ODA effectiveness The CG for Vietnam is co-chaired by the MPI and the Country Director of the World Bank in Vietnam Decree 131/2006/ND-CP states that MPI "be the focal point of the government in making preparations for annual CG Meetings and international forums on ODA" Over the years the CG meeting has been a
Trang 9regular venue for Vietnamese and foreign players
in the field of ODA
Over 20 Government-Donor-NGO Partnership Groups have been formed under the CG to give
sectoral focus to inputs and to improve coordination
One of these is the "Partnership Group for SME
Promotion and Private Sector Development"
(SMEPG), which had its first meeting in April
2000 hosted by donors and started being chaired
by ASMED in 2003 after the agency's establishment The SMEPG aims to ensure donor coordination and the effective use of ODA in support of SME development On the instruction
of MPI, Japan and UNIDO initiated the donors'
Box 1: Regulatory framework for donor coordination in Vietnam
· Decree 131/2006/ND-CP (promulgated by the government in November 2006) replaced its predecessor, Decree 17/2001/ND-CP (promulgated in May 2001), and issued regulations on the management and utilization of ODA
· Decree 61/2003/ND-CP promulgated by the government in June 2003 regulates the mandates, tasks and organizational apparatus of MPI, states that MPI, in regard to the management of ODA, "…acts as a contact body for the promotion, coordination and management of ODA funds…" and "…leads the preparation and organization of ODA promotion and coordination in accordance with ODA promotion and use strategies and plans…"
· Decision 603/QD-BKH issued by MPI in August 2003 stipulates the mandates, tasks and organizational structure of MPI's Foreign Economic Relations Department (FERD) This Department acts as a focal point in MPI for ODA coordination and management, inter alia, within the responsibilities of MPI
· Decree 90 stipulates that ASMED is responsible for "implementing international cooperation for SME promotion by allocating and balancing resources and raising external funds for SME assistance" This means the mobilization of ODA support for the SME sector is the responsi-bility of ASMED
· Recent developments in donor coordination principles and practices include the Paris Declaration on Aid Effectiveness released in March 2005, which quoted under its section on harmonization that donors should "work together to reduce the number of separate, duplicative missions to the field and … promote joint training to share lessons learned and build a community of practice" The localized version of the above Declaration is the Hanoi Core Statement, which states "…the Government … further strengthens its leadership role in coordinating aid at all levels…" and "…the Government of Vietnam and donors work together
to share other reviews and carry out more joint reviews…"
· The revised Vietnam Harmonization Action Plan and the ODA Master Plan incorporated better donor coordination and improvements in other ODA issues for the maximum effectiveness of aid efforts
Source: Compiled by the author.
Trang 10contribution in co-chairing the SMEPG with
ASMED Presently, the SMEPG meets twice a
year, normally a few weeks before the CG
meeting The co-chairs are selected on a rotation
basis among key donors in the field
In an attempt to improve the effectiveness of the SMEPG in Vietnam, it agreed to initiate the
establishment of thematic working groups under
the Partnership at its June 2005 meeting These
working groups were identified as: business
regulatory reform at the central level, local
economic governance, BDS, sectoral approaches,
SME finance, sustainable business practices, and
business research and monitoring These working
groups consist of project management staff and
professionals instead of representatives of donors
(who are members of the SMEPG) and are
seeking ways to improve information exchange,
coope-ration and coordination of activities at the
level of implementation Results of work conducted
through the thematic working groups are then
reported at the next meeting of the SMEPG
In addition to the above initiatives, there have been other attempts that aim to simplify the work
of donors in Vietnam and/or reduce transaction
costs among donors The Like-Minded Donor
Group (LMDG) is an ad hoc grouping of
Hanoi-based bilateral donors (Sweden, Denmark, the
Netherlands, Canada, Finland, Norway,
Switzerland and the United Kingdom) who are
drawn together by a common commitment to use
the CPRGS as a framework for ODA planning and
delivery The LMDG is based on a single
donor taking the lead with pooled financing,
significantly reducing the transaction costs among
donors and providing faster and more flexible
responses to government The group of five
multilateral and bilateral banks (WB, ADB, JBIC,
AFD and KfW) has also been sharing strategies,
practices and procedures, as and when possible, in
implementing common financial projects in
Vietnam Recently the EU worked on a common
strategy titled "EU Action Plan for Harmonization
of Aid in Support of Private Sector Development", which provides recommendations to be used for all member states for better efficiency in implementing development cooperation projects in Vietnam
As mentioned earlier, for its part, ASMED is the sole government body taking responsibility for SME development, including the task of being the focal point and counterpart in donor-funded projects/programs in the SME field Established in
2002 and restructured in 2003, ASMED now has seven divisions, three centers and a staff of around
70 The International Cooperation Division, which specifically deals with external relations issues, including donor coordination, has four staff members
Statistics show that ASMED is the national partner in 14% of 58 projects that are currently active or have just finished in the field of SME promotion/PSD13 In every brainstorming or fact-finding working session with donor representatives and consultants, ASMED has welcomed initiatives with a strong emphasis on the need for aid coordination, particularly in terms of location Orientation has always been provided at an early stage in project formulation regarding the latest priorities in government policy towards the development of the SME sector At every major donor event, ASMED has continuously conveyed the message of improved donor coordination Since its establishment, ASMED has chaired the SMEPG meetings with two co-chairs representing the donors At every SMEPG meeting, ASMED reported on the current status of SME development in Vietnam and clearly stated the government's priorities to an audience of more than 50 representatives from all major Hanoi-based donors/projects in the SME field ASMED and some major donors initiated and realized the idea of dividing the SMEPG into thematic working groups under this partnership in order to have more