USAID Linkages for Small and Medium Enterprises (LinkSME) Project Quarterly Progress Report

The project's purpose is to foster significant increases in the quantity and/or quality of business linkages between Vietnamese SME-firms and lead firms. Systemic changes include evidence-based regulatory and policy recommendations to improve the SME enabling environment. The project's mandate extends beyond supporting new policy measures, helping the Government of Vietnam (GVN) improve how laws are implemented. In late March, Prime Minister Phuc approved a new one-stop-shop model that would handle administrative procedures (APs) relating to business registration, export-import procedures, land use, production safety, and tax payments. The model had been developed with substantial help from the project. The project scored two policy wins during the quarter. On January 1, Prime Minister Nguyen Xuan Phuc issued an ambitious and binding directive to improve the business environment and national competitiveness. The project had contributed substantially to the provisions in the document through policy advice given with respect to reforms measured by the World Bank's Ease of Doing Business (EoDB), reforms and measures that would facilitate non-cash payments, and measures that would mitigate the impact of the pandemic on businesses. On March 26, the Ministry of Planning and Investment (MPI) issued a decree that clarified how various provisions of the new Law on Investment would be implemented. The project had contributed to the development of this decree, offering recommendations that would clarify sectors where foreign investors were either prohibited or otherwise subject to conditions of entry, streamline the investment appraisal process, improve transparency, and support more efficient implementation. The project's progress in market linkages was also notable. The project pre-evaluated and assisted several SMEs in preparation for introduction to lead firms. Lead firms issued nine purchase orders to SMEs during the quarter. Additionally, five linkages from purchase orders facilitated through the project's direct linkage assistance and issued in previous quarters were completed, with a total value of $86,726.80. Two new pillars under market linkages gained momentum with the onboarding of an Access to Finance (A2F) Technical Assistance Manager/Advisor in January and the identification of a similar officer for digital transformation (DX) in March. The project was negotiating with several banks and reaching out to women-owned SMEs regarding A2F opportunities by the end of the reporting period. It also had finalized its activity plan for the remainder of the year with the Agency for Enterprise Development (AED). On DX, the project and the AED launched its outreach to SMEs through a well-publicized event held in Ho Chi Minh City (HCMC) in January. The project's staff restructuring was nearly complete as the quarter ended, and the project was well on its way to meeting its targets for the number of pre-evaluations under its monitoring and evaluation plan. The project's achievements are even more impressive given the extensive staff restructuring that was undertaken during the quarter. The project's progress is measured by key performance indicators (KPIs) and is reported in accordance with Section F, Deliveries or Performance, F.6. Deliverables, subpart a. Quarterly Progress and Financial Reports of the USAID LinkSME contract. The project's financial report shows that the obligation at the end of Y3 Q2 was approximately $17.4 million, with spent to date as of March 31, 2021, at $8,882,007.