Washington D.C., November 12, 2002
—The Mekong Project Development Facility (MPDF), an IFC-managed initiative for small and medium enterprises (SMEs) in Vietnam, Cambodia, and Laos, has received approval to extend its operations for a second five-year period beginning January 1, 2003. IFC, the private sector development arm of the World Bank Group, also approved funding of US$5 million for this second phase.
With headquarters in Hanoi, MPDF has worked since 1997 to promote sustainable private sector development in its three target countries. A key driver of development in these transition economies is the SME sector, which MPDF supports at three levels—selective direct engagements with individual enterprises; capacity building of local support bodies such as financial institutions, consulting companies and business associations; and policy reform efforts to improve the often difficult business environment for SMEs.
Since its inception, MPDF has secured funding for over 130 projects representing total investments of $109 million. It helped raise more than $60 million of that as equity or long-term loans as well as providing various types of technical assistance. These projects are estimated to have created 17,000 jobs directly and will generate about $132 million a year in foreign exchange earnings. Perhaps more importantly, during this period MPDF trained over 4,000 SME owners and managers and 2,700 bank officers, sold 43,000 management training workbooks, published 13 private sector discussion papers, and helped establish four new SME support institutions.
In Vietnam, MPDF’s recent initiatives have included support for the development of a new regional bank training center based in Ho Chi Minh City. It is owned by Vietnam’s leading private banks and provides a broad range of training and technical assistance as needed by the local banks. Building on the successful sale of over 40,000 “Teach Yourself Business Management” workbooks, MPDF developed a wide-ranging flexible learning program that will provide training materials of various types and formats. A new initiative helps strengthen the member services and advocacy role of local business associations. In Cambodia and Laos, projects include working to strengthen key business associations, such as the tourism and bankers associations in Cambodia, supporting microfinance institutions, helping commercialize the income-generating activities of SMEs, and supporting SME and bank management training programs.
A recently completed rigorous independent evaluation of MPDF found that the project’s original rationale was sound and remains valid, and the project had surpassed most its targets. It noted that MPDF not only provided valuable services to the SME sector directly, but played a very important and broader role in developing the market for private sector services through financial, training, and consulting services. The evaluation also made a number of technical recommendations about ways to improve MPDF’s operations. They will be adopted in the upcoming second five-year phase.
“We are delighted to receive the support from IFC to start our next phase,” said MPDF General Manager Mario Fischel. “We have achieved some very encouraging results in our first five year,” and with the broadening of our approach to developing local support institutions, such as banks, training institutes, consultants, and business associations, we hope to be even more effective in our next phase and contribute to the evolution of viable models for SME development in general.”
The new $28 million, five-year budget for MPDF II, of which the IFC will provide $5 million (18 percent), will focus on the following programs:
(1) Company Advisory Assistance: MPDF will continue to provide financial, technical and managerial assistance to private SMEs, but will shift the objective of its assistance to developing the demand for and capacity of local providers of business development services.
(2) Capacity Building of Support Institutions: Building on the achievements of phase I, this will form the heart of future activities, and encompass training and technical assistance to local financial intermediaries; developing new products and expanding capacity of the flexible learning program; helping business associations influence policy reform and better serve their members; promoting exports through development of training materials and adoption of high-quality social and environmental standards.
(3) Research and Information: Pursuing research and studies on private sector status and constraints, with emphasis on specific areas where there is strong need and MPDF has a comparative advantage through its direct enterprise-level experience.
In addition to IFC, current donors to MPDF include the Asian Development Bank (ADB), Australia, Canada, Finland, Japan, Norway, Sweden, Switzerland, and the United Kingdom. France has agreed in principle to provide funding to MPDF II for a three-year period. Other potential donors, including Belgium and the Netherlands, are also considering contributing to MPDF II.
MPDF is one of nine IFC-managed SME facilities around the world. Managed by the SME Department (a joint imitative of IFC and the World Bank), together these facilities have more than 330 field-based staff and a combined annual budget of $31 million.
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications. More information is available at http://www.ifc.org and http://www.ifc.org/sme.
