SME Cluster Development Initiatives in CLMV countries

Madhurjya Kumar DuttaProgram Manager,

Mekong Institute, Thailand29th October 2012

YGMS Program

AEC 2015Goal :Regional economic integration by 2015.

AEC envisages :

(a) a single market and production base,(b) a highly competitive economic region, (c) a region of equitable economic development, and (d) a region fully integrated into the global economy.

AEC 2015To transform ASEAN into a region with free movement of goods, services,

investment, skilled labour, and freer flow of capital.

Areas of cooperation include :• human resources development and capacity building; • recognition of professional qualifications; • closer consultation on macroeconomic and financial policies; • trade facilitation measures• enhanced infrastructure and communications connectivity; • development of electronic transactions through e-ASEAN; • integrating industries across the region to promote regional sourcing; • enhancing private sector involvement for the building of the AEC.

“One Vision, One Identity, One Community”

ASEAN GMS Countries - 2010

Land area: 1.94 M sq Km

Population: 232 M

ASEAN Countries - 2010

Land area: 4.48 M sq Km

Population: 614 M

1,600

300

1,200

3,211

819

2,533

Achieving ASEAN 2015 is Constrained by “The Prosperity Gap”

2003 2009

Source:–AEC Chartbook 2010

Per Capita GDP – US$

CLMV -SME situation• SMEs are the backbone of every economy

in the GMS. • SMEs- 95% of all private enterprises in the

GMS countries • Employ 75-90% of the domestic workforce. • Small Share of SMEs’ production in total

domestic output - average 20-40% with direct contribution of SMEs to merchandise export earning is only 15-25 %.

• Challenge - how to link more effectively with regional and global markets as SMEs in the CLMV countries belong to domestic market-oriented industries.

Major issues faced by CLMV countries that hinder narrowing development gaps and economic integration into AEC include:

Underdeveloped public human resource capacities and

institutional support systems to develop and implement trade

and investment policy and regulatory framework

Lack of industry clusters and facilities that can provide

SMEs access to regional and global value chains

Small and Medium Enterprises

Limited ability to integrate into ASEAN and global value chains

Duration: 3 years (2012-14)Partners: Ministry of Industry, Commerce, Industry and Trade associations, SME associations in Cambodia, Lao,

Myanmar and Vietnam.

Outcomes:

Increased Understanding of Value of SME Clusters and Export NetworkIncreased understanding and utilization of FTAs by SME exporters

Capacity Development for Integrating CLMV Economies into

AEC 2015

Approach:Modular Capacity Development

Learn to Do Do to Learn

Share to Learn

SME Cluster Development and Export Network

SME Cluster Development and Export Network

Training on SME cluster and Export consortia

Action Research

Investor Forum

a. Modular Training Programs a. Modular Training Programs

b. Action Plan b. Action Plan

Implementation of action plan to form cluster and export consortia

c. Action Researchc. Action Research

Process documentation of action research

Policy Briefs on SME cluster development

d. Investor Forumd. Investor Forum

Market access to SME consortia

Implementation Strategy

SME Cluster and Export Consortia

Capacity Building Group

Capacity Building Group

Identify Sector/Product Identify Sector/Product

Action Plan Preparation for Capacity Building

Action Plan Preparation for Capacity Building

Coaching for Export Consortia Formation

Coaching for Export Consortia Formation

Implement Action Plan on SME cluster development Consortia

Implement Action Plan on SME cluster development Consortia

SME Consortia Group SME Consortia Group

Value Chain Actors Identification

Value Chain Actors Identification

Action Plan Preparation for Export consortia

Action Plan Preparation for Export consortia

Implement Action Plan Coaching Value Chain

Implement Action Plan Coaching Value Chain

Export Consortium Formed

Export Consortium Formed

Export Consortium Formed

Export Consortium Formed

Market Linkage Market Linkage

Investor ForumInvestor Forum

Action Plan

1 Cambodia Capacity Building (CB) - Milled Organic Rice ClusterGroup: Lun Yeng, Lay Navinn, Yun Sovanna, Ek Shopheara

2 Cambodia Consortia Group (CG)- Instant Noodle Export ConsortiaGroup:Linh Thorn&Pok Mony

3Laos CB- Silk ClusterGroup:Malaykham Philaphone, Phetanong Insarn & Somthong Philavanh,Philayhack Phothisane

4 Laos-CG-Furniture Export ConsortiaGroup:Vannitha Phommavong, Phithikone Vilaithong

5 Myanmar CB Dehydrated Vegetable ClusterGroup:Aung Win, Tin Htay, MuMu, Phyu Sin Thant

6 Myanmar CG Plastic Export ConsortiaGroup:Aung Myint, Aung Myo

7 Vietnam CB Silk and HandicraftGroup:MaiDieuHuyen, NguyenMinhHien,NguyenMinhHai

8 Vietnam CG Organic Tea Export ConsortiaGroup:HoangCongMinh, ThanVanSuu

Task of YGMS in Action Research

To document the process of SME cluster formation and the integration of the selected product into regional/global value chain.

Action research in CLMV countries and Korat Pork SME Cluster in Thailand

Attend one week training programme at Mekong Institute on “Action Research Methodology” during 12-16 November at Mekong Institute, Khon Kaen Thailand.

Assist National Researcher to develop action research plan defining objectives, work plan and deliverables.

Conduct and assist field action research and document process of the identified SME clusters and Export Consortia as per research plan.

Analyze data on SME cluster and export consortia formation on identified SME clusters.

As part of YGMS output, write report on SME product cluster Mekong Institute

Present the final results in MI as part completion of YGMS program.