STRENGTHENING DISASTER AND CLIMATE RESILIENCE OF SMALL & MEDIUM ENTERPRISES IN ASIA. Viet Nam. Roadmap for SME Resilience
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1 STRENGTHENING DISASTER AND CLIMATE RESILIENCE OF SMALL & MEDIUM ENTERPRISES IN ASIA Viet Nam Roadmap for SME Resilience
2 2 ROADMAP FOR STRENGTHENING THE DISASTER-RESILIENCE OF SMES The iprepare Business facility for engaging the private sector in Disaster Risk Management is a joint initiative by the Asian Disaster Preparedness Center (ADPC), the Asian Development Bank (ADB) through the Integrated Disaster Risk Management (IDRM) Fund and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH within the framework of the Global Initiative on Disaster Risk Management (GIDRM). It focuses on building disaster-resilient businesses in the region through partnerships to strengthen the resilience of the private sector, particularly SMEs; providing technical assistance in strengthening resilience on a demand-driven basis; supporting governments in strengthening the enabling environment that promotes risk sensitive and informed investments by private sector; and facilitating knowledge sharing at the regional and national levels. The Asian Disaster Preparedness Center (ADPC) is an independent regional nonprofit organization that works to build the resilience of people, communities and institutions to disasters and climate change impacts in Asia-Pacific. Over the past 30-years, ADPC has expanded its scope and diversified its operations for a programmatic approach that offers long-term and sustainable solutions to addressing the underlying causes of disasters and climate change risks. The Asian Development Bank (ADB) is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific. ADB assists its members, and partners, by providing loans, technical assistance, grants, guarantees, and equity investments to promote social and economic development. With support from the Government of Canada, ADB established the Integrated Disaster Risk Management (IDRM) Fund in 2013, to assist the development of proactive IDRM solutions on a regional basis within ADB s developing member countries in Southeast Asia, including Cambodia, Indonesia, Laos, Myanmar, Philippines, Thailand and Viet Nam. The Fund provides a strong mechanism for supporting ex ante investment in IDRM and complements the existing financing modalities of ADB for supporting ex post relief and recovery activities. In order to respond more effectively to the global challenges posed by disaster risks, the German Government, led by the Federal Ministry for Economic Cooperation and Development (BMZ), has founded the Global Initiative on Disaster Risk Management (GIDRM). The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ GmbH) has been commissioned to manage the GIDRM. The aim of the Global Initiative is to bring together German and regional experts from the public and private sectors, civil society and the academic and research community, to facilitate mutual learning across national boundaries as well as to develop and pilot innovative disaster risk management solutions. The Global Initiative focuses on three priority areas including Disaster Response Preparedness and Civil Protection; Critical Infrastructure and Risk-sensitive Economic Cycles; and Early Warning Systems. Publication details On behalf of the iprepare Business facility, Published by the Asian Disaster Preparedness Center (ADPC) SM Tower, 24th Floor 979/69 Paholyothin Road, Samsen Nai Phayathai, Bangkok 10400, Thailand Tel: Fax: adpc@adpc.net
3 VIET NAM 3 Acknowledgements The iprepare Business facility wishes to thank all the individuals and organizations who contributed to this Roadmap document, and who continue to support the regional project on Strengthening the Disaster Resilience of Small and Medium Enterprises in Asia. In formulating the Viet Nam country Roadmap the project team was grateful for inputs from Ministry of Planning and Investment (MPI), Ministry of Agriculture and Rural Development (MARD), Ministry of Industry and Trade (MOIT), Ministry of Natural Resources and the Environment (MONRE), Viet Nam Chamber of Commerce and Industry (VCCI), Hanoi Industry & Trade Association, Viet Nam Association of Small and Medium Enterprises, The Asia Foundation (TAF), Oxfam Viet Nam, World Vision Viet Nam and The Viet Nam Development Bank throughout the various consultations, meetings and forums over the course of the project.
4 4 ROADMAP FOR STRENGTHENING THE DISASTER-RESILIENCE OF SMES What is a Roadmap? Principally, the Roadmap document serves as a means of: Collating and clarifying priority areas for enhancing the disaster preparedness and coping capacities of SMEs in Viet Nam Identifying the relevant actors, stakeholders or policy owners for addressing these issues Outlining potential approaches or pilot initiatives for tackling the identified challenges As such, the Roadmap serves as a guiding document which can inform the relevant concerned agencies and organizations for SME development and disaster risk management (DRM) as well as policymakers, on the ways forward for strengthening the resilience of smaller enterprises in the country. Furthermore, the Roadmap is intended to align with relevant national plans, policymaking recommendations and legislative arrangements, for instance the forthcoming SME development plan (to continue on from the previous plan spanning ) and new a law on support for SME development which has been submitted to the Viet Nam national assembly this year. The Roadmap also takes into account pertinent issues identified at the global and regional levels relevant to SME and Business resilience. The Sendai Framework for Disaster Risk Reduction , the foremost global initiative on risk reduction and resilience building, identifies the private sector as a crucial stakeholder in efforts to build more disaster-proof communities and societies. In comparison with its predecessor the Hyogo Framework for Action , the Sendai Framework also has a more explicit focus on the need to protect people s livelihoods. Private sector resilience is therefore an important component of achieving Sendai s stated expected outcome for the substantial reduction of disaster risk and losses in lives, livelihoods and health in the economic social, cultural and environmental assets of persons, businesses, communities and countries 1. In the Asia Pacific region where SMEs account for a large proportion of all private enterprises, employment and contribution to GDP, smaller enterprises are a key component to effectively engaging the business sector in disaster risk reduction efforts. Notably, all of the SFDRR s four priority areas of: (1) Understanding Risk, (2) Strengthening disaster risk governance, (3) Investing in DRR resilience and (4) enhancing disaster preparedness for effective response & build back better in recovery, rehabilitation and reconstruction highlight areas where the private sector including SMEs can support resilience building efforts, including at the national and local levels. Correspondingly, the Emergency Preparedness Working Group (EPWG) of the Asia-Pacific Economic Cooperation (APEC) seeks to build capacity in the region so that APEC member 1 UNISDR (2015). The Sendai Framework for Disaster Risk Reduction
5 VIET NAM 5 economies can better mitigate, prepare for, respond to, and recover from emergencies and natural hazards. This aims to more effectively disaster-proof business, trade and economic growth and communities as well as information sharing, knowledge and technology to improve regional capacity on disaster risk reduction. A specific priority area under the EPWG Strategic Plan was Promoting public-private partnerships to develop joint disaster preparedness actions and build up disaster resilience with the objectives of creating stronger partnerships to support business and community resilience to disasters as well as promoting the development of effective business continuity and critical incident tools for SMEs to reduce their vulnerability and promote resilience. Additionally, APEC s Small and Medium Enterprises Working Group (SMEWG) which works to encourage the development of SMEs and to build their capacity to engage in international trade also acknowledges the need to build the disaster resilience of such enterprises to ensure their competiveness and survivability. The SMEWG Strategic Plan for has the objective to improve Natural Disaster Resilience and Ensure Business Continuity of SMEs and MEs under the priority area of Building Management Capability, Entrepreneurship, and Innovation. Alignment of the Roadmap approaches and pilot initiatives for tackling identified challenges with these global and regional frameworks is an important consideration for ensuring that disaster resilience building is undertaken in an integrated and coordinated manner. Towards a Roadmap for SME Disaster Resilience in Viet Nam Under the aforementioned project the iprepare Business team worked with relevant incountry partners to produce country reports which presented results from survey on the disaster resilience of SMEs as well as providing a strategic policy analysis of the enabling framework for SME disaster resilience in the respective target countries. Together with information gathered from consultations during a country mission in January 2016, the country reports were able to identify a number of key issues and the ways forward for strengthening SME resilience in the country, thereby informing the formulation of the Roadmap 2. For Viet Nam, the SME Resilience Survey identified a need for SMEs to have much greater awareness of the costs of disasters when they occur, and of the need to factor this into Business Continuity Management(BCM) and DRM training. It also identified the need to take a multi-hazard approach, given SMEs own preoccupations with the broader economic and business environment, in order to engage with them more effectively. The survey results indicate the importance of demonstrating to SMEs that BCM which improves disaster resilience also improves the bottom line i.e. profits and enhanced 2 ADPC (2016). Disaster Resilience of Small and Medium Enterprises (SMEs) in Viet Nam - Enabling Environment and Opportunities.
6 6 ROADMAP FOR STRENGTHENING THE DISASTER-RESILIENCE OF SMES competitiveness. SMEs surveyed were also interested in receiving support and advice from the government, as well as tax relief and other financial incentives based on BCP and demonstrated disaster resilience capacity. In terms of existing government support for SME disaster resilience, the key finding was that so far the institutional and legislative systems for DRM, CCA and SME business development have not joined hands to provide the necessary support. A Roadmap process is an opportunity to create both mutual understanding and awareness, and to establish specific mechanisms for such coordination into the future. Specific Roadmap thematic areas which are adapted from the country report were summarized in tabular format along with suggested key actions, potential pilot initiatives which might be carried out by relevant in-country agencies in partnership with ADPC or other development partners, as well as suggestions on the relevant actors, stakeholders or policy owners responsible for each of the identified Roadmap issues. The following Viet Nam Roadmap is the result of the various initiatives conducted under the Strengthening the Disaster Resilience of SMEs Project. It refers to the findings of the survey on understanding SME disaster vulnerability and the policy review on SME development and disaster risk reduction in the country. These findings pointed to the need for improved access to information on SMEs, increased awareness by SMEs, capability building, risk financing and participation in policy formulation by the private sector. The activities and initiatives for the Roadmap that would address these needs were identified during the National Business Forum on Strengthening Disaster Resilience of Small and Medium Enterprises (SMEs) in Viet Nam held on September 30, The forum was attended by around 80 officials and representatives from a range of government agencies, business owners of large and small enterprises, business associations, financial institutions, and development partner organizations as well as international and local NGOs. During the forum workshops, participants were asked to identify key actions, stakeholders and potential pilot initiatives. The outputs of the workshops were validated and refined in order to determine the final elements of the Roadmap which included inputs from Ministry of Planning and Investment (MPI), Ministry of Agriculture and Rural Development (MARD), Ministry of Industry and Trade (MOIT), Ministry of Natural Resources and the Environment (MONRE), Viet Nam Chamber of Commerce and Industry (VCCI), Hanoi Industry & Trade Association, Viet Nam Association of Small and Medium Enterprises, The Asia Foundation (TAF), Oxfam Viet Nam, World Vision Viet Nam and The Viet Nam Development Bank.
7 Roadmap for Strengthening the Disaster-Resilience of Small, and Medium Enterprises (SMEs) in Viet Nam Identified Roadmap Theme Suggested key actions Relevant actors, stakeholders or policy owners Potential pilot initiatives Timeline 1. Integrated legislative, policy and institutional frameworks for DRM & CCA and SME development & promotion Consider the following under the new law on SME support currently under development: Reviewing the definition of SMEs e.g. employment/assets criteria for medium enterprise classification, inclusion of low-income household businesses Institutionalizing cooperation between the government-led systems for DRM & CCA and SME development & promotion Institutionalizing participation of the private sector in national mechanisms for SME development and disaster resilience support Develop policies to encourage adaption to climate change which recognize the needs and requirements of SMEs. The policies should include specific incentives and penalties to stimulate engagement on the part of business owners Develop policies which create and allocate financial sources and funds for SME support, including DRR & DRM Identify criteria for SME support, e.g. enterprises have to demonstrate commitment to implement Business Continuity and risk reduction measures to access financial support Identify roles of related parties, include local governments, enterprises and other social organizations, in supporting disaster resilience socio-economic development Learn from experience on policy development and implementation from other countries for SME business development and engagement in DRM Government at all levels led by Disaster Management Center (DMC) and MPI SMEs and VCCI Other social organizations Advocate the review of how SMEs are defined in the process of developing the new law on SME support Review of existing policy plans and updating of associated institutional arrangements to create interface between the two systems e.g. National Strategy for Natural Disaster Prevention, Response and Mitigation to 2020; 2011 Action Plan on Promoting Public-Private Partnership for Disaster Risk Reduction in Viet Nam Develop draft implementation plan for relevant stakeholders following new law on support for SME development, including specific roles and responsibilities of the private sector, and cross-sector coordination and collaboration mechanisms Define and establish support mechanisms and criteria for financial incentives under the new law Participation and exchange of knowledge on integrated policy development for DRM & CCA and SME development & promotion via regional platforms e.g. Asian Business Forum VIET NAM 7
8 Identified Roadmap Theme 2. Enhancing SME general and disaster risk data Suggested key actions Review current statistical collection and analysis of SMEs to obtain more quantitative and qualitative data for policy interventions that address their disaster resilience Improve MARD s database relevant to SMEs (e.g. hazards, disaster loss & damages) in view of analysis and dissemination Synthesize and connect statistical data among MARD, GOS and MOF and TAC, under MPI including clearly identifying risk factors for SMEs Technical agencies as such meteorology and hydrology units should provide technical data for disasters Relevant actors, stakeholders or policy owners MPI, including TAC MARD National Development Planning Commission (NDPC) Steering Committee for Natural Disaster Prevention and Control (SC-NDPC)at commune & district levels Enterprise associations Ministry of Finance (MOF) General Statistics Office of Viet Nam (GOS) National Center for Hydrometeorological Forecasting (NCHMF) Potential pilot initiatives 1. SME General data Review SME database and survey methodologies and determine additional and disaggregated data to be collected e.g. turnover and economic contributions by enterprise size, ownership by sex, age of enterprises, location and industry sector 2. Disaster data relevant to SMEs Identify and profile micro enterprises and SMEs located in risk-prone locales in Viet Nam Conduct dialogues on how to synthesize statistical data relevant to SMEs among concerned agencies Develop circular and loss & damage forms To standardize data of SMEs, industrial zones and economic zones Develop online tools e.g. development of integrated website for presentation disaster data relevant to SMEs Timeline for pilot time after 2020 for implementation 8 ROADMAP FOR STRENGTHENING THE DISASTER-RESILIENCE OF SMES
9 Identified Roadmap Theme Suggested key actions Relevant actors, stakeholders or policy owners Potential pilot initiatives Timeline 3. DRM and BCM awareness, capacity building and training Share and utilize available training documents and resources to expand training activities on BCM and DRM, including programs for specific sectors/industries Integrate DRM into existing training activities, e.g. Start-up program, SME business development activities Develop training programs which promotes an all-hazard approach and is based on sectors and industries Direct technical support on BCM and DRR provided to SMEs in risk prone areas MARD MONRE MPI Ministry of Science and Technology (MOST), including Small and Medium Enterprise Development Support Center (SMEDEC) Ministry of Education and Training (MOET) NGOs, SMEs and SME associations Large enterprises Conduct mapping, review and stocktaking of existing relevant BCM and DRM training materials and resources Convene annual National forum on SME and Business Resilience to strengthen enhanced awareness, cooperation and coordination among relevant stakeholders (both public and private sector including large corporations and SMEs) for sharing of good practices and lessons learned with focus on capacity building and training Must have strong and effective regulations to encourage/ enforce SMEs to develop their BCP following trainings Work with large enterprises and industry cooperatives to address supply chain issues and economies of scale for SME implementation of BCM Enhance engagement with private sector organizations e.g. Chambers of Commerce, industrial associations on DRM initiatives Integrate themes of BCM and DRM into training programs of schools and universities Related Schools, Universities and academic institutions Pilot programme for direct technical support to selected SMEs in risk prone locations in Viet Nam for BCM implementation and basic principles of disaster risk reduction including supporting the uptake of ISO 22301: 2012 (BCM Systems Standard) for SMEs in risk prone locations as proposed by SMEDEC2 Pilot technical support to develop area, cluster level BCM which includes both large corporations and SMEs Pilot the integration of DRM and BCM modules into existing business development curricula at selected schools, universities and academic institutions. VIET NAM 9
10 Identified Roadmap Theme 4. Risk Financing for SME Resilience Suggested key actions The state/government should have incentives on capital and support on cost for SMEs. (SMEs have to face with many types of input costs and other incurred cost by government s requirements, which bring less benefit to SMEs} Risk transfer initiatives should consider micro finance insurance through financing institutions/banks (lenders) and for those SMEs with demonstrable disaster preparedness measures e.g. BCP The regulation/framework must be integrated and consider the risk financing as incentives or mandatory conditions Relevant actors, stakeholders or policy owners VCCI SMEs Banks and financial institutions Department of Planning and Investment (DPI), MPI Ministry of Industry and Trade (MoIT) MOF Ministry of Natural Resources and Environment (MONRE)- NGOs Potential pilot initiatives Conduct research and feasibility study for risk financing solutions to enhance SME disaster resilience in the Viet Nam context Pilot to implement after feasibility study Timeline 6 months to 1 year 10 ROADMAP FOR STRENGTHENING THE DISASTER-RESILIENCE OF SMES
11
12 This publication is an output of the regional project Strengthening the Disaster Resilience of Small and Medium Enterprises in Asia. The overall objective of the project is to build disaster-resilient capacities in SMEs in Indonesia, the Philippines, Thailand and Viet Nam by undertaking the following activities: 1) Identifying actions to strengthen resilience of SMEs; 2) Providing technical assistance in strengthening resilience to selected SMEs on a demand-driven basis; 3) Supporting governments in strengthening the enabling environment that promotes risk sensitive and informed investments by SMEs; 4) Facilitating knowledge sharing; 5) Up-scaling, leveraging and formalizing business resilience tools, platforms and initiatives. National Partners Indonesia Ministry of Cooperatives and SMEs (MoCSME) Indonesian National Board for Disaster Management (BNPB) Philippines Department of Trade and Industry (DTI) National Disaster Risk Reduction and Management Council (NDRRMC) Thailand Office of Small and Medium Enterprises Promotion (OSMEP) Department of Disaster Prevention and Mitigation (DDPM) Viet Nam The Ministry of Planning and Investment (MPI) The Disaster Management Center (DMC)
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