LinkSME opens huge supply chain opportunities for Vietnamese SMEs

The launching even of USAID LinkSME

Today, USAID, the Vietnamese Government Office, and the Ministry of Planning and Investment (MPI) launched the USAID linkages for SMEs project (USAID LinkSME).

The five-year, $22.1 million USAID LinkSME project will work with the Government Office and the MPI to strengthen the SME supply chain linkage ecosystem and improve business associations’ and trade groups’ capacity to support SME business development.

Linking SMEs with lead firms will advance the Indo-Pacific vision of improved trade and competitiveness and support USAID/Vietnam’s objective of expanding inclusive, market-driven, private-sector-led growth.

At the ceremony, Minister and Head of the Government Office Mai Tien Dung highlighted the support of the US government in improving institutional capacity and administrative procedures.

The investment climate in Vietnam has been improving. Around 3,451 of 6,191 business conditions and 6,776 of 9,926 goods lines have been removed since 2018, while 30 administrative procedures have been simplified, saving VND6.3 trillion ($274 million) per year.

“Moreover, we are building an e-government, as well as a digital economy and society. By the end of next November, we will launch the National Public Services Portal, contributing to preventing petty corruption,” Minister Mai Tien Dung said.

The LinkSME project is part of the process of improving the business environment, as well as creating opportunities for integration by linking domestic businesses with regional and international partners.

“The LinkSME project plays an important role in the sustainable development of the country, and in helping Vietnam overcome the middle-income trap in the next decade,” the head of the Government Office said.

Minister Nguyen Chi Dung addressing the event

Sharing the same opinion, Minister of Planning and Investment Nguyen Chi Dung confirmed that the project would help to overcome the challenges that Vietnamese SMEs are facing, strengthen linkages of SMEs, and promote them to reach out to international markets.

The minister emphasised the target of the prime minister and the government to develop a dynamic and innovative private sector, setting businesses as the centre and driving force of development.

According to the MPI, there are over 730,000 operating enterprises which significantly contribute to the economic growth and sustainable development of the country by creating jobs, improving the lives of employees, and narrowing the gap between the rich and the poor.

However, low technology adoption, low productivity, lack of experience in working with leading firms, as well as a shortage of skilled staff and management are all issues waiting to be addressed.

Minister Nguyen Chi Dung highlighted the role of LinkSME to improve the productivity of enterprises and boost the economic development of the country. He also suggested the US government to develop other projects to improve competitiveness, training, technology, and helping Vietnamese businesses join the global value chain.

In response to the minister, US Ambassador to Vietnam Daniel J. Kritenbrink said: “The goal of the US government here is to support the development of a strong, prosperous, and independent Vietnam. We are honoured to be your partner and to invest in your success.”

“I am equally confident that the US-Vietnam comprehensive partnership will continue to flourish as well. We are looking forward to continuing our prosperous partnership to help boost private sector growth and accelerate Vietnam's economic potential," he added.

The US Ambassador to Vietnam and the MInister of Investment shaking hands

LinkSME, which aims to significantly increase the quantity and quality of linkages between Vietnamese SMEs and leading firms, is currently operating in the electronics and metals sectors and will expand to other sectors in the future.

USAID LinkSME analysis quantifies the current growth potential for Vietnam through strengthening supply chain at $58 million.

The project will connect SMEs with leading firms interested in increasing local content in Vietnam and deepening their local supply chain, providing access to their procurements as well as providing technical assistance to upgrade and meet leading firms’ requirements.

Meanwhile, lead firms will be connected with qualified Vietnamese SME suppliers who understand major firms' needs, and will be provided better information about suppliers’ product lines, capabilities, and efficiency, while significantly reducing the cost of locating Vietnamese suppliers.