39221-022: Micro, Small, and Medium-Sized Enterprise Sector Development Program
Total Page:16
File Type:pdf, Size:1020Kb
Grant Consultant’s Report Project Number: 39221 December 2011 Bhutan: Micro, Small and Medium-Sized Enterprise Sector Development Program (Financed by the Asian Development Fund) Prepared by Pohl Consulting and Associates Berlin, Germany For Ministry of Finance Bhutan Development Bank Limited This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. Kingdom of Bhutan: Micro, Small, and Medium ‐ Sized Enterprise Sector Development Program Component 1: MSME Development Policy, Strategy and Incentive Framework, and Management of CSF Project Number: 39221 FINAL REPORT Pohl Consulting & Associates, Berlin, Germany Currency Equivalents (As of 31 October 2011) Currency – Ngultrum (BTN) Unit BTN 1.00 = USD $ 0.023 USD $1.00 = BTN 48.0 Waiver This report has been prepared by Pohl Consulting & Associates, Germany. The views expressed in this report are those of the Consultants and are not necessarily the views of the Asian Development Bank or the Royal Government of Bhutan. Table of Contents 1 Glossary of Acronyms ........................................................................................ 5 2 Glossary ................................................................................................................ 6 3 Background: A Brief on Bhutan’s Economy ................................................... 8 4 Needs Assessment Report on Bhutan’s MSME Sector ................................ 9 5 Approval of the MSME Sector Development Project by ADB ................ 11 6 Appointment of the Consultants and the Terms of Reference: ............... 14 7 Nature of Deliverables and Status of Action Taken .................................. 16 7.1 Prepare a Draft MSME Development Policy: ................................................. 16 7.2 Prepare a Draft MSME Development Strategy: ............................................. 18 7.3 Conduct an Enterprise Survey and Submit an Analytical Report on the Findings: ..................................................................................................................... 19 7.4 Conduct a Competitiveness Study of Bhutan’s MSME Sector: ................... 20 7.5 Prepare a Cluster and Value Chain Development Report: .......................... 22 7.6 Prepare a White Paper on Enterprise Registration, Submit a draft Enterprise Registration Bill and a Report on I.T. Infrastructure for e‐ Registration: ............................................................................................................... 23 7.7 Prepare a White Paper on MSME Definition: ................................................ 24 7.8 Prepare a White Paper on Development of Cooperatives: .......................... 25 7.9 Prepare a White Paper on Public‐Private Partnership for MSME Development: ............................................................................................................ 25 7.10 Prepare a Discussion Paper of Credit Guarantee Funds: ......................... 27 7.11 Prepare an Action Plan for the Development of MSMEs: ........................ 27 7.12 Prepare an Inventory of Available Studies on Competitiveness, Supply Chain and Value Added Analysis: ......................................................................... 28 7.13 Prepare a BDS Supply and Demand Inventory: ........................................ 28 7.14 Develop Standard BDS Packages to be Marketed Under the CSF: ......... 29 7.15 Conduct Awareness Workshops for Companies to Participate in Cluster and Supply‐Chain Programs: .................................................................................. 30 7.16 Create a BDS Web‐site: .................................................................................. 30 7.17 Monitor and Evaluate BDS Operations, including the Preparation of a Benefit Impact Analyses: ......................................................................................... 30 7.18 Design and Operationalize a Cost Sharing Facility (CSF): ....................... 31 8 General Remarks on Finalization of Project Report: Likely benefits/impact of recommendations and possible problems in implementation: ............................................................................................................ 39 9 Annexes Enclosed: Reports/White Papers Submitted as Supporting Documents: ..................................................................................................................... 40 Annex 1: “SME Development – An Integrated Perspective” (Report of GFA Consulting Group) ........................................................................................................ 41 Annex 2: Report and Recommendations of the President to the ADB Board ... 42 Annex 3: Inception Report ........................................................................................... 43 Annex 4 : MSME Development Policy ...................................................................... 44 Annex 5 : MSME Development Strategy .................................................................. 45 Annex 6: Report on the Enterprise Survey ............................................................... 46 Annex 7: Competitiveness Study Report .................................................................. 47 Annex 8: Report on Cluster and Value Chain Development ................................ 48 Annex 9: MSME Database/Website and Enterprise Registration Management System Report ................................................................................................................ 49 Annex 10: Compilation of White Papers .................................................................. 50 Annex 11: Enterprise Registration Bill ...................................................................... 51 Annex 12: Discussion Paper on Credit Guarantee Funds ..................................... 52 Annex 13: MSME Action Plan .................................................................................... 53 Annex 14: Inventory of BDS Supply and Demand ................................................. 54 Annex 15: Requests made by CSFU/PMU/PCA for ADB approval for changes in CSF .............................................................................................................................. 55 Annex 16: Final Report on CSF ................................................................................... 56 Annex 17a. List of Meetings 2010–2012 ..................................................................... 57 Annex 17b. MSME Consultation Meetings 2010–2012 ........................................... 67 Annex 17c. List of Persons Met ................................................................................... 83 1 Glossary of Acronyms ADB Asian Development Bank BCCI Bhutan Chamber of Commerce and Industry BDFC Bhutan Development Finance Corporation Limited BDS Business Development Services BPO Business Promotion Officer BTN Bhutanese Ngultrum CSF Cost Sharing Facility CSFU Cost ‐ Sharing Facility Unit DCSI Department of cottage and small industries GNH Gross National Happiness GNHC Gross National Happiness Commission IFC International Finance Corporation FYP Five year plan MoEA Ministry of Economic Affairs MoF Ministry of Finance MoLHR Ministry of Labour and Human Resources MSME Micro, small and medium ‐ size enterprises NGO Non ‐ Government Organization PR2 Progress Report 2 PR3 Progress Report 3 PSC Programme Steering Committee RgoB Royal Government of Bhutan RTIO Regional Trade and Industry Office MSME Small and medium size enterprises TA Technical assistance ToR Terms of Reference 2 Glossary Business services: an inclusive term for services designed for business clients and includes two divisions, business support services and business development services. Business development services are those designed to facilitate change to another, specified, level of performance or capacity (such as growth training and consultancy, product design and development, market enlargement). Services designed to facilitate business growth and performance improvement in clusters and supply networks would fall into this category. Business support services are services such as delivery, repair, and other types of supplier inputs that firms use routinely in support of their usual operational activities, when development is not a necessary outcome BDS market: BDS providers and enterprises and the exchange of business services between them. This exchange may by formal or informal. It may include fee‐based transactions for services and/or services provided as part of other commercial transactions. BDS provider: A firm or institution that provides BDS directly to enterprises. Bundled services: Several business services provided together as part of a package. This package of services may be offered independently or as part of another commercial transaction; for example, a transaction between a wholesaler and a producer. Cluster: A cluster is a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities. Because of the shared proximity – both in terms of geography and of activities – cluster constituents enjoy the economic benefits of several types of positive location‐specific externalities. These externalities include access