Recommendation on Effective ECB Framework (P9)

The objective of this section is to give the recommendations of SME entrepreneurs in Laos toward the most effective ECB framework for LDC, particularly for SMEs in Laos. It also shows the impact of an effective ECB framework on the performance and competence of SMEs in LDCs. Data analysis indicates that most informants affirm that an effective ECB framework should be based on the local context LDCs in terms of promoting and protecting the benefits of local SMEs. In addition, an effective ECB framework should act as a guideline to strengthen entrepreneurial knowledge and skills for SME entrepreneurs as well as stimulates enterprise creation. Furthermore, most informants comment that an effective ECB framework should not only broaden business potential for SMEs, but also build creditability and capacity with financial institutions and stakeholders. Thus, the core themes that emerged related to this proposition are:

 A local-based ECB Framework

 ECB Knowledge and Financial Resources

 A Mechanism for Policy Implementation

 SME Performance and Credit

4.11.1 Locally-based ECB Framework

Key findings in this section show that most informants recommend that an effective ECB framework should be one that meets the local context of the SMEs, which means adopting practical methods in promoting entrepreneurial education for SMEs. These methods should increase entrepreneurial skills and be based on real practices and real case scenarios, from fundamental knowledge to forming strategic business plans, seeking business potential and operational strategies as well as strategic marketing approaches.

4.11.2 ECB Knowledge and Finance Resources

Most informants stated that an effective ECB framework should be adapted from ones from the neighbouring countries whose economic climate is similar to Laos, in particular SME characteristics and context. In addition, an effective ECB framework should help to build the capacity of SMEs to access financial resources through credit building. This can be done in the form of encouraging commercial banks to collaborate and follow up on the proper utilisation of the borrowed money of SMEs and to evaluate their business performance, hence building the creditability of SMEs to lending institutions.

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Given the fact that limited access to finance constitutes a major impediment to SMEs’ activities, most informants involved in this research comment that as part of effective ECB framework implementation the government should support SMEs to have access to financial funds through a “credit guarantee scheme”, which will facilitate flexible business operations and foster the life cycle of businesses. Furthermore, building a resource centre is another significant recommendation to be included in an effective ECB framework that is proposed by most informants. They state that building a resource centre for SMEs to access entrepreneurial management guidelines and skills is more than a strategic capacity building initiatives for local SMEs, since it can also be helpful for self-assessment when seeking solutions to business-related issues.

4.11.3 Mechanism for Policy Implementation

The majority of informants state that a mechanism to implement government policy on SME promotion and development is vital to an effective ECB framework. They comment that the government has good policies on supporting the local SMEs but implementation is the key challenging part, especially in simplification of documentation processes. Therefore, the ECB framework should cover the practical implementation mechanism of government policy on SME promotion and development.

4.11.4 SME Performance and Credit

Another significant sub-theme that is cited among most informants is the strategic monitoring and evaluation of business performance by the government. Informants state that an effective ECB model should include a mechanism for government to technically support SMEs in business operations, including productivity and machine operation and strategic marketing approaches.

In addition, an effective ECB framework should promote and protect local SMEs’ rights and benefits. They state that since the country has been opened more to FDI, and many foreign owned companies have been set up in Laos, local producers and SMEs have been suffering from the imitation of local products and services. As a result, local SMEs are facing the loss of market segments and becoming uncompetitive. Thus, the informants recommend that an effective ECB framework should cover regulatory framework mechanisms to protect the local SMEs’ rights and benefits. These recommendations and inputs proposed by the informants to be part of an

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effective ECB framework are reflected in the recommendations and strategic approaches of the Organisation for Economic Co-operation and Development-OECD (2000).

This study recommends a strategic approach to enable a better business environment for SMEs through the support of the government in various forms to SME business activities. One of the significant approaches to support SMEs in accessing financial fund is the strategic “secured transaction”. The objective of this strategy is to provide a certain degree of guarantees to creditors and to facilitate the mitigation of non-performing loans (NPL). This initiative helps SMEs to get access to secure savings instruments, to liberalise government investment rules the and also to develop credit growth thought increasing the funds available for SMEs. See table 10.

Table 10: Recommendations on Effective ECB Framework for LDCs

Conditions Core themes In-depth interview evidence

Effective ECB Framework

Local-based ECB Frameworks

“I would like government to modify the vocational training course related to business management into more practical in a sense that allowing students to do homework more on real cases practice” [PS-P6].

“The effective framework for SME entrepreneurial capacity building should be adopted to the local context-based and it should suit meet the needs of local entrepreneurs including helping them how to do the business plan until looking for markets and marketing strategies to sell their products, action plan to follow up and monitoring and evaluating measures should be in place” [PS-P2].

ECB knowledge and Finance Resources

“They should look for more financial sources for SMEs by dealing with banks in sharing risks and credits”[PS-P5]. “I think in terms of helping or building the local communities including entrepreneurs, the government should adapt the policies to be some kind of procedures in building the local SME capacity. For example setting the SME support centre for districts of provinces in order to make local SME entrepreneurs have access to supports and advice when they have issues related to their business”[G-P7].

Mechanism for policy

implementation

“…. you know we now have good policies on SME development and promotion, but the key issue is at the implementation point. For example: We do have policy of “One stop documentation”, Yes! It’s good on policy but in practically one stop has so many tables to be passed, when you do documentation” [PS-P3]. SME performance

and credit

“An effective ECB framework should promotes government agencies concerned come down to monitoring the actual business performance and come up with more specific trainings that support the day-to-day production formation such as machine operation and marketing skills” [PS-P6].

Page 128 4.13 Chapter Summary

This chapter presented the key findings of qualitative data analysis collected through the face-to- face in-depth interviews among SME entrepreneurs across business industries and stakeholders concerned in Laos. The raw data was coded and analysed to generate the core themes and patterns, which represented the most relevant to this research’s objectives. Each proposition was validated and supported by the indicative verbatim quotes as evidences of qualitative results presentation. In this manner, 10 propositions addressed in the Chapter two were validated and examined as the foundations of the conceptual model for entrepreneurial up skilling for SMEs in the LDCs.

The next chapter will discuss the themes and patterns that have emerged as well as the interpretation derived from the data analysis. The key findings within the scope of the relevant literatures will be discussed with empirical evidence and supports. Finally, the conceptual model of ECB for up skilling SME entrepreneurs in the LDCs will be formed.

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