Hanoi, Vietnam --- Thirty-five (35) participants from sixteen (16) public, private and civil society organizations will receive training from the German Development Cooperation (GIZ) to assess the insurance gaps among Small and Medium Enterprises (SMEs) in Vietnam on 7-8 December 2016. The first of its kind training which identifies the need of insurance among SMEs, linking these with insurance providers, is an original concept of the GIZ Regulatory Framework Promotion of Pro-Poor Insurance Markets in Asia (GIZ RFPI Asia II).
Using the GIZ RFPI Disaster Risk Insurance Manual (DRIM) entitled: “Bridging the Natural Catastrophes Insurance Protection Gap for SMEs in Agriculture and Other Sectors”, GIZ links insurance Regulators, insurers, disaster management planners, telecommunication companies, civil society groups, and public infrastructure offices towards the identification of Natural Catastrophes affecting SMEs, the limitations of disaster management plans which could turn into risks, and the remaining risks that can be transferred to insurance, and finally, product distribution. The DRIM uses four key steps in identifying the insurance needs among SMEs: (1.) Risk Assessment; (2.) Disaster Risk Management Analysis; (3.) Gaps Identification; and (4.) Disaster Risk Finance Options.
SMEs comprise more than 90 percent of the Vietnamese economy, providing employment to 80 percent of its working population and contributing to 40 percent of GDP in 2015. However, increasing extreme weather events and Natural Catastrophes (NatCat) expose SMEs engaged in Vietnam’s strong export-oriented economy to losses and financial risks. Protection of SMEs from NatCats becomes a priority for Vietnam to sustain and establish the social gains of its positive economic growth.
These destructive events come from seasonal storms affecting 6 out of 10 enterprises, 85 percent of the time according to a study in 2011 by the Asia Foundation. Loss in productivity from floods occurred 45 percent of the time; and cyclones 12 percent of the time. NatCats had rendered some 5 percent of SME’s inviable, forcing affected establishments to close and start another business. Around 30 percent of affected SMEs were without business for a significantly long period, while 43 percent had small loses.
Slightly more than half of SMEs (58%) does not have disaster management plans, while the remaining 42% prepared disaster plans but had no capacity to implement them.
The DRIM guides the coordination of SMEs with the Ministry of Finance, the Ministry of Construction, and the Ministry of Agriculture and Rural Development among various stakeholders, to look into their respective disaster management plans and identify the financial risks that have not been addressed. The training links the identified gaps experienced by SMEs with disaster risk finance options including insurance. Once processed, the DRIM training results will be opened to interested insurance and international reinsurance companies to guide them in developing suitable products for SMEs in Vietnam.
RFPI II is a regional program implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) with support from the Ministry for Economic Cooperation and Development (BMZ) of the Federal Republic of Germany. The program is led by Dr. Antonis Malagardis and is implemented in Vietnam, Indonesia, Nepal, Mongolia, the Philippines, and Pakistan. GIZ RFPI cosponsors the DRIM training with the Mutual Exchange Forum on Inclusive Insurance (MEFIN Network), which is comprised by Regulators and Private Insurance Companies in Asia, and The Assistance Centre for SME North Agency for Enterprise Development (AED) under Ministry of Planning and Investment (MPI) in Vietnam, through Mr. Chu Vu Viet, Deputy Director.