Research Reports

Mekong Institute - A Comprehensive Report on SME Cluster Development in CLMV Countries

This action research is aimed at identifying potential of and designing strategy for developing dynamic and vibrant SME clusters in Cambodia, Lao PDR, Myanmar and Vietnam (CLMV). It is imperative to mention here that eight clusters, two from each CLMV countries were selected for the purpose of the action research. The clusters thus selected here are rattan and silk clusters in Cambodia, silk and wooden furniture clusters in Lao PDR, mango and fishery clusters in Myanmar and ceramic and tea clusters in Vietnam. It was found during conduction of the research that the concept of clustering and cluster development as a tool for small and medium enterprises (SMEs) development is yet to sink in the Government policy. Though there are some ad-hoc measures made in developing SME clusters in a few countries in different time scale, but devising a comprehensive strategy of cluster development to ensure holistic growth of small and medium enterprises and improving their global competitiveness has not been attempted previously in the CLMV countries.


The study found that the tea cluster of Vietnam has not made any effort to take benefit of collectivization. It was also found that rattan products manufacturing enterprises in Cambodia are facing challenges both in the internal and external fronts and the former challenges require immediate attention. In order to grab the export market sustainably, the local enterprises should expedite efforts to improve their quality, design, productivity and efficiency.  In case of the silk cluster in Cambodia, the nature of problem is somewhat different as farmers’ lack of interest in mulberry cultivation has resulted in shortage of silk supply. Efforts to implement cluster development approach in the silk and wooded furniture sectors have not been pursued seriously in Lao PDR till date. Growth of these two vital economic sectors is primarily driven by large enterprises as a result, the cluster did not grow in size and holistic and inclusive development could not be pursued. These lead companies prefer to work with salaried weavers and farmers and increase their own businesses only. The two select sectors in Myanmar namely mango and fishery are reeling under international marketing in-efficiency. Mango from the Mandalay region in Myanmar is heavily dependent on the cross-border Muse market in China. In the fishery sector, the market is primarily dominated by the middlemen and the fishermen have hardly any idea about market, price, customers etc. and these results in distress selling many a times.          
Based on this study, it can be inferred that in general, the select sectors under the study were in their primitive stage of clustering, except the ceramic cluster in Vietnam. The enterprises have no or very little idea about the benefits of cluster development. They basically possess symptoms of a tier-one cluster manifesting weak cluster actors linkages, inefficient networking, low level of social capital, lack of culture of entrepreneurship, inability to upgrade technology, lack of access to  finance, lack of joint marketing and export initiative, value chain inefficiency etc. The vicious cycle of poor quality and poor rewards are omnipresent and business is dictated by larger enterprises/companies which have better access to resources and markets. 

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