Rach Gia, June 8, 2010 - The one-day mid-year informal Consultative Group (CG) meeting for Vietnam was held today, with the participation of Vietnam’s Prime Minister Nguyen Tan Dung.
At the meeting, Development Partners provided inputs to Vietnam’s 2011-2020 Social Economic Development Strategy (SEDS) and the 2011-2015 Socio-Economic Development Plan (SEDP). Development Partners expressed their continued support to Vietnam and their expectation that the country will deepen its ongoing reforms to ensure that Vietnam completes the unfinished low-income country agenda, and moves firmly into middle-income status.
At the meeting, the Government and Development Partners also reviewed Vietnam’s recent macroeconomic developments. They agreed that progress had been made in terms of supporting growth and ensuring stability. They also stressed the importance of timely disclosure of key economic data and clearly explaining policy orientations to build market confidence.
THE SEDS AND SEDP
H.E. Prime Minister Nguyen Tan Dung attended the morning session and briefed Development Partners about the recent socio-economic performance of Vietnam. He took note of the Development Partners’ suggestions on the NDS and the SEDP and proposed further discussion. He informed the Development Partners about the guiding principles for the NDS and the SEDP, including “(i) rapid development in close combination with sustainable development, with the latter being a cross-cutting requirement for the entire strategy, (ii) synchronous and appropriate economic and political innovation aiming at building a Socialist Vietnam with a prosperous people and strong, democratic, equitable and civilized nation, (iii) exercise of democracy and maximal promotion of the human factor, regarding it as the subject, main resource, and objective of development, (iv) vigorous development of productive forces at increasingly higher scientific and technological levels while improving production relations and the socialist oriented market economy institutions, and (v) shaping of an increasingly independent and autonomous economy in the context of ever far reaching international integration.”
The Prime Minister also highlighted the three main strategy breakthroughs, namely improving the socialist oriented market economy institution to create an environment for equal competition and administrative reforms, developing high quality human resources, and developing a synchronous infrastructure system with modern facilities.
Development Partners expressed appreciation of the opportunity to comment on the NDS and the SEDP, and urged the government to expand the consultation process to gather more inputs into the two important documents. On behalf of the donor community, the EU Ambassador, Mr. Sean Doyle noted that the Development Partners “are interested to know more about how the government will accelerate the fight to eliminate poverty, deal with environmental pollution and manage the proposed state-owned Economic Groups transparently, fairly and efficiently in the interest of the Vietnamese people.”
MACRO ECONOMIC MANAGEMENT
Minister of Planning and Investment Vo Hong Phuc, in his opening remarks, reviewed the macroeconomic situation and recent government actions. He highlighted the many challenges Vietnam has faced lately. He explained that “to cope with these challenges, the Vietnam Government adopted various specific policies to prevent slowdown, maintain economic growth and guarantee social welfare, including: credit interest support, tax reduction and exemption, export encouragement, investment and consumption stimulus, social welfare policy measures, job creation, poverty reduction, life stabilization, etc.”
“The IMF welcomes the recent restoration of more stable macroeconomic conditions, but notes that the situation is still fragile and urges the government to focus on consolidating macroeconomic stability to secure the continued recovery of the economy,” said Mr. Ben Bingham, the IMF Senior Resident Representative.
Commenting on recent macroeconomic developments, Mr. Ayumi Konishi, ADB Country Director, said: “One thing I would like the government to recognize is that in a market economy, ‘perception’ is as important as the reality of the economy” and urged the government to provide economic data and explain its policies.
ECONOMIC RESTRUCTURING
Development partners and government discussed three key issues in relation to the economic restructuring expected as Vietnam moves into the middle-income groups of countries. A first issue is “enhancing the role of the private sector, with more involvement in global value chains, the development of supporting industries, and a level playing field for all businesses,” according to the Chief Representative of JICA to Vietnam, Mr. Motonori Tsuno. In this connection, the Development Partners stressed the need to further reform state-owned enterprises in general, and Economic Groups in particular “the separation of the ownership and the regulatory functions of the state, and the strengthening of corporate governance in these entities, were mentioned as priorities in this respect,” Mr.. Tsuno added. The third issue emphasized by Development Partners was the need for sustainable financing for infrastructure. Proper resource mobilization mechanisms include a more efficient banking sector, the development of capital markets and the adoption of a framework for Public-Private Partnerships (PPPs).
INCLUSIVE GROWTH
Development Partners welcomed the attention the Government is giving to ensuring that growth in Vietnam remains inclusive. “Vietnam has had a long history of impressive poverty reduction,” said Mr. John Hendra, UN Resident Representative. “However, different and innovative approaches are needed to reach the last 15 percent of the population in poverty. What is more, economic and social policy needs to be seen as two sides of the same coin, particularly to ensure that inequality of opportunity does not undermine Vietnam’s progress.” Development Partners commended the government for its recent social protection strategy, but noted the challenge of further reducing poverty among ethnic minorities. The meeting also agreed on the importance of using reliable poverty data and reliable poverty assessments as the basis to adopt effective policies for social inclusion.
CLIMATE CHANGE
The government and Development Partners agreed that climate change, which is expected to lead to more extreme weather and sea-level rise, will pose new challenges to Vietnam. Sea-level rise is a serious concern for the Mekong River Delta where the meeting was held. Mr. Peter Lysholt Hansen, Ambassador of Denmark stressed “the importance of mainstreaming climate change in overall strategies and including low carbon development opportunities in the SEDP and the NDS as an option for sustainable development.”
EDUCATION AND SKILLS
Ms. Deanna Horton, the Canadian Ambassador summarized the Development Partners’ views, stating that “a sustainable, high-quality economic growth model for Vietnam requires that the skill gap be overcome through improved higher education, including demand-driven training, better management of educational institutions, and a more flexible system with updated teaching methodologies.”
As reform of higher education and vocational stalls, partners stressed the importance of (i) building management and institution capacity, (ii) demand driven training, (iii) more flexible student-centered system, (iv) teacher qualification and modern teaching methodologies, and (v) the legal framework.
ANTI – CORRUPTION
At the meeting, Mr. Rolf Bergman, Ambassador of Sweden emphasized that at the Anti-Corruption Dialogue, the Government and Development Partners have talked about the importance and necessary the laws, decrees and regulations are. However “I would like to confirm our concern that it is now more important than ever to ensure that these laws and decrees are enforced, implemented and reviewed in all aspects of anti-corruption work, from investigation, prosecution to sanctions. Otherwise, corruption will deteriorate even more.”
In the concluding speech, Ms. Victoria Kwakwa, Country Director of the World Bank in Vietnam highlighted the importance of tackling key risks to Vietnam’s development success, in particular, SOE sector reforms and emerging large economic groups. She appreciated the sincere, frank and open dialogue between the donor community and the government and looked forward to deepening this dialogue.
