Consultative Group meeting agreed on measures to lay the foundation for sustainable growth

December 10, 2012

Hanoi, 10/12/2012 - The Consultative Group Meeting between the Government of Vietnam and Development Partners was held today with the focus on laying the foundation for Vietnam’s sustainable growth. Delegates agreed that ensuring macroeconomic stability, developing education and skills, and ensuring a sound land policy are some of the key priorities for a successful middle income country.  Development Partners pledged 6,485 million USD for Vietnam’s development agenda in 2013.

Prime Minister Nguyen Tan Dung attended the first part of the meeting and updated participants on Vietnam’s performance in 2012 and the Government’s policy directions for 2013. He thanked the Development Partners for their constructive comments on the need to maintain macroeconomic stability and restructure the growth model for sustainable development, and thereby avoid falling into the middle income trap. He recognized the participants’ comments and advices for an equal and effective education and training system that prepare Vietnamese with skills needed for Vietnam’s middle income status.


While discussing about the economy, Delegates agreed that Vietnam’s macroeconomic conditions have improved during 2012, but expressed concern about the slowing economy and less than anticipated progress on the triple restructuring agenda: investment; banking and financial market, and SOE restructuring. They urged the government to maintain macroeconomic stability, undertake decisive action on structural reforms including resolution of non-performing loans, improve the corporate governance in SOEs and banks, and raise the level of transparency and disclosure in the state sector and better articulate policy actions and results of the restructuring process.    

"Over the past few years and before the recent slowdown, the economy grew at levels that could not be sustained in the long run and accumulated vulnerabilities along the way. These vulnerabilities and structural constraints have diminished Vietnam’s medium-term growth outlook. In 2013 and beyond, difficult challenges need to be tackled." said Sanjay Karla, Resident Representative of the International Monetary Fund to Vietnam.

To do this, the ADB Country Director Tomoyuki  Kimura added that "Enhancing inter-ministerial coordination is essential as there are significant sectoral linkages that cut across the reform program".


This year, one of the main topics for discussion at the CG was how to ensure high quality education and skills, as the prerequisite for Vietnam’s transition to an efficiency-driven, industrialized economy is a well-skilled labor force.  The World Bank presented initial findings of the upcoming Vietnam Development Report on Skills. Based on a recent employer survey focused on skills the analysis shows that while Vietnam’s workers are increasingly well educated, many employers in Vietnam are critical of the quality of education.  In many cases, workers’ skills do not match employer needs in an increasingly demanding and advanced labor market, where cognitive and behavioral skills are just as important as the pure technical skills.  

Delegates agreed that Vietnam should focus more on: a) making sure that the technical skill development evolves along with the technological progress by promoting partnership between employers and education and training providers, b) ensuring that the country’s skill strategy also promotes cognitive skills, such as problem solving and verbal abilities, and behavioral skills, such as social and interpersonal abilities, and c) ensuring that teaching methods are modernized to include less memorization and more interactive learning.

"Development partners really welcome the focus this year on education and skills." said Fiona Lappin, the Head of UK Department for International Development in Vietnam. "The UK, including the British Council as well as DFID, work with Vietnam across the education spectrum and it’s clear that human resources are absolutely critical to Vietnam’s ability to sustain growth, fight poverty and avoid the middle income trap. It’s not just about qualifications but about critical thinking and employability.This is an exciting opportunity to address this at the CG, and in doing so to forge a path to help Vietnam take full advantage of its young population. Development partners are ready to help Vietnam innovate by sharing lessons learned and experience."


Discussing the revision of Vietnam’s Land Law, delegates agreed that the process must create a favorable environment for more effective, equitable, and environmentally sustainable management of scarce land resources.  Development Partners urge the Government to assure secure land rights for farmers, more flexible use of agricultural land, strengthening the land use rights of vulnerable groups such as women, the poor, and ethnic minority communities. They also recommended the establishment of a more transparent and equitable arrangements for land acquisition and compensation by the State and limiting the circumstances in which compulsory land acquisition may occur. Improving the effectiveness of land planning management systems within an overall enhanced framework for land governance will be critical for the efficiency and inclusiveness of Vietnam’s future development

“This is a key reform for Viet Nam’s future inclusive and equitable growth." says Pratibha Mehta, United Nations Resident Coordinator in Vietnam. “The reform provides an opportunity to promote greater transparency and accountability in Viet Nam’s land governance and to ensure that market mechanisms are applied in the land law, particularly in relation to compensation for land users in the land recovery process."


CG participants agreed on the evolution of the CG into the Vietnam Development Partnership Forum (VDPF) from 2013 onwards, with the overall vision to support policy dialogue on areas of mutual interest in order to foster broad-based socio-economic development and improved well-being for all Vietnamese. The current CG format, designed 20 years ago, served primarily as a platform for ODA resource mobilization. Today most development partners have their own bilateral ODA discussions and the resource mobilization function of the CG is no longer relevant.  What is needed now is a platform for substantive and meaningful dialogue between the Government and partners in Vietnam’s development.

The new Forum will be both an annual event aimed at high-level policy dialogue as well as a process to support ongoing dialogue with a view to building consensus and generating commitments among different stakeholders toward actionable items of the Government of Vietnam’s development and reform priorities.

In her summary of CG proceedings, the World Bank Country Director for Vietnam, Victoria Kwakwa, stated that “The CG discussion demonstrates the continued strong partnership between Vietnam and development partners. We have agreed at least two important areas of follow up, one is to set up a forum for policy dialogue on education and skills, and to seek relevant experience on legislative frameworks to support customary land use of ethnic minorities."

Minister of Planning and Investment Bui Quang Vinh concluded the meeting by thanking the Development Partners for the fruitful discussion. He expressed his belief that with the new phase of the CG evolution, relationship between Vietnam and Development Partners will be lifted to a new height to better serve Vietnam’s development agenda. 



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