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Speeches & Transcripts December 13, 2017

Opening Remarks by World Bank Country Director at Vietnam Development Forum 2017

Minister Nguyen Chi Dung

Government Ministers, Leaders of government agencies, committees of the National Assembly, committees of the Party,

Ambassadors, Heads of Development Agencies,

Ladies and gentlemen,

Good morning! Xin chao!

Welcome and Introduction

It is my great privilege and honor to join Minister Dung in welcoming you to the Vietnam Development Forum 2017. I know this is a very busy time for Government and development partners and I would like to thank you sincerely for arranging your schedule to be here today. I would also like to thank the Ministry of Planning and Investment, all Development Partners and speakers for their strong collaboration leading up to today’s event.

This year, the VDF focuses on quest for productivity growth in Vietnam which is an issue of crucial importance for Vietnam medium term development prospects. Spurring productivity growth is essential for Vietnam to meet its aspirations of becoming upper middle income country by 2035.

Highlights of Achievements in 2017

Minister Dung, ladies and gentlemen,

As the year comes to a close, I would like to congratulate the government on several important achievements of 2017. Vietnam has witnessed another year of robust growth and macroeconomic stability, marked low single digit inflation, a relatively stable exchange rate, and a strengthening external position. I am also very encouraged by progress in several areas of strategic reforms – business and administrative environment, banking sector, public investment as well as fiscal and debt management. In particular, I would like to congratulate the government for achieving an improvement of 14 ranks in the WBG Doing Business 2018 ranking. Reform implementation must keep this positive momentum, as it is critical for continued macroeconomic stability and higher productivity growth.

VDF 2017 – A Quest for Productivity Growth

Minister Dung, Ladies and Gentlemen,

In the last five years, and following the global recession, Vietnam has achieved a commendable growth recovery.  However, a continuing trend of weak productivity growth remains concern. Vietnam’s average labor productivity growth rate is about four percent. This compares to rates above seven percent for China and five percent for Korea when these countries were at similar levels of development as Vietnam is now.  Current productivity growth rates are unlikely to deliver the sustained rapid growth that could see Vietnam follow the development trajectory of countries like Korea and Singapore.

How can Vietnam address the productivity challenge? Regardless of how productivity is measured, this question really translates into a question of efficiency. How does Vietnam’s economy produce more for a given level of inputs?

The question might look simple, but there are no simple answers. Improvements in efficiency must take place both within individual sectors as well as across sectors, which require effective market institutions and government support. I would like to highlight four areas for our discussion today.

First, there is ample room for efficiency gains within individual economic sectors in the economy. This could include enhancing industrial energy efficiency, enhancing agricultural transformation and agribusiness development; more efficient transport, logistics and connectivity. But going beyond efficiency gains, moving up value chains is critical to improve productivity. Again, agriculture transformation in the Mekong Delta is a clear example -  shifting from a conventional “rice – fruit – shrimp” to a higher-value production structure of “shrimp – fruit – rice”. Effective linkages between domestic and FDI firms are also critical for Vietnam to move up in global value chains, and ultimately improve its productivity.

Second, reforms to develop and enhance effective market institutions will need to be significantly steeped up to achieve higher productivity growth. This includes continued effort in improving business enabling environment – with focus on simplifying administrative procedures and reducing cost burden. But it also means fostering more effective markets to improve resource allocation – it is critical to adopt more market based approaches to allocate productive resources in both capital and land markets. This will ensure recourses are flowing to the most efficient and productive uses. Finally, strengthened competition policies to ensure a transparent and level playing field for all economic actors.

Third, we can not emphasize more the importance of education, skill and innovation agendas in the country’s quest for productivity growth. Vietnam has done well in basic education. But a new set of knowledge and skills are needed to contribute to productivity growth, and importantly to a changing economy. As Vietnam integrates further into the global economy, industry and manufacturing, as well as agriculture and services, are expected to become increasingly sophisticated. Further development of the domestic private sector will also require innovation. The skills-sets sought by Vietnamese and foreign employers will change, requiring the labor market and higher education institutions to adapt, especially as workers with advanced skills and education are in short supply. Creating an effective institutional and incentive framework for innovation is critical for future sustainable productivity growth.

Finally, the question is how Vietnam will mobilize and use its scarce public resources efficiently to finance its ambitious development agenda over the next five years. At a time when concessional development assistance is phasing out – as a result of the recently obtained middle income status -- Vietnam will need to increasingly rely on mobilizing domestic resources. Improving domestic revenue mobilization, complemented by efforts to enhance expenditure efficiency and debt management capacity, especially domestic debt market, will be important to ensure development objectives can be achieved without raising debt to unsustainable levels. In addition, efforts must be stepped up significantly to create an enabling environment for private sector participation in quality infrastructure development – a critical contribution to Vietnam’s needed productivity growth. I look forward to a new and comprehensive Law on Public-Private Partnership that will address many current challenges to the PPP agenda in Vietnam. Last, but not least, ODA resources will need to be used more strategically and effectively to complement domestic public resources, and aim to leverage private investments.    


New Direction for the VDF and Conclusion

Ladies and Gentlemen,

I am strongly encouraged and inspired by the Government’s strong commitment act as a facilitator for Vietnam’s inclusive economic development and growth. Development partners stand ready to support Vietnam, to provide quality support—including knowledge and access to international experience and best practices and the VDF is really flagship event in this regard. I believe we will have an interesting and highly relevant set of issues on our agenda this morning. To get the most out of this Forum, I hope that we will all be focused and succinct in our remarks and give others a chance to speak.

I look forward to a very productive dialogue.

Thank you! Xin cam on!