This was resulted from the Vietnamese authorities’ strong commitment to effectively use the ODA resources and promote reforms in various fields and at the same time it showed international donors’ confidence to stand side by side with Vietnam in its further development process.

During the two-day meeting, development partners welcomed the continued integration of Vietnam into the international system with its successful accession to the World Trade Organisation in January 2007 and congratulated the country on its election as a non-permanent member to the United Nations Security Council for a two-year term starting in January 2008.

With a buoyant economy and positive prospect for continued growth, the country is on target to achieve the key goals set out in the Socio-Economic Development Plan 2006 – 2010.

Frank and constructive discussions

For the second consecutive year, the meeting had the participation of Vietnam’s Prime Minister Nguyen Tan Dung who reaffirmed his commitment to accelerate economic reforms and to reach economic growth of 8.5 – 9 % in 2008, while ensuring that growth and development is sustainable.

“The Government of Vietnam will control inflation and reduce poverty rates, create more jobs and take action to mobilise resources from all sources to ensure infrastructure development, especially as it regards transportation and energy. We will also focus our efforts on the development on human resources, especially vocational training.

The government also remains committed to preventing and punishing corruption more effectively,” he added, noting also that Vietnam remains a developing country with low income levels, which still needs support from the international community. 

The meeting featured fruitful discussion on Vietnam's social and economic performance.

Vietnam’s Minister for Planning and Investment Vo Hong Phuc noted the positive collaboration between Vietnam and its development partners.

“We have fulfilled many goals and the completion of others have gone beyond our expectation. International relations have been strengthened and international integration has been deepened and broadened,” he stated.

The donors argued that the impending graduation of the country from low-income to middle-income status would pose a new set of challenges that will require a different set of solutions. In this process, emphasis should not only be on economic growth, but on the continued strengthening of institutions, accountability, transparency, the rule of law and active participation from civil society. In its transition period Vietnam should learn from the positive as well as negative lessons of those who have already ventured down the path of development. 

The donors urged Vietnam, which became member of the World Trade Organisation in January, to maintain its strong economic expansion it needs to become an industrialised nation.

"Vietnam needs to consolidate its socio-economic development to continue to grow to become an industrialised nation, rather than to be caught in the middle income country trap," the Asian Development Bank said in a statement adding that "It would be particularly important to focus on the acceleration of necessary reforms and to develop necessary infrastructure."

The threat posed by climate change was a topic of particular concern. As an especially disaster prone country, partners encouraged Vietnam to act resolutely and with strong political leadership to mitigate against its potentially devastating impact. At the same time, the country should ensure that its further development and economic growth does not threaten the country’s unique environment.

Towards middle-income and beyond

Vietnam’s development partners cautioned the government that moving towards an industrialised economy could be even more difficult than the shift from being low-income to a middle-income one. Therefore, they pledged to continue assisting the country with this transition.

“A new decade will offer a set of changing challenges,” said Japanese Ambassador Norio Hattori, suggesting that "I would like to encourage the government to steadily implement Financial Sector and SOE reforms. Improving the investment environment also remains as important as ever.” He also underscored the importance of good governance and the drive against corruption.

The development donors stressed that quality of growth was a necessary focus to avoid the middle-income trap, which has created difficulties for other countries in the world as they graduated from low-income status.

The Country Director of the Asian Development Bank, Ayumi Konishi said that “Vietnam should focus on undertaking key reforms and the quality of growth. The country’s attractiveness to investors depends on a favorable legal and administrative environment.

The benefits of global integration can only be grasped by economies whose competitiveness is not undermined by high transaction costs caused by red tape, bureaucracy, and an unresponsive administrative system. Strengthening Vietnam’s public administration system is essential to transforming the country into a modern, industrialised and prosperous nation.” 

Commenting on the economic fundamentals of Vietnam as well as macro-economic threats, Mr Shogo Ishii, Assistant Director, Asia and Pacific Department of the International Monetary Fund stated that “Vietnam is one of the fastest growing and most dynamic economies in Asia.

Economic growth remains robust and is expected to exceed 8% in 2007, driven by buoyant private consumption and investment. However, in the period ahead monetary policy will need to focus more closely on reigning in the increasingly high inflation rate and sharply rising asset prices, which have become an ongoing concern. Furthermore, a key challenge is to ensure greater exchange rate flexibility and we encourage the authorities to allow the Vietnamese Dong to be more responsive to pressures on the exchange rate.”

“With the government’s strong commitment to economic reform, the IMF is confident that Vietnam will successfully be able to meet its key policy challenges,” he said.

Speaking on behalf of the European Union, French Ambassador Hervé Bolot pointed to some of the challenges which Vietnam is to face in the future. “Vietnam remains a major success story in poverty reduction, but there are challenges. A high share of the population, particularly in rural and remote areas remain highly vulnerable to environmental and economic shocks and risk falling back into poverty,” he said.

Many delegations also noted that 2007 had been a difficult year for Vietnam with natural disasters repeatedly striking the country. The consequences had been grave in terms of loss of human lives, damage to infrastructure and the financial losses for the poor. Concern was also expressed that climate change would present a new set of hazards for the country, needing resolute and fast response from both global and local actors. 

United Nations Resident Co-ordinator, John Hendra noted that Vietnam remains one of the most vulnerable countries to global warming and its consequences.

He further stated that, “while we hope the UN Meeting being convened in Bali this week will lay out an agenda and roadmap for a post-Kyoto framework, it is clear that Vietnam, with the strong support of its partners, needs to step up its focus on integration of climate change adaptation into its overall policy framework.”

Vietnam’s future prospect for further reforms

Delegates welcomed the many initiatives that the Government had taken over the last year to tackle corruption and to create institutions that can accommodate the complexities of a rapidly growing economy and a changing society. These developments include the comprehensive anti-corruption legal framework and the legal framework for international integration and WTO accession.

Commenting on the successful 2007 CG meeting, World Bank Country Director for Vietnam, Ajay Chhibber stressed that “In this Consultative Group meeting partners have committed to provide the largest amount of ODA to continue support to its goals of further reducing poverty, and maintaining growth in an inclusive and sustainable manner.”

“Vietnam has been widely praised, but there has also been an earnest and open discussion on some key outstanding challenges. The discussions over the past days pay testimony to the commitment of Vietnam to address these outstanding challenges, but also of the willingness of the country’s development partners to stand by its side as it moves to middle-income status and beyond,” he added.

In response, Minister of Planning and Investment Vo Hong Phuc thanked the participants for their contributions and valuable comments. He noted that “Vietnam is building a legal and institutional system in line with international practices and commitments to WTO.”

He pledged that Vietnam would spare no efforts to address the country’s urgent issues and that Vietnam hoped to receive further support including suggestions from the international community to help the country achieve a high and sustainable growth rate and deal with a number of challenges such as inflation and natural disasters.

The increase in aid is not the reflection of fear, it is the reflection of support and it supports the measures Vietnam is taking that go beyond a middle income country. 

Source: Nhan Dan.