SUMMARY

1. The role of infrastructure development to socio-economic development

1.1. Definition of infrastructure

In general, infrastructure is a typical part of technical facilities in a national economy, its major function and task are to assure common necessary conditions for normal and unceasingly production and extensive reproduction process, while satisfying multi-aspect needs of social life. Infrastructure is also defined as overall material, technical, and architectural facilities playing a fundamental role in maintaining usual socio-economic activities.

Infrastructures could be divided into many various types basing on different criteria. Infrastructures of each sector, industry, and area consist of typical works serving special activities of that area or industry, and other inter-industrial works to insure consistent operation of the whole system. In most related literatures, infrastructures are commonly divided into 2 types, namely: economic infrastructures, and social infrastructures...

1.2. The role of infrastructures to development

Many researches have concluded that infrastructural development is of positive effects to socio-economic development in both developed and developing countries. Development level of infrastructure has crucial influences to national development. For instance, a synchronous and modern infrastructure system will create momentum for development, accelerate economic growth, improve productivity and effectiveness of the economy, as well as help to solve social issues. In contrary, the lack and the weakness of infrastructures in some developing countries are resulting to the jam of resource rotation, difficulties in investment absorbing, and infrastructural bottle-necks, causing direct adverse impacts to economic growth.

As a matter of fact, pursuance to the policy of “infrastructure development should goes ahead”, over recent years, the Government of Vietnam has made a relatively high investment for infrastructural development. Annually, 9 – 10 percent of GDP is invested in infrastructural facilities of transport, energy, tele-communication, water supply, and sanitation industries – a high rate given national standard.

1.3. Experiences in infrastructural development in some countries

1.3.1. Experiences of Korea

Since 1960s as Korean economy started its intensive industrialization time, Korea has seen a robust infrastructural development process. So far, Korea has possessed a relatively advanced infrastructural system comparing to those of other emerging industrial economies. Given current informative and knowledge-based economy, Korean government is aiming to new goals of infrastructural development.

Thanks to continuous efforts of the government, investment in infrastructural development has increased with an average annual rate of 20 percent. It is notable that the number in recent years is even higher than the growth rate of national budget. At present, development direction of Korea is enhancing national capacity to utilize the global creativeness and knowledge dissemination system as a way to build a knowledge economy, basing on measures, as follows: a dynamic information and communication facility system; high level of intellectual standards of the people; a system of research centers, universities, institutes, enterprises, and other organizations who are able to tap the global knowledge for localizing and creating new knowledge; and an effective economic and institutional system.

So far, private sectors, including foreign investors, have taken parts in most of infrastructure construction in all fields of Korea. Though, in a few fields, their participation remains limited.

Korean government plays a very important role in the development of national infrastructures. This is not only due to a fact that the Government and governments of all levels are major investors of big infrastructure projects, but the Government also provides and implements policies encouraging infrastructure development proper to each phase of economic development conditions and requirements.

1.3.2. Experiences of Indonesia

During the three decades prior to Asian financial crisis 1997-1998, infrastructures play a crucial role to economic growth and poverty elimination in Indonesia.

To overcome deadlocks after the crisis, Indonesian government has restarted many important infrastructure projects, and implemented remarkable reforms to coordinating mechanisms among ministries involved on infrastructural development. Particularly, in 2005, the Government established a public and private partnership framework to promote public and private investment as well for infrastructures. Followings were many other reforms implemented.

With large investment, Indonesian government consumes that infrastructures continuously play a crucial role in national economic development and growth. Well invested infrastructures will create good job opportunities in the infrastructural sector itself, reducing business – production costs, encouraging domestic and foreign investment, generating new economic centers thereby creating more employment opportunities, and improving living standards, etc.

2. Current status of infrastructural development in Vietnam

2.1. Policies and guideline for infrastructural development

Recognizing the importance of infrastructures to the national development, right from the first years of renovation, Vietnamese Communist Party did focus on acceleration of infrastructural development which was in negative conditions. Such policy has been affirmed in many important documents of the party and the state.

By institutionalizing policies of the Party, the government, industries, and authorities of different levels have provided concrete strategies, planning, plans and policies to develop general infrastructures and infrastructural facilities in various sectors and localities. These policies focus on the mobilization of resources, granting priorities to improve and upgrade transportation, irrigation, electricity, and post and communication facility systems, metropolitan and social infrastructure systems. In addition to saving ODA for infrastructural development, the Government also concentrates on attracting FDI and private capital for infrastructures in forms of BOT, BTO, and BT, etc. The state also does their utmost to create a healthy and favourable competition environment for investors, while implementing good pricing policies to assure profit-making business for investors and reasonable prices for consumers.

2.2. Current status of infrastructural development

2.2.1. Achievements

Pursuance to policies of granting priorities to infrastructural development, Vietnam has spent capital accounting for 9-10 percent of GDP annually for infrastructural development. The implementation the policy on diversifying invested capital for infrastructural development has attracted various economic sectors participating in this field. In terms of capital mechanism for infrastructural development in recent years, ODA has accounted for a biggest proportion; followings are private capital sources (including domestic and foreign investment), capital by users’ payment, governmental bonds, state budget, and others.

As a result, the unbalance of infrastructure demand and supply has been basically improved; quality of infrastructural services has been increased; and the coverage of infrastructural services has been widened to almost all areas of the nation.

2.2.2. Shortcomings and weaknesses

There remain some weaknesses in the infrastructural system of Vietnam, such as small scales, limited capacity, interrupted connection – particularly in transportation and communication, etc. In comparison with other developing countries in the region, transportation infrastructure in Vietnam is below the average level. In general, development level of Vietnam’s infrastructures has not satisfied socio-economic development needs

Such weaknesses have been seen as big constraints to Vietnam’s economic development and growth over the last years. Poor infrastructures also cause adverse impacts to living standards of the people, particularly the poor and people living in isolated and remote areas.

2.2.3. Rationales of weaknesses

First, shortcomings in infrastructural development planning

Second, the lack of investment capital for infrastructural

Third, poor performance of state management towards infrastructures.

3. Solution for further infrastructural development to assure and accelerate sustainable development in Vietnam

According to estimation of economic experts, Vietnam will needs about USD 140 billion to meet requirements of infrastructural development in some next years. This is a remarkable challenge to Vietnam. Therefore, the promotion of diversified investment capital sources for infrastructural development has been seen as a breakthrough solution. Followings are some majors measures to develop key infrastructural sectors.

- Concentrating on the establishment of horizontal and vertical transportation system throughout the nation, providing connection between difficult areas and major economic areas as well as big cities; developing transportation system connecting with international ones.

- Developing a unified electricity production and supply system

- Developing a post and telecommunication network to ensure a well performed communication system

- Enhancing and diversifying investment capital sources for infrastructural development