ADB Lends Nearly US$ 4 Billion to Vietnam

In fact, the US$3.9 billion loan is not a fixed commitment. This is just a proposed loan pending for a response from the Government of Vietnam. ADB will also have methods to check the results of current lending projects. If these projects are good enough, future loans may be bigger in value.

 

In addition, according to the ADB’s data, the fund was mainly aimed for economic growth in the 2007 - 2010 phase but priority fields of this grant are shifted to transportation, education, energy, finance, agriculture and water supply. Transportation is of special priority with 34 per cent of total funding.

 

In fact, the Vietnamese economy is rated to have a relatively fast GDP growth. GDP per capita rose from US$843 USD in 2007 to US$1,409 in 2011. The rate of poverty reduction is also rapid. Vietnam was also successful when it is recognised as a low-middle income country. However, the Vietnamese economy also confronts with a lot of challenges like regional inequality and inefficient management. In addition, the economy is prone to vulnerability.

 

As a middle-income country, Vietnam’s access to Official Development Assistance (ODA) resources may change in terms of both volume and the types of concessions granted. Although this maybe a challenge, we see it as an opportunity for Vietnam to review the role of ODA in order to ensure its more strategic use. This allows ADB to refocus our assistance programme and enhance coordination and collaboration with other development partners like the International Monetary Fund (IMF) and the World Bank (WB).

 

The ADB’s CPS for Vietnam in the 2012 - 2015 period focuses on supporting Vietnam with the target of target of rising to upper middle-income status through three pillars: inclusive growth, economic efficiency and environmental sustainability. The assistance will follow the principle of priorities assigned in the Socioeconomic Development Plan 2011-2015 of the Government of Vietnam. To bring this strategy into practice, ADB proposed a variety of financing sources and support methods, including loan and equity investments, technical assistance and other knowledge products, and policy advice. The proposed lending programme, including industry development sub-programmes, aims to implement institutional and policy reform as well as capacity-building. To optimise development impacts from ADB’s operations in Vietnam, this country partnership strategy systematically applies the principles of selection and evaluation of project readiness while preparing the project list. Performances of the ongoing project list will be reviewed carefully when [ADB] considers a new loan.

 

In this phase, ADB is expected to lend Vietnam nearly US$3.892 billion in the next three years together with a technical assistance grant of US$24.6 million. In addition, ADB will provide a regular loan of US$943 million a year in the 2013 - 2014 period and US$760 million for 2015. Besides, the fund from the Asian Development Fund (ADF) will provide Vietnam with US$385 million a year in the 2013 - 2014 period and US$395 million for 2015. ADB will focus its support on six core areas in the public sector: agriculture, natural resources and environment, education, energy, finance, transport, water supply, and urbanisation.

 

However, ADB also recommended that the amount of funds it gets in 2013-2014 depends on Vietnam performance assessments to which the efficiency of operating performances will count. This also means that if previous programmes are unsuccessfully operated, the funding may be dropped or discontinued.

 

Regional integration will bring many opportunities to Vietnam but will also present many new challenges to it.

 

To take shape and have a solid foothold in supply chains, Vietnam must improve the competitiveness of Vietnamese enterprises and enhance the performance of the economy in order to attract FDI. Thereby, it helps Vietnam remove obstacles in infrastructure system.

 

Vietnam is known to the world as an attractive country to foreign investors because of its high education levels, broad markets, and low-paid labour. However, Myanmar has recently emerged as a formidable competitor. Especially, it competes with Vietnam low-paid labour supply and investment incentive policies. Therefore, the Vietnamese Government necessarily has fundamental and radical changes to increase the competitiveness of the whole economy.

 

According to ADB, the private sector has a huge demand for credits but it is fraught with credit difficulties because of tightened credit policy that aims at curbing inflation. ADB also has a support fund for this field but the funding may still go through the channel of the Government in the form of loan guarantee and new loan. ADB has also developed financing support programmes for the private sector to access to capital and to create a level playing field for public and private enterprises.

 

ADB also has specific supports for this field at project level like water resource development support and traffic infrastructure development support. ADB aids the construction of subways in Hanoi and Ho Chi Minh City as well as power management. Nonetheless, according to ADB, these hardships are weighing on the region, not on only Vietnam. ADB also has an environmental research centre located in Thailand to seek most common solutions for all six Mekong subregion countries.