Vietnam Development Report 2005 Released

Vietnam Development Report 2005 Released

The Vietnam Development Report 2005, which was released on November 25, 2004 by the World Bank, says that Vietnam’s economy has changed rapidly during the doi moi (renovation) process and institutions should catch up with such a progress.

As a joint research of donors with the involvement of Vietnamese researchers and cadres, the report evaluates the progress achieved so far in the building of a modern governance apparatus and points out the fields in which Vietnam should exert further efforts.

Klaus Rohland, country director of the World Bank in Vietnam, said that the changes in public finance and administration accountability, decentralisation and management would produce basic impacts on activities of the Vietnamese Government. On a deeper level, the issue is not ‘how’ to manage a governmental apparatus effectively but also ‘for what.’

According to the report, Vietnam’s GDP growth rate would be maintained high in 2004 and may exceed that of 7.2 per cent in 2003. Non-oil export continues to see a high increase despite facing many pressures. Payment and budget deficits are expected to fall. In the first ten months, macro-economic development situation saw a high increase of prices but the inflation has slowed down. A high world oil price is one of the factors causing a suddenly high inflation, but helped increase incomes from export and other revenues of the Government. There are also stronger signs for the possibility of Vietnam’s accession to the World Trade Organisation and the reform of State owned enterprises has gained progress, despite a slow speed, especially in the banking sector.

Also according to the report, there has been a basic change in the Vietnamese Government’s activities. The National Assembly has been allowed to be responsible for approving budget, including the allocation of budget to local governments with solid progress seen in public financial management.

However, the report says that Vietnam continues to have to overcome many challenges, including a separation of investment decisions from recurrent expenditure decisions. The problem is not only that there are two different ministries responsible for developing long-term investment plans and annual budget, but also a weak co-operation between them has caused an imbalance between investment expenditure and recurrent expenditure.

At the same time, the ongoing decentralisation has been based on the allocation of a large proportion of the budget from wealthy provinces and cities to the poorest ones. However, the allocation of resources from provinces to its districts and communes has not always met the demand.

Administrative entities have had their operations scrutinised under tough examination in the past. However, with the present administrative reforms increased autonomy should go hand in hand with increased accountability and measures to ensure equality and accessibility. The application of minimum service standards, internal auditing and the collection of feedback information from people who these units serve, and the application of closer guidelines on allowance payment for staff members should be promoted. 

The recovery of urban land from State-owned enterprises may contribute to the development of the private sector. The control of State-owned enterprises’ activities and the promotion of governance of State-owned commercial banks are one the biggest difficulties for Vietnam.

In salary reform, not all civil servants are underpaid, especially when they enjoy non-salary benefits. Therefore, a more careful analysis is needed for salary in and outside the public sector.

In particular, surveys show that corruption is familiar in Vietnam. Transparency should be promoted while rules on procurement and bidding should be perfected and electronic interfaces should be constructed to minimise direct contact with the Government in business. This may play a vital role in this field. 

• Lan Anh