Seeking Path for Higher Economic Growth

4:50:07 PM | 7/31/2014

Vietnam and the World Bank Group announced that they have agreed to conduct a joint study that will recommend policy actions to greatly increase economic growth in Vietnam in the coming years, putting it on a path to become a modern, industrialised country in a generation. The study will identify the changes Vietnam needs to make to build sustainable and inclusive growth and join the ranks of high-income countries.
“We look forward to working closely with Vietnam on this joint report and sharing our global experience to help it realise its potential of becoming a high-income country in the decades ahead,” said World Bank Group President Jim Yong Kim. “Vietnam’s leadership can improve the lives of the Vietnamese people even more if they improve the efficiency and competitiveness of its economy and create the conditions for the private sector to become a driving force for job creation, innovation and high-productivity growth that benefits everyone.”
The study will look at changes Vietnam needs to boost trade and competitiveness and improve the business and investment climate to attract more foreign and domestic private investment. It will also examine the policies and actions Vietnam will need to build economic sustainability, reform its institutions and create more equality and opportunities for all people. Vietnamese Prime Minister Nguyen Tan Dung and World Bank President Jim Yong Kim agreed to complete the study within one year.
“We hope this study will support our strategy to improve people’s lives even more by offering guidance on how to accelerate our economic restructuring and institutional reforms so we can boost growth and provide additional support to the poor,” said Prime Minister Nguyen Tan Dung. “A big focus of the report will be encouraging private sector investment that helps create jobs while ensuring greater equality and inclusiveness for all people.”
Prime Minister Nguyen Tan Dung and World Bank Group President Jim Yong Kim announced this joint study in Hanoi, where they also signed credit agreements for five new projects totalling US$876 million. In addition, Kim announced the World Bank Group will provide Vietnam with over US$3.8 billion in concessional financing through IDA, the World Bank’s fund for the poorest countries, in the next three years. A key objective will be to help Vietnam use World Bank resources to attract additional private financing. President Kim also met the General Secretary of the Communist Party of Vietnam Nguyen Phu Trong and State President Truong Tan Sang during this visit.
Over the last few decades, Vietnam has made remarkable progress in reducing poverty. The percentage of people living in poverty dropped from almost 60 percent in the 1990s to under 10 percent today. Over the same period, the mean income for the bottom 40 percent of the Vietnamese population increased by an annual average of 9 percent. Vietnam’s growth rate has averaged 6.4 percent per year for the last decade, but it has begun to slow recently.
“Vietnam can return to higher rates of growth if it makes the bold reforms needed in the financial sector and in state-owned enterprises with greater transparency and accountability,” Kim said. “The World Bank Group is committed to supporting Vietnam as it moves ahead with these tough reforms and we truly appreciate our long and trusted relationship with Vietnam.”
Kim said Vietnam, like other developing economies, is working with the World Bank Group to tackle climate change and increased extreme weather events, which threaten to roll back development gains over the past decades. He also thanked Vietnam for agreeing to sign on to a call to establish a price on carbon, a global effort that will be released at the United Nations Climate Summit in September.
Quynh Anh