Vietnam will confront new challenges in adapting its infrastructure policies and institutions in the coming time in spite of the country’s remarkable success in expanding access to infrastructure services in the past 20 years, according to a new World Bank (WB) study entitled “Vietnam’s Infrastructure Challenges”
“Vietnam has been tremendously successful in ensuring that the entire country has benefited from infrastructure investment, and this investment has underpinned rapid growth, increased access to basic services, and reduced poverty,” said Klaus Rohland, the World Bank’s Country Director for Vietnam, at the launch of the study at a workshop yesterday in Hanoi.
Meanwhile, Rohland pointed out that the country will face emerging challenges such as the need to mobilize new sources of finance, accelerated urbanization, environmental issues, and increased recognition of governance issues.
The study’s recommendations can serve as a reference point in discussions with the Government on infrastructure reform, said Christian Delvoie, the World Bank’s Director of Infrastructure in East Asia and the Pacific.
Delvoie stated pleasures of working with Vietnam are the government’s willingness to pilot new ideas and to quickly disseminate those that prove to be suited to the Vietnamese situation. Based on the study, WB is seeking to help the process of policy development by providing both an analysis of Vietnam’s infrastructure challenges and suggestions for reform based on lessons learned around the world.
Deputy Minister of Planning and Investment, Tran Dinh Khien told the workshop that the issuance of the report is a good opportunity for government offices to exchange and learn more from experiences in building strategies for infrastructure development, the ability to further mobilize financial sources and management over infrastructure investment.
Khien also added that Vietnam’s economy has been developing since 2000. The GDP growth rose 7.5 per cent in the 2001-2005, ranking the second in Asia after China whilst the GDP per capita averaged some $640 last year. The number of poor households dropped to 22 per cent.
In order to successfully conduct the targets and tasks for the 5 year socio-economic development plan for 2006-2010 aiming a rapid and sustainable growth, Vietnam will need huge investment for infrastructure, Khien said, adding the country should focus investments on socio-economic targets aiming at poverty reduction while continuing to support areas, especially the provinces facing natural calamities and encouraging all sectors to invest in infrastructure in a bid to create a drastic changes in infrastructure structure.
The study praises Vietnam’s existing infrastructure strategy, noting that total investments in infrastructure have been close to 10 per cent of GDP in recent years, a very high level by international standards.
However, the study notes that new challenges facing Vietnamese infrastructure strategists include the following:
Firstly, international donors currently finance almost 40 per cent of infrastructure investment. As Vietnam becomes richer, donor assistance will play a smaller role and alternative sources of finance will need to be found.
Secondly, to cope with influx of some one million people flocking to cities each year from rural areas, Vietnam should improve urban planning and management and better control ad hoc residential development while decentralizing more responsibility to local governments and adopting more flexible planning methods to help achieve this target.
Thirdly, improved planning processes will be needed to identify investment opportunities with high social returns. And governance reforms, addressing enterprise incentives and corruption, are necessary to maximize the returns from the chosen investments.
Last but not least, the communist-ruled country will have to eradicate the rising gap between the highest income earners and the lowest income earners. An issue of increasing importance will be how to target any government fiscal support to infrastructure to benefit the poorest citizens.
The study prepared by WB staff and consultants from 2004 to 2006 includes six volumes: a report on Infrastructure Strategy provides an overview of the challenges facing Vietnam and deals with issues of common importance across infrastructure sectors; other sector reports deal with Water and Sanitation, Power, Transport, Telecommunications, and Urban Development.
A three-day workshop is debating it in Hanoi as a means of inviting feedback on its contents from the Government and other stakeholders before final publication.
According to the study, since 1990, the road network in Vietnam has more than doubled in length and its quality has improved substantially. All the urban areas and 88 per cent of rural households access to power and access to improved water supplies grew from 26 per cent of the population to 49 per cent between 1993 and 2002, and access to hygienic latrines grew from 10 per cent to 25 per cent of the population.
WB, VNS, Labour
Vietnamese
