Effective institutions needed to tackle four key priorities: WB

By Lan Huong - Dec 05, 2018 | 02:58 PM GMT+7

TheLEADEREffective market institutions, and a transparent, clean and accountable state are lynchpins of development for Vietnam to resolve four key priorities including private sector, infrastructure, human capital and green growth, according to World Bank Vietnam.

Effective institutions needed to tackle four key priorities: WB
World Bank Country Director Ousmane Dione at Vietnam Reform and Development Forum 2018. Photo: Le Tien

Making opening remark at Vietnam Reform and Development Forum 2018 held today in Hanoi, World Bank (WB) Country Director Ousmane Dione emphasized that Vietnam’s journey to become a modern, industrial economy has only just begun, and past achievements are no guarantee for future success.

“Domestically, Vietnam will have to tackle rising structural headwinds, including a rapidly aging population, slow productivity growth and weak investment as well as an increasing environmental toll on development.”

“Leaning against these structural headwinds at home, Vietnam will also need to navigate a changing terrain abroad where shifting global trade patterns and the digital economy are both reshaping opportunities and creating new risks,” explained he.

As Vietnam has become a middle-income country, development challenges are increasingly sophisticated and cross-sectoral in nature. 

"Hence, effective coordination across ministries and agencies as well between central and local authorities are now more important than ever," he said.

To help Vietnam realize its aspiration of becoming a successful upper middle-income country as envisioned in the Vietnam 2035 Report, World Bank Country Director suggest four key priorities.

Firstly, reforms to promote domestic private sector development will need to be significantly stepped up, making it a primary driver for improved productivity and economic growth.

“This entails continued effort to remove obstacles to private business and strengthen regulatory environment,” insisted Ousmane Dione.

"Attraction of FDI should also shift away from quantity to quality with a focus on high-tech and high value-added investments with technology transfer to harness stronger linkages between domestic and foreign firms," said he.

He added: "This would ultimately help domestic private sector effectively join the global value chains.”

Secondly, notwithstanding current fiscal constraints, continued investment in infrastructure is critical for future growth and it is not only quantity, but quality matter.

Thirdly, “we cannot emphasize more the importance of investment in human capital, especially in the context of fast-changing disruptive technologies and a digital era.”

As such, investment in human capital will require a life-cycle approach which entails effective coordinated efforts to improve health care and nutrition, especially in early childhood, lifelong education and skill training.

Lastly, Vietnam’s rapid growth is taking an increasing environmental toll. This is evident in land degradation and soil erosion, rapidly growing green-house gas emissions and air pollution, increasing water degradation, deforestation and pressure on bio diversity.

Vietnam will also have to mobilize and use its scarce public resources efficiently to finance this ambitious development agenda. Improving domestic revenue mobilization, complemented by efforts to enhance expenditure efficiency and debt management capacity will be important to ensure development objectives can be achieved without raising debt to unsustainable levels.

“Available ODA resources will need to be used more strategically and effectively to complement domestic public resources and aim to leverage non-financial benefits, know-how and private investment,” emphasized the World Bank Country Director.