Vietnam has been significantly impacted by natural disasters for years with human and economic losses. Despite the efforts of the government and people, the country still faces several key challenges in disaster risk management including institutional fragmentation, ineffective processes for coordinated sectoral planning, and the absence of a cost-effective strategy for financial protection.
TheLEADER had a talk with Alwaleed Alatabani, the Lead Financial Sector Specialist at the World Bank in Vietnam on this issue.
Do you have any comments on the impact of natural disasters on Vietnam economy?
Alwaleed Alatabani: Vietnam is a country that is prone to natural disasters which have impacted on the country’s economic growth throughout the history. It would be very difficult to determine the exact impact on the GDP growth of a country but it is very clear that natural disasters do impact individuals, especially the most vulnerable in rural areas. They must be addressed at the national level because of broader implication for economic growth.
What should Vietnam do to mitigate the impact of natural disasters?
Alwaleed Alatabani: Given the circumstances of Vietnam, we look beyond the budget of research because it becomes unsustainable when climate change continues and these disasters become bigger and impact much larger. Therefore, it is very difficult for countries to bear all this cost. Such countries as Vietnam should look at other risk mitigation mechanisms such as a contingent financing mechanism to complement budgetary resources or insurance programs for different stakeholders and assets.
In terms of the financing strategies, Vietnam has to be able to model the risk events taking place, determine the severity of those events and also have the financing in place to help them address some of the high cost associated with relief efforts, recovery, and reconstruction.
How about the coordination of Vietnam’s related ministries and departments in climate change management, especially in managing financial resources from such international institutions as WB?
Alwaleed Alatabani: Coordination is a key in the climate change management.Therefore, it is essential to have a national financing protection strategy which should be discussed by all stakeholders as it is not the time to think about where do we get the funding from but how to respond to disasters. Committees must be established to do the strategies and have it in place anytime to be more proactive in developing the needs in times of more disasters.
Are there any obstacles in Vietnam’s legal framework that may hinder the financial resources from such institutions as WB?
Alwaleed Alatabani: In terms of financing, I do not think that is a problem in case of Vietnam. But there are some sorts of limitations, for instance, the debt ceiling, 65 per cent of GDP, limits the amount of money Vietnam can borrow. So that could be a constraint in terms of new financing that can be attracted from abroad. But in terms of legal architecture, there might be some inconsistency between the budget law and the public debt management law that needs to be looked at.
Are there any model countries for Vietnam to follow to mitigate the effect of climate change?
Alwaleed Alatabani: Several countries have succeeded in addressing disasters like Mexico and the Philippines as well as such high-income nations as Japan, the U.S, and Australia. They have strong institutional structures to support countries with disasters management. Vietnam could learn from them how to build resilient infrastructure and stronger collaboration between provincial and central government All of these must be very critical if Vietnam wants to succeed in having integrated disaster management strategies, particularly when it comes to financing.
What are the specific projects that WB will invest in Vietnam?
Alwaleed Alatabani: We are focusing on building the technical capacity for the country to be able to address particular aspects related to modeling the natural disaster looking at all levels of government. WB will continue to support Vietnam, especially in the analytical and technical capacity building with stronger reports for the country to draw experience in managing risks of other countries. So we have to take into account the unique country circumstances, laws as there might be things that Mexico can do but Vietnam cannot and vice versa because of the legal constraint. Therefore, it is very important for us to understand the legal architecture of a country.
We also support Vietnam in raising awareness of the need for having an integrated financial solution to address the disasters.
Thank you so much!
