SINGAPORE, Dec. 4 (UPI) -- Vietnam's medium-term economic prospects have grown considerably stronger, thanks in part to the government's adoption of a new program of structural reforms. Now, it needs to pursue rigorously the implementation of its policy agenda.
"I am greatly encouraged by the commitment here to foster a vibrant, efficient private sector which can help stimulate growth, increase productivity, and create jobs for the Vietnamese people. The challenge now is in implementation. This will not be easy, but we are eager to assist the government's efforts to unleash the energy of the private sector and to deepen economic reforms and privatization measures," said Peter Woicke, Executive Vice President of the International Finance Corporation.
As a demonstration of the IFC's commitment, Woicke just signed several deals worth $70 million.
On Dec. 7-8, the Consultative Group Meeting (donors) will meet in Hanoi to discuss new financial assistance for 2002. So far this year, the country has received $1.7 billion worth in financial aid from the international donors out of $2.8 billion pledged for fiscal year 2001.
Donors will review progress achieved so far this year, and based their discussion on a report prepared by the World Bank, and the news is pretty good.
"Despite the uncertainty that shrouds the global economy, Vietnam's medium-term prospects for growth remain good, internal factors driving growth are more favorable today than at any time in the past five years, and macroeconomic performance in 2001 is close to expectations, giving Vietnam the second highest growth rate among the larger economies in the region both this year and next," said Kazi Matin, Lead Economist for the Vietnam Country Program in the report.
"Vietnam has taken significant steps in the past year to restore growth and reduce poverty, but in light of the current global slowdown, needs to act quickly and seize the opportunity to gain in competitiveness and position itself for the decade ahead," added Andrew Steer, Country Director for the World Bank in Vietnam.
Woicke also commended the government for its recent actions to promote private sector growth, including passage of the enterprise law, revision of foreign investment law, establishment of the stock exchange, the signing of two large power deals, new reform agreements with the IMF and World Bank, and most recently, the ratification of the US Bilateral Trade Agreement.
The trade agreement, which is expected to take effect at the start of next year, was the last step in a long reconciliation that began with the lifting of an American trade embargo in 1994. In embracing the pact, Vietnam has committed to difficult reforms. The agreement requires that trade barriers be lowered, state industries compete with foreign companies and copyright and investment guarantees be raised to international levels.
The agreement should dramatically boost Vietnam's export earnings, and, perhaps more significantly, will promote Vietnam's move towards a modern rules-based approach to trade and investment, enhancing their international reputation as a country open to business, the World Bank said.
Last week, the World Trade Organisation chief Mike Moore also began talks in Vietnam on ways to speed up accession to the WTO. The country needs the WTO membership to gain full access to the Chinese market.
The World Bank is recommending that the government implement the recently adopted structural reform agenda "more rapidly," while positioning itself as a safe of productive place to invest.
While a recent survey shows that Vietnam is perceived as the "safest" country in Asia, its reputation for slow decision-making and insufficient transparency needs to be overcome through implementation of the governance reform issues, the report said.
Voicke noted that the business community and government have been equally frank in discussing the constraints that the private sector has been facing.
"While our initial investment experience in Vietnam from 1993-97 had not been overwhelmingly positive, we are very much encouraged by the current willingness to remove constraints to the private sector and happy to see the business community inside Vietnam is more positive on prospects than perceptions which exist outside," Voicke said.
While potential donors are expressing satisfaction at the latest development, the Human Rights Watch, a New-York based group, urged on Monday the international donors to press for significant progress in human rights and rule of law, including the released of political and religious dissidents.
"Now that Vietnam's economy is opening up, this is a good time for donors to press for human rights improvements," said Sidney Jones, executive director of the Asia Division of Human Rights Watch.
