In Can Tho: Hoang Thanh Ha 0903430193 In Hanoi: Tran Kim Chi (84-4) 934 6600 ext 702 Fax (84-4) 934 6597 E-mail: ctran@worldbank.org Can Tho, June 3, 2005 – Representatives from the Government of Vietnam, 22 donor countries, 13 international agencies, 4 international NGOs, and the private sector gathered for the informal mid-year Consultative Group (CG) meeting in Can Tho City. They reviewed the state of Vietnam’s economy in the first 5 months of 2005, the preparation of Vietnam’s next 5-year Socio-Economic Development Plan (SEDP) and its integration with the Government’s Comprehensive Poverty Reduction and Growth Strategy (CPRGS) process, the preparation for WTO accession, and the status for reforms in the banking sector, anti-corruption, public administration reform, and legal and judiciary development. They also discussed the effectiveness of Official Development Assistance (ODA), the fight against HIV/AIDs and how to curb the spread of Avian Influenza. Earlier mid-year meetings have been held in Hai Phong in 1998, Hue in 1999, Dalat in 2000, Hoi An in 2001, Ho Chi Minh City in 2002, Sapa in 2003, and Vinh in 2004. On June 2, 2005 development counselors and high-level officials held technical discussions to prepare for the CG meeting.
H.E. Deputy Prime Minister Vu Khoan opened the meeting by taking stock of the challenges facing the Vietnamese economy. “The latest multilateral negotiations for WTO membership in Geneva have been concluded recently with positive outcomes, and Vietnam is moving towards the conclusion of bilateral negotiations with a large number of partners. To meet the demands of WTO entry, the National Assembly will amend this year’s law-making agenda, and at the same time we will focus on creating a more enabling business climate, effectively address a number of social issues, and reinforce our anti-corruption and wastefulness control measures. In this process, we welcome and highly appreciate frank, constructive and helpful comments from the international community,” said the Deputy Prime Minister.
The Ministry of Planning and Investment (MPI) provided an update on recent strong socio-economic developments in Vietnam, in spite of challenges from natural hazards, such as drought, flooding and the Avian influenza. MPI also provided donors with an update on activities carried out since the CG in December 2004 to prepare the new SEDP, integrating the CPRGS approach. Donors commended MPI for committing to consultations at all levels of government and with all population groups. Donors also commended the Ministries of Rural Development, Education and Transport for the constructive consultations already carried out, and recommended that similar processes be carried through in other line ministries. Donors emphasized the importance of engaging early on in a substantive discussion of the consolidated, national SEDP to facilitate the alignment of their ODA programs to the new SEDP. Donors welcomed the intention of the Government to co-host with the World Bank a workshop for donors in August to discuss the first draft of the SEDP.
“Japan highly appreciates the efforts to formulate the next SEDP, based on the CPRGS approach. As the Government prepares for its new five year plan, it will be crucial to ensure consistency between the SEDP, sectoral plans and provincial plans, as well as its links with the budget. Japan congratulates the Government for its willingness to enter into a dialogue with donors on these issues and hopes a draft SEDP will be shared at an early stage. Based on the expected detailed dialogue with the Government, Japan intends to align its ODA program with the next SEDP and will adjust its country assistance program in this light,” Japanese Embassy Minister, Mr. Daisuke Matsunaga, said.
The ILO Representative for Vietnam, Ms. Rose Marie Greve, speaking for the UN agencies, congratulated the Government for its strong commitment towards the Millennium Development Goals (MDGs) and the objectives of Agenda 21. “As Vietnam prepares for the next Socio-Economic Development Plan, it will be important to place remaining social and regional disparities centre stage, including urban poverty and ethnic minorities, and to address gender issues. It will also be necessary to map the possible poverty and social impacts of WTO accession and integrate appropriate responses into the planning process, including social safety nets. Addressing social disparities requires local level targeted action with strong participation of people in their own development,” said Ms. Greve.
During the delegates’ discussion on the state of the economic reform program, the IMF representative, Mr. Lazaros Molho, emphasized the importance of faster banking sector reform to protect debt sustainability, improve credit allocation, and promote higher-quality investment and growth. “Early action needs to be taken to strengthen the State Bank of Vietnam’s independence and clearly establish its supervisory authority over all the banking institutions that operate in Vietnam. In the area of SOCB reform, the authorities’ equitization plans need to be pursued without further delay. At the same time, Government interference in the lending decisions of SOCBs will need to be curtailed, and corporate governance significantly strengthened,” Mr. Molho said.
Delegates commended the Government Inspectorate for its preparation of a draft law on anti-corruption and examined ways to strengthen other aspects of administrative, legal, and judiciary reform. “Corruption increases the cost of doing business and often affects the poor and most vulnerable. The draft law is comprehensive in scope and in particular its preventive measures such as asset declaration of Government officials, could be very forceful in curbing corruption, if implemented effectively. Sweden has been happy to help form a consortium of donors to assist the Government in strengthening the capacity of the inspectorate system. It is hoped that the support program will begin implementation before the next CG-meeting in December,” the Ambassador of Sweden H.E. Anna Lindstedt, said.
Government and Donors discussed measures to improve aid effectiveness and commended the “Hanoi Core Statement”, based on key principles of Government ownership, alignment of donor support, harmonization and simplification, managing for results and mutual accountability. The delegates welcomed the Hanoi Core Statement and expressed its strong commitment to reach a final endorsement ahead of the New York summit on Aid Effectiveness in September.
“That Vietnam is the first country to localize the Paris declaration on aid effectiveness is an appropriate tribute to its resolve to engage with development partner to increase aid effectiveness. This takes us from general statements of intent to practical steps of implementation. As we continue working with Government to align our support to the SEDP, it will be essential to increase our focus on strengthening the Government’s own systems of public service delivery and to ensure consistency between the new SEDP and ODA regulations”, said the Ambassador of the European Commission, H.E. Markus Cornaro.
Delegates noted that progress in the area of harmonizing procedures continues to be good and expressed its strong commitment to continue recent promising efforts at harmonizing ODA procedures in light of the outcome of the Paris High Level-meeting on aid effectiveness. At the same time as donor procedures for delivering aid are being harmonized, donors expressed a willingness to provide financial support directly to the Government’s budget and rely more on the Government’s own mechanisms for disbursing funds. “In support of Vietnam’s wide ranging reform program, including strong progress in the area of public financial management, we have decided to join the group of donors that provide direct budget support to the Government under the Poverty Reduction Support Credits,” the French Ambassador, H.E. Jean-Francois Blarel, said.
Government and donors also took stock of recent efforts to strengthen the fight against HIV/AIDS since the last CG meeting. At the technical discussions, Minister of Health, H.E. Tran Thu Trung Chien, presented recent achievements resulting from Government efforts to prevent the spread of HIV/AIDs and to provide effective assistance to those living with HIV/AIDs. Delegates expressed its eagerness to continue working with Government in these endeavors and emphasized the importance of strengthening the coordination within Government and between donors. Government also presented a status report on managing and preventing outbreaks of Avian Influenza.
Delegates were briefed on the recent meeting of the Vietnam Business Forum held in Ho Chi Minh City on June 1, 2005. The Forum was attended by more than 300 representatives of the private sector, both local and foreign. Participants acknowledged the high degree of trust and confidence that had been built up between government and business, reflected in the open consultations on the drafting of the new enterprise and investment laws. Members of various chambers of commerce also expressed their strong support for Vietnam’s accession to the WTO. They thanked the government for its efforts at improving the investment climate, and pointed towards a need for stronger measures in areas such as private participation in infrastructure, tax refunds, implementation of the land law and customs procedures.
Mr. Klaus Rohland, World Bank Country Director for Vietnam, summed up the key results of the meeting. “Vietnamis at an important juncture in its development process and the next SEDP should provide guidance for completing the transition to a market economy. The Government’s role will be to create the right incentives for the private sector to become the leader of economic growth. This implies that the Government will treat production targets as indicative, and will focus on development outcomes. In areas such as infrastructure, where the investment requirements are enormous, as illustrated by recent power shortages, the Government would continue to play a key role, but would engage the private sector as a partner in meeting the needs,” concluded Mr. Rohland.
In his closing remarks, H.E. Planning and Investment Minister Vo Hong Phuc underlined Vietnam’s commitment to work with donors to develop a new 5-year Socio-Economic Development Plan for 2006-2010 with new approach, where Government will play a guiding role in addressing important social and economic challenges. “The Government remains committed to move towards a new planning approach focused on outcomes, with community consultation. The public expenditure plans will be openly finalized. The consultations on the next 5-year plan for 2006-2010 have clearly demonstrated the resolve from both sides to engage in a substantive dialogue on the new SEDP,” Minister Phuc said.
In closing, delegates agreed that they would meet in December to the formal Consultative Group Meeting in Hanoi.
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