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Meeting Vietnam’s Social and Economic Targets 2006 - 2010
Donors and the Government discussed Vietnam's social and economic performance. Vietnam’s Minister for Planning and Investment Vo Hong Phuc said, “the achievements in ODA implementation are remarkable, and have contributed to reaching socio-economic development and poverty reduction targets in Vietnam. The implementation of the 5-year Socio-Economic Development Plan 2006 - 2010 is a long road that offers many advantages and opportunities while at the same time posing no small difficulties and challenges given Vietnam’s accession to the WTO. This further requires the Vietnamese Government and people to make a yet greater effort while putting a big demand for the international community’s further assistance to Vietnam”.

Donors complemented the efforts of the Government in the past months, noting that 2006 has been an extraordinary year for Vietnam with the successful hosting of the annual APEC meeting, accession to the World Trade Organization, and its recent election to the Security Council of the United Nations. They underlined that while it has been a year which has seen Vietnam’s firm integration into the international community, an integration which will bring with it many advantages, it will also require the country to continually adjust to new realities.

"WTO accession poses challenges as well as opportunities" said H.E Mr. Norio Hattori, Ambassador of Japan. "The accession is expected to bring about significant impact upon Vietnam's economy and society. One of its associated challenges is the need to build up the capacity of local governments including provinces. Japan continues to work together with Vietnam to attract more investment through their Joint Initiative. Japan is also resolved to continue its infrastructure assistance including major transportation projects.”He also welcomed Prime Minister Nguyen Tan Dung’s commitment to fight corruption and expressed high expectations for his leadership.

Donors and Government agreed that the steps taken to reform and open up the economy will benefit the Vietnamese people through the creation of employment, increasing exports and enhanced ability to attract foreign investment. While commending the strong economic progress in the last few years, as well as the prudent macroeconomic management, delegates emphasized the need to accelerate reforms, particularly of State Owned Enterprises (SOEs) and address shortcomings in the financial sector. Donors emphasized that in the future, the Government should move rapidly from being an owner to becoming a regulator of business.

Mr. Lazaros Molho of the IMF stated that “Vietnam’s overall record of economic performance has continued to be impressive over the last year. WTO membership will undoubtedly provide Vietnam with enhanced opportunities for continued rapid economic development but as authorities clearly recognize the outlook is not without risks. To reap the full benefits from increasing global integration, macroeconomic management will need to be increasingly vigilant, reforms of previously-protected industries will need to be stepped up, and financial system regulation and supervision upgraded.”

Delegates emphasized that strengthening the capacity of government employees and institutions is a critical challenge. They noted that a middle-income country has a more complex economy, much more diverse across regions and across sectors, and Vietnam must tackle this to put itself on track to become an industrialized country.

Mr. Ayumi Konishi, the Country Director of the Asian Development Bank stated that, “As Vietnam is entering into a new phase of development, it has to improve its competitiveness. And for Vietnam to be competitive, it has to enhance efficiency at all levels, the national and firm levels, as well as in effective absorption of the increasing level of assistance.”

As part of the CG process, the Vietnam Business Forum (VBF) was held 13 December 2007 between representatives of the business community and the government. On behalf of the VBF, Mr. Oliver Massman congratulated the Government on WTO accession adding that, “While accession should boost international investment, the subsequent challenge will be for Vietnam to build a strong platform for private sector investment that will ensure healthy levels of FDI and economic growth. This platform will best be supported by three pillars: infrastructure development, education, particularly higher education, and maximizing tourism sector opportunities.”

The VBF acknowledged the Government’s openness in consulting with the business sector. Participants especially highlighted the significance of continued consultation in the drafting of laws and regulations, and ensuring their timely issuance.

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Social Inclusion and Improving Governance
Donors and the Government agreed on the importance of combating corruption. H.E. Kari Alanko, the Ambassador of Finland, which holds the Presidency of the European Union stated that, “Corruption is a major factor that slows down Vietnam’s development efforts. It is also a fact that corruption influences perceptions about development assistance in donor countries.” He also observed that legal and judiciary reforms are critical, “a strong and independent judiciary system is a precondition for a society based on the rule of law. The EU considers that the rule of law not only safeguards human rights, but is also a crucial precondition for sustainable development.”

Donors noted that development is about more than just economic growth, underscoring that emphasis must also be placed on quality of growth, social inclusion and on the changing nature of the relationship between the state and society. They emphasized the importance of establishing an enabling legal framework, including an appropriate Law on Association, for civil society participation in Vietnam’s development process.

The well-being of the country’s most vulnerable citizens must also be prioritized as the economy strengthens, donors said. People living with disabilities, or with HIV/AIDS, and people vulnerable to natural disasters as well as ethnic minorities need the active support of the state to ensure a life in dignity, noted Mr. John Hendra, United Nations Resident Coordinator. He further underlined that, “Efforts to sustain development progress over the long term through the development of transparent, democratic and accountable public institutions and sustainable management of the environment and natural resources should guide ODA in the future.”

Concern about the persistent poverty of Vietnam’s ethnic minorities was echoed by several other delegations. The Norwegian Ambassador, H.E. Kjell Storlokken, speaking on behalf of Canada, New Zealand, Switzerland and Norway recognized the significant efforts made by the Government to improve the lives of disadvantaged groups, welcomed the new measures in the SEDP 2006 – 2010 for socio-economic development of the mountainous and ethnic minority areas, but added that, “Improvement of the living conditions of poor ethnic minority households and communities goes beyond infrastructure and economic development. It is important to empower the ethnic minorities’ representation within the administrative and political level and enhance the role of ethnic minority communities in the planning and decision-making process.” The ambassador, drawing from the experience of all four countries underscored that, “Ethnic minority culture forms a vital component of a country’s cultural heritage and plays an important role in the development of a dynamic and contemporary society.”

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Aid Effectiveness
Donors reaffirmed their commitment to align their assistance to the SEDP 2006 – 2010 as emphasized in the Hanoi Core Statement (HCS) on aid effectiveness, and welcomed the new Decree 131 on Overseas Development Assistance (ODA) utilization and management. They also welcomed the forthcoming independent monitoring mission that will give an objective assessment of the implementation of the HCS.

The group of Like-Minded Donors commended the strong leadership of the Government in advancing aid effectiveness through the implementation of the Vietnam Harmonization Action Plan. They emphasized, however, that additional efforts could be made to further the effectiveness of ODA through the harmonization of management cost norms, aiming at a revised cost norm framework, including ceiling and floor rates, both for Government and donors. Furthermore, the group joined other participants in welcoming the One UN initiative, and commended the Government leadership in piloting this important initiative, which will provide a solid basis for enhancing the efficiency and effectiveness of the United Nations.

In his closing remarks, Mr. Klaus Rohland, World Bank Country Director for Vietnam, underlined that “the SEDP’s goal of Vietnam becoming a middle income country by 2010 is ambitious but attainable. Given its recent performance Vietnam should aim high. Reaching middle income status is not only about income levels, but also about putting in place complex institutions. It is about making the delivery of services more decentralized; it is about increasing transparency and accountability; it is about building a social protection system reconciling efficiency with support to the vulnerable. Above all, reaching middle-income country status requires a shift in the role of Government from owning and doing to leading and regulating.”

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