Vietnam Striving to Become Middle-Income Country, World Bank President says

Contacts:

In Washington : Mohamad Al-Arief (202) 458-5964

malarief@worldbank.org

In Hanoi : Nguyen Hong Ngan (84-4) 934 6600 – 234

nnguyen5@worldbank.org

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”Vietnam has the potential to be one of the great success stories in development. It has already achieved one of the fastest improvements in living standards in the world, with a great reduction in poverty” Mr. Zoellick said. “Driven by the first stage of reforms and the benefits of trade and WTO accession, Vietnam is on pace to become a middle income country by 2010. It has boosted rural electricity,   attracted over US$ 10 billion of foreign direct investment last year and launched its first international bond issue.

“The World Bank Group – in particular, the International Development Association (IDA) – has been a strong partner for Vietnam over these past 14 years. This experience shows the considerable benefits of IDA when the money and advice is put to productive use. Now we are proud to work with Vietnam on the next stage: broadening social inclusion; improving the institutions of good governance; strengthening the business context; and focusing on environmental improvement.”

To better appreciate the challenges of rural development in Vietnam, Mr. Zoellick spent a day in mountainous Yen Bai province, Mr. Zoellick saw how local farmers benefited from the Bank’s IDA supported programs and projects. In Hong Ca Commune, in Tran Yen District, Yen Bai province, Mr. Zoellick saw local infrastructure built under the IDA-supported  Northern Mountains Poverty Reduction Project, co-financed by the UK ’s Department for International Development. The Northern Mountains Poverty Reduction Project has benefited 165,000 people from a number of ethnic groups in the province.

“In the northern mountains region, one of Vietnam ’s poorest areas, I saw successful Government initiatives supported by the World Bank to build infrastructure and increase the availability of electricity. These projects have shown that well-designed development projects can broaden opportunity to the poorest people,” Mr. Zoellick said.

Mr. Zoellick talked to the local community, and listened to Mr. Ha Giap Hung, a farmer, as he described how his life had changed so far. Thanks to a bridge built under the Northern Mountains Poverty Reduction Project, Mr. Hung can now cross the stream next to his house to go to the field, even during flooding season. He can now afford a motorbike, which he only dreamt of before the bridge was built.

“Mr. Hung’s example shows that people can be better off with small investments tailored to the local needs. The World Bank can create opportunity and hope,” Mr. Zoellick said.

Mr. Zoellick also visited a 220kV substation in Yen Bai province, built under the Vietnam System Efficiency Improvement, Equitization and Renewables Project. The substation is a crucial middle point of the 220kV link between China and Vietnam. The station has proved to be effective in stabilizing the regional transmission network, reducing losses, improving power supply quality and meeting the growing energy demand of northern mountainous provinces. The project has helped Vietnam expand its rural electrification program under which 92 percent of households nationwide now have access to electricity.

President  Zoellick greets Prime Minister Nguyen Tan Dung.

Mr. Zoellick met with Prime Minister Nguyen Tan Dung; Deputy Prime Minister and Minister of Education and Training Nguyen Thien Nhan; Minister of Planning and Investment Vo Hong Phuc; Governor of the State Bank of Vietnam, Mr. Nguyen Van Giau; Minister of Agriculture and Rural Development Cao Duc Phat; and Minister of Transport Ho Nghia Dzung; and other senior officials.

Mr. Zoellick congratulated the Prime Minister and the government on the country’s achievements in transforming the economy and for spreading the benefits of growth widely.

“Decisions on land reform, market liberalization, investing in social sectors and infrastructure, and enabling the private sector have transformed this country in less than a generation. Vietnam and the World Bank have built a partnership based on mutual trust, and we will certainly continue our support in the coming years as a key development partner.”

Mr. Zoellick also discussed with Government officials ways that the World Bank Group’s International Finance Corporation (IFC) can play a greater role as Vietnam relies increasingly on private sector dynamics and growth. “IFC investments might encourage foreign investors in the financial, infrastructure and energy sectors,” Mr. Zoellick noted.

The Bank Group will support Vietnam ’s efforts to increase the country’s competitiveness and improve governance, increase transparency and accountability, strengthen and deepen the financial sector, modernize social protection systems, improve environmental management and upgrade the quality and quantity of infrastructure. Central to this will be Vietnam ’s announced plans to modernize public debt management and implement the anti-corruption law.