VietNamNet Bridge – Foreign donors yesterday (Dec 5) expressed their commitment to support Viet Nam in its reforms and economic development, even though no amount of funding was announced, compared to past years.

A photo of the Phap Van Intersection in Ha Noi. Although Viet Nam is still trying to address shortcomings in the national economy, foreign donors are continuing to support Viet Nam in its reforms and economic development.

They were speaking at the first-ever Viet Nam Development Partnership forum with donors and development partners held in Ha Noi, which replaces the bi-annual Consultative Group meeting.

Taking the floor, Prime Minister Nguyen Tan Dung said the event signaled that Viet Nam had transformed itself from a nation merely receiving Official Development Assistance, to achieving the status as a development partner with foreign donors.

"The support of foreign donors in the past 20 years has played a critical role in our achievements," PM Dung said. "Still, we know there are many shortcomings of our economy that we are trying to address and we welcome any policy advice."

In a briefing on the country's socio-economic situation, Dung said the Government felt confident that the economy would close at the 5.4 per cent growth rate this year, and return to 6-per cent growth in 2015.

According to the PM, the size of the economy is estimated at US$176 billion, while per capita income is nearly $2,000. He noted that inflation has been brought under control to 6 per cent this year, from about 18.3 per cent in 2011.

Answering the donors' concerns about reforms of state-owned enterprises, the head of the Government reaffirmed that all non-core businesses from state-owned enterprises would be completely halted in 2014-15.

Further, according to the PM, the equitisation process will be completed in 2020 and 500 state-owned enterprises will be equitised in 2014.

"I want to have your understanding that we really want to speed up SOEs reforms, but we need to have a road map to make sure that the reform would not harm our social development," he said.

At the forum, World Bank Country Director Victoria Kwakwa stressed that even though the global economy is in better shape, strengthened competitiveness will be critical for Viet Nam to derive maximum benefits from the global recovery.

"Growth continues to be sluggish," Kwakwa said. "Restoring the financial health of the banking and the SOE sectors and leveling the playing field for the private sector seem important for reviving confidence in the economy."

Kwakwa also noted that there are still about 19 million poor Vietnamese, with 75 per cent of the extreme poor being ethnic minorities, which calls for the need to include the private sector in promoting better access to social services.

Further, Tomoyuki Kimura, Country Director of the Asian Development Bank in Viet Nam, said as Viet Nam's economy grows, the volume of available ODA resources would diminish and the terms of borrowing become less concessional.

That means the country must diversify its development financing, which requires providing a conducive environment for private sector participation, Kimura said.

Meanwhile, Japanese Ambassador Hiroshi Fukada said Japan, as one of the largest donors in Viet Nam, continued having concerns over the implementation of some ODA-funded projects in the country that have fallen behind schedule.

The Vietnam Development Partnership Forum held in Ha Noi on December 5.

However, Dung said the ODA disbursement rate for 2013 increased 13 per cent, compared with 2012, and with the National Assembly's recent approval on extending the budget spending cap to 5.3 per cent of the GDP, there would be more funding to counterbalance ODA-funded projects.

European Union Ambassador Franz Jessen said the EU would continue supporting Viet Nam's development goals and appreciated the country's efforts in speeding up trade negotiations, especially the Free Trade Agreement with the EU, scheduled to be completed in late 2014.

The EU also will commit to increase ODA for Viet Nam in the 2014-20 period.

At the press conference after the forum, Minister of Planning and Investment Bi Quang Vinh said the amount of ODA that donors committed for Viet Nam in 2014 would still be at the same level as 2013, which was about $6.45 billion.

"Viet Nam has entered a new era of growth, and we need to change our mindset about ODA. We borrow today and our next generations will be responsible to pay. We can't borrow funds at all costs, but have to make sure that they can be used effectively and can be repaid," Vinh said.

International donors have pledged $78 billion in ODA for Viet Nam since 1993, when Viet Nam was one of the poorest countries in the world, with a per capita income of about $100.

Source: VNS