ADB Country Director for Vietnam Tomoyuki Kimura made the announcement in a conference launching the organization’s country partnership strategy for the 2012-15 period.
Though Vietnam has made some major achievements over the past two decades, such as rapid GDP growth and poverty reduction, the ADB has said that the country’s development has been constrained by some persistent structural rigidities.
Yumiko Tamura, Principal Country Specialist, said that low productivity, low competitiveness and inefficiency in Vietnam’s economic management were long-term issues caused by skilled labour shortage and infrastructure bottlenecks.
She warned “Vietnam is one of the countries most vulnerable to environmental degradation and climate change.”
The country’s efforts to increase transparency and consistency in economic policies – key to restoring market confidence – also needed to be stepped up, she added.
Meanwhile, as a lower middle-income country, Vietnam’s access to Official Development Assistance (ODA) resources may change in terms of both volume and the types of concessions granted, Kimura said.
“Although this may be a challenge, we see it as an opportunity for Vietnam to review the role of ODA in order to ensure its more strategic use. This allows ADB to refocus our assistance programme and enhance co-ordination and collaboration with other development partners.”
Throughout the 2012-2015 period, ADB will support Vietnam’s target of rising to upper middle-income status through achieveing inclusive growth and enhancing economic efficiency and environmental sustainability.
The support provided will be based on principles that align with the priorities of the country’s socio-economic Development Plan 2011-15, which also intersect with its Socio-Economic Development Strategy until 2020.
Inclusive growth will be reached by improving infrastructure, rural development, access to economic resources and support to education.
To efficiently improve the economy, the ADB plans to continue supporting structural land policy reforms, including those regulating state-owned enterprises (SOE). They will also invest in strengthening public sector management and help Vietnam adopt clean technology to become more resilient to the impact of climate change.
The new strategy will focus its support on six core areas in the public sector: education, energy, finance, transport, water supply, and agriculture, natural resources and environment (ANR).
Total suggested lending for the period will amount to US$2.6 billion from ordinary capital resources and US$1.2 billion from concessions granted by the Asian Development Fund. Funding for technical assistance will reach US$8 million annually.
The transport sector will be the largest beneficiary, receiving 34 percent of the US$3.8 billion in total. The energy sector comes next with five projects worth US$700 million, while the ANR sector will receive US$340 million.
“We will also help the Government promote private sector participation in infrastructure projects through various innovative modalities including public private partnership,” Kimura said.
“We will continue working closely with the Government, other stakeholders and development partners to help Vietnam maintain strong reform and restructuring momentum,” he added.