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Accelerate Reforms for Viet Nam's Even Higher Growth

HANOI, VIET NAM (27 March 2007) –Viet Nam will continue its dynamic economic expansion with GDP growth of 8.3% in 2007, and 8.5% in 2008, assuming the country continues to accelerate reforms in its economic and public administration systems, the Asian Development Bank (ADB) said in a major report released today.

“It is essential for Viet Nam to accelerate reforms in its economic and public administration systems” says Ayumi Konishi, ADB Country Director to Viet Nam. “At this stage, it is more important to focus on ‘how’ Viet Nam can achieve high level of growth, rather than the numbers themselves.

The Asian Development Outlook 2007 (ADO), the annual ADB publication that forecasts economic trends in Asia, noted that with the accession of WTO, the successful organization of the APEC Leaders Meeting in November, adoption of a new Socio Economic Development Plan 2006-2010, and record high foreign direct Investment (FDI), Viet Nam has entered a new phase of economic development characterized by globalization and related opportunities and challenges.

Viet Nam has achieved impressive growth in the last decade with average GDP growth at 7.3%. The broad-based and vigorous growth has resulted in the reduction of poverty from 58.1% in 1993 to an estimated 18.1% in 2006. The success was achieved through a steady transition to a market-based system and the rapid growth of private sector. Closer integration will provide impetus for vigorous reforms and pro-business policies, underpinning strong economic growth in the future.

“If Viet Nam accelerates reforms, a sustainable high level of growth will follow,” Mr. Konishi says. “Equitization of state-owned enterprises, financial sector reforms, simplification of public administration for greater efficiency, transparency and accountability, and improvement in infrastructure are all important for Viet Nam to be more efficient and thus competitive.”

The ADO says overall economy of Asia in 2006 expanded 8.3% in 2006, the fastest rate in more than a decade. Rapid growth in the People’s Republic of China (PRC) and India accounted for about 70% of the region’s economic expansion in 2006. The ADO 2007 forecasts developing Asian economies to expand at 7.6% in 2007 and 7.7% in 2008.

The growth of economies of Southeast Asia are projected to slow down somewhat to 5.6% in 2007 from 6% in 2006, due mainly to a softening in some major export markets. “Only in Indonesia and Viet Nam is growth projected to be higher this year,” says ADB Chief Economist Ifzal Ali.

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 67 members – 48 from the region. In 2006, it approved loans and grants for projects totaling $8.5 billion, and technical assistance amounting to almost $242 million.

Read the ADO 2007 [ PDF: 347kb | 5 pages ] chapter on Viet Nam.

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