Viet Nam and ADB

ADB’s assistance program for Viet Nam for 2024–2026 focuses on the country’s transition to a climate-resilient and sustainable economy, driven by the private sector and continued policy reforms.

Economic forecasts for Viet Nam

Figures are based on the latest edition of ADB's Asian Development Outlook, which analyzes economic and development issues in Asia and the Pacific. This includes forecasting the inflation and gross domestic product growth rates of economies throughout the region.


 

Comparative economic forecasts

The latest available economic data for Viet Nam compared to countries in Southeast Asia.


 

Policy Challenge—Accelerating Disbursement of Public Investment

Public investment is a critical engine of economic growth, but plans must be implemented for this engine to provide power. According to the Ministry of Planning and Investment, an increase of 1% in public investment disbursement corresponds to a 0.058% increase in GDP growth. In addition, every 1 dong of disbursed public investment capital stimulates 1.61 dong of investment capital from the non-state sector. However, the execution rate compared to planned investment has been consistently low, hovering around 80% for the year. While the government has tried to address this problem, progress has been insufficient.

First, projects approved with allocated budgets sometimes are not ready to move forward, causing extensive delays. A systematic approach to improve project readiness can significantly enhance effective implementation. Many projects require preparatory groundwork, such as feasibility studies, land clearance arrangements, and preparatory procurement in parallel with project approval procedures. Better readiness to expedite project implementation will help minimize cost overruns

Second, projects sometimes require design or budget changes even after approval and budget allocation. This can cause long interruptions before project work can start. One major obstacle to timely and quality project preparation is the complexity of regulations, particularly land use planning, land acquisition, and site clearance. This rigidity is a crucial challenge in situations of market fluctuations. Soaring prices due to shortages of materials and inputs for production, driven by regulatory constraints, lead to higher costs, forcing contract renegotiations or the need for additional funding and approvals. As part of improving project cycle procedures, regulations should be revised to allow for principle-based flexibility and fit-for-purpose adjustments. This will help facilitate efficient project approval and management that can be adapted to various circumstances without repeating the approval process. It is also important to strengthen the capacity of provincial and local public investment staff to improve the quality of project preparation.

Third, weak coordination between public investment and budget processes has resulted in slow and insufficient budget allocation. In recent years, it has been reported that central agencies received higher allocations than what they can initiate, while provinces received too little to meet their needs. The pressing challenge of the mismatch between allocated budgets and investment mandates often leads to inefficiencies and delays in project implementation — funds may not be optimally directed toward identified priority areas, resulting in suboptimal resource utilization. This limits project progress and capital utilization efficiency.

The government has adopted measures to enhance transparency, efficiency, and accountability in budget allocation and disbursement. This promotes better coordination between central and local authorities, prioritizing projects based on impact and readiness, and implementing rigorous monitoring mechanisms to ensure funds are utilized effectively and efficiently. However, their effectiveness seems to be limited. Disparities among the execution capabilities at different government levels highlight the need to strengthen the allocation process and build the capacity of local governments. The ongoing decentralization of public investment mandates and fiscal responsibilities has exposed weaknesses in addressing inter-provincial or regional challenges. The budget processes could be adjusted to allow for flexibility, which would be more efficient at any level (central or provincial) to contribute resources to a regionally coordinated project.

In 2024, public investment will continue to play a vital role in supporting the economy. Following budget approval by the National Assembly, the Prime Minister approved the capital allocation plan of D688.5 trillion to continue building infrastructure and driving economic development. The government has implemented various policy measures to expedite disbursement of public investment and enhance effective execution. These measures include a series of resolutions and directives focusing on different aspects of public investment disbursement. However, to sustain progress, more systematic measures are required to improve the legal and regulatory processes for successful implementation. By proactively addressing these obstacles in an integrated manner throughout the project cycle, Viet Nam can unlock the full potential of its public investment initiatives driving sustainable economic growth and development.

More resources

Asian Development Bank and Viet Nam: Fact Sheet

Asian Development Bank and Viet Nam: Fact Sheet

The Fact Sheets summarize ADB's partnerships with member economies, providing key facts and figures and an overview of activities and future directions.

Asian Development Outlook (ADO) April 2024

Asian Development Outlook

The Asian Development Outlook analyzes economic and development issues in developing countries in Asia.

Key Indicators for Asia and the Pacific 2023

Key Indicators

The Key Indicators for Asia and the Pacific publication presents data regarding the economic, financial, social, and environmental situations in a broad range of countries across the region.

Basic Statistics 2024

Basic Statistics

The Basic Statistics brochure presents data on selected social, economic, and SDG indicators such as population, poverty, annual growth rate of gross domestic product, inflation, and government finance for economies in Asia and the Pacific.