World Bank praises Vietnam growth, presses reforms
HANOI - The World Bank has praised Vietnam for reducing poverty through rapid economic growth but also called on the communist-ruled country to speed up market reforms and vigorously fight corruption.
"Vietnam has been remarkably successful in generating growth and reducing poverty," said World Bank managing director Juan Jose Daboub, with 30 million people lifted from poverty since the launch of reforms 20 years ago.
The bank, with projects worth nearly four billion dollars in Vietnam, would commit another 800 million dollars per year over the next five years to support a reform agenda that "could be a model for other countries," he said.
But Daboub also said there was now "a sense of urgency in Vietnam. We believe that we have to move faster. The country has to accelerate the process of reforms so that the people can reap the benefits faster."
Calling for further liberalisation, Daboub warned that "neighbouring countries are not going to stand still and wait for Vietnam to move. They're moving forward and Vietnam has a choice -- which is to lead or to follow."
The praise tempered with caution echoed comments made by the Asian Development Bank (ADB), ratings service Standard & Poor's (S&P) and the US Treasury Secretary Henry Paulson over the past week.
ADB country director Ayumi Konishi called Vietnam "the star of Southeast Asia" and projected 7.8 percent economic growth this year, Asia's fastest rate after booming China, while also listing corruption as a challenge.
Standard & Poor's raised Vietnam's long-term foreign currency rating a notch to BB, above Indonesia and the Philippines, citing market reforms and efforts to improve infrastructure and the investment climate.
It said Vietnam had "strong economic growth potential" with good labour productivity and a high savings rate, but also warned it still faced "structural weaknesses" including an undercapitalised banking system.
Paulson said that while Vietnam's expected accession to the World Trade Organisation (WTO) this year would "accelerate growth and increase living standards", it "needs to be followed by further reforms."
Some key shortcomings were highlighted in a report last week by the World Bank and International Finance Corporation, which ranked Vietnam 104th out 175 countries in terms of the ease of doing business.
Red tape, especially in tax and bankruptcy procedures, and a lack of minority shareholder protection were among the hurdles that meant Vietnam "remains a challenging place to do businesses," said the report.
The World Bank's Daboub said "there are still many tasks pending," speaking just after a meeting of Asia-Pacific Economic Cooperation finance ministers in Hanoi.
He said Vietnam needs "institutions that work," including a stronger legal system, vigilant oversight of the financial sector, and a strong media that can hold state institutions accountable.
"We believe that it is important to maintain commitment for a governance agenda that is the strengthening of institutions that work, as well as the fight against corruption," Daboub told a media briefing Saturday.
He highlighted a corruption case that rocked the regime this year, the loss of millions of dollars in the transport ministry's infrastructure unit PMU 18, which saw a minister sacked and several officials jailed.
The PMU 18 portfolio included 130 million dollars from the World Bank, which is due this month to release the results of a probe on whether corrupt cadres squandered and gambled away some of its money.
Daboub said the case showed that there were "some cracks in the system" and urged Vietnam to enforce new laws to prevent similar abuses.
"We need to make sure," he said, "that those cracks are closed with cement."
Agence France Presse - September 10, 2006.
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