The Vietnamese government has succeeded in reducing the country’s overall economic instability, but more progress is needed to address the economy’s structural weaknesses, according to the Asian Development Bank (ADB).
Vietnam has sharply reduced inflation from more than 20 percent in August 2011 to around 6 percent by December 2013, stabilized the exchange rate, and built up a strong current account surplus and higher foreign reserves.
But the country cannot sustain its rapid growth without stronger regulation and supervision of the financial system, market discipline on large state-owned enterprises, and better physical and social infrastructure, said ADB president Takehiko Nakao during his recent meeting in the country with Prime Minister Nguyen Tan Dung and other top-ranking state officials.
“To reach its potential, Vietnam must deal with multiple risks and challenges such as improving competitiveness, managing growing inequities, developing institutional capacity, enhancing transparency, and strengthening governance,” Nakao said.
He also touched on the themes of innovation through competition, inclusiveness through improved infrastructure, and integration through regional cooperation.
For infrastructure financing alone, Vietnam will need an estimated US$167 billion over the next decade to sustain the desired growth trajectory, Nakao added.
The country could meet its funding gap for infrastructure by strengthening revenues, engaging in public-private partnerships, developing domestic capital markets, and tapping the ASEAN Infrastructure Fund, said ADB.
Photo: Shinsuke JJ Ikegame