Special edition

“Economic growth must be harmoniously combined with cultural development and social progress and equality”

Vo Hong Phuc

Minister of Planning and Investment and Standing Deputy Chairman of the Vietnam National Sustainable Development Council Vo Hong Phuc said Vietnam highly appreciated and effectively used international aids with an aim to implementing its development goals based on economic growth, environmental protection and social security.

When assessing the results of implementing Vietnam's 10-year socio-economic development strategy for 2001-2010, the issues of quality, efficiency and sustainability of the development were strongly emphasised. Can you elaborate on this?

It must be affirmed that, during 10 years of implementing the socio-economic development strategy for 2001-2010, Vietnam took full advantage of opportunities and favourable conditions to overcome difficulties and challenges, especially negative impacts from the two regional and global financial-economic crises, and harvesting impressive achievements. Vietnam last year gained the status of a middle-income country. Many key targets of the 10-year strategy were fulfilled, such as reaching new development levels in forces of production and relations of production.

The national economy grew fast, expanding 7.26 per cent annually on average. In 2010, Vietnam's per capita gross domestic product (GDP) fetched $1,168 and the economic structure shifted towards a positive direction. The statute of the socialist-oriented market economy continued to be built and perfected. The nation recorded significant cultural and social achievements in many aspects, particularly poverty reduction. People's material and spiritual lives were improved. Vietnam's prestige was enhanced in the international arena, creating important premises for the country to boost industrialisation and modernisation, and improve people's living quality.

However, the achievements are not commensurate with the nation's potential and economic development is unsustainable. The growth quality, productivity, efficiency and competitiveness of the national economy is low, while macro-economic balances are not stable. Economic growth remains dependent on extensive development factors and slowly shifting into intensive development. Some cultural and social weaknesses were slowly surmounted. The natural environment in many localities is being seriously polluted, while resources and soil are not yet well managed, causing ineffective exploitation and use. The status of the market economy, the quality of human resources and infrastructure remain hindrances to the country's development.

Vietnam has learnt that it must attach special importance to the quality, efficiency and sustainability of development, ensuring macro-economic stability, harmoniously dealing with the relationship between the pace and quality of growth.

How will the lessons translate into action during the next 10 years?

The MPI has worked hard to turn development challenges into triumphs

Vietnam's view of development, which has been shown in its 2011-2020 socio-economic development strategy, is that rapid development must be linked to sustainability. Vietnam has conditions for rapid development and the requirement for rapid development is pressing. Sustainable development is the foundation for rapid development, while rapid development creates resources for sustainable development. Rapid development and sustainable development must go together in socio-economic development planning and policies.

Vietnam's economy must develop sustainably and the macro-economy must be stabilised. It is necessary to accelerate the economic restructuring, transform the growth model and give the top priority to quality, productivity, efficiency and competitiveness. We must attach special importance to in-depth growth and development of a knowledge-based economy.

Economic growth must be harmoniously combined with cultural development and social progress and equality, while people's quality of life must be continuously improved. Socio-economic development must go hand-in-hand with environmental protection and improvement, taking the initiative in coping with climate change.

In addition, it is necessary to pay special attention to socio-political stability, national defense and security to firmly protect the national independence, sovereignty, unity and integral territory to ensure for the country's rapid and sustainable development.

Regarding investment in sustainable development, the issue of capital sources is always a big challenge for Vietnam. Besides internal sources and foreign direct investment (FDI) capital, what is the government's viewpoint on official development assistance (ODA) funds? Will these capital flows be affected as Vietnam becoming a middle income country?

ODA funds and other sources mobilised externally in combination with internal sources have been contributing to Vietnam's socio-economic development. Vietnam's government always affirms the contributions of international donors and investors in Vietnam is of significance, helping the country develop its economy, infrastructure and social security. Over the time, the ODA funds pledged for Vietnam by international donors have been increasing through Consultative Group (CG) meetings. So far, ODA capital committed for Vietnam has climbed to more than $64 billion, of which roughly $30 billion was disbursed. During 2006-2010, ODA pledged for the country hit over $31 billion, a 1.5-fold increase against the period 2001-2005, with disbursed sum of $13.8 billion, surpassing the set target by 16 per cent. These figures show the confidence of donors and development partners in Vietnam, particularly Japan and the Asian Development Bank (ADB).

The government of Vietnam would like to express sincere thanks for this valuable assistance. However, when becoming a middle-income country changes in scale, structure and lending conditions pose many challenges for Vietnam. Grants and favourable ODA loans will drop. In this context, Vietnam is closely working with development partners to prepare for the development of new aid partnerships through a comprehensive ODA strategy during 2011-2015.

Could you shed some light on the use of ODA funds in Vietnam?

Vietnam always makes sure that international aids are used effectively and efficiently. It takes measures to ensure the accountability and transparency in managing and using aids. Donors, via fact-finding investigation delegations, have highly appreciated Vietnam's efforts of using ODA funds effectively. For instance, recently, ADB president Haruhiko Kuroda and World Bank East Asia and Pacific Region vice president James Adams shared the same opinion that Vietnam was among countries with ODA effective use. Many programmes and projects funded by the international community have been executed successfully here in Vietnam.

At present, development partners are continuing to cooperate with Vietnam's Ministry of Planning and Investment to prepare a new policy framework with an aim to enhance the efficiency of aid sources for Vietnam's sustainable development.