World Bank announces new cooperation framework with Vietnam

September 14, 2017 | 12:07
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The World Bank Group will help Vietnam develop a strong private sector, which will be able to get fairer treatment in a level domestic playing field.
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The World Bank Group announced the new framework of its partnership with Vietnam
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The World Bank Group (WBG) last week announced its new Country Partnership Framework (CPF) with Vietnam for the 2017-2022 period.

Under the CPF, the proposed WBG framework for engagement in Vietnam for the financial years 2018-2022 is organised around three focus areas, including enabling inclusive growth and private sector participation, investment in people and knowledge, and ensuring environmental sustainability and resilience.

These areas cover 11 objectives, of which “promoting private sector and agri-business development” is a priority.

“We will support Vietnam with comprehensive engagement to strengthen private sector development and participation across sectors,” said the World Bank’s country director to Vietnam Ousmane Dione.

“A stronger private sector is needed to effectively play its role in the national economy as a provider of quality jobs, a contributor to economic growth and national revenue, and an investor in infrastructure development, as well as to enhance Vietnam’s competitiveness,” he stressed.

Currently, while foreign direct investment is surging in Vietnam, accounting for 70 per cent of the country’s total export revenue, only one out of five Vietnamese private firms are engaged in exports, and even they have limited links to the global value chain.

Under the CPF, WBG will support Vietnam to strengthen its private sector’s competitiveness, enhance the domestic sector’s integration into the global value chain, and improve the investment climate.

This will include supporting the government to strengthen and implement a regulatory framework in favour of private sector development and a levelling of the playing field between private and state-owned enterprises (SOEs), as well as domestic and foreign investors.

Commenting on WBG’s new CPF, Minister of Planning and Investment Nguyen Chi Dung said, “The CPF marks a new era of co-operation between Vietnam and WBG promoting national and sustainable development.”

“It is expected that the CPF will help Vietnam reach the status of a high middle-income nation, boosting the country’s administrative and economic reforms. The CPF will also act as an important guideline for Vietnam to effectively use WBG’s support to the country,” Dung stressed.

On June 3, 2017, Party General Secretary Nguyen Phu Trong inked and issued Resolution No.10/NQ-TW of the Fifth Plenary Meeting of the 12th Communist Party of Vietnam’s Central Committee. The resolution aims to develop the private economy into an important driving force of the socialist-oriented market economy.

Under the resolution, the best conditions are to be extended to the private economy to develop rapidly and sustainably. All impediments and prejudice against private enterprises are to be removed. The private economy is allowed to develop in all sectors that are not banned by law. These firms are encouraged to contribute capital to and purchase stake in equitised and divested SOEs.

Efforts are being made to achieve Vietnam’s target of having at least one million enterprises by 2020, over 1.5 million by 2025, and at least two million by 2030.

The resolution set the objective to enhance the private sector to grow faster than the whole economy. The sector’s contribution to the national GDP will be 50 per cent by 2020 (from the current 40 per cent), 55 per cent by 2025, and 60-65 per cent by 2030.

Indicative World Bank lending programme, FY18-20 ($ million)a
CPF focus area IDAb IBRD Others
FY18
Dynamic cities urban development project 1 330
Ho Chi Minh City Subnational DPO1 1 100
Ho Chi Minh City Subnational DPO1 1 4.2
Health service delivery reform project 2 80 15
GPOBA quality deaf education in Vietnam project 2 3
Ho Chi Minh City flood risk management project 3 400
GEF Mekong delta integrated climate resilience and sustainable livehoods project 3 6
Vietnam HCFC phase-out project stage II 3 14.6
Power sector PDO4 3 170
GCF risk-sharing facility for industrial enterprises 3 80
Climate change and green growth DPO2 3 90
FCPF north central coast region emission reduction programme 3 90
GEF strengthening partnerships to protect endangered wildlife 3 3
Subtotal 690 480 215.8
FY19/20
Fiscal governance PDO2 1 300
Ho Chi Minh City subnational PDO2 1 100
Revenue administration for integration and development 1 100
Agriculture restructuring project 1 100
Southern region waterways and transport logistics corridor project 1 250
Vietnam National University project 2 100
EVN solar power project 3 200
Distribution efficiency II 3 350
Power sector reform DPO5 3 170
Mekong Delta water security project 3 400
CAT-DDO 3 200
Subtotal 870 1,400

a. The indicative list is based on government-expressed demand for support and is not exhaustive. All IDA 18 transitional support will be programmed.

b. IDA transitional support on non-concessional (IBRD-like) terms.

By By Thanh Dat

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