IFC: Time to think about sustainable growth

16:12 | 20/08/2013
The current economic slowdown is not only an opportunity for Vietnam to restructure the economy in general, but also an opportunity for enterprises to pay more attention to sustainable growth. International Finance Corporation’s vice president for Asia Pacific Karin Finkelston, shares with VIR.

Do you think Vietnamese enterprises do not pay much attention to sustainable growth, especially in this time while they are facing economic challenges?

I think that in a crisis environment, social responsibility and governance standard are things that really don’t matter for many enterprises, but firm needs to see these things are keys that resulting the issues of the economy. The issue that banks are facing is poor corporate governance standards which leads to non-performing loans, so I think now is the time to really look at corporate governance and see how we can put issues in places and have a mechanism for helping the economy grow. I think on the other sides, environment and social responsibility should be kept in mind. And I think Vietnam growth in looking at green growth is most important.

In addition to support the banking sector, what is IFC’s plan to support the enterprises to develop sustainably?

We’re looking at sustainment in few areas. We have ongoing corporate governance programme for clients. We’re looking at green credit policy so the banking sector can really start to build its own management system of environment and social policy. At the same time we’re also looking at energy efficiency lending, how a bank can become a channel to be giving credit to enterprises willing to change the equipments to be more energy efficient. Another, we are looking at renewable energy which is a part of the sustainable development. Finally, I think one thing is key for sustainable development is to look at the growth of private sector and how can private sector play a bigger role in the economy. We will really advocate a faster equitisation programe, we will look at how we can diversify the ownership of the state -owned enterprises in some of key sectors to really make sure the enterprises run efficiently.

Do you have any advice for the small and medium enterprises facing credit crunch but still want to grow sustainably?

IFC has made loan available in Vietnam in the past year, $805 million in Vietam and a big part of it was to finance the banks to support small businesses. And what I will recommend them do is to really have good corporate governance and risk management in the market. They really need to look out who are the banks operating well and try to build relationship with those banks. This will help them access long term loans from the banks.

Vietnam is experiencing low growth over the past years, in your view is this an opportunities for Vietnam to slow down and have a sustainable agenda?

I think this is a real opportunity for Vietnam to take some structure reform. This is the longest slow growth since the Doi Moi opening up, and I think this is really time for Vietnam to reform. The structure of the economy has served well till now. But now we have to reform the structure and look how we can build the economy that will be competitive. Vietnam is entering the Trans-Pacific Partnership, Vietnam needs to make sure its companies are really fit to complete in the region. So I think the state enterprises’ reform, equitisation, is really important to a competitive growth in Vietnam.

I think this is a great opportunity. The equitisation of state-owned enterprises need to be implemented hand in hand with the reform of banking sector because a lot of non-peforming loans were used to support state-owned enterprises.

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