|The programme will help the Government push ahead with measures to boost banking sector stability.— Photo cafef
MANILA (VNS) — The Asian Development Bank (ADB) has approved loans totalling US$230 million to support Viet Nam's ongoing reforms to overhaul public finances, boost private investment, and revive its economic competitiveness.
"Viet Nam is falling behind neighbours in terms of competitiveness and ease of doing business, and this is hurting its ability to attract private investment and grow the economy," Tomoyuki Kimura, ADB's Country Director for Viet Nam, said.
"Structural obstacles are holding the country back and this loan assistance from ADB, along with support from other donors, will allow the government to press ahead with measures to resolve these issues."
After the country's shift away from a centrally planned economy in 1986, growth averaged over 7 per cent a year from 1990 to 2007 while per capita income almost quintupled.
Viet Nam has seen more muted economic activity in recent years with domestic private investment as a ratio of gross domestic product declining from around 15 per cent a year in 2007-10 to 11.5 per cent in 2013.
Skills gaps in the workforce, a relatively unsophisticated financial sector, a hefty fiscal deficit, unequal conditions for state enterprises compared with the private sector, and an opaque business regulatory environment have held back competition, investment, and growth.
The programme will help the Government push ahead with measures to boost banking sector stability, improve public administration, strengthen State-owned enterprise management and develop a clearer and more transparent regulatory environment for business. Specific actions supported by the programme include implementation of the Government's credit institution restructuring plan, legislation to regulate and guide the rollout of an anti-corruption law, steps for the restructuring of State-owned enterprises, and amending the Law on Public Procurement.
The programme's outcomes will include simplified value-added tax procedures and a reduction in income tax for small- and medium-sized enterprises and transaction costs for small businesses, all of which will help boost productivity and support employment and poverty reduction.
The programme targets boosting private investment as a percentage of GDP to 15 per cent by 2020.
ADB's assistance is complemented by US$250 million from the World Bank and $150 million from the Japan International Co-operation Agency.
The programme's estimated completion date is June next year. — VNS