Tuesday, December 29, 2009

World Bank Expands its Support to Higher Education in Vietnam

Ngân hàng Thế giới Tăng cường Hỗ trợ Giáo dục Đại học của Việt nam
Viện trợ Chính sách Phát triển Đại học (DPL)



Cũng có ở: English


Ngày 3 tháng 8 năm 2009 - Ngân hàng Thế giới gần đây đã thông qua khoản tín dụng trị giá 50 triệu đô la cho Chương trình Chính sách Phát triển Giáo dục Đại học của Việt Nam và 127 triệu đô la cho Chương trình Bảo đảm Chất lượng Giáo dục Trường học. Trong cuộc phỏng vấn này, Jeffrey Waite, Chuyên gia đầu ngành về Giáo dục và Phát triển nhân lực tại Văn phòng Ngân hàng Thế giới ở Việt Nam nói rõ thêm về sự hợp tác giữa Ngân hàng Thế giới với Chính phủ Việt Nam trong nỗ lực nâng cao chất lượng giáo dục đại học.

Báo Cáo Phát Triển Việt Nam 2010 by World Bank

Báo Cáo Phát Triển Việt Nam 2010

Country Brief

Overview

Source: World Development Indicators 2007


Vietnam’s poverty reduction and economic growth achievements in the last 15 years are one of the most spectacular success stories in economic development. During this period, the World Bank Group’s relationship with Vietnam has also matured and grown considerably. The Country Partnership Strategy for FY07-FY11 supports the Government’s Socio-Economic Development Plan 2006-2010, which lays out a path of transition towards a market economy with socialist orientation, with the goal of attaining middle income country status by 2010.


Development Progress


Economic and Institutional Development

Vietnam is one of the best performing economies in the world over the last decade. Real GDP has on average grown by 7.3 percent per year during 1995-2005 and per capita income by 6.2 percent per year. The economy has proven resilient to shocks and negative impacts from SARS, avian influenza, poor weather, high commodity prices, inflation, and anti-dumping suits. In US dollar terms, income per capita rose from US$260 in 1995 to a 2007 level of US$835. At this pace Vietnam would enter the ranks of middle income countries by surpassing US$1,000 per capita in 2010.

Vietnam has become increasingly integrated with the world economy and has become a member of the WTO. Exports have been the main drivers for growth, and foreign investments have been buoyant in recent years. Main manufacturing exports are garments, footwear, and wood products, reflecting Vietnam’s comparative advantage of a low-cost but high-quality labor force. While external demand conditions have been generally favorable, the supply response has been made possible by domestic reforms that have dismantled controls on economic activity and strengthened the investment climate. Between 1995 and 2005, the share of agriculture in GDP has declined from 27 percent to 21 percent, while that of industry has risen from 29 percent to 41 percent. In January 2007, Vietnam became the 150th member of the WTO after several years of intensive negotiations.

Recent growth is driven by the rising importance of the private sector. The role of the state sector in manufacturing activity has declined appreciably: from 52 percent in 1995 to under 35 percent in 2006. But this has resulted more from the emergence of a vibrant private sector than from the dismantling of the state sector, which is being restructured and focused on more “strategic” activities. Macroeconomic policies in Vietnam have been generally prudent and key economic balances have been maintained at manageable levels. The Government’s fiscal and monetary stance reflects a determination to not repeat past mistakes that resulted in a short period of hyperinflation in 1992-1996.

Economic transition accompanied by an institutional overhaul. There has been significant progress in public financial management with the implementation of a new State Budget Law in 2004. The entire 2005 budget was disclosed to the public for the first time. The National Assembly is responsible now for the approval of budget, including allocations to lower levels of government. Decentralization is another important trait of the ongoing institutional transition. The planning process, as evidenced by the rafting process of the latest Socio Economic Development Plan, has also become considerably participatory.

A New Socio-Economic Development Plan for 2006-2010 was approved by the National Assembly in June 2006. The SEDP aims at rapid development, carefully balanced between its four pillars of economic, social, environmental development, and improved governance and institutions. The main challenges for the SEDP implementation are to address entrenched poverty among ethnic minorities, improve the quality and efficiency of public investments and development strong systems and institutions for transparent and efficient public sector management.

Medium Term Economic Outlook and Debt Sustainability

Growth performance was solid in 2007. Economic growth accelerated slightly, to 8.5 percent, making 2007 the third consecutive year above the 8-percent benchmark. Some of the potentially adverse shocks that were feared from WTO accession, especially in relation to agriculture and retail trade, did not materialize. The business climate continued to improve: business sentiment surveys consistently show an upbeat mood among enterprises, with a large majority of them foreseeing an expansion in 2008. The investment rate attained 40.4 percent of GDP in 2007. Growth was increasingly driven by the private sector, with 59,000 new enterprises registering during the year, an increase of 26 percent with respect to the previous year. Foreign Direct Investment (FDI) commitments almost doubled, to $20.3 billion, whereas stock market capitalization reached 43 percent of GDP by end 2007, compared to 1.5 percent two years earlier.

Some deceleration of economic growth can be expected in the short term, but medium-term prospects remain strong. High inflation and a large current account deficit have affected the investment sentiment, resulting in a slowdown of short-term capital inflows. The stabilization package adopted by the government in March 2008 has also resulted in a decline in stock prices and a much cooled down real estate market. As part of the package the government decided to reduce its growth target for 2008 to 7 percent. However, due to statistical inertia the growth rate for the entire year can be expected to be higher than the target. Over the medium-term, the magnitude of the investments being implemented suggests that economic growth will continue at a sustained pace.

Selected Economic Indicators:
Source: General Statistics Office (GSO) and State Bank of Vietnam (SBV) for 2006 and 2007; World Bank forecasts (base case scenario) for 2008 and 2009.

The fiscal stance of the government remains prudent. The official deficit was lower than budgeted in 2007, and stood at around 1 percent of GDP. The overall fiscal balance including off-budget investment expenditure was around 6 percent of GDP, similar to that of previous years. Off-budget investments include the issuance of government bonds for education, infrastructure and the re-capitalization of state-owned commercial banks (SOCBs). However, they are off-budget only in name. The choice of these investments reflects the priorities spelled out in the SEDP, and issuance of such bonds is subject to approval by the National Assembly. The stabilization program being implemented by the government includes a reduction of recurrent expenditures by 10 percent and a discontinuation of public investment projects which are not essential or lack appropriate funding.

Poverty Profile

The level of public debt, at 42 percent of GDP, is moderate and is considered to be sustainable. The indebtedness is similar to other ASEAN countries. The baseline scenario of the most recent Debt Sustainability Analysis (DSA) by the World Bank and the International Monetary Fund (IMF) is broadly in line with the investment and growth outlook of the SEDP. It estimates public and publicly-guaranteed debt to increase from 44 percent of the GDP in 2007 to around 51 percent by 2016, and decline slightly thereafter. This increase, though significant, is still considered within manageable limits, especially since more than half of it will remain on highly concessional terms. The concessional component of Vietnam’s debt, embodied in long repayment periods and low interest rates, is reflected in the gap between the nominal level of public debt and its net present value (about 35 percent of GDP). External debt, both public and private, is projected to decline somewhat: from a little over 30 percent of GDP to just under 26 percent in 2017. The ratio of external debt service payments to exports is estimated to remain about 4 percent during 2007 to 2017. Vietnam should thus remain at low risk of external debt distress.

A remarkable success in reducing poverty: New household data indicate that the general poverty rate fell from 58.1 percent in 1993 to 16% in 2006. The standard metrics tracking inequality suggest that the high growth and rapid poverty reduction were accompanied by only very modest increases in inequality. The Gini coefficient, for example rose from 0.34 to 0.37 between 1993 and 2004 and declined to 0.36 in 2006. This favorable trend of shared growth is considered attributed to an egalitarian redistribution of land, the liberalization of agricultural markets, and booming low-skill labor. The data also indicate that poverty reduction accelerated in the past two years.



Challenges Remain in Tackling both Persistent Pockets of Poverty and Poverty among Ethnic Minorities. These impressive achievements in reducing poverty and the absence of striking increases in inequality sit alongside slower progress for an important sub-group of the population: ethnic minorities. In 2006, 10.2 percent of the Kinh and Chinese people were living in poverty, compared to 52.2 percent of ethnic minority people. Though accounting for only 13.5 percent of the total population, ethnic minorities now constitute 44.4 percent of the poor. The poverty gap for ethnic minorities is 15.4 percent, compared to only 2 percent for Kinh people. (Poverty gaps reflect the average distance between the expenditures of the poor and the poverty line, in percentage of the latter.)






Development Outcomes

Vietnam has outperformed many other countries in terms of progress towards achieving the Millennium Development Goals (MDGs). Five of the ten main MDG targets set for 2015 have already been attained, and another three could be reached ahead of time. However, Vietnam might only partially achieve the target on reversing the loss of environmental resources and could miss the target on halving the share of the population without drinking water and sanitation. Also, it should be noted that alongside a remarkable performance on nearly all of the MDGs, important disparities in achievement remain between the Kinh majority and ethnic minority groups. For example, fewer ethnic minority children are enrolled in school, especially girls. Maternal mortality and child mortality rates are much higher in mountainous areas where many ethnic minorities live than in the rest of Vietnam.

Progress Towards The Millennium Development Goals:


Source: United Nations Development Program, GSO and World Bank


Challenges Ahead

For Vietnam to achieve middle income status by 2010, it is imperative that the foundations of a modern market economy are established. Key challenges include:

1. Completing the structural reform agenda, including the implementation of WTO commitments and the banking reform roadmap

2. Establishing an efficient regulatory framework for infrastructure while expanding the capacity to fill the supply gap in energy, transport and water;

3. Setting up social security systems that would provide for health care financing, pensions for retirees and support for temporary unemployed; and improving the quality of education throughout the system;

4. Protecting the environment and better managing natural resources;

5. Establishing a public administration based on principles of efficiency, accountability and transparency, and

6. Implementing the Anti-Corruption Law and regulations effectively.

Vietnam's Economy Shows Signs of Recovery

- The global financial crisis and economic recession has slowed economic growth in Vietnam. However positive signs of recovery have been emerging as results of government efforts to support economic activity
- The recession has had a significant impact on Vietnam’s external sector
- The fiscal deficit is expected to widen to about 9.4 person of GDP in 2009, reflecting a decline in revenues and a significant increase in expenditures
- Monetary policy has been loosened substantially to support domestic demand after a period of tightening in 2008 to tackle overheating

People in the center of the global crisis

Tran Thi Thanh is waiting to cross the road in the busy street near Hoan Kiem lake – the very centre of Hanoi. The 20-year-old, vain-looking and tiny girl feels much pressure of the rocketing price on her daily life.

Being a sophomore at the University of Labor and Society, Tran has to work at night as a baby-wear seller with a meagre 800 thousand dong per month wage (roughly 40 USD) to afford her study and living in the big city. Because of the job, she has to sacrifice time for studying, resulting in losing her scholarship accordingly.



Tran Thi Thanh - Student


She says her life is getting more difficult as all of her classmates and friends at school, especially those from the countryside.

“If not due to the global crisis, the price of living, the room rent would be lower. But since the global crisis wreck the havoc on people, all the prices of room rent, electricity, water increased dramatically. A bunch of vegetable was 500 Dong before and now it is about 3-4-thousand dong. The doubling price makes our life harder.”

Figures that speak

Tran is possibly the luckier than the 14 other million people in Asia, which according to a recent World Bank Report will fall into poverty as a result of the recent crisis.

In Vietnam, the global financial crisis and economic recession certainly slowed economic growth. Export of garments and other industrial products collapsed in the fourth quarter of 2008, and a slowdown in manufacturing became noticeable, resulting in workers losing their jobs or being underemployed. The impact was apparent in the first quarter of 2009, when GDP increased only by 3.1 percent from a year earlier, or 4 percentage points below the average first-quarter growth for the last few years.

The government announced its stimulus package which included various measures, from an interest rate subsidy, to tax breaks, and to additional capital spending. As a result, GDP grew by 4.5 percent in the second quarter and 5.8 percent in the third, raising real GDP growth to 4.6 percent year-on-year for January – September. Fiscal deficit is expected to widen to about 9.4 person of GDP in 2009, reflecting a decline in revenues and a significant increase in expenditures. Monetary policy has been loosened substantially to support domestic demand after a period of tightening in 2008 to tackle overheating.

The picture isn’t that bright when it comes to challenges that Vietnam has to face in the future in its quest for poverty reduction. The pockets of poverty in the poorer and mountainous regions of Vietnam with high concentration of ethnic minorities, urban poor and migrants workers, workers in the informal sectors and households enterprises are specifically vulnerable.


Do Thi Thao - Street Vendor

Do Thi Thao has sold conical hats on the street of Hanoi to tourists for more than a year now. The 17- year-old girl sends money home reguarly to help her parents in Thanh Hoa province in the Northeast support the education of other three brothers and sister.

Today, she has not sold anything since the morning and it was the same for the past several days. She stresses being a street vendor is a very difficult way of earning money.

“Everyone has his/her own destiny. Being a street vendor is extremely difficult. I have to go out no matter how it rains or sun shines.”

Looking ahead

The reports praised Vietnam for doing relatively well in reducing poverty levels, despite the sharp increase in food and fuel prices in the first half of 2008, and the slow growth in late 2008 and early 2009.

At the same time, there are things that still need attention. Greater and more effective investment in education and training of Vietnam’s future workforce, for example, is expected to help reduce vulnerabilities and growing economic opportunities. For people like Tran Thi Thanh, this is definitely important as education will give her a better tomorrow than selling baby clothes like now.

The report also suggests a system of social protection, which is underdeveloped in Vietnam but absolutely necessary if the country moves forward. This will help provide basic services for the most vulnerable people, including ethnic minority people, poor migrants so that they can seek for better opportunities and not having to care for their basic needs. But for now, Do Thi Thao will still have to make ends meet by selling conical hats and crossing her fingers for more tourists to come by.


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