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Publication(Washington, DC, 2005-11) World BankBusiness development has been one of the main forces behind rapid poverty reduction in Vietnam. Together with the redistribution of agricultural land, and the broad coverage of social services, it allowed a large fraction of the population to engage in more productive occupations and raise their living standards. But businesses are still struggling with important constraints. Insufficient availability of finance, difficulties in accessing land and continuous gaps in infrastructure services (in spite of enormous investment efforts) are among the most important obstacles identified by entrepreneurs. In a booming labor market, retaining qualified personnel and finding the skills required to move up the ladder are also perceived as barriers to business development. As a result of these constraints, the domestic private sector remains dominated by small enterprises. In between a myriad household businesses and a few thousand large state-owned enterprises (SOES) and foreign companies, there are not many small and medium enterprises, and only a handful of domestic private firms have made it to the top. Sustaining business development in Vietnam requires the completion of the structural reform agenda. Fully developing the land market, restructuring the financial sector, managing state assets in a more efficient and transparent manner, mobilizing resources for infrastructure development, are the key priorities in this respect. Further integration with the world economy, especially through the accession to the World Trade Organization, is bound to lock-in some of these changes, and level the playing field between domestic and foreign enterprises. But there i s also a complementary reform agenda, aimed at leveling the playing field between the domestic private sector and SOEs and mobilizing capital (both public and private) in an efficient way. Global integration and domestic reforms are needed to sustain rapid economic growth while avoiding the accumulation of large contingent liabilities for the government. For Vietnam to become a middle-income country will entail going beyond structural reforms and laying the foundations of a modern market economy, introducing competition and proper regulation in infrastructure services, modernizing tax administration, reforming the legal and judiciary systems, reducing corruption, improving governance at local levels, are all part of a second generation of reforms that need to be put on track for Vietnam to move up to the next phase.
Publication(Washington, DC, 2004-11-22) World BankFundamental changes are taking place in the way the Government of Vietnam operates: the 2001 Constitution empowered the National Assembly to hold votes of no-confidence in the leaders it elects, including ministers. The State Budget Law, effective in January 2004, further expanded those powers, by making the National Assembly responsible for the approval of the budget, including allocations to lower levels of government. In parallel, there is a steady increase in the extent of decentralization. And some successes can be reported in the public administration reform agenda too, in particular, the adoption of the One-Stop Shop (OSS) model at the national level should improve the delivery of administrative services to households and enterprises, and reduce the opportunities for petty corruption. Notwithstanding, it should be recognized that important challenges remain. The goal of this report is to review the progress accomplished so far in building modern governance, and to identify areas where more needs to be done. To attain this goal, the report combines a range of perspectives, and relies on a variety of analytical tools. It carefully reviews patterns in government spending, and revenue at aggregate levels, but also in specific sectors and programs. It evaluates the decision-making processes behind employment and pay policies, investment projects, resettlement programs and budget allocations. It more broadly assesses the justification for government interventions in different aspects of the economy, and the impact of such interventions on key development outcomes, including poverty reduction. Vietnam's continued commitment to inclusive development provides the vision responsive to running an efficient government. Securing rapid economic growth, sustaining continued poverty reduction, and attaining the Vietnam Development Goals, are part of such vision. With this vision in mind, the report flags several areas of concern: planning versus budgeting, and modernizing that planning; better service delivery; redistributing to the poorest; setting budget allocation norms; delegation to spending units; and, management of state assets.
Publication(Washington, DC, 2002-11-21) World BankThe focus of the report, combined with Vietnam's remarkable long-term growth potential, presents a favorable outlook, suggesting the effects of the East Asian crisis are over. The country is committed to socially inclusive development, and, translates a vision of transition towards a market economy, with socialist orientation into concrete public actions, emphasizing the transition should be pro-poor, noting this will require investments in the rural, and lagging regions, and a more gradual reform implementation, than often recommended. However, challenges identified include, first, further progress in economic reform - fast progress in liberalizing foreign trade, and integrating with world economy is increasingly at odds with the slowdown of state-owned enterprise reform. Second, poverty alleviation may be endangered - for in the absence of vigorous action, inequality is likely to increase. And, third, improving the quality of governance faces an economic inefficient mismatch, reflected by its legal framework, budgetary system, and administrative structures, resulting from the inherited centrally-planned economy. The report reviews the increasing inequalities, and the need to redress imbalances, indicating that - although needed - economic reforms, trade liberalization, and the transformation of state-owned enterprises, may create losers, while many of the gains of the last decade remain fragile. The Comprehensive Poverty Reduction and Growth Strategy (CPRGS) identified key decisions that need to be made, supported by strong inter-ministerial coordination for its implementation, namely rolling out to provincial, district, and commune levels in order to better align priorities, and expenditures to the national development goals, supported by external assistance.