Services Sector- an Engine for Growth and Poverty Reduction

Oct 26, 2004

Ha Noi The development of the services sector as an engine for growth and poverty reduction is the central issue discussed today in Ha Noi at a gathering of high level officials and representatives from the government, business sector, donors and other civil society organizations.

Entitled “Viet Nam’s Services Sector – Emerging Challenges and Approaches”, this two-day policy dialogue was jointly organized by the Ministry of Planning and Investment (MPI) and the United Nations Development Programme (UNDP). The discussion also brought together high profile international services experts from Australia,  Brazil,  Canada, India and Malaysia.

Mr Truong Van Doan, Vice Minister of Investment and Planning, said this first-ever gathering of national and international services experts and officials was very timely and needed as Viet Nam’s economy is going global rapidly. “The benefits of services liberalization extend far beyond the services industries themselves; they are felt through their effects on all other economic activities.” said Mr Doan.

The discussants paid particular attention to the Government’s plan to formulate a comprehensive services strategy. The strategy is expected to set clear goals for the sector up to the year 2020 and provide new guidelines for policy makers and business managers to further develop the services sector in accordance with the country’s economic and human development objectives and priorities.

Liberalization of services such as education, health, transport, water and sanitation will not be without problem for the poor. According to UNDP Resident Representative in Viet Nam, Mr Jordan Ryan, for developing countries like Viet Nam, any external trade strategy should put people at its core. This means that it should contribute to greater job creation and environmental sustainability, ensure the fulfilment of needs for all the population in areas of food, health, education, and promote a balanced rural-urban growth.

Viet Nam has been leading the developing world in reducing poverty, effectively halving the country’s poverty rate from well over 60% in 1990 to some 30% recently. Further poverty reduction must therefore not be threatened by trade agreements that do not appropriately reflect the development priorities of Viet Nam. A proposed trade strategy must, therefore, first analyze the possible impact of such reforms on the most vulnerable groups of the population. Mr Ryan noted, “The challenge ahead is for Viet Nam to make its way in the world and use trade to provide even greater opportunity for millions of its citizens rather than rewards for the few.”

During the discussion, international experts also shared knowledge and experiences regarding the main challenges and approaches in formulating a national services strategy as well as measures to effectively implement it.

Dr Dorothy Riddle, President and Chief Executive Officer of Service-Growth Consultants Inc. of Canada, sees the services sector as the primary engine for job creation, coupled with the proliferation of small service enterprises.

“The availability of high quality services inputs contributes both to increasing the value-added of industrial goods and to generating higher skills jobs,” Dr Riddel said. “A well-developed, competitive service sector can provide significant benefits in stimulating economic growth and alleviating human poverty.”

Ambassador Narayanan and former Permanent Representative of India to the World Trade Organization, shared the view. “The service sector plays an essential role in ensuring the competitiveness of the whole economy and introducing activities with higher value addition,” he said.

Also on discussion were the current situation of Viet Nam in light of its international commitments, the need for efficient ministerial coordination mechanisms, the promotion of local services firms and the role of foreign direct investment.

This policy dialogue is part of a UNDP-supported project, “Capacity Strengthening to Manage and Promote Trade in Services in Viet Nam in the Context of Integration”.
Contact informationProject VIE 02/009
Address: Room 415, Building B, 2 Hoang Van Thu Street, Ha Noi
Tel/Fax: 0804 4934 & 04-734 2903

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