Opening remarks at Spring Economic Forum
Speaker: UN Resident Coordinator/ UNDP Resident Representative, Ms. Pratibha Mehta
Date: 5-6 April 2013
Event: Spring Economic Forum, Economic Committee of the National Assembly
Venue: Sheraton Hotel, Nha Trang
Excellency Mdme. Nguyen Thi Kim Ngan, Vice Chair of the National Assembly,
Excellency Mr. Nguyen Van Giau, Chair of the Economic Committee of the National Assembly.
Distinguished guests, colleagues and friends
Let me start by thanking the Economic Committee of the National Assembly for the opportunity to address this important forum.
UNDP has been supporting the Economic Committee of the National Assembly to strengthen its capacity in overseeing macroeconomic policies since 2010. An important pillar of our contribution has been the facilitation of bi-annual economic fora. These fora provide a unique opportunity for an open and frank exchange of ideas on the challenges facing the Vietnamese economy between members of the NA, policy makers, experts, academia and business representatives. These debates, as acknowledged by ECNA's leadership, provide valuable inputs into the oversight reports and resolutions of the NA.
In 2012 Vietnam managed to maintain macroeconomic stability, thanks largely to domestic stabilization measures. However, these measures together with the slow progress on structural reforms in the banking, public investment and SOE sectors have led to a slowdown in 2012. The economy grew at its slowest pace since 1999. Many of the underlying domestic root causes and structural drivers of macroeconomic instability remain unresolved and the costs of delay in reforms have become more visible. These costs are likely to increase significantly if decisive measures are not taken. The impact will be felt not only in terms of non-performing loans, declining investor confidence or international credibility but most importantly in terms of declining growth, employment creation and living standards of Vietnamese citizens.
A lot of the discussions so far have focused on the importance of structural reform and a new growth model to address issues of declining productivity and competitiveness. While this is crucial, we should not neglect the human development perspective and the importance of quality of growth, its inclusiveness and sustainability.
In this context I would like to offer some observations for the discussion over the next two days:
There is widespread consensus that structural reforms need to be accelerated to revive growth and to address macroeconomic instability. Yet little attention has focused on how the growth pattern so far has led to a widening gap between rich and poor and increasing inequalities in opportunities of people to benefit and contribute to the growth process.
April 5th - today - marks 1000 days to the deadline to achieve the MDGs. Although Vietnam has made significant progress at the national level, huge disparities between regions, rural and urban, the Kinh majority and ethnic minorities persist. In 2010 Vietnam was globally ranked 6th in terms of progress both in absolute and relative terms. If we are to make sure that the MDGs are achieved, urgent action would be required to address inequalities when we plan and implement economic reforms.
International research shows that inequalities inhibit people from fully engaging in economic opportunities which can slow down growth. A more inclusive and broad-based growth strategy could therefore not only address rising inequalities but also help lift the economy on a more sustainable, longer-term growth trajectory.
We all know that addressing structural reforms and improving the quality and sustainability of growth under the current economic climate is challenging. Economic restructuring requires strong and sustained political will to deal with the vested interests resisting change.
With limited resources, public expenditure needs to become more transparent and efficient. Creative ways will have to be found to free up resources for example by addressing corruption and reducing leakages. Another example would be phasing out inefficient and regressive subsidies, such as those on fossil fuels. In 2011, according to the International Energy Agency, fossil fuel subsidies in Vietnam amounted to 3.33% of GDP or US$ 4.12 billion. While as a comparison in 2011 public health expenditures amounted to 1.8% of GDP and education to 4.7% of GDP.
Freed up resources could be invested into human capital, ensuring equitable access to quality basic services and productive employment opportunities. The recent post-2015 consultations held in Vietnam with eight groups have shown that people, particularly the most disadvantaged, across all ages aspire for quality jobs, education and health.
A more inclusive growth strategy would also need to be accompanied by investing into basic social safety nets to protect the chronically poor and to mitigate the risks of transitory livelihood shocks.
I therefore encourage that the discussion should also take into account the broader issues of distributional impact of economic restructuring, particularly on the poor and vulnerable. This may require additional research and impact analyses which the ECNA project could support. Furthermore, dialogue between economic and social policy makers could lead to holistically addressing Vietnam's socio-economic concerns. This would alsostrengthen the important oversight function of the National Assembly to ensure that all Vietnamese can benefit from economic development.
I once again thank the Economic Committee of the NA for convening this important forum and look forward to the frank and rich discussions over the coming two days. Considering the urgency of addressing the reform constraints, I hope that the forum will come up with concrete and action-oriented recommendations that feed into the next NA session.
The Autumn forum will provide an opportunity to follow-up and to take stock on the issues discussed today.
Chuc cac dai bieu suc khoe va thanh dat.