This is a key recommendation of the Development Finance Assessment Report: “Financing Sustainable Development in Viet Nam” launched in Ha Noi on September 11th 2018 by the UN Development Programme (UNDP) in partnership with the Ministry of Planning and Investment (MPI).
The Launch features key representatives from the Government of Viet Nam, business sector, academia, international development partners and the media. Director of UNDP’s Regional Bureau for Asia and the Pacific Haoliang Xu, who is visiting Viet Nam to participate in the World Economic Forum, and MPI Deputy Minister Le Quang Manh attended the Launch.
Photo: CPVUsing the lens of the Integrated National Financing Framework (INFF), the report analyzes the composition, characteristics and trends of Viet Nam's development finance and development investment resources, with comparisons to other countries, mainly from the ASEAN region.
The report provides an overview of the changing development finance landscape in Viet Nam: Foreign Direct Investment (FDI) and remittance inflows have been high, while ODA is declining, and government revenue is not increasing fast enough to sustain the high level of public investment needed to meet increasing spending obligations, and public debt is rising.
According to Mr. Haoliang Xu, the Development Finance Assessment Report shows the rapidly changing development finance landscape in Viet Nam. He noted “While the volume of domestic private investment in 2015 has doubled since 2002, its share of total development finance, of around 40%, and per capita domestic private investment - USD490 in 2015 compared to the ASEAN average of USD690 - are amongst the lowest in the ASEAN region”.
Photo: CPVMr. Haoliang Xu called for urgent actions, including incentives for increasing domestic private investment; public investment crowding in private investment; attracting FDI that helps link domestic firms to global value chains; enhancing tax collection, state asset management and introducing property and environmental taxes; and working towards an integrated national financing framework for SDGs.
He reaffirmed UNDP’s readiness to partner with Viet Nam in effective financing for SDGs, especially enhancing synergies of all finances (public, private, national and international) and maximizing their contributions to SDG outcomes.
The report highlights the need to facilitate Vietnamese private enterprises to grow in sizes, productivity, competitiveness and become formal. It recommends Viet Nam to enhance coordination between central and local governments, and move away from using tax incentives to attract FDI to: (i) improving infrastructure, (ii) creating an enabling business environment and (iii) equipping workers with 21 Century skills./.