Vietnam’s advantages in economic recovery

Turk underlined that Vietnam has done a tremendous job in containing the COVID-19 pandemic and the country’s performance is brilliant and at the front of the world in curbing the spread of the SARS-CoV-2 virus.

“Vietnam has been free of community transmission for more than two months and that’s such a fantastic achievement if you look at what’s happening to the rest of the world,” she said.

The way in which the Vietnamese Government has contained the virus shows that the Vietnamese economy has been relatively resilient, as it is still growing and many of the economies globally could not.

The World Bank forecast Vietnam's GDP to grow 2-3% this year, and 5-6.5% next year.

The way in which the government has brought COVID-19 under control is the best possible promotional tool for Vietnam, Turk affirmed.

Ways to maintain competitive edge

She also pointed out that there are some risks to the Vietnamese economy, as now it is still an unpredictable time.

Although Vietnam has this competitive edge right now, at a certain point that competitive edge will go because other countries will open up. So the question for the Vietnamese Government now is how to maintain that edge in the future, the WB official said.

“Even though the Vietnamese economy’s relatively resilient, the situation globally is very unpredictable at the moment. That means there’re also certain risks on the horizon and it makes sense to manage those risks proactively as possible,” she said.

According to the WB official, all of the sectors have suffered impacts of social restrictions and the slowdown in the global economy, in addition to the increase in unemployment and the impact on small businesses where they see contraction of their reserves.

Like many other countries, stress on the fiscal situation could also put stress in the future on Vietnam’s financial sector because if businesses start to have problems in their cash flow, they have problems in repaying loans.

The country should also be concerned about poverty and social risks as well and make sure that vulnerable population is properly protected.

Addressing bottlenecks in capital disbursement

Turk said that the WB has a strong programme of support to the Vietnamese Government with 39 projects totalling US$7 billion.

The bank is able to bring strong data analysis to the government to help them prepare for these risks and can also channel investment that might strengthen a potential recovery in the future.

The WB’s disbursements in Vietnam tend to be lower than in the rest of the world from WB’s perspective, Turk noted, citing that on average it takes 19 months from the approval of the project to the first disbursement of the project.

In recent months, however, there has been an acceleration in disbursement on public investments financed by public funds in the country, she said.

She voiced her hope to see the acceleration also applied to those investments such as being financed by ODA. There is room for strengthening the management of ODA and there could be more clarity around different roles and responsibilities, Turk stated.