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ADB reaffirms strong support to GMS and Vietnam

Released at: 15:47, 31/03/2018

ADB reaffirms strong support to GMS and Vietnam

Photo: Viet Tuan

ADB President congratulates GMS members on 25 years of successful regional cooperation and pledges continued support.

by Linh San

The President of the Asian Development Bank (ADB), Mr. Takehiko Nakao, congratulated the six member countries of the Greater Mekong Subregion (GMS) at the GMS6 Summit held in Hanoi on March 31 for their 25 years of successful regional cooperation. He reaffirmed the ADB’s continued support to the program, with $7 billion expected over the next five years to help it achieve inclusive growth and sustainable development.

In speeches to the GMS Summit and the GMS Business Summit, Mr. Nakao said: “I would like to commend all GMS countries on the economic cooperation over the last 25 years.” The GMS Program was initiated in October 1992 with ADB’s support, to assist the transition process and strengthen regional cooperation by encouraging cross-border economic and trade relations.

“Today, GMS countries are among the fastest growing economies in Asia and the world,” Mr. Nakao went on. “They recognize the benefits of being regionally integrated and globally connected. The ADB will continue to facilitate the GMS Program, which has been built on mutual trust and the ‘3 Cs’ of connectivity, competitiveness, and community.”

Mr. Nakao met with Prime Minister Nguyen Xuan Phuc on March 30 during his three-day visit to Hanoi, where they discussed Vietnam’s recent economic development and continued ADB support. He commended the government for steering Vietnam’s economic growth to 6.8 per cent in 2017; the highest since 2007. The country has pursued sound macroeconomic policies and reduced its budget deficit, pushing down the public debt to GDP ratio.

The ADB forecasts Vietnam’s economic growth to exceed 7 per cent in 2018, led by robust export growth, rising domestic consumption, and strong investment fueled by continued foreign direct investment. Inflation is projected to remain at around 3.5 per cent for the year, as strong domestic demand and bank lending is offset by relatively stable domestic food and transportation costs.

“It is important to continue structural reforms to improve productivity and economic competitiveness,” Mr. Nakao said. “The banking system needs to be strengthened by resolving non-performing loans and tightening supervision. The program to divest State-owned enterprises should be accelerated and their corporate governance strengthened.”

He reaffirmed the ADB’s commitment to helping Vietnam achieve more inclusive and environmentally-sustainable growth; the central goal of the ADB’s country partnership strategy (CPS) with Vietnam for 2016-2020. Anchored in the government’s 2016-2020 Socio-Economic Development Plan, ADB’s assistance under the CPS focuses on creating quality jobs and improving economic competitiveness, strengthening infrastructure and service delivery, and addressing environmental sustainability and climate change.

Mr. Nakao said the ADB is working closely with the government to ensure that Vietnam makes full use of the $613 million in ADB concessional financing that remains available to it in 2018, before the country’s graduation from concessional assistance on January 1, 2019.

After Vietnam’s transition to ADB’s more market-based resources (instead of mixed with concessional assistance), the ADB can provide at least $1 billion a year in 2019 and 2020 through sovereign operations. It will support projects in intra-regional and urban transport, wastewater and drainage, and urban climate change resilience. Furthermore, it will actively look to mobilize concessional co-financing from ADB’s trust funds and bilateral and multilateral partners.

In its operations in Vietnam, the ADB will seek to have greater value addition by proactively incorporating innovation and technology. It will support the adoption of on-farm water efficient technologies for climate-friendly agriculture, the integration of urban metro and bus networks, the expansion of climate resilient urban wastewater and flood management, the use of artificial intelligence-based analysis to improve urban public services, and the use of technology-driven credit analysis that promotes financial inclusion for small and medium-sized enterprises.

It will strengthen its support to private sector development in Vietnam, using both sovereign and non-sovereign financing.

Vietnam was one of the founding members of the ADB, in 1966. Since it resumed operations in 1993, the ADB’s assistance to Vietnam has reached $15.4 billion in loans, $310.6 million in technical assistance, and $329.5 million in grants.

Based in Manila, the ADB is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members; 48 of which are from the region.

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