Donors pledge $4.45 bln in aid to Vietnam http://today.reuters.com/news/articlenews.aspx?type=worldNews&storyID=2006-12-15T110028Z_01_SP73264_RTRUKOC_0_US-VIETNAM-ECONOMY-DONORS.xml
Fri Dec 15, 2006
By Ho Binh Minh and Grant McCool
HANOI (Reuters) - Donors on Friday pledged $4.45 billion in aid to Vietnam for 2007, up a fifth from $3.7 billion this year, as the Communist-run country seeks to improve its under-developed infrastructure and sustain high growth.
International donors urged Vietnam, which will become the newest member of the World Trade Organization on January 11, to accelerate its move to becoming a market economy.
"Vietnam, with its WTO membership, is entering a new stage of development," Asian Development Bank country director Ayumi Konishi told a news conference. "Vietnam needs to be more competitive."
Among the pledges, the ADB's are the largest at $1.14 billion. European Union countries promised a combined $948.2 million, followed by Japan with $890.3 million and the World Bank's $890 million.
Vietnam said much of the money would be for the construction of roads, ports and power plants. But officials said the donors would only disburse aid when it can be matched against contracts that Vietnam signs for projects, such as infrastructure work.
The aid, announced at an annual meeting between government and donors, would be part of the Southeast Asian nation's ambitious plan to reduce poverty and boost economic growth in 2007 to 8.2-8.5 percent from 8.2 percent expected this year.
"This year's pledges are proof of our close cooperation and the Vietnamese government is committed to using this precious support in the most effective ways," Deputy Prime Minister Pham Gia Khiem said at the end of the two-day conference.
Planning and Investment Minister Vo Hong Phuc said the country also aimed to reform policy making, such as speeding up guidance for government departments on how to implement new laws.
FIGHT AGAINST CORRUPTION
Vietnam began its shift from a centrally planned economy 20 years ago, but estimated gross domestic product this year was still relatively small at $61 billion.
Corruption, lack of transparency and implementation of new laws were among the challenges Vietnam faced in trying to achieve its goal of middle-income status, or an annual per capita income of more than $1,000, by 2010, donors said.
"It is clear that many donors expected action," World Bank country director Klaus Rohland told the news conference. "The fight against corruption will not be won overnight as this is a long-term issue."
Per capita income was $720 in 2006, but some researchers believe it could be as much as three times higher in Ho Chi Minh City and Hanoi, the biggest urban areas in a country of 84 million people.
Minister Phuc told donors on Friday that policy makers in the ruling Communist Party would meet next month to adopt a resolution on economic integration issues as Vietnam joins the world's biggest free-trade club. Action to take included raising civilian and corporate awareness of the country's commitments, accelerating legal reforms, simplifying the administrative agencies and raising competitiveness, Deputy Prime Minister Khiem said.
He added that development was needed to help rural and remote areas avoid being harmed during the country's WTO accession.
About two thirds of Vietnamese people live in rural areas but the industry and construction sectors made up 41.5 percent of the GDP, followed by services with 38.4 percent and the remaining 20.1 percent from the agricultural and fisheries sectors.
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