Building immediate resiliency for a more robust economy

April 26, 2022 | 11:30
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Vietnam’s economy has reaped relatively positive growth for Q1. Caitlin Wiesen, resident representative in Vietnam for the United Nations Development Programme (UNDP), talked with VIR’s Nguyen Dat about the economic outlook for the entire year, with some recommendations for stronger results.

How do you assess Vietnam’s recent socioeconomic performance, especially the Vietnamese government’s efforts in containing the pandemic and recovering?

Building immediate resiliency for a more robust economy
Caitlin Wiesen, resident representative in Vietnam for the United Nations Development Programme (UNDP)

We appreciate the government’s effort to put the security and safety of the people as a priority during the pandemic, especially the government’s leadership in the rapid and equitable deployment of COVID-19 vaccines. The vaccination campaign has enabled the government to open up further for business and tourism.

All pandemic indicators are trending downwards, and we are very happy to see that elementary school students are going back to school. These are promising signs for Vietnam and its economic recovery. However, even though the pandemic seems to have passed its peak, the crisis is not over.

Last year, Vietnam introduced two support packages for those affected by lockdowns and social distancing, with the first package worth $2.7 billion, and the second package at $1.13 billion. However, these were not enough to protect vulnerable households from income loss from lockdowns. At the height of the pandemic in August 2021, poverty rose from 10 to 33.4 per cent. Even though support was there, migrants, self-employed, and the homeless were not eligible for benefits.

This has widened the inequality gap between the high income and low-income groups, and these low-income groups will experience the slowest economic recovery this year.

What is your expectation for Vietnam’s government in reviving the economy for the whole of this year?

As stressed in our Green Inclusive Economic Rebound Conference in February, Vietnam’s recovery needs to generate economic growth, green growth, and inclusive growth. The economic rebound needs to achieve the objectives of stimulating economic growth and supporting vulnerable households that were the worst affected by the pandemic. There is an important role for the government to play in leading environmentally-sustainable growth and deepening the capabilities of the domestic sector.

For green growth, we expect to see investment in a just energy transition and more climate mitigation and adaptation activities. For inclusive growth, we expect to see a comprehensive approach to improving the allocation of financial resources based on socioeconomic outcomes and increasing the supply of domestic finance. The pandemic has challenged livelihoods and exacerbated inequalities, and if Vietnam were to achieve the Sustainable Development Goals (SDGs), this year really needs to be a year of action.

How do you think the economy will fare amidst unprecedented global problems and other huge challenges, and what recommendations could be offered now?

Growth will accelerate this year, as tourism, transport, and other services are open. However, it is unrealistic to think that there will be an immediate return to the growth path experienced before the pandemic. We are looking at multiple challenges including a climate crisis; rising fuel prices; supply chain disruption due to prolonged lockdowns; and the knock-on effects of the war in Ukraine.

The government, therefore, plays an important role in ensuring growth is sustainable beyond this year. This will include an increasing supply of long term finance, facilitating growth among domestic firms through technology upgrades and public investment, and increasing climate finance, among others.

Given the climate threats and the pandemic still looming, Vietnam needs to plan and increase its resilience for future shocks, both human and natural shocks. The government needs to set the objective of pandemic recovery along with the achievement of the socioeconomic development plan and achievement of the SDGs. All these require upgrading the country’s growth strategy to be green and inclusive.

To meet the objective of achieving high-income status by 2045, Vietnam needs to invest a larger share of national output into national competitiveness, increasing value in domestic industries, and upgrading technological and innovation capabilities.

What are the UNDP’s commitments to Vietnam in realising its goals of becoming a high-income economy by 2045 and reaching net-zero emissions by 2050?

To support the development of strong domestic productive capabilities, the UNDP is conducting research with the Ministry of Planning and Investment on linking public investment to development outcomes, strengthening the domestic capital market, and restructuring national development banks. We hope to support policy recommendations in these areas, as well as in building capabilities of domestic firms for better integration into the global value chains.

To support Vietnam’s commitment to reaching net zero emissions by 2050, we undertaking several actions for a just climate transition. In last December, the UNDP and other partners reaffirmed our commitment to Vietnam and the country’s efforts to achieve the new climate targets.

The UNDP is ready to work collectively with the like-minded donor group on the nationally determined contributions to support the government to mobilise international resources, including a combination of increased public and private investment, drawing on official development assistance and concessional loans to reduce costs to Vietnam, and providing needed expertise, knowledge, and technology to accelerate the green transition and improving the regulatory environment for a just energy transition.

We are also supporting the Ministry of Natural Resources and Environment to revise the National Climate Change Response Strategy to align with the net-zero carbon emissions target by 2050. The strategy will link Vietnam’s pledges on clean energy, methane reduction, coal phase-out and forest protection to reach the targets by 2050 and convert them into concrete actions.

Building on existing programmes with the Green Climate Fund and Global Environment Facility financed projects, the UNDP is working closely across key ministries to map out the necessary interventions in each sector and region and to mobilise the most up-to-date and reliable scientific information on current and forecasted impacts of climate change.

The UNDP is deepening our partnership with the government to protect vulnerable groups from the impacts of climate change with integrated storm and flood resilient programmes in coastal provinces, water management in the central highlands and environmental governance in the Mekong Delta region, to ensure that no-one is left behind in the process of adapting to climate change.

We are also developing a major new project that aims to build resilience for coastal communities and implement natural-based solutions in mangrove and coral protection while supporting local livelihoods and eco-tourism.

By Nguyen Dat

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