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Corruption, lack of reform endanger Vietnam's progress

Government corruption and slow progress in reforming the financial sector will jeopardise Vietnam's economic and social development unless immediate steps are taken, the World Bank warned yesterday.

Within the past decade a third of Vietnam's population, or as many as 20 million people, have been lifted out of poverty, "but these dramatic gains remain fragile," said World Bank country director Klaus Rohland.

`PRO-POOR' GROWTH

"While the pro-poor nature of economic growth in Vietnam over the last decade provides good reason to be optimistic there are also clear signs that development is becoming less inclusive," he added.

Rohland said the challenge now is to ensure that the benefits of economic growth filter down among all regions and sectors of the population.

The World Bank estimates that the Southeast Asian nation will record economic growth of around 7.0 percent this year, making it the world's fastest growing economy after communist China.

Rohland's comments came ahead of next week's annual meeting of aid donors to the communist nation and the publication of a joint donor report on poverty.

In a statement, the World Bank criticized the govern-ment's slow progress on restructuring Vietnam's ailing state-owned enterprises and implementing financial sector reform.

It warned that a "portion of today's economic growth will have to be devoted, sooner or later, to clearing bad debts" and protecting the solvency of financial institutions.

"On the governance front, the abuse of public office for private gain risks making everyday life miserable when it happens at low levels and leads to resource misallocation and waste when it affects collective decision-making."

FIGHTING CORRUPTION

The fight against corruption, the World Bank said, should be a priority to maintain equitable economic and social development in Vietnam.

"Tackling difficulties on these two fronts is key for Vietnam to remain a success story in the longer term," it said

Failure to address these issues, the bank warned, could lead to "the emergence of a variant of crony capitalism already seen elsewhere, not to the development of a vibrant market economy with a socialist orientation."

Vietnam began doi moi, or market reforms, in 1986.

The two-day Consultative Group meeting of foreign donors to discuss the country's aid programme, one of the biggest in the world, begins Tuesday.

Last year, donors pledged US$2.5 billion in assistance to Vietnam for this year despite concerns over corruption in the disbursement of funds and the communist regime's human rights record.
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