Magazine article Business Asia

Hanoi's Fate Hinges on Reform

Magazine article Business Asia

Hanoi's Fate Hinges on Reform

Article excerpt

Vietnam, once earmarked for economic stardom, has been all but forgotten in the fracas surrounding Asia's financial crisis.

The head of the World Bank in Hanoi says that despite the regional economic crisis, Vietnam's annual growth could continue to rise at between 7 and 9 per cent if new reforms are quickly implemented.

"If Vietnam does the right thing, it has the instruments and levers that could compensate for the regional downturn," said Mr Andrew Steer, the bank's director in Vietnam.

"We believe the economy could grow by 7 to 9 per cent per year if (Vietnam) implements serious reforms of the state-owned enterprises, the financial sector, trade policy and domestic deregulation."

Gross domestic product (GDP) is forecast to grow at 6.64 per cent in the first six months of the year. The official figure for GDP growth in 1997 was 8.8 per cent.

The IMF and Asian Development Bank have predicted Vietnam's GDP growth this year at 5 per cent. Other forecasts are less optimistic.

Mr Steer emphasised that Vietnam, which has been spared the full brunt of the regional turmoil, needed to move quickly to capture new markets before other East Asian countries began to grow again.

"Countries in the region are reforming faster than most expected and a year from now they will be lean, mean and world-class competitors," Mr Steer said. He said communist Vietnam had made structural changes to help take it down the reform path, but more was needed.

"We have seen significant progress, but that doesn't add up to what is needed to take the country over the threshold," Mr Steer said. …

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