Speech

Remarks at the Dinner Celebrating the 10th Anniversary of the Normalization of Vietnam's Relations with the International Financial Institutions, David Burton, Director, Asia and Pacific Department, IMF

October 22, 2003

Your Excellency, State Bank Governor Le Duc Thuy, senior officials of the State Bank of Vietnam and other government agencies, distinguished guests, ladies and gentlemen:

It is a very great pleasure to be here this evening, on my first visit to Hanoi, to celebrate the 10^th anniversary of the normalization of Vietnam's relations with the international financial institutions (IFIs). Normalization of relations in October 1993 was followed almost immediately by approval of an IMF loan to Vietnam. This marked the beginning of a new period of close cooperation between the IMF and Vietnam to which we at the IMF attach the higest importance.

Vietnam has made impressive progress indeed with broad-based economic development during the last 10 years. Output per capita (in US$) has increased by some 140 percent; the share of the population in poverty has been halved; exports have increased 6-fold, and are now diversified across a wide range of products and markets. These achievements reflect the vision of the government in moving forward steadfastly with its "doi moi" program. Key elements of this approach that contributed to its success include: establishing and then maintaining macroeconomic stability; steady integration into the global economy; and the expanding role of market mechanisms in guiding economic activity. The IMF has been pleased to be associated with this process of reform.

Vietnam of course still faces important challenges if it is to maintain its record of rapid growth and further poverty alleviation - challenges that are fully recognized in the government's Comprehensive Poverty Reduction and Growth Strategy (CPRGS). The global economy is increasingly competitive, with some of the strongest competition here in Asia. For Vietnam to compete successfully, resources for investment must be mobilized and used efficiently. This will require banks that operate along commercial lines, enterprises that respond to market incentives, the efficient provision by government of the needed infrastructure, and a business climate supportive of private investment. Progress has been made in all these areas, but much more remains to be done. Also crucial will be continuing to maintain a stable macroeconomic environment. And access to external markets must be ensured, for which WTO membership can play an important part.

We in the IMF will be pleased to assist Vietnam in achieving its development goals in the period ahead. We offer our broad international experience on all issues relating to macroeconomic and financial sector stability - areas that are our "core business". We hope that we can contribute through policy dialogue, backed by our best efforts to understand the specific circumstances of Vietnam; through the provision of technical assistance in areas, such as tax policy and banking supervision, where we have specialist expertise; and by providing financial support, as in recent years, through our Poverty Reduction and Growth Facility.

This does not mean, of course, that we will necessarily see eye-to-eye with the government on every issue. There have been times in the last 10 years where there have been differences of view between the IMF and the government, usually on the appropriate pace of reforms rather than the general approach that needed to be taken. Such differences of view, however, should be seen as the sign of a healthy relationship in which both parties can learn from one another, working together for common goals.

In closing, let me say that I am confident that Vietnam will achieve its potential for economic development, continuing to raise rapidly standards of living, especially of its poorest people. And we at the IMF stand ready to help in any way we can in this vital endeavor.

Thank you.