Context
Since the beginning of its reform policy in 1990, Viet Nam has taken great strides toward a (social) market economy and was able to join the World Trade Organization (WTO) in 2007. Nevertheless, important government institutions have remained unable to adjust their principles, laws and rules in a manner that would enable Viet Nam to exploit the advantages of integration into the world economy to achieve broad sustainable growth.
Objective
Selected market-based institutions are prepared to meet the requirements of more intensive integration into the world economy and of managing environmentally sound socio-economic development.
Approach
The project consists of four components:
Economic and social policy
Public finance
Financial systems development
Development of international competence at the macroeconomic level
The project's services are directed at institutions that are responsible for or advise key areas of the economic reform processes, such as the Central Institute for Economic Management, the Ministry of Planning and Investment, the Ministry of Finance and the State Bank.
The project acts on three levels:
1. Analysis of the regulatory framework for economic reform and its adaptation to current developments;
2. Processes and instruments of the authorities involved in the economic reform are overhauled;
3. In-service training for the staff of partner organisations ensures long-term implementation of the reforms.
Results achieved so far
To improve monetary policy, the operative independence of the State Bank has been enshrined in law. The functions of the State Bank and the supervisory authorities have been reorganised accordingly.
To increase the stability of the financial markets, monitoring in the banking sector has been improved. Almost 90% of commercial banks now apply the regulations on internal auditing and controlling. The regulatory authority for the capital market has been strengthened with a new capital market law and an independent clearing house. The consolidation of all bond trading in the Hanoi Security Trade Center and the development of products for the bond market have been supported. The trade volume at the Hanoi Stock Exchange has quadrupled in the space of three years.
Management of the economy has been improved by the establishment of a Monetary Statistics and Forecast Department at the State Bank. This has enhanced the economic analysis and forecasting capabilities of the State Bank, economic research institutes and the Ministry of Finance.
A new law on debt management has improved the efficiency of the Ministry of Finance and reduced the cost of state debts.
The financial power of the poorer provinces and municipalities has been strengthened in the context of budget policy.
A new green tax law has introduced levies on environmentally damaging products, thus reducing their use.
Since 2010, about 60 Vietnamese professionals and managers completed a three-month macroeconomic training programme in Germany.