Vietnam urged to persist with fiscal reforms
VIETNAM should continue implementing fiscal reforms and promote private sector participation in order to fill the gap in infrastructure investment, says a senior Asian Development Bank (ADB) official.
This should be done by creating an attractive investment environment, Bambang Susantono, ADB vice president for Knowledge Management and Sustainable Development, said at a conference held in the capital city to release a report on meeting Asia’s infrastructure needs.
The report primarily covers infrastructure needs in transport, power, telecommunications, water supply and sanitation, sectors that are key to poverty reduction.
Key current challenges, according to Susantono, include rapid growth of Asian Development Bank members to middle-income status, leading to a shift towards knowledge-based economies; demographic changes due to increasing life spans, leading to increases in ageing populations; rapid urbanisation leading to the development of megacities requiring paradigm shifts in institutional decision-making for improving livability; rising inequality in income and opportunities since the early 1990s, resulting in less inclusive growth; and significant increase in risks from climate change and natural disasters.
To address these challenges, he suggested that tax reforms, reorientation of expenditure, cautious borrowing, and non-tax revenues were some of the major tasks that the country should focus on.
By improving fiscal reforms, together with creating attractive investment environment to enhance participation of the private sector, making better use of public private partnerships and deepening its capital markets, Vietnam can see improvements in infrastructure investment, Susantono said.
The government should make a list of expenditures and projects to set investment priorities, he added.
According to the report, developing Asia will need to invest US$26 trillion (Bt920.4 trillion) from 2016 to 2030, or $1.7 trillion per year, if the region is to maintain its growth momentum, eradicate poverty, and respond to climate change. Without climate change mitigation and adaptation costs, the estimated cost is $22.6 trillion, or $1.5 trillion per year.
Of the total climate-adjusted investment needs over 2016–2030, $14.7 trillion will be for power and $8.4 trillion for transport. Investments in telecommunications will reach $2.3 trillion, with water and sanitation costs at $800 billion over the period.
