Macroeconomic Reforms/ Green Growth Programme in Viet Nam
Since the comprehensive policy reforms in 1990, Viet Nam has developed rapidly and achieved impressive economic growth, reaching the status of a lower middle-income country. This growth entailed the extensive use of labour, natural resources and capital. In order to maintain high growth rates in the future, the country faces the challenge of increasing its productivity and improving the quality of growth by mitigating its negative impacts on the environment.
In 2012, Viet Nam adopted the Vietnam Green Growth Strategy to address some of those challenges and to make its economic growth more sustainable. However, the progress in the implementation of the strategy is hampered by insufficient policy coherence and the lack of capacities to enforce policies addressing environmental protection and environmentally and socially responsible use of resources. The low availability of financing for green investments is a further obstacle in the implementation of the VGGS. Fiscal (eco tax, environmental protection charges) as well as financial and capital market instruments (green bonds, green credits, green index) are limited.
Guided by the Viet Nam Green Growth Strategy, the Government of Viet Nam is conducting measures that foster an ecologically and socially sound growth process.
GIZ is implementing this programme on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), and for the European Union (EU) as a co-financer.
To achieve its objective, the programme deploys international and national experts foradvisory services to a number of government institutions. The programme supports the Government of Viet Nam in (i) reforming its regulatory framework, (ii) introducing new policy instruments and (iii) capacity-building, enabling the country to transition to an environmentally and socially sustainable market economy.
These services are directed at institutions responsible for key areas of the economic reforms, including the Ministry of Planning and Investment (MPI), the Central Institute for Economic Management (CIEM), the Ministry of Finance (MoF), the State Securities Commission (SSC) and the State Bank of Viet Nam (SBV).The programme is divided into the following areas of intervention:
1. Strengthening advisory capacity on green growth issues: Support the Central Institute for Economic Management, as a research institute under the MPI, in providing state-of-the art research thereby contributing to strengthening evidence-based policy making. International and local experts provide advisory services related to economic modelling, policy simulation, environmental impact assessments and stakeholder dialogues.
2. Coordination of the National Green Growth Strategy: Support to the Ministry of Planning and Investment in coordinating the implementation and the monitoring of the VGGS. This includes the development of related legal and administrative instruments, monitoring and review tools and, at the provincial level, training for civil servants and formulation of green growth action plans.
3. Public Finance Modernisation (EU - funded) : On behalf of the EU Delegation to Viet Nam, GIZ is implementing the ‘EU-Public Finance Modernization Project’. The project aims to improve transparency, accountability and efficiency in public financial management. Through technical advisory, the Ministry of Finance strengthens its capacity to ensure the alignment of legal, organisational and regulatory frameworks for the planning and execution of the budget on the central and sub-national level with international standards.
4. Green fiscal policy reform: The programme provides targeted advisory services to MoF on fiscal policy reforms to facilitate Viet Nam’s economic transformation to green and sustainable growth. This includes support for the analysis of budget processes from a green-growth perspective, the adjustment of fiscal instruments and incentives for green investments, the levying of taxes to discourage environmentally irresponsible behaviour, and the introduction of green standards for public spending.
5. Green financial sector reform: GIZ supports the State Bank of Vietnam (the country’s central bank), commercial banks, the State Securities Commission and the stock exchange to mobilize private investment for green growth. Through various training measures and support for the development of innovative green investment instruments, the SBV introduces environmentally and socially sustainable reforms to the financial system – above all green banking and green capital markets.
6. Green Economy Training: Experts and managers from key government agencies in Viet Nam participate in training measures in Viet Nam and abroad. The blended-learning modules and practical transfer projects equip the participants with technical competences in the field of green economy as well as with the management and leadership skills needed to initiate sustainable change in their institutions. Courses and workshops in Viet Nam and Germany are implemented by an international consulting firm led by IP CONSULT and aim at fostering a common understanding of green growth concepts.
7. Implementation of the Agenda 2030 for Sustainable Development: GIZ supports the MPI and other ministries to strengthen their capacity in monitoring and reporting of the implementation of the Agenda 2030. The programme assists the government of Viet Nam in preparing its National Voluntary Review of the Implementation of the 2030 Agenda to be presented in New York in 2018
Results achieved so far
The major results in the support of the Vietnamese government bythe Macroeconomic Reforms / Green Growth Programme and its predecessor projects since mid-1990s can be divided along three pillars:
Strengthening the regulatory framework:
Introducing policy instruments: