The Asian Development Bank yesterday forecasted Viet Nam's GDP growth would reach 5.6 per cent this year with further expectations it may hit 5.8 per cent in 2015.— VNA/VNS Photo Quang Nhat

HA NOI (Biz Hub) — The Asian Development Bank yesterday forecasted Viet Nam's GDP growth would reach 5.6 per cent this year with further expectations it may hit 5.8 per cent in 2015.

The bank said the improved outlook reflected progress made in addressing weaknesses in Viet Nam's banking sector, a recovering US economy and growth in the eurozone.

Further explanation by the bank showed inflation is also expected to average 6.2 per cent this year and 6.6 per cent in 2015, but only against the backdrop of stable food production, moderate economic stimulus and a slight depreciation in the dong.

In its 2014 Asian Development Outlook report released in Hanoi, the bank's officials called on the Government to create a level-playing field for public-private partnerships to attract more private investment for public infrastructure and to make public services more affordable for the nation's poor.

Dominic Mellor, an economist for ADB Vietnam, said the new Public Private Partnership (PPP) decree needed to place greater emphasis on competition by ensuring an open bidding process and adopting international practices for awarding projects.

The bank also said the private sector regarded the bidding and negotiating process for PPPs in Viet Nam as "unpredictable and lengthy," adding that this had stalled private investment in infrastructure.

The new PPP decree will not impose the proportion of the state's contribution in PPP projects. Instead, the state's contribution will be identified based on certain financial indicators for projects.

According to the Ministry of Planning and Investment, Viet Nam will need to invest $170 billion between 2011 and 2020 on building infrastructure for electricity, water supply, transportation and sewerage. However, public funding and official development assistance are expected to meet only half the funds needed to meet demand for the projects.

"A sound regulatory framework for PPPs can expand the reach and quality of public service delivery," said ADB Country Director for Viet Nam Tomoyuki Kimura.

The new PPP decree, is expected to be adopted by the Government in May.

Regarding efforts to reform State owned enterprises (SOEs), the ADB described the goal to partially privatise 432 state-owned enterprises over 2014-15, as ambitious and called for more "internal efforts" by SOEs to tighten management practices, corporate governance and efficiency.

"We cannot assume that when a company is equitised, its performance will improve," said ADB economist Mellor.

The bank also noted Viet Nam's progress on financial sector reforms in supervising bank lending, mergers, the restructuring of weak banks and the easing of restrictions on foreign investment in domestic banks. — VNS