Workshop on Dissemination of the Study Results on "Accelerating Sustainable Development in Viet Nam: Policy Options"

Summary

Workshop on Dissemination of the Study Results on "Accelerating Sustainable Development in Viet Nam: Policy Options"

On 6 Nov 2024 in Hanoi, the Ministry of Planning and Investment (MPI) in cooperation with the United Nations (UN) in Viet Nam and UN Economic and Social Commission for Asia and the Pacific (UNESCAP) jointly organized a Workshop on Dissemination of the Study Results on "Accelerating Sustainable Development in Viet Nam: Policy Options". In disseminating the key findings and recommendations of the joint macroeconomic modelling study, the workshop aimed to:

1. Better understand the status, challenges and opportunities in financing national development priorities and SDGs regionally and in Viet Nam. 
2. Share knowledge, experience and best practices on financing SDGs acceleration regionally and in Viet Nam.
3. Explore actionable policy measures, initiatives and practices that can scale up financing required to drive SDG transformation in Viet Nam, drawing from the findings and recommendations from the macroeconomic modelling study. 

MPI Vice Minister Nguyen Thi Bich Ngoc opened the workshop with an appreciation to the UNESCAP and UN Resident Coordinator Office (UNRCO) in Viet Nam for jointly conducting this important macroeconomic modelling study with MPI. After thorough review, the Vice Minister (VM) conveyed MPI’s appreciation of the results of the modelling, which can contribute to the Socio-Economic Development Plan (SEDP) and Socio-Economic Development Strategy (SEDS).

The Vice Minister underlined that the study provides useful substance at a very opportune time. VM finds the policy implications well grounded. MPI in turn had already advised the Prime Minister to embrace some of the policy recommendations. 

UN Resident Coordinator (UNRC), Ms. Pauline Tamesis, expressed gratitude for the partnership with MPI and the larger UN Country Team in Viet Nam, including ESCAP. The UN in Viet Nam is committed to providing the Government of Viet Nam with cutting-edge economic, social and environmental analysis. 

UNRC underlined the urgency to achieve the SDGs by 2030. The study’s focus on energy transition, building resilience and digital transformation aims to help Viet Nam accelerate achievements of SDGs and national development priorities. Specifically, the study identified key investment priorities that can yield positive outcomes for the economy, society and the environment. 

Dr. Vatcharin Sirimaneetham, Chief of the Macroeconomic Policy and Analysis Section, UNESCAP, provided an overview of the regional economic conditions and underscored the importance of financing for accelerating SDG progress.

Ms. Lin Zhuo, Economic Affairs Officer, UNESCAP, made a presentation on Augmented Public Debt Sustainability Analysis and Boosting Affordable and Long-term Government Financing in Asia and the Pacific. She provided an overview of the application of the augmented public debt sustainability analysis in Indonesia, Mongolia and Thailand. She shared knowledge and insights into how the governments can expand affordable and long-term investments and financing of SDGs and national development goals.

Dr. Kongchheng Poch, Economist, UNRCO, made a presentation on Key Findings and Recommendations of the Study on “Accelerating Sustainable Development in Viet Nam: Policy Options.” 

Key findings and recommendations highlighted that:

• Investment in renewable energy would likely help Viet Nam to achieve the targets of renewable energy development, reduction of carbon dioxide emissions and improvement of air quality, as well as economic expansion. GDP will grow by 3-4 per cent compared with the baseline scenario in the first years of that investment before declining to a positive extra gain of about 2 per cent of baseline GDP until 2030. After 2030, the impact on GDP would increase again with an average gain of about 3.5 per cent, given the new and larger investments between 2031 and 2050. However, in view of the huge value of investments involved, there would likely be a surge in public debt if the investments were to be financed mainly by the Government.
• Carbon tax could be a useful tool for decarbonizing the economy, reducing emissions and improving fiscal space, while having only a modest negative impact on the economy. The revenue generated from the carbon tax and the savings from eliminating carbon-linked subsidies would create significant fiscal space, enabling government debt to decrease from the baseline of 60 per cent of GDP to 38.8 per cent in 2030, and achieve a larger debt reduction over the long term. However, the policy would likely have an adverse impact on GDP, which would decrease at the modest rate of 1 per cent over the long term.
• Investment in green infrastructure, health, social protection and education, as allocated in the three National Target Programmes (NTPs), is likely to have a significantly positive effect on poverty reduction and economic output, especially during the programme implementation period from 2021 to 2025. Assuming that the NTP investment is efficiently disbursed, the economic output is likely to expand by 2 per cent compared with the baseline scenario during the years of programme implementation from 2021 to 2025.
• Investment in information, communication and technology (ICT) infrastructure, which would be approximately 2 per cent of GDP, would likely result in a positive effect on economic output in the long term. The positive growth effect is projected to increase gradually from the baseline in 2020 and grow by nearly 0.7 per cent of the baseline from 2025 onwards.

The plenary discussion pointed to the relevance and importance of the policy scenarios chosen for the modelling and analysis. 

• The investment in renewable energy is progressing and expected to reach 60% of the total energy mix by 2030. Carbon tax will help reduce emissions and pollution, while increasing government revenue for the state budget. Currently, Viet Nam is implementing environmental protection levy. For the introduction of carbon tax, it is important to study more thoroughly with a focus on regulatory impact assessment.
• Investments in human capital development such as education, healthcare and social protection should not be underrated. This could be a gamechanger for improving human and social development and enhancing skills development and productivity to help Viet Nam in reaching high-income status by 2045.

The participants applauded that the study provided quantitative evidence for informing policymaking related to sustainable development in Viet Nam.

The workshop was concluded with a few key notes by Mr. Le Viet Anh, Director General of the Department of Science, Education, Natural Resources and Environment (DSENRE), MPI. The DG underlined that the study could provide valuable inputs to the preparation of new SEDS, SEDP and Party Congress 2026 deliberations. MPI intends to request further deep-dive analyses on sectors to provide more granularity to the policy recommendations suggested in the macroeconomic modelling study. The DG also noted the tremendous amount of knowledge required to discuss the ‘how’ or the financing options. 

Find the report "Accelerating Sustainable Development in Viet Nam: Policy Options - Macroeconomic Modelling (Augmented Public Debt Sustainability Analysis) Study" at this LINK