How Viet Nam can handle economic and climate crises

Published: 26/11/2008 05:00



VietNamNet BridgeRachel Kyte, the International Finance Corporation’s (IFC) vice president of Business Advisory Services, was in Viet Nam for two days as part of a wide range of visits to the region. Kyte talked to reporters about IFC’s plans in Viet Nam given the global financial crisis,

Rachel Kyte, the International Finance Corporation’s (IFC) vice president of Business Advisory Services. (Photo: VNN)

I don’t know what forecast will hold true at the end of the day, in terms of the economic impacts on Viet Nam. However, IFC will remain in Viet Nam and stay committed to strong commercial banks, to strong financial institutions, and to strong private sector. Our goal is to help these firms with liquidity, and to help them sustain themselves through the downturn. We will also remain active in the market as an equity investor, so that those companies that have strong fundamentals will come out of the crisis in good stead. Every crisis transforms itself into opportunities eventually, and we will remain active in the market and look to invest in good financial sector firms. So, while we don’t know how long and how deep the crisis will be, we know that IFC will be able to partner with strong firms.

We have one very specific response to SME support in Viet Nam. We are increasing trade finance capacity, which is an immediate response to the contraction of world liquidity on SMEs, and is particularly important to SMEs in Viet Nam. My colleague here, Sin Foong Wong, will lead a team to make sure we are increasing our trade finance line with our partner banks in Viet Nam.

The current economic downturn in the US and Europe has made negative impacts on Viet Nam’s export enterprises. What is your advice for Viet Nam’s export enterprises in this time of difficulty?

Global demand will shrink for many different products and services, and that will have impacts throughout the global value chain in the manufacturing sector. It should also impact the agriculture sector here in Viet Nam.

IFC, by being able to offer both finance and advice, can assist our clients and their sectors to use the period of economic downturn to focus on efficiency, and to focus on a strategy that will help them survive a drop in orders and demand.

We want to help them position themselves to be as competitive as possible. When orders start to pick up again, we will ensure that Viet Nam will be considered to be a location of choice for sourcing products. Not only that, but also within Viet Nam there will consequently be a competitiveness between factories, whereby best practice firms can secure access to the value that can be found in supply chains. They can do this by becoming a better firm, and by being able to demonstrate that they are efficient, that they adhere to good labour practices and good environmental standards.

Climate change is starting to have bad impacts on the Vietnamese economy. Which economic sectors in Viet Nam, do you think, have been most badly effected by climate change?

All the economic sectors will be negatively affected by the climate change eventually.

Viet Nam’s geographical position puts it at high risk from some of the impacts of climate change, including weather patterns, and rising sea-levels. These will badly impact Viet Nam’s agriculture and its population.

We regard climate change as significant risk, but we also see huge opportunity. In particular, in country like Viet Nam, it is possible to change course and the path to the development, without having an impact on the speed of the growth of the economy.

We are looking for very concrete ways in which to deliver the win-win for private companies in Viet Nam.

One way is looking for opportunities for existing firms to become more energy efficient and to introduce cleaner production processes. Cleaner production is better for the environment and the climate; it is also an immediate return to the bottom line, because the energy produced and energy price will be lower, and there will be less inputs necessary which will cause businesses to have greater profit.

We are also looking for opportunities to invest and to provide biogas for more renewable energy in Viet Nam. There are now new renewable technologies that are commercial or almost commercial. We want to be involved in finding ways to bring them in scale to Viet Nam.

We are also finding ways to help private enterprises understand the risks to their business from climate change and how they may adapt to the climate change.

What do the WB and IFC plan to do to help Vietnam’s Government to address the climate change issues?

My colleagues at the WB will be working with the Government on adapting strategies and on how to support the Government in thinking about this issue. From an IFC perspective, what we are looking at is how to introduce energy-efficient technologies that can be used at household levels. For example, clean lighting and clean heating. We will also look at renewable energy that can be used at the village level and distributed at the household level. With our strengths in investment in the private sector, we can provide commercially successful business models that bring new clean technologies like heat, power, and light to rural areas in the Mekong basin as well as elsewhere in Asia.

(Source: Viet Nam News)

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