May 4, 2017 1:00 pm JST

Vietnam can leverage the ADB and AIIB to its advantage

Deputy transport minister hopes for 'positive competition' between two lenders

Asia has two multinational lenders on the scene -- the Asian Development Bank and the Asian Infrastructure Investment Bank, a situation some view as a recipe for rivalry. Others, however, see it as an opportunity.

Nguyen Ngoc Dong, deputy minister at Vietnam's Ministry of Transport, recently spoke with The Nikkei about how the Southeast Asian nation can maximize its links with the two banks.

Q: How do you think the ADB and AIIB differ from each other?

A: The AIIB seems to have a more flexible structure than the ADB, allowing for a simpler screening process.

The ADB covers a range of areas, not only infrastructure but also human resource development and social institutions, as well as efforts to eliminate poverty. I hope the newer AIIB can compete with the more established ADB in a positive way. I think the ADB could learn from the AIIB how to simplify its own screening process.

Q: How will Vietnam be involved with each bank?   

A: Vietnam is an AIIB board member and is working with the bank to arrange lending for projects.

The private sector makes up a significant part of the bank, which fits with the situation in Vietnam. Since the AIIB is a private-led bank, it is able to act more dynamically than a public-led organization.

The ADB is headquartered in Asia, and connecting areas across Asia, be it in the Mekong region or in southern and northern Vietnam, is one of its missions. The bank can help us develop the infrastructure we need by providing us with know-how on one-stop customs systems, securing land and so on.

Q: How important is Japanese technologfor your country?  

A: Japan and Vietnam are strategic partners. For Vietnam, Japan has been the largest provider of funds, accounting for nearly half of the loans for our transport projects. Japan has also contributed significantly to Vietnam in terms of technological transfers, and its help in developing human resources is crucial.

Our government plans to incorporate information technology into transport infrastructure development. Domestic businesses are keen to take part in Vietnam's smart highway system [which a Japanese company has received an order for].

Adapting the latest technologies to fit Vietnam's needs is vital. Initially, for example, Japan and Vietnam had different mobile phone systems, but today both can be used in Vietnam.

Q: What do you hope for from the ADB?  

A: The number of local employees at the ADB's Hanoi office is increasing. The office is in charge of screening local deals, but it still needs to maintain a certain level of communication with the Manila headquarters, which is rather costly. I would like to see the ADB grant greater authority to the Hanoi office.

Because Vietnam has become a middle-income state, we can no longer ask for a preferential interest rate on loans from the ADB. Public debt is costly for the government, too. From now on, we have to prioritize high-potential projects when seeking loans.

Interviewed by Nikkei staff writer Rintaro Tobita

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