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WB Ready to Help Vietnam Meet Growing Infrastructure Demands

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With a 7.1 percent growth rate in 2018, Vietnam’s fast-paced economic development is boosting demand for infrastructure, the World Bank Vice President for Infrastructure Makhtar Diop said today, during his first visit to the country. According to World Bank estimates, Vietnam’s sustainable infrastructure needs will require investments of up to US$25 billion per year.

Currently, about two-thirds of Vietnam’s infrastructure spending come from public resources. Diop emphasized that financing needs of the magnitude faced by the country now cannot be borne by the public sector alone. Increasing efficiency in public investments and establishing the right conditions to crowd in private financing in infrastructure development are important parts of the solution to infrastructure development.

During his three-day visit, Diop had fruitful discussions with leaders of the central government, cabinet members, the National Assembly, and local governments. During his meeting with Prime Minister Nguyen Xuan Phuc, Diop congratulated Vietnam for the country’s rapid growth while maintaining broad equity and urged the Government to share its development success stories with other peer developing countries that are facing similar challenges. 

At the same time, he expressed the World Bank Group’s continued commitment and willingness to support Vietnam’s infrastructure development agenda. He indicated that the WBG could contribute relevant global knowledge and expertise and emphasized that current favourable economic conditions would offer an opportunity to deepen reforms.

According to Diop, strong and quality investments in infrastructure will be key to sustain Vietnam’s economic growth in the medium and long terms. He praised the efforts to plan and prioritize national backbone infrastructure systems, including express ways, railways, and inland waterways; as well as sub-national infrastructure in key areas such as urban transport/mobility and waste water treatment; and regional integrated infrastructure that promotes economic development as well as address emerging challenges such as climate change.

The World Bank official also stated the Bank would stand ready to provide financing and technical support, as well as assist in mobilizing private sector resources, to help Vietnam develop its critical infrastructure. As part of the “Maximizing Finance for Development” approach, the Bank has been supporting the Government of Vietnam to create a well-functioning and enabling environment to attract private sector participation. This includes developing a strong Public-Private Partnership regulatory framework and a solid domestic financial sector that also ensures efficient operation of State Owned Enterprises as a crucial part of the infrastructure agenda.

As part of the trip, Diop met with Hanoi leaders to discuss the City’s infrastructure development needs, particularly urban transport and mobility. He also visited the port city of Haiphong to examine key infrastructure facilities, and witnessed development results brought about by the ongoing World Bank financed Haiphong Urban Transport Development Project, which helped improve urban accessibility and strengthen capacity for urban transport management and planning. He visited the manufacturing site of Vinfast – maker of Vietnam’s first automobile and e-scooter, and Lach Huyen International Gateway Port.

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From Relief to Recovery: PNG’s Economy in the Time of COVID-19

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Papua New Guinea’s economy has been hit hard by the COVID-19 crisis due to weaker demand and less favorable terms of trade, according to the latest World Bank economic update for the country.

From Relief to Recovery, the World Bank’s Economic Update for Papua New Guinea for July 2020 projects that the country will experience an economic contraction in 2020, with pandemic-related global and national movement restrictions weakening external and domestic demand and affecting commodity prices. These impacts are also expected to lead to wider financing gaps for the government and the central bank, and higher unemployment and poverty than previously anticipated in early 2020.

It is estimated that PNG’s real GDP will shrink by 1.3 percent in 2020, the current account surplus will narrow to about 15 percent of GDP, and the fiscal deficit will reach 6.4 percent of GDP.

In response to the COVID-19 crisis, the PNG government has mobilized domestic resources and is engaging development partners and the private sector for additional support for the people and the economy of PNG.

“The World Bank welcomes the swift actions by the PNG authorities to manage the COVID-19 shock by protecting the lives of the people of PNG and supporting livelihoods of vulnerable households and small businesses,” said Michel Kerf, World Bank Country Director for Papua New Guinea and the Pacific. “While the focus of the authorities is currently on crisis mitigation, it is important to also look beyond the current year to a more robust and resilient recovery over the medium term.”

The report emphasizes that a COVID-19-related revenue shortfall, increased emergency health spending and an economic support package have created an unanticipated fiscal gap of over US$400 million (1.8 percent of GDP) in 2020. The capital budget is expected to be hit harder than the recurrent budget and the government will have to trim non-essential spending.

In addition to the economic analysis, the report contains an additional section dedicated to physical infrastructure development in PNG.

The section recommends that the government’s pre-COVID-19 infrastructure investment plans should be amended amid the current crisis, which may result in the government having to resume its “Connect PNG” infrastructure development program once the pandemic is over while keeping the overall fiscal framework under control.

It also highlights the importance of more equitable access to quality infrastructure once the country moves to the recovery and resilience phase of COVID-19 response as well as the need to improve the balance between infrastructure investment and maintenance with greater emphasis needed on the latter.

The report concludes that PNG can significantly improve its infrastructure situation by strengthening policy design, investment planning, and coordination among agencies and with development partners. However, it will be vital for the government to set the stage for more sustainable and inclusive development by strengthening macroeconomic management and accelerating structural reforms while protecting the vulnerable.

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Deloitte: Energy Management – Paused by Pandemic, but Poised to Prevail

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Since Deloitte began conducting its annual survey tracking clean energy attitudes and actions a decade ago, the percentage of residential consumers concerned about climate change and personal carbon footprints has risen steadily from about half to a consistent 68%, putting increasing pressure on businesses to do more. The year 2020 appeared to be the tipping point, but when COVID-19 hit, many questioned whether the momentum had been derailed as companies focused on survival.

Deloitte’s 2020 Resources Study, “Energy Management: Paused by Pandemic, but Poised to Prevail,” found that despite the pandemic — and maybe in part because of it — progress in efforts to manage energy use, reduce carbon emissions and address climate change will likely continue and even potentially accelerate in the longer term. The study is based on survey data collected from 1,531 residential consumers and 602 business decision-makers.

Consumer concern about climate change is rising, but looking to others to solve
Consumer sentiment about climate change has steadily increased over the past decade. Sixty-eight percent of residential consumers surveyed said they were “extremely or very concerned” about climate change and their personal carbon footprint and 65% said they saw greater renewable energy development as boosting the national economy, the highest level since 2014. While the benefits of clean energy are clear, most consumers (80%) surveyed expect others, such as the government and corporations, to address climate change issues. And about a third of respondents expect action from their employers.

Millennials are a driving force for corporate sustainability
Further emphasizing the corporate role, more than a third of respondents who identified as full- or part-time employees, students and/or job seekers said it’s extremely or very important to work for a company with sustainability and/or climate-risk goals, and this sentiment rose to nearly 50% among millennials. “Employee motivations” has consistently been one of the top three drivers of corporate energy management programs, selected by at least a quarter of business respondents each year. But in 2020, that rose to a third, the highest level ever in our surveys. Employees are becoming more vocal about climate change, and this may be due to the growing influence of millennials in the workplace.

Businesses are feeling increasing stakeholder pressure to address climate risk
In line with rising consumer sentiment, nearly 60% of businesses surveyed feel increased pressure from stakeholders to develop and disclose plans to demonstrate how they’re addressing climate risk. The stakeholders seen as most active are employees (49%), followed by board members (42%), customers (41%) and shareholders (37%). Of those businesses feeling increased pressure, nearly 90% have reviewed or changed their climate-risk disclosure procedures and developed plans to address climate-related risks.

Importantly, although businesses are feeling pressure, they also increasingly see procuring clean energy as doing the “right thing.” In fact, 75% of those surveyed said recent global climate change reports have caused them to focus more on energy management. And almost 90% of respondents now see energy procurement as “not simply a cost to the company, but an opportunity to reduce risk, improve resilience, and create new value.”

Convergence of cost and clean means more green
Over the past 10 years, the “cost” versus “clean” motivations for utilizing cleaner energy resources have been steadily converging as renewable energy costs have declined. This greater affordability is allowing businesses and residential consumers to prioritize clean energy without making bottom-line sacrifices.

Businesses are procuring more renewables through more channels:

  • Sixty-three percent of businesses surveyed have increased emission reduction goals.
  • Three-quarters of business respondents said customers are asking them to procure renewable energy.
  • More than half (51%) of businesses said they’re working to procure more electricity from renewables.
  • Of the 60% of businesses citing having onsite generation, the highest share of electricity supply was generated with cogeneration (15%) and renewables (13%).
  • Microgrids also appear to be growing in popularity with 44% of business respondents saying they’ve considered a microgrid, a spike of 9 points over 2019.

Residential consumers still cost-conscious but putting environment first:

  • For the first time in five years, “utilizing clean energy sources to be better stewards of the environment” was cited ahead of “keeping my total energy bills affordable” as one of the top three most important energy issues to residential consumers.
  • More than half (53%) of respondents said it’s “extremely” or “very” important that part of their electricity supply comes from renewable energy.
  • Thirty-two percent of respondents said they were “very” or “extremely” interested in installing solar panels and 51% of those who don’t already have them on their primary residence, expressed interest if combined with battery storage.
  • Among respondents who had already installed rooftop solar, “clean” beat out saving money for the first time as the primary motivator.
  • Renewables are gaining ground as a reason for respondents to switch providers versus lower electricity costs as renewables rose 3 points in 2020 to take second place from “better service,” while “lower electricity costs” stayed steady in first place.

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ADB, IEA Renew Agreement to Collaborate on Energy Sector Sustainability and Resilience

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The Asian Development Bank (ADB) has renewed a memorandum of understanding (MOU) with the International Energy Agency (IEA) to scale up collaboration and advance progress on sustainability with increased focus on energy sector resilience in Asia and the Pacific.

“The energy sector is a key driver of growth and human development, especially during recovery from the impacts of the coronavirus disease (COVID-19) pandemic,” said ADB President Masatsugu Asakawa. “We are pleased to renew our agreement with IEA, which builds on our successful collaboration to date, and we look forward to advancing our shared objective of achieving a more sustainable and resilient energy future in Asia and the Pacific.”

Under the 3-year agreement, the two organizations will share knowledge and best practice in energy sector data and analysis, on-the-ground engagement, capacity building, technology, and innovation, among other areas. This will help to overcome critical knowledge and experience gaps blocking the development of sustainable energy systems in ADB’s developing member countries and enhance IEA’s data collection and capacity building efforts in Asia and the Pacific.

ADB first signed a 3-year MOU with IEA in March 2017 to facilitate knowledge and analytical work to advance clean energy development in ADB’s developing member countries. As part of this, ADB worked with IEA to study power system flexibility in India to integrate more solar and wind energy in the grids.

The renewal agreement was signed on the occasion of IEA’s Clean Energy Transitions Summit, where Mr. Asakawa gave a speech at the plenary session to an audience of over 50 energy ministers and energy sector leaders. Last month, IEA Executive Director Fatih Birol delivered the keynote address at ADB’s 15th Asia Clean Energy Forum 2020. IEA is a knowledge partner of ADB’s leading annual energy forum.

ADB invested more than $23 billion in clean energy, including both sovereign and nonsovereign initiatives from 2008 to 2019. Last year, ADB’s climate financing reached a record $6.56 billion, meeting its target of doubling its annual climate investments from 2014 one year ahead of schedule.

Under Strategy 2030, ADB is targeting $80 billion in cumulative climate financing from its own resources by 2030 and for at least 75% of its country operations to feature climate adaptation and mitigation initiatives.

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