The focus of the report, combined withVietnam's remarkable long-term growth potential,presents a favorable outlook, suggesting the effects of theEast Asian crisis are over. The country is committed tosocially inclusive development, and, translates a vision oftransition towards a market economy, with socialistorientation into concrete public actions, emphasizing thetransition should be pro-poor, noting this will requireinvestments in the rural, and lagging regions, and a moregradual reform implementation, than often recommended.However, challenges identified include, first, furtherprogress in economic reform - fast progress in liberalizingforeign trade, and integrating with world economy isincreasingly at odds with the slowdown of state-ownedenterprise reform. Second, poverty alleviation may beendangered - for in the absence of vigorous action,inequality is likely to increase. And, third, improving thequality of governance faces an economic inefficientmismatch, reflected by its legal framework, budgetarysystem, and administrative structures, resulting from theinherited centrally-planned economy. The report reviews theincreasing inequalities, and the need to redress imbalances,indicating that - although needed - economic reforms, tradeliberalization, and the transformation of state-ownedenterprises, may create losers, while many of the gains ofthe last decade remain fragile. The Comprehensive PovertyReduction and Growth Strategy (CPRGS) identified keydecisions that need to be made, supported by stronginter-ministerial coordination for its implementation,namely rolling out to provincial, district, and communelevels in order to better align priorities, and expendituresto the national development goals, supported by external assistance.
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