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  • World Bank okays $86 mln for energy efficiency in Vietnam

    World Bank okays $86 mln for energy efficiency in Vietnam

    The World Bank will provide Vietnam with $86.3 million to support the development of a commercial financing market for investing in industrial energy efficiency.

    The provision includes a $8.3 million grant used to build private sector capacity to execute energy efficiency projects, the bank said in a statement.

    It will also provide technical assistance to the Ministry of Industry and Trade and relevant authorities to strengthen policy frameworks on energy efficiency.

    The remaining amount will be used to establish a risk-sharing facility to provide credit guarantees to support local banks in providing loans for energy efficiency projects.

    By reducing lending risks, the facility is expected to mobilize around $250 million of commercial financing to be provided to industrial enterprises and energy service companies at competitive terms and with low collateral requirements.

    “Scaling up energy efficiency is the single best and lowest cost option to achieve multiple goals at once: meeting energy demand, preventing pollution and reducing greenhouses emission while also increasing industry competitiveness,” said World Bank country director for Vietnam, Carolyn Turk.

    The World Bank estimates that Vietnam could save up to 11 gigawatts of new generation capacity by 2030 if comprehensive demand-side energy efficiency investments are carried out.

    The energy efficiency investment need for key industries in Vietnam has been estimated at around $3.6 billion.

  • Vietnam labor costs highest among ASEAN comparators

    Vietnam labor costs highest among ASEAN comparators

    Vietnam’s labor cost is the highest among comparator countries in Southeast Asia, a World Bank report says.

    In a report on enhancing enterprise competitiveness and enhancing small and medium-sized enterprise (SME) linkages, it says Vietnam’s labor costs are higher than in comparable Southeast Asian peers.

    It defines labor costs for each firm as the cost of all payments to all workers divided by the number of workers.

    It says wage costs about $2,739 per worker for the median Vietnamese firm, about twice as high as in Laos, Myanmar and Malaysia, and about 30 to 45 percent higher than in Cambodia, Thailand and the Philippines.

    While Vietnam’s labor costs are higher than in the rest of the region, they seem in line with productivity levels and thus do not seem to be a major obstacle to competitiveness, the report says.

    The average manufacturing firm in Vietnam produces about $10,500 worth of value-added per worker per year, higher than in most countries in Southeast Asia. It is around $10,000 in Malaysia, and $5,000 in Cambodia.

    Vietnam’s relatively high value appears to be partly driven by high and growing use of capital, the report says.

    The report also breaks down labor productivity in the country by region. The north-central and central coastal regions of Vietnam have the highest productivity — of almost $16,000 value addition per worker — while the southeast comes in second at $14,000.

    The Red River Delta region has a productivity of only $7,000, and it is even lower in the Mekong River Delta at around $6,000.

    It also said that foreign-owned firms are generally more productive than domestic firms, which can be explained by their easier access to technology and finance through their parent companies.

    The World Bank report also says that capital productivity is low in Vietnam. The ratio of sales to value capital in Vietnam is around 160 percent, lower than in any of its peers in Southeast Asia. The bank’s data confirms that capital might not be used very efficiently in Vietnam.