After decades of preferential treatment, incentives, and subsidies, state-owned enterprises (SOEs) in Viet Nam failed to compete effectively, and their financial problems created significant fiscal risks. Having virtually no access to private capital markets, general corporations had relied on extensive borrowing from the government and state-owned commercial banks to finance their operations.
By implementing market-oriented reforms, Viet Nam achieved robust economic growth over an extended period. As a result, the country advanced from a narrow inward-looking economy to a rapidly growing lower-middle-income economy. In 2011, when the project was designed, it was entering a new phase in which past gains were to be consolidated and new challenges were to be addressed.