Vietnam’s initiative on Pacific Rim disasters

08:16 | 12/03/2017 Finance - Banking

(VEN) - Vietnam, as the host of APEC 2017, proposed a disaster risk financing and insurance initiative as an element of regional financial cooperation. The proposal has won the support of the 21 member economies of the Asia-Pacific Economic Cooperation forum.  

vietnams initiative on pacific rim disasters

Financial policies should be focused on preventing and minimizing natural disaster risks

Asia-Pacific is the region most vulnerable to natural hazards in the world. Statistics show that since 2005, this region had faced nearly 2,000 natural disasters, or more than 40 percent of those worldwide, which caused over 500,000 human deaths and affected more than 1.4 billion people, leading to material losses totaling about US$520 billion. Vietnam is one of the countries that have suffered heavy impacts of natural disasters, ranking third in the region and 22nd worldwide. Natural disasters caused about 750 human deaths and economic losses equivalent to nearly one percent of Vietnam’s gross domestic product each year.

In the opinion of Nguyen Viet Loi, Director of the National Institute for Finance under the Ministry of Finance, financial measures play a very important role in preventing and mitigating natural disaster risks. APEC economies need to cooperate to set up and develop suitable financial systems which can help them effectively manage natural disaster risks. Improved disaster risk insurance measures will help reduce the burden on the state budget and contribute to enhancing the awareness of natural disaster risks in order to prepare effective plans to prevent and cope with disasters.

Sharing this opinion, Alwaleed Alatabani, Lead Financial Sector Specialist at the World Bank in Vietnam, advised countries to adopt specific financial strategies to cope with natural disasters using state budgets and other financial sources. Disaster risk insurance policies will serve as effective tools and therefore should be disseminated among state authorities and people.

To develop the disaster risk insurance market, APEC economies need to enhance the quality of infrastructure and build risk modeling capacity to assess the possibility and seriousness of damage. At the same time, they should adopt financial strategies to cope with natural disasters at a national as well as local level. To ensure effective enforcement of disaster risk financing and insurance policies, along with promoting institutional improvement, it is necessary to set up comprehensive database systems catering for the management of public assets and disaster risk insurance.

APEC Finance Ministers will meet this October to discuss directions for developing the disaster risk financing and insurance initiative. The ministers will focus their discussions on action plans and programs for training, experience sharing, and exchange of experts among APEC member economies, as well as technical assistance from international organizations for the implementation of this initiative.

The disaster risk financing and insurance initiative recognizes the vital necessity for suitable financial strategies and policies

to help APEC countries cope with natural disasters in an effective manner.

Lan Ngoc