Responding to and overcoming financial losses due to natural disasters

Dr. Le Thi Thuy Van - Deputy Director of the Institute of Strategy and Financial Policy delivered the opening speech at the Workshop.

Speaking at the opening of the workshop, Dr. Le Thi Thuy Van - Deputy Director of the Institute of Strategy and Financial Policy said that the current climate change situation has caused worrying phenomena in climate and weather, including saline intrusion, drought, high tides, etc., along with great damage and loss, which has significantly affected the economy in general and people's lives in particular. It is estimated that each year, Vietnam suffers losses from natural disasters of about 1.5 - 2% of GDP.

To overcome the consequences of natural disasters, Vietnam has been mobilizing financial resources mainly through support policies from the State budget, the Finance Committee, resources from the Natural Disaster Risk Prevention Fund and from organizations, individuals and insurance forms... It can be seen that mobilizing such financial resources can support in responding to and overcoming natural disaster damage by about 30%. At the same time, with limited budget resources, the development of financial and budget plans needs to be more proactive and long-term oriented. It is forecasted that by 2030, the total damage caused by natural disasters will cause damage to Vietnam's average GDP by about 3%. Therefore, the Workshop was organized to assess the impact of natural disasters and propose disaster prevention measures to minimize the risk of financial loss in Vietnam.

Mr. Nguyen Xuan Tung - Department of Dyke Management and Disaster Prevention, General Department of Disaster Prevention presented a paper.

In the presentations at the Workshop, Mr. Nguyen Xuan Tung - Department of Dyke Management and Natural Disaster Prevention, General Department of Natural Disaster Prevention presented the situation of damage caused by natural disasters in Vietnam, in which natural disasters such as storms, heavy rains, flash floods, floods and landslides, land subsidence due to drought have caused about 300 deaths and missing people/year, economic losses of 1 - 1.5% of GDP calculated over the years from 2017 - 2022. In particular, the phenomenon of storm Molave (storm No. 9) making landfall in Quang Ngai in 2020 caused 88,591 houses to have their roofs blown off, more than 2,500 houses to collapse and the total estimated damage was up to 10,000 billion VND.

Due to the increasingly extreme and unusual impacts of natural disasters, exceeding records nationwide, lasting throughout the year, affecting all areas of economic and social life, Mr. Xuan Tung has made a number of recommendations on solutions in institutions and policies such as the need to integrate disaster prevention and control into socio-economic development planning and plans; organize implementation, combine multiple objectives, especially the use and mobilization of financial resources. Thereby, resources to overcome the consequences of natural disasters need the participation of State management agencies; local resources and also need investment and support from international organizations, domestic and foreign enterprises. At the same time, to rebuild damaged infrastructure for people, it is necessary to meet about 15 - 30% of actual needs.

MSc. Luu Anh Nguyet - Institute of Strategy and Financial Policy presented a paper

In the financial resources for responding to and overcoming financial losses caused by natural disasters, MSc. Luu Anh Nguyet - Institute of Strategy and Financial Policy said that the resources from the State budget mainly come from the Budget Reserve, Financial Reserve Fund, State Reserve Source, only enough to support natural disaster prevention in the form of expenditures, subsidies are still low, not enough to insure natural disaster risks and there is no strategy/risk management model, leading to the fact that the State budget only meets about 25 - 35% of the need to overcome the total damage caused by natural disasters every year.

Therefore, in order to build a comprehensive strategy for financial response and disaster risk reduction, MSc. Anh Nguyet proposed to focus on developing proactive financial resources and promoting investment from the international capital market through financial resources funded before and after natural disasters, thereby increasing the efficiency of state budget spending, and building many models and preferential policies (credit, tax, insurance costs); Adding more revenue to the extra-budgetary financial fund and disaster bond credit, etc. to support affected subjects to stabilize production, build flood-proof houses, build residential clusters and routes and houses for people.

Dr. Nguyen Thi Hai Duong - Lecturer of National Economics University presented on building natural disaster risk insurance in Vietnam

Regarding the development of natural disaster risk insurance in Vietnam, Dr. Nguyen Thi Hai Duong - Lecturer at the National Economics University made recommendations on natural disaster risk insurance through Agricultural Insurance for agricultural production activities and support policies for some groups of subjects provided with insurance products for industrial crops and fruit trees; Property insurance; Microinsurance according to the Law on Insurance Business amended and supplemented in 2022 (Decree 21/2023/ND-CP: Regulations on microinsurance) should be implemented to ensure people's rights when natural disasters occur.

In addition, Dr. Hai Duong also shared international experiences on disaster risk insurance that can be applied in Vietnam. In Indonesia, the World Bank has worked closely with the Indonesian Government to develop and implement the National Disaster Risk Financing and Insurance Strategy (DRIF), which insures government assets against disaster risks.

It can be seen that in order to build natural disaster risk insurance in Vietnam, there needs to be a strong commitment from the political system, to build a database on risks and losses and a model for dealing with natural disasters; to encourage the development of risk insurance products (risk index, compensation insurance) and to find reinsurers and the cooperation of international organizations in technical activities to build a model for dealing with natural disasters.

During the workshop, many presentations and contributions, building plans to overcome losses caused by natural disasters came from researchers, experts in agencies, the Institute of Strategy and Policy, Institute of Meteorology, Hydrology and Climate Change,...

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