The government said that while it had hoped to manage the games when the country competed for the honor, the continuing impact of the global recession of 2008 has made it impossible.
Vietnam is ranked as one of the poorer countries of the world, 132 out of 184 countries on a descending scale of wealth, one notch below Uzbekistan and one above Moldova.
“Impacts from the global financial crisis and economic downturn are still on the national economy. The country’s socio-economic situation remains in difficulties,” said a statement attributed to Prime Minister Nguyen Tan Dung on the official government Web site. “The State budget is limited and prioritized for other urgent projects.”
It was not immediately clear which country would take over from Hanoi as host of the 18th Asian Games.
“We’ve only heard about it and we are waiting for a formal communication from the Vietnam Olympic Committee,” Randhir Singh, secretary general of the Kuwait-based Olympic Council of Asia, told Reuters.
According to Reuters, Dung held a crisis meeting with top officials on Thursday and concluded it was better to opt out now, because poor preparation could damage Vietnam’s reputation.
“Hosting and successfully organising regional and international sports events will contribute to socio-economic development, promoting the country’s images and increasing its position. However, if fails to do so, the effects will be reversed,” said the government statement.
Economists’ estimates for the cost of Vietnam hosting the Games have varied from $150 million to as high as $500 million.
Hanoi, the Vietnamese capital, was awarded the Games in November 2012, ahead of the Indonesian city Surabaya. Incheon in South Korea will host the event this year.
Vietnam’s gross domestic product is about $155 billion. The export-oriented economy was indeed hit hard by the recession, but growth has slowly returned.
The Asian Games, which was held for the first time in 1951, typically features about 40 sports and is attended by athletes from 45 countries.