Vietnam is a development success story. Political and economic reforms (Doi Moi) launched in 1986 have transformed the country from one of the poorest in the world, with per capita income around $100, to  lower middle income status within a quarter of a century with per capita income of over $2,000 by the end of 2014.

Vietnam has also made remarkable progress in reducing poverty. Using the $1.90 2011 PPP line, the fraction of people living in extreme poverty dropped from over 50% in the early 1990s to 3% today. Concerns about poverty are increasingly focused on the 15% of the population who are members of ethnic minority groups. These groups account for more than half the poor, and progress on ethnic minority poverty reduction has slowed.

Vietnam’s growth rate averaged 6.4% per year in the 2000s, but begun to slow in the wake of the global financial and economic crisis. However, driven by strengthening domestic demand, GDP has accelerated to 6.3% during the first half of 2015, the fastest first-half-of-the-year growth rate in the past five years. Vietnam has managed to improve macroeconomic stability, with the consumer price index rising only 0.6% year-on-year in August 2015, down from 4.3% a year earlier.

According to a recent report co-published by the Government of Vietnam and the United Nations in September 2015, Vietnam has completed a number of MDGs and targets such as (i) eradicate extreme poverty and hunger, (ii) achieve universal primary education, (iii) promote gender equality in education and it has achieved certain health-related indicators such as reducing the maternal mortality ratio and the child mortality ratio. The country also achieved the target for malaria and tuberculosis control as well as combating the HIV/AIDS prevalence rate and is on the way towards reaching the targets for universal access to reproductive health services and improving maternal health.

The Socio-Economic Development Strategy (SEDS) 2011-2020 gives attention to structural reforms, environmental sustainability, social equity, and emerging issues of macroeconomic stability. It defines three "breakthrough areas": (i) promoting human resources/skills development (particularly skills for modern industry and innovation), (ii) improving market institutions, and (iii) infrastructure development.

The five-year Socio-Economic Development Plan (SEDP 2011-2015) elaborated objectives for the first five years of the SEDP including high quality and sustainable economic growth, improved living standards of ethnic minority populations, strengthened environmental protection; and mitigation and prevention of the adverse impacts of climate change. In addition to the elaboration of three SEDS breakthrough areas, the SEDP 2011-2015 identified three critical restructuring areas – the banking sector, state-owned enterprises (SOEs) and public investment that are needed to achieve these objectives. However, a recent draft of the SEDP 2016-20 acknowledges the slow progress of the reform priorities of the SEDP 2011-215 and emphasizes the need to accelerate these reforms in 2016-2020 to achieve the targets set in the 10-year strategy. This draft SEDP 2016-20 also acknowledges the challenges and opportunities associated with further deepening of economic integration since almost all tariff lines will be zero by 2020 and emphasizes the proactive integration and macroeconomic stability as other important objectives of the next five years.

The Government has recently paid increasing attention to improving the business environment, with two Resolutions issued in March 2014 and March 2015, setting out concrete actions to remove obstacles to doing business in Vietnam, with a goal of achieving a business environment comparable to the average of the ASEAN-6 group.

Last Updated: Oct 5, 2015

Aligned with the Government's overall strategic priorities and goals, the Bank’s Country Partnership Strategy (CPS) 2012 - 2016 aims to support Vietnam’s three breakthrough areas of promoting human resources, improving market institutions, and advancing infrastructure development. The CPS supports implementation of Vietnam’s SEDP (2011-2015), including selected elements of Vietnam’s transition from a lower middle income country to a successful middle income country: from an agrarian economy toward one that is more urban and industrialized; from a focus on quantity to a focus on quality of production and services; and from a comparative advantage of low-cost labor, with low value added, to one with growing innovation and higher value-added production and services.

As regards the WBG’s new twin goals of eliminating extreme poverty (living on less than $1.25 per day) by 2030 and boosting shared prosperity among the poorest 40% in developing countries, Vietnam is a signature example of a country in recent times that has achieved rapid growth without a large increase in inequality. Economic growth has allowed Vietnam to achieve spectacular poverty reduction and shared prosperity over the last 25 years. Vietnam’s extreme poverty rate using the new $1.90 2011 PPP line is 3%.  However ethnic minorities, who are 15% of the population, account for half of the poor using the national poverty line and have a poverty rate of 59%. In addition Vietnam has not made as much progress on some non-income indicators including nutrition and access to clean water and sanitation. Maternal and child health and education indicators in some ethnic minority communities are also quite low. A large percentage of Vietnamese still live just above the poverty line and could fall back into poverty given rising levels of vulnerability— including from climate change impacts.

Thus, in Vietnam, the Twin Goals agenda suggests enhanced attention to 4 priority themes: (i) supporting return to strong and inclusive growth; (ii) giving more focused attention to non-income dimensions of poverty; (iii targeting communities that are getting left behind, notably ethnic minority communities; and (iv) addressing sources of vulnerability.

The CPS program supports investments and policies organized into a strategic framework of three pillars and three cross-cutting themes. The pillars are: (i) strengthening Vietnam's competitiveness in the regional and global economy, (ii) increasing the sustainability of its development, and (iii) broadening access to opportunity. Key cross-cutting themes are (i) strengthening governance, (ii) supporting gender equity, and (iii) improving resilience in the face of external economic shocks, natural hazards and the impact of climate change.

With new challenges emerging in the poverty agenda - e.g., rising inequality, urban poverty, and concentration of poverty in remote ethnic minority communities - the CPS includes a renewed commitment to poverty reduction, including better understanding of Vietnam's shifting poverty dynamics, and to new targeted poverty interventions informed by this understanding.

Governance and gender lenses are applied to all operations at an early stage of preparation to seize opportunities for strengthening support in these areas. Resilience emerges as an important theme in light of Vietnam's greater vulnerability to shocks on several fronts: external shocks at both the macroeconomic and household level, and natural hazards and climate change. The CPS supports a strengthening of Vietnam's resilience on these specific issues in the respective pillars of the framework.

The progress review of the WBG CPS conducted in 2014 showed that the strategy remained highly relevant to the country development challenges as laid out in the SEDS and SEDP and to the objectives of promoting poverty reduction and shared prosperity. Significant progress has been made on the CPS objectives and outcomes.

At the recent Vietnam Development Partnership Forum (VDPF) 2014, it was agreed that more attention will be paid to strong implementation of the legislations passed and revised recently, including Laws on Public Procurement, Enterprise, Public Investment, Education, Social Insurance, Health Insurance etc., which were aimed at both enhancing the business environment and economic development, and creating an improved social safety net for a more inclusive growth for Vietnam. The VDFP, co-organize by the Ministry of Planning and Investment and the World Bank, is a platform for high level dialogue between the Government of Vietnam and Development Partners. 

Last Updated: Oct 5, 2015

Vietnam is still transitioning to a market-based economy. The Bank’s partnership with Vietnam since 1993 has contributed to achieving notable results.

As of September 2015, the World Bank has provided more than $20 billion in grants, credits and concessional loans to Vietnam. Vietnam's existing portfolio consists of 47 IDA/IBRD operations and 4 stand-alone trust funds projects, with total net commitments of $8,313 billion. Similarly, the IFC and the MIGA programs in Vietnam have increased significantly.

Vietnam received the first loan from the IBRD, the Bank’s lending arm for middle-income and poorer creditworthy countries, in 2009, to support a program of public investment reforms. By now, IBRD has committed over 2.8 billion USD to Vietnam, helping the country advancing quicker in its development path.

Urban upgrading programs have improved the living conditions of millions of urban poor. In many cities, low-income areas faced frequent flooding and had poor sanitation, causing serious health and environmental risks. The Vietnam Urban Upgrading Project addressed those challenges in Hai Phong, Nam Dinh, Ho Chi Minh City and Can Tho, benefiting 7.5 million people. The project also provided 95,000 micro loans for households whose incomes were in the bottom 40% for home improvement and income generation. (Read the story and watch the video)

Urban sanitation remains a priority area for support in the urban sector. The Ho Chi Minh City Environmental Sanitation Project has a transformational impact on the city, directly benefitting over 1.2 million people with improved sanitation and reduced flooding while at the same time serving as a new city asset that can be enjoyed by the people of Ho Chi Minh City. (See the story and video) The Coastal Cities Environmental Sanitation Project provided drainage, wastewater collections and treatment plants as well solid waste management facilities and conducted a comprehensive capacity building program, benefiting 800,000 citizens in Dong Hoi, Quy Nhon and Nha Trang. (Read the results brief)

Forest plantations have brought strong social, environmental and economic benefits to local communities. From 2005 to 2015, more than 43,000 households in six provinces in central Vietnam have received access to micro finance and technical support to establish over 76,500 hectares of forest under the Forest Sector Development Project. The project is the first, and to date, the only one in Vietnam using the approach of lending to small-holder plantation which proves to be much more sustainable, compared to the country’s traditional approach of subsidizing plantation. (Watch the video and view slideshow)

Access to rural credit services has improved significantly. Over the past decade, a growing number of rural households gained access to credit—for farming and small business activities—for the first time. The Bank’s First and Second and the Third Rural Finance Projects contributed to this trend as well as to the strengthening of several rural financial institutions. The last two projects financed more than 535,000 sub-projects, leveraging total investments equivalent to US$1.23 billion and generating new sources of employment. More than a third of the borrowers in the Third project accessing formal financial institution credit for the first time and more than half of the borrowers are women. (See video and story)

Water supply and sanitation facilities have expanded. Urban water supply has doubled in small towns to 60% between 2006 and 2009 and is up from 75% to 95% in cities for the same period. Rural access to clean water has seen an increase from 36% to 70% between 1999 and 2009. The World Bank has helped to support this development through investments in rural water and sanitation in the Red River Delta Region and through innovative programs such as the Global Output-Based Aid funded project in partnership with the East Meets West Foundation. Between 2005 and 2013, the Red River Delta Rural Water Supply and Sanitation Project provided access to clean water for nearly 1.3 million people in four provinces through community-based approaches. Households received access to low-interest loans to build or rehabilitate more than 48,000 hygienic toilets and sanitation facilities, increasing the percentage of households with hygienic toilets from 25 percent to 87 percent. (See the video and story)

Disaster early-warning and forecasting capacity and integrated disaster risk management has been improved. Implemented in 12 provinces, the Disaster Risk Management Project helped constructed 11 major flood and storm mitigation infrastructure, such as safe harbor, river dykes, evacuation roads, drainage pumping stations. More than 210,000 villagers in 30 communes implemented structural measures, including multi-purpose evacuation centers and drainage canals, along with non-structural measures, such as the development of Safer Commune Plans and evacuation drills. (View the story and photo slideshow)

Electricity now reaches 95% of the population. Every day for the past ten years, 9,000 people have been connected to the grid for the first time in Vietnam. The country doubled its power generation capacity from 12,000 MW in 2005 to 25,000 MW in 2010. Under the Second Rural Energy Project, over 2.7 million people in some of the poorest parts of Vietnam gained access to electricity as 555,327 households were connected to the national grid. (Watch the video)

Over 90% of the population is now connected by all-weather roads. Working in 33 provinces, the Third Rural Transport project is reaching some of the most difficult mountainous regions of Northern Vietnam, linking poor and marginalized communities to better markets and services. Averaging 4.5% of GDP investment, Vietnam is the leading investor in Asia in its roads infrastructure to make space for the economy to grow, allow cities to move, and lift the remaining population out of poverty. (Watch the video)

95% of motorcycle riders now wear a helmet. With 6.5 fatalities per 10,000 vehicles/year, over six times those in Japan, accidents on Vietnam’s roads are a major contributing factor to a national injury crisis. Addressing one of the highest accident rates in the world, the Vietnam Road Safety Project is working to bring health, education, police, and highway agencies together to save lives.

Improving living standards in remote mountainous areas. Under the first Northern Mountains Poverty Reduction Project, 353,871 households have benefitted from improved health care, and over 118,000 households have access to clean water, significantly improving the health of local people. A follow-on project has built on these earlier gains plus strengthen community disaster risk preparedness and pilot market linkage service initiatives. Participating households’ income has increased 10% and higher than the average of those in other communes outside of the project areas. Almost 80% of common-interest farming groups claimed to have better access to market information and reach higher productivity. (See the story and video)

Primary school enrollment reached 99 percent of eligible children and school attendance ratios for boys and girls have largely been equalized. The proportion of primary students in full day programs doubled from 25% in 2005 to 50% nationwide. Children in disadvantaged districts increased enrollment to 94% (compared to 97% nationally) while girls enrollment in secondary school now exceeds boys at 78% to 77%. Personalized lessons brought a more hands-on approach to learning for ethnic minority students in 49 primary schools. The New School model, which used innovative teaching and learning practices in the classroom, have been piloted in 1,447 primary schools in all 63 provinces. After three years’ of project implementation, another 2,000 primary schools have volunteered to apply this model. (See the video and story)

Health conditions and access to health services have been improved. Thanks to the Mekong Regional Health Support Project, an estimated 16 million people in the Mekong Delta region are benefiting from improved health services and facilities. From this number, 2.5 million people also have better access to health insurance. About 10,000 health workers have received health-related courses and additional training to meet the region’s demands. The HIV/AIDS Prevention Project has significantly contributed to keeping Vietnam’s HIV/AIDS prevalence rate below 0.3 per cent of its population. (Watch the video)

Higher education institutions enjoy greater autonomy and hold greater accountability. A series of three development operations supported the formulation of a new legal framework which provides greater level of autonomy to higher education institutions and increase their accountability, such as deciding number of students, deciding training content and opening new programs, staff recruitment and retention, disclosing annual reports on financing, staffing and learning outcomes, among others. (Read the results brief)

Women rights to land titles increased. Following the success of two World Bank-supported pilot projects in the early 2000s, the government passed a Land Law making it mandatory for all land titles to be issued jointly in the names of husbands and wives (watch the video). The Bank-supported Vietnam Land Administration Project aims to issue some 5 million (jointly held) land titles by 2013.

Last Updated: Oct 5, 2015


Vietnam: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments