Vietnam’s shift from a centrally planned to a market economy has transformed the country from one of the poorest in the world into a lower middle-income country. Vietnam now is one of the most dynamic emerging countries in East Asia region. Read More »
Vietnam is a development success story. Political and economic reforms (Doi Moi) launched in 1986 have transformed Vietnam from one of the poorest countries in the world, with per capita income below $100, to a lower middle income country within a quarter of a century with per capita income of $1,130 by the end of 2010. The ratio of population in poverty has fallen from 58 percent in 1993 to 14.5 percent in 2008, and most indicators of welfare have improved. Vietnam has already attained five of its ten original Millennium Development Goal targets and is well on the way to attaining two more by 2015.
Vietnam has been applauded for the equity of its development, which has been better than most other countries in similar situations. The country is playing a more visible role on the regional and global stage, having successfully chaired the 2009 Annual Meetings of the Boards of Governors of the World Bank Group and the IMF, and carried out the Chairmanship of the Association of South East Asian Nations (ASEAN) in 2010.
The Eleventh Congress of the Communist Party of Vietnam in January 2011 called for a more comprehensive approach to the country's renovation, decided to promote greater citizens' participation and unity within Vietnam, and to engage proactively in international integration. The Congress re-affirmed Vietnam's approach to state-led development, but also revised key policy documents to place greater emphasis on market processes and non-state ownership of economic assets.
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 overall goal is for Vietnam to lay the foundations for a modern, industrialized society by 2020.
Over the last quarter of a century, Vietnam's politics and society have gradually evolved towards greater openness and space for civil participation. The ability of the National Assembly to perform the role of a check and balance on the executive has strengthened. Despite this progress, greater openness and opportunity for citizens to participate in governance is needed to support Vietnam's long term vision of becoming a modern industrialized society.
More recently, the conclusions of the October 2011 Communist Party Plenum recognized the need for economic restructuring and identified restructuring of public investment, of SOEs and the financial sector, as priorities for the next five years.
Aligned with the Government's overall strategic priorities and goals, the Bank’s Country Partnership Strategy (CPS) 2012 - 2016 will support Vietnam’s three breakthrough areas of promoting human resources, improving market institutions, and advancing infrastructure development.
The CPS introduces several new principles of Bank engagement in Vietnam aimed at increasing the Bank's impact: (i) sharpening strategic focus by reducing program dispersion through consolidation and greater selectivity; (ii) improving operational efficiency through the introduction of more systemic approaches, leveraging resources by strengthening policy dialogue and analytical and advisory services (AAA), through synergies with development partners, and across the World Bank Group (WBG); and (iii) accelerating implementation for more timely results.
The CPS program will support 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 will be 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 challenge for the Vietnam program is to achieve results faster. During the CPS period, the Bank and Government will work to assess underlying fiduciary systems capacity and to diversify lending instruments for faster development impact. The Bank will also continue to work jointly with the Ministry of Planning and Investment (MPI) and other donors to address systemic official development assistance (ODA) implementation issues and undertake analyses to learn from well-performing provinces and sectors. At the project level, the Bank and MPI are giving priority to improving project readiness for implementation, accelerating preparation, and managing the existing portfolio proactively. A more streamlined results framework of this CPS will serve as a management tool for the Bank's Vietnam Country Team.
Vietnam is going through a far-reaching transformation from an inward-looking planned economy to one that is globalized and market-based. The Bank’s partnership with Vietnam since 1993 has contributed to achieving notable results.
As of December 31, 2012, the Bank's portfolio in Vietnam consisted of 51 IDA/IBRD active operations, 4 stand-alone Global Environment Facility and Carbon Finance Operations and large Recipient Executed Trust Fund. Total net commitments are US$ 8,358 million, of which US$ 8,276.5 million are IDA/IBRD. The portfolio concentrates on infrastructure, including transportation and urban development, rural development, energy, water resources management, public administration reforms, finance, education, health and social services, and environment.
Vietnam received the first loan from the IBRD, the Bank’s lending arm for middle-income and poorer creditworthy countries, in 2009, which supported a program of public investment reforms. It marked a closer step of the country to reach the lower middle-income status in the following year.
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 Vietnam Rural Finance projects contributed to this trend as well as to the strengthening of several rural financial institutions. The second project financed more than 400,000 sub-projects, leveraging total investments equivalent to US$740 million and generating new sources of employment. (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.
About 80% of urban households have sanitation but currently most use septic tanks and very little waste is treated. The World Bank is supporting the development of sanitation systems in several cities, including financing some of the country's first wastewater treatment plants, including in coastal cities such as in the World Heritage site of Ha Long Bay (watch the video), and the important urban centers of Da Nang and Hai Phong. Urban sanitation remains a priority area for support in the urban sector.
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 will build on these earlier gains plus strengthen community disaster risk preparedness and pilot market linkage service initiatives.
Primary education doubled and more disadvantaged children were enrolled. 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%.
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.