Vietnam is a development success story. Political and economic reforms (Đổi Mới) launched in 1986 have transformed the country from one of the poorest in the world, with per capita income around US $100, to  lower middle income status within a quarter of a century with per capita income of around US$2,100 by the end of 2015.

Vietnam’s per capita GDP growth since 1990 has been among the fastest in the world, averaging 5.5 percent a year since 1990, and 6.4 percent per year in the 2000s. Vietnam’s economy continued to strengthen in 2015, with estimated GDP growth rate of 6.7 percent for the whole year.

Social outcomes have improved dramatically across the board. Using the US$1.90 2011 PPP line, the fraction of people living in extreme poverty dropped from more than 50 percent in the early 1990s to 3 percent today. Concerns about poverty are now focused on the 15 percent of the population who are members of ethnic minority groups, but account for more than half the poor.

Not only are incomes higher, but the Vietnamese population is better educated and has a higher life expectancy than most countries with a similar per capita income. The maternal mortality ratio has dropped below the upper-middle-income country average, while under-five mortality rate has fallen by half, to a rate slightly above that average. Access to basic infrastructure has also improved substantially. Electricity is now available to almost all households, up from less than half in 1993. Access to clean water and modern sanitation has risen from less than 50 percent of all households to more than 75 percent.

Vietnam’s 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.

In addition to the elaboration of three SEDS breakthrough areas, the five-year Socio-Economic Development Plan 2011-2015 focused on three critical restructuring areas – the banking sector, state-owned enterprises and public investment -- that are needed to achieve these objectives. The recent draft of the SEDP 2016-2020 acknowledges the slow progress of the reform priorities of the SEDP 2011-2015 and emphasizes the need to accelerate these reforms in 2016-2020 to achieve the targets set in the 10-year strategy.

Vietnam also faces an unfinished economic modernization and structural transformation agenda. Part of this relates to maximizing the gains from the ongoing structural transformations that have been a major contributor to growth since the early 2000s.

With agriculture still accounting for almost half the labor force, and with significantly lower labor productivity than in the industry and services sectors, future gains from structural transformation could be substantial. The transformation from state to private ownership of the economy is even less advanced. The state also wields too much influence in allocating land and capital, giving rise to heavy economy wide inefficiencies. So, adjusting the role of the state to support a competitive private sector–led market economy remains a major opportunity.  This will be important for enhancing productivity growth which has been stagnating for a long time.  Vietnam needs more rapid productivity growth to underpin sustained rapid growth in order to achieve its objective of reaching upper middle income status in the next few decades. 

Vietnam has boosted its international economic integration as it enters into more free trade agreements with the Eurasian Economic Union, the European Union, South Korea and the Trans-Pacific Partnership. At the same time, the ASEAN Economic Community was established on December 31, 2015, and is likely to create more opportunities for the country to integrate into regional and global economies. But while global integration has advanced well, with Vietnam embedding itself in global value chains, the benefits are constrained by the absence of linkages with domestic firms. 

Vietnam is preparing for a change in the country’s leadership, following the 12th Congress of the Vietnam Communist Party in January 2016, and with the upcoming General Elections in May 2016.

Last Updated: Apr 11, 2016

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.

Regarding the WBG’s twin goals of eliminating extreme poverty (living on less than US$1.25 per day) by 2030 and boosting shared prosperity among the poorest 40 percent 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. Thus, in Vietnam, the twin goals agenda suggests enhanced attention to four 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.
All operations are viewed through governance and gender lenses at an early stage of preparation in order 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’s 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.

The recent Vietnam Development Partnership Forum (VDPF) 2015 agreed on the need to strengthen reform efforts, competitiveness, citizens' participation, the broader inclusion agenda, the unfinished poverty agenda -- particularly relating to ethnic minorities -- and the increasing vulnerability of a growing number of people who live close to the poverty line. The 2015 VDPF also discussed the effective use and mobilization of development resources, which to some extent depend on implementing market institutions reforms. The VDFP, co-organized 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: Apr 11, 2016

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

Since the launch of Đổi Mới in 1986, Vietnam has recorded significant and historic achievements. Success from reforms raises expectations for the future, and there is a firm aspiration that by 2035, Vietnam will be a modern and industrialized nation moving toward becoming a prosperous, creative, equitable, and democratic society. Motivated by these aspirations, the Government of Vietnam and the World Bank Group jointly prepared the Vietnam 2035: Toward Prosperity, Creativity, Equity and Democracy report that gives further shape to Vietnam’s aspirations, highlights the key development challenges that remain, and outlines a series of policy recommendations to help Vietnam achieve its 2035 goals. Vietnam 2035 report recognizes six key transformations: (1) to enable economic modernization with a competitive private sector firmly in the lead; (2) to improve the country’s technological and innovative capacity; (3) to reshape urban policies and investments for more dynamic cities and urban centers; (4) to chart an environmentally sustainable development path with increasing adaptation and resilience to changing climate patterns; (5) to promote equality and inclusion among marginalized groups for the development of a harmonious middle- class society; and (6) to establish a modern rule of law state and a democratic society.

Besides advisory work, as of March 2016, the World Bank has provided almost US$21 billion in grants, credits and concessional loans to Vietnam. Vietnam's existing portfolio consists of 45 IDA/IBRD projects and trust funds operations, with total net commitments of US$8,745 billion.

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 had 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 accessed formal financial institution credit for the first time and more than half of the borrowers were women. (See video and story)

Water supply and sanitation facilities have expanded. Urban water supply has doubled in small towns to 60 percent between 2006 and 2009 and is up from 75 percent to 95 percent in cities for the same period. Rural access to clean water has seen an increase from 36 percent to 70 percent 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 percent 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 percent 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 as it makes space for the economy to grow, allow cities to move, and lift the remaining population out of poverty. (Watch the video)

95 percent 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. Of those, 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: Apr 11, 2016


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

*Amounts include IBRD and IDA commitments