Overview

Vietnam’s development record over the past 30 years is remarkable. Economic and political reforms under Đổi Mới, launched in 1986, have spurred rapid economic growth and development and transformed Vietnam from one of the world’s poorest nations to a lower middle-income country.

Vietnam has enjoyed strong economic growth. Since 1990, Vietnam’s GDP per capita growth has been among the fastest in the world, averaging 6.4 percent a year in the 2000s. Despite uncertainties in the global environment, Vietnam’s economy remains resilient. The country’s medium-term outlook remains favorable, with GDP expanding by 6 percent in 2016, while the country’s fundamental drivers of growth – resilient domestic demand and export oriented manufacturing – remain in force.  

Growth has been equitable—with a dramatic reduction in poverty—and social outcomes have improved significantly. In 1993, over half of the population lived on less than $1.90-a-day. Today, the rate of such extreme poverty has fallen to 3 percent. The proportion of the population living below the national poverty line (GSO-WB Poverty line) reached 13.5 percent in 2014—down from close to 60 percent in 1993. More than 40 million people escaped poverty over the course of two decades.

Vietnam has made significant advances in the provision of basic services. The Vietnamese population today is more educated and healthier than twenty years ago—and these advances are enjoyed across society. Learning outcomes are high, including in primary school. Infant and under-five mortality rates have been significantly reduced in the last twenty years, down to 19 and 24 mortalities per thousand births in 2012, respectively. Stunting also significantly decreased, from 61 percent in 1993 to 23 percent in 2012. Life expectancy at birth is now 76 years, an improvement from 71 years in 1993.

Access to basic infrastructure has also improved substantially. Significant progress were charted from 1993 to 2012. For example, at least 99 percent of the population now use electricity as their main source of lighting compared to 14 percent more than twenty years ago. More than 67 percent of the rural population now enjoy access to sanitation facilities, and more than 61 percent have access to clean water, compared to only 36 percent and 17 percent, respectively, two decades earlier.  

Yet development challenges and limitations remain for Vietnam. Poverty gains are fragile and a significant portion of the population, particularly in rural areas and among ethnic minorities, is vulnerable to falling back into poverty.

The contribution of productivity growth – the main driver of GDP expansion in the 1990s – has declined over the last ten years. As the growth of the labor force slows, the growth of labor productivity will not likely deliver the growth rates Vietnam aspires to achieve.

At the same time, while broad macroeconomic stability remains, some vulnerabilities, including fiscal imbalances and unresolved asset quality problems in the banking sector, require attention. A stronger domestic private sector can also serve as an engine for growth, as would accelerated reforms in the SOE sector.

Urbanization can fuel higher growth, but achieving urban agglomeration requires an update of the current urbanization model. Significant investments over recent decades have made headway, but more productive infrastructure, particularly in energy, transport, water, sanitation, and telecommunication, are needed. Continued modernization of the agriculture sector is also key, as agriculture will remain an important driver for growth and poverty reduction in Vietnam for years to come.

The Government of Vietnam continues to show commitment to reforms. Vietnam’s 2011 – 2020 Socio-Economic Development Strategy (SEDS) – a 10 year strategy – highlights the need for structural reforms, environmental sustainability, social equity and emerging issues of macroeconomic stability. It defines three "breakthrough areas": (i) promoting skills development, particularly for modern industry and innovation; (ii) improving market institutions, and (iii) further infrastructure development. The Socio-Economic Development Plan (SEDP) for 2016-2020, approved in April 2016, acknowledges the slow progress on certain policy priorities and emphasizes the need to accelerate reforms. 

Last Updated: Apr 13, 2017

The forthcoming World Bank Group (WBG) Country Partnership Framework (CPF) will guide WBG engagements in Vietnam during the period from FY18 – FY22. Reflecting priorities expressed in the WBG 2016 Systematic Country Diagnostic (SCD), the Vietnam 2035 Report, and the government of Vietnam’s (GoV) 2016 - 2020 Socio-Economic Development Plan (SEDP), the new CPF will have three focus areas:

  • Enable inclusive growth and private sector participation;
  • Invest in people and knowledge; and
  • Ensure environmental sustainability and resilience.

Building on the World Bank Group’s continued strong engagements in Vietnam, the forthcoming CPF will introduce a number of strategic shifts, in order to respond to emerging transitions, challenges and opportunities linked to the country’s development process as well as the government’s priorities. Proposed strategic shifts in WBG engagement over the new CPF period include:

  • Comprehensive engagement to strengthen private sector development and participation across sectors;
  • Support to achieve the financial sustainability of public services;
  • Support to further poverty reduction amongst ethnic minorities, through income generating activities;
  • Multi-sector engagements to strengthen linkages between education and the labor force; and
  • Support to the promotion of low-carbon energy generation.

WBG engagement in Vietnam supports the WBG twin goals of eliminating extreme poverty and boosting shared prosperity. Vietnam is a signature example of a country that has achieved rapid growth without a large increase in inequality.

With the Vietnam Systematic Country Diagnostic 2016 (SCD) – a report that serves as the analytical underpinning for defining WBG engagements in Vietnam over the next five years – strategic priorities that would support Vietnam in eliminating poverty and boosting shared prosperity have been identified. Entitled Sustaining Success – Priorities for Inclusive and Sustainable Growth, the report highlights the achievements and challenges in sustaining inclusive growth and job creation, inclusive service delivery, and sustainable management of natural resources.

The diagnostic also reflects on Vietnam’s aspiration to become a modern and industrialized nation by the year 2035. These aspirations were the driving force behind Vietnam 2035: Toward Prosperity, Creativity, Equity and DemocracyThe report, jointly prepared by the Government of Vietnam and the World Bank Group, gives further shape to Vietnam’s goals, highlighting key remaining development challenges and outlining policy recommendations that would help achieve the 2035 goals.

Six critical transformations for further development were identified by the Vietnam 2035 report. First, economic modernization with a competitive private sector firmly in the lead, followed by improved technological and innovative capacity. A reshaping of urban policies and investments for more dynamic cities and urban centers is another potentially key transformation, as is the charting of an environmentally sustainable development path with increasing adaptation and resilience to changing climate patterns. The remaining key transformations are the promotion of equality and inclusion among marginalized groups as part of the development of a harmonious middle-class society, and the establishment of a modern rule of law state and a democratic society.

Last Updated: Apr 13, 2017

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

As of March 2017, the World Bank has provided $22.5 billion in grants, credits and concessional loans to Vietnam. Vietnam's existing portfolio consists of 50 IDA/IBRD operations and four stand-alone trust funds projects, with total net commitments of almost $9.5 billion.

Vietnam received the first loan from the IBRD, the Bank’s lending arm for middle-income countries, in 2009, to support a program of public investment reforms. Today, IBRD has committed more than $3.3 billion to Vietnam, helping the country advance more quickly on its development path.

With World Bank funding and expertise, in just 4 years Vietnam has expanded access to full-day preschool to 84 percent of five-year-old children – up from 66 percent in 2011. The quality of preschool instruction improved through the provision of professional development for a large number of Early Childhood Education (ECE) teachers and managers. More than 2,000 core teachers were trained to improve the capacity of some 250,000 ECE teachers to adopt a child-centered learning approach. (Read the result brief here)

Vietnam is pursuing reforms and investments that aim to promote green growth and address its high vulnerability to climate change, and has taken decisive steps since signing the Paris Agreement. This partnership is critical for achieving the targets of Vietnam’s Nationally Determined Contribution, by mobilizing resources, providing technical assistance and supporting policy change (Read the feature story and slideshow here).

Strengthening laws and policies addressing prevalent forms of conflict of interest – such as gift taking, nepotism and using insider information for personal gain – can improve the integrity and efficiency of the public. A recent joint report by the Government of Vietnam and the World Bank, and supported by the UK Government, offers insight into policy reforms that would address conflicts of interest, including reforms of legislation. (Read the story and download the report here)

Urban upgrading programs have improved the living conditions of millions of urban poor. In many cities, low-income areas suffer from frequent flooding and poor sanitation, posing serious health and environmental risks. The Vietnam Urban Upgrading Project, active in Hai Phong, Nam Dinh, Ho Chi Minh City and Can Tho, address these challenges. Benefiting some 7.5 million people, the project provided 95,000 micro credit lines for home improvement and income generation to families whose incomes were in the bottom 40 percent. (Read the story and watch the video)

Urban sanitation remains an important challenge in many cities. The Ho Chi Minh City Environmental Sanitation Project, which directly benefits more than 1.2 million people, has helped transform the city by improving sanitation and reducing flooding (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 are important sources of income for low-income families. From 2005 to 2015, more than 43,000 households in six provinces in central Vietnam received micro credit and technical support for small-holder plantation development. The Forest Sector Development Project, involving some 76,500 hectares of forests, is the first, and to date, the only project in Vietnam using the approach of lending to small-holder plantations – an option proving to be much more sustainable than the traditional approach of subsidizing plantations. (Watch the video and view slideshow)

Water supply and sanitation facilities have expanded. Urban water supply has doubled in small towns to 60 percent between 2006 and 2009 and rose from 75 percent up 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 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)

Early-warning and forecasting capacity for integrated disaster risk management continues to improve. Implemented in 12 provinces, the Disaster Risk Management Project helped construct 11 major projects for flood and storm mitigation infrastructure such as safe harbors, river dykes, evacuation roads and 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 in Vietnam, 9,000 more persons were connected to the grid for the first time. In only five years, the country doubled its power generation capacity to 25,000 MW in 2010. Under the Second Rural Energy Project, more than 2.7 million people in some of Vietnam’s poorest areas gained access to electricity. (Watch the video)

The Third Rural Transport project is helping poor and marginalized in 33 provinces, particularly some of the most difficult mountainous regions of Northern Vietnam, connect to better markets and services. Today, over 90 percent of the population is now connected by all-weather roads. Averaging 4.5 percent of GDP investment, Vietnam leads Asia in its investments in roads infrastructure. (Watch the video)

With 6.5 fatalities per 10,000 vehicles per year, automotive accidents are a national concern in Vietnam. 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 in order to save lives. 95 percent of motorcycle riders now wear a helmet. 

The first Northern Mountains Poverty Reduction Project has improved the quality of life in remote mountainous areas. Amongst the results: more than 118,000 families gaining access to clean water and more than 350,000 families benefiting from improved health care. A follow-on project has built on these earlier gains and also strengthened the disaster risk preparedness of communities, as well as pilot market linkage service initiatives. As a result, participating families are enjoying incomes at least 10 percent higher than the average of communes outside of the project areas. Almost 80 percent of common-interest farming groups cite better access to market information and 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 percent in 2005 to 50 percent nationwide. Children in disadvantaged districts increased enrollment to 94 percent, while girls’ enrollment in secondary school now exceeds boys at 78 percent to 77 percent. Personalized lessons in 49 primary schools brought a more hands-on approach to learning for ethnic minority students. The New School model, which used innovative teaching and learning practices in the classroom, has been piloted in 1,447 primary schools across all 63 provinces. After three years of project implementation, 2,000 more primary schools volunteered to implement the model. (See the video and story)

Higher education institutions enjoy greater autonomy and hold greater accountability. A series of three development operations supported the formulation of a new legal framework that provides a greater level of autonomy to higher education institutions and increases their accountability. This accountability includes the ability to decide on the number of students; training content; opening new programs; staff recruitment and retention; disclosing annual reports on financing, and staffing and learning outcomes. (Read the results brief)

Women’s 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 13, 2017


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

*Amounts include IBRD and IDA commitments

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