The World Bank In Vietnam

Vietnam has been a development success story. Economic reforms since the launch of Đổi Mới in 1986, coupled with beneficial global trends, have helped propel Vietnam from being one of the world’s poorest nations to a middle-income economy in one generation. Between 2002 and 2021, GDP per capita increased 3.6 times, reaching almost US$3,700. Poverty rates (US$1.90/day) declined sharply from over 32 percent in 2011 to below 2 percent.

Thanks to its solid foundations, the economy has proven resilient through different crises, the latest being COVID-19. Vietnam was one of only a few countries to post GDP growth in 2020 when the pandemic hit. GDP growth slowed down to 2.58 percent in 2021 due to the emergence of the Delta variant but is expected to rebound to 5.5 percent in 2022.

Health outcomes have improved along with rising living standards. Infant mortality rates fell from 32.6 per 1,000 live births in 1993 to 16.7 per 1,000 in 2020. Life expectancy rose from 70.5 to 75.4 years between 1990 and 2019, the highest in the region for countries at a similar income level. Vietnam’s universal health coverage index is at 73—higher than regional and global averages—with 87 percent of the population covered.

Access to infrastructure services has increased dramatically. As of 2019, 99.4 percent of the population used electricity as their main source of lighting, up from just 14 percent in 1993. Access to clean water in rural areas has also improved, up from 17 percent in 1993 to 51 percent in 2020.

Vietnam has grown bolder in its development aspirations, aiming to become a high-income country by 2045. To do this, the economy would have to grow at an annual average rate of around five percent per capita for the next 25 years. Vietnam also aims to grow in a greener, more inclusive way, and has committed to carbon neutrality by 2050.

A few megatrends are shaping the future of Vietnam. The country’s population is rapidly aging and global trade is declining. Environmental degradation, climate change, and the rise of automation are growing. The ongoing COVID-19 crisis has accelerated these trends.

To rise up to these challenges and meet its development goals, Vietnam needs to dramatically improve its performance to implement policies  particularly in finance, environment, digital transformation, poverty/social protection, and infrastructure, according to the World Bank’s latest Systematic Country Diagnostic Update.

Last Updated: Apr 14, 2022

The current World Bank Group Country Partnership Framework (CPF) for Vietnam, endorsed in 2017, guides the Bank Group's engagements in the country from 2018 to 2022. It has four priority areas:

·         Enable inclusive growth and private sector participation

·         Invest in people and knowledge

·         Ensure environmental sustainability and resilience

·         Promote good governance

Building on the World Bank Group’s continued strong engagement in Vietnam, the CPF introduces strategic shifts that guide the Group’s work to:

·         Strengthen private sector development and participation across sectors;

·         Achieve the financial sustainability of public services and transfers;

·         Reduce poverty among ethnic minorities;

·         Strengthen linkages between education and the labor market;

·         Promote and stimulate low carbon energy generation.

The World Bank Group conducted a Performance and Learning Review of the CPF in early 2019. It confirmed the relevance of the current CPF and broadened the Bank’s engagements to improve the welfare and development of ethnic minority groups and support the implementation of Vietnam’s Nationally Determined Contributions to reduce greenhouse gas emissions.

The World Bank Group has just completed the Vietnam – Country Systematic Diagnostic Update 2021, which analyzes how the global and domestic megatrends, and shocks such as the COVID-19 pandemic, are reshaping Vietnam’s development priorities. This key analytical work will inform the upcoming CPF.

Last Updated: Apr 14, 2022

As of April 14, 2022, the Bank has provided US$25.27 billion in grants, concessional loans and credits to Vietnam through 214 operations. Vietnam's existing portfolio consists of 31 active projects, with total net commitments of US$5.72 billion. In addition, Vietnam benefits from a large and diverse portfolio of Advisory Services and Analytics (ASA), with 28 currently being undertaken. Many ASA engagements leverage country-level partnerships and trust funds from development partners.

COVID-19 Response

Since COVID-19 hit the country in early 2020, the World Bank Group has worked with Vietnam on multiple fronts of the national response strategy – from health crisis management to fostering a resilient recovery. Through a grant from the Pandemic Emergency Financing Facility, the World Bank helped ramp up testing capacity for 84 laboratories nation-wide, cutting the turnaround time from 24-48 hours to 4-6 hours. Building on global expertise, the Bank issued a series of policy notes on strategies to protect vulnerable groups from the negative impacts of COVID-19 and to stimulate a broad recovery.

Clean Energy

The Trung Son Hydropower Project supported the development of a 260 megawatt grid-connected hydropower plant in a remote part of central Vietnam. Fully operational since 2017, the plant has supplied one billion kilowatt-hours of electricity annually at a unit cost lower than other renewable sources or coal. The hydro plant reduced GHG emissions by approximately one million tons compared to a thermal plant supplying the same volume of electricity. The project increased local access to electricity from 30 percent in 2015 to 97 percent in 2019 – while also contributing to an improved quality of electricity supply in the broader region.

The Vietnam Renewable Energy Development Project supported some of the first large-scale private-sector led deployments of renewable energy into Vietnam’s power mix. The project provided early-stage investment and technical support to build the requisite capacity and incentives among all stakeholders for scaled-up development. In addition, 19 small hydropower plants were built with a total capacity of 320MW, which supplied an annual volume of 1,260GWh. All these plants followed global best practices on environmental and social risk management, setting new industry benchmarks in Vietnam.

Environment and Natural Resources  

Through the Climate Change and Green Growth Development Financing Project, the World Bank made a strong contribution to the climate change and green growth agenda. The project helped improve inter-sectoral coastal planning and mainstream climate change into public investment across key sectors. In addition, policies supported by this program helped promote the uptake of water-efficient irrigation practices and technologies and prompted provinces to establish protection corridors for main water sources. Reforms brought about by this program also contributed to improved energy efficiency of household appliances and increased investment in renewable energy.

Since 2016, the Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project has helped more than one million farmers in the region transition into more climate-resilient and resource-efficient ways of living. The project leveraged an extensive network of scientists working with farmers to find new production models that best fit the agroecological and socioeconomic challenges, and scale them up. It also focused on creating an enabling infrastructure network and improving regional cooperation on water and land management.

With the World Bank’s support, Vietnam mandated the establishment of a carbon market in January 2022. The Partnership for Market Readiness (PMR) Program helped lay the legal foundation and build capacity for using this market-based instrument between 2016 and 2021. The program supported the government in assessing institutional, policy, and technical gaps for using carbon pricing. It also helped develop the main building blocks for carbon pricing including data collection, measuring, reporting, verifying, and crediting process.

Urban Development

The Mekong Delta Region Urban Upgrading Project  turned low-income, low-lying areas into greener urban spaces in six cities of the Mekong Delta Region. The project helped improve the living conditions of about 625,000 direct beneficiaries by upgrading basic infrastructure. An additional two million people indirectly benefited from city-wide infrastructure improvements and new social facilities. The total quantifiable benefits were estimated at approximately US$724 million in terms of savings in healthcare costs, productive time, flood control damage, and increased land value.

Rural Development

The Results-Based Rural Water Supply and Sanitation Under the National Target Program helped address one of the biggest challenges in rural Vietnam by investing in physical infrastructure and improving the legal framework for sustained access to water supply and sanitation services. Between 2013 and 2019, more than one million people had their water supply connected to sustainable water systems, while 400,000 new functioning water supply connections were built. In addition, about 1.4 million people in 203 communes gained access to commune-wide sanitation. Improved sanitary latrines were built in some 142,000 households and 1,500 schools.

Human Capital

Education

Vietnam joined the Human Capital Project in 2019 to improve nutrition and access to quality education and enhance workforce development for a changing economy. The World Bank has supported Vietnam in reforming the educational system at all levels. The School Readiness Promotion Project, for example, helped increase access to full-day preschool to 84 percent of five-year-old children in 2015  from 66 percent in 2011. The quality of preschool instruction improved through the introduction of a child-centered learning approach for 250,000 early childhood education teachers. The Bank also provides strategic advice for Vietnam on how to prepare its workforce for future jobs.

Health

The World Bank supports Vietnam’s efforts to provide quality, affordable health care services for all citizens. In the northern part of Vietnam, 13.7 million people—many of them from remote areas—have better access to quality healthcare. The Northeast and Red River Delta Regions Health System Support Project improved the treatment capacity for 74 public hospitals at the district and provincial levels by investing in upgrading the medical infrastructure and training health workers. Key interventions in cardiology, obstetrics/gynecology, pediatrics, oncology, and trauma are now available at these hospitals, sparing patients the need to seek care at hospitals far from home.

Poverty Reduction

Vietnam has made great strides in reducing poverty and improving quality of life for millions. The World Bank has worked closely with Vietnam to address the last miles in poverty eradication as approximately eight million of Vietnamese people still lived with less than US$3.20 per day in 2018. The Second Northern Mountains Poverty Reduction Project, implemented in six mountainous provinces in the poorest region of Vietnam during 2010-2018, exemplifies this partnership. The project helped raise the living standards of ethnic minorities by improving their access to infrastructure, building capacity among local governments and communities, and promoting market linkages and business innovations. The project, which benefited 192,000 households and resulted in a 16 percent-increase in incomes, provided good lessons for government to revise its poverty reduction policy and approach.

Governance Reforms

Improving the efficiency and integrity of the public sector is a priority for the World Bank in Vietnam. Since 2018, the World Bank has supported Vietnam’s Office of the Government (OOG) in its efforts to build a digital government to enhance the efficiency and transparency of public service delivery. In February 2019, the Bank and OOG conducted a readiness assessment to ascertain the potential for digital government development, leading to the launch of the National Public Services Portal in December and E-Cabinet in June 2019. In August 2020, the Vietnam's Open Budget Portal went live, making budget information for all government levels available for the public in one place.

Last Updated: Apr 14, 2022