H.E. Mr. Trinh Dinh Dung, Deputy Prime Minister of Vietnam
Representatives of the Central Committee for Disaster Prevention and Control, Line Ministries, Mass Organizations, Provinces and International Organizations
Distinguished delegates, Ladies and Gentlemen,
I am honored to participate in this important National Conference on Disaster Risk Management.
First of all, I would like to acknowledge and congratulate the exemplary leadership of the Government, specifically the Ministry of Agriculture and Rural Development (MARD) and Ministry of Natural Resources and Environment (MONRE) in strengthening policies and institutions for addressing disaster and climate risk.
The approval of the National Strategy for Natural Disaster Prevention, Response and Mitigation; the Law on Natural Disaster Prevention and Control, the National Climate Change Strategy and action plans, and establishment of the Vietnam Disaster Management Authority are just a few examples of the government’s strong commitments to the resilience agenda.
Disaster Risk Management and Climate Resilience are core development issues for Vietnam. Vietnam is one of the most hazard-prone countries in the East Asia and Pacific region. The country 3,260-km coastline is regularly exposed to typhoons, floods, drought, coastal erosion and landslides.
A recent climate risk index ranks Vietnam in the top 10 countries that are most affected by extreme weather events over the past 20 years.[1]
With climate change, the frequency and intensity of such events are expected to further increase. A recent World Bank study of 84 coastal countries ranks Vietnam, unfortunately, in the top tier countries that are most at risk of sea level rise in terms of impact on population, GDP, urban extent and wetland area.[2]
Extreme Weather Events and Disasters have high socio-economic impacts, which translate into substantial costs to the country - estimated at 1% of the GDP[3]. The recent post-disaster rapid assessment in Khanh Hoa province shows that the impact of typhoon Damrey is estimated to reduce GDP growth in 2018 by an estimated 0.9%. And a risk assessment carried out by the Government with the technical support of the World Bank in 2017[4] estimated that USD 1.3 trillion worth of assets are at risk but only about 5% of assets in the country are covered by insurance.
Despite significant investment in better planning, the government still faces a funding gap after disasters. The current financing capacity of Vietnam meets only about 21% of the estimated need just for emergency reconstruction and recovery. Vietnam could see losses of over 4% of GDP in the case of a major disaster. In the next 50 years, Vietnam has a 40% chance of experiencing an event with economic losses exceeding USD6.7 billion and population affected greater than 39 million.
These numbers are not just projections and estimates. They are the reality that Vietnam is facing and will have to factor. As such, there is clearly a strong need to continue proactively investing in risk reduction, preparedness and long-term resilience. If Vietnam does not invest in disaster resilience today, it decreases opportunities for social, economic and environmental progress for years to come.
At the World Bank, we understand the urgency to invest in disaster and climate resilience. In the past 5 years, the World Bank tripled its financing for disaster risk management, committing about US$6 billion each year to support resilience[5]. Learning from global experience, we have developed an integrated approach to disaster risk management, including a strong policy framework, investments in risk reduction and disaster risk financing.
Beyond financing, we support our partner countries with a package of wide ranging technical and financial support, combined with global project experience, to enhance the capacity of the implementing agencies.
The World Bank has been proactively supporting the DRM and Resilience agenda in Vietnam. In the recent decade a lone, we have provided financing of USD1.7 billion for hydromet modernization, disaster early warning systems, key disaster prevention infrastructures and dam rehabilitation. Additionally, we have been able to mobilize an estimated US $7.5 million in trust funds through the Global Facility for Disaster Reduction and Recovery (GFDRR) to help strengthen the government’s policies and legal frameworks on DRM, and promote the local and international knowledge exchange between Vietnam and other countries. We also provided millions of dollars supporting mainstreaming of resilience in investments focusing on urban development, transport, agriculture and water resources management.
There is room for more collaboration in this important agenda. Looking forward, I would like to take the opportunity to highlight several areas where the World Bank can support the government in further addressing disaster risks and climate issues in Vietnam.
First, I see a need for greater coordination on the water resource agenda. Take the case of Ninh Thuan province which suffers from recurrent hazards including floods and droughts.
An integrated approach, including coordinated planning of reservoirs through basins transfer, advanced technologies for water savings and resilient crops to droughts, and powered by clean solar and wind energy abundant in the province could boost the economic productivity and support better socio-economic development.
Second, improved financial planning will be also critical to establishing a robust system for disaster preparedness and response. It is encouraging that a number of financing instruments are currently available to the government. However, there is a heavy reliance on state budgets at all levels to finance disaster risk reduction and post-disaster response and recovery. Better coordination of these instruments could help the government better manage the costs of disasters and ensure funding will be channeled in an efficient and timely manner.
In this regard, the Ministry of Finance could take the lead in proactive financial planning for disasters through the development of a comprehensive disaster risk finance strategy. Combing different financial instruments can allow both the government and communities to mobilize, access and disburse financing from both public and private sources quickly for immediate response and recovery needs. Given the increasing fiscal constraints, the Government could also look to the capital and insurance markets to secure additional sources of funding from the private sector, alleviating the burden on state budget. In the World Bank we call this Maximizing Finance for Development, by crowding in private funding and blending it with public resources. In this regard, the recent effort by the MoF in introducing insurance for public infrastructures through the revision of the Public Assets Management Law is an example and a good step in the right direction. I would like to congratulate the MoF for this innovative approach.
Third, innovative instruments can be developed to help cope with the unpredictable nature of natural disasters and climate change. Catastrophe Deferred Drawdown Option (CAT DDO) is an example. It is an instrument that combines reforms in disaster risk management policies with innovative financial tools, allowing for the government to access needed financing in a timely manner. For example, as contingent line of credit, in the Philippines, CAT DDO helps achieve fundamental DRM reforms, while at the same time providing quick-release financing for disaster recovery and reconstruction. In 2013, the CAT-DDO enabled the Philippine government to mobilize USD 500 million just days after a tropical cyclone Hayan hit Tacloban. The platform for policy progress it established also helped to set up disaster risk management offices in all 80 provinces and over 90% of all cities and municipalities with budget and staffing allocations.
Another example is the establishment of a Fund for Natural Disasters in Mexico (FONDEN) to support disaster relief and reconstruction. FONDEN resources, leveraged with market-based risk transfer instruments, allow for transfer of risks through insurance and other risk transfer mechanisms such as catastrophe bonds. Most recently, in 2011, it secured indemnity cover for government assets and low-income housing with a US$400 million excess of loss reinsurance treaty. FONDEN now provides one of the most sophisticated disaster financing vehicles in the world.
We would be happy to share more global experiences and support government agencies in learning about and utilizing these innovative instruments, taking into account specific needs of Vietnam.
Deputy Prime Minister Trinh Dinh Dung, , Ladies and Gentlemen,
I would like to reiterate the strong commitment of the World Bank to support Vietnam sustain its remarkable socio-economic success in the face of increasing natural disaster and climate risks. We stand ready to provide financial and knowledge support to the Government of Vietnam in implementing resilient development investments. Applying proven global practices and involving stakeholders at all levels, including the private sector, will encourage adoption of the identified measures and thus, help to build resilience to natural disasters and climate change.
I wish you all a very successful conference and look forward to our continued and fruitful partnership.
Xin cam on.
[1] https://germanwatch.org/fr/download/16411.pdf
[2] (Dasgupta et. al, 2007)
[3] Vietnam Central Committee for Disaster Prevention and Control, 2017
[4] Vietnam Catastrophe Risk Assessment and Modeling, Country Risk Profile, the World Bank 2017.
[5] The World Bank, 2017
