Regions and Countries

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p. 9 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies A. Agriculture B. Infrastructure C. Social Infrastructure and Environment D. Governance Dimensions of ADB Operations E. Gender Dimensions of ADB Operations F. Private Sector Operations IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Viet Nam : III. Sector Strategies

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A. Agriculture and Natural Resources

1. Agriculture and Rural Development

37. Agriculture accounts for 24 percent of Viet Nam’s GDP, 66 percent of employment, and 38 percent of exports. High growth rates of agricultural output, achieved through liberalization of markets and assignment of land use rights, are behind Viet Nam’s impressive success in reducing poverty during the 1990s. Improving the efficiency of agriculture continues to be essential to consolidate and further advance the recent gains. At the same time, the agricultural sector can form the base for diffused industrialization, linked to agroprocessing and agriculture-based industry and services. Productivity improvements and crop diversification supported by a favorable policy environment will be needed to sustain this process, along with more sharply targeted poverty reduction interventions.

38. ADB assistance to date has focused on agricultural policy reform, rural infrastructure, rural credit, and rehabilitation and improved management of water resources infrastructure. ADB’s Agriculture Sector Program Loan (ASPL), completed in 1997, sought to encourage planned Government reforms in the areas of market development, input supply, exports and imports, prices and subsidies, sector SOEs, and public support services. The program was generally effective in decreasing the interest rate subsidy to SOEs engaged in rice marketing and export, partially removing trade barriers notably for rice and fertilizers, and issuing titles for agricultural and forest land with rights of transfer and use as collateral to obtain loans. In other areas of ADB assistance, steady progress is being achieved in projects for promoting rural development, notably in rural infrastructure improvement and rural credit, and in facilitating management of irrigation systems and flood protection.

39. Future ADB assistance for the sector will be based on a combination of support for policy reforms and geographically focused poverty reduction interventions, with special emphasis on the Central Region, and on the link between poverty and natural resource management. Policy reform needs related to input and output markets and prices, subsidies, trade, production, land use and ownership, rural finance, research and extension, taxation and cost recovery are being analyzed jointly with the Government to determine the appropriate course of action, which ADB is prepared to support through program lending or a sector development program (SDP) approach. Poverty reduction projects will focus on the poorest provinces in the North Central Coast and Central Highlands, where socio-economic indicators are among the lowest in the country. These projects will be designed with a strong participatory approach to empower and work with local communities, involving local levels of government, mass organizations, NGOs, and project beneficiaries.

2. Forestry and Natural Resources

40. The link between natural resources management, poverty reduction, and rural development is very strong in Viet Nam. Careful water resources development and management is necessary to sustain high productivity, since land is very intensively cultivated due to high population densities, and to address conflict among competing uses. Water management is also necessary to mitigate the impact of adverse climatic conditions, which often result in extensive flooding. Positive steps have been taken by the Government to reverse the depletion of natural forests and improve forest cover and management practices. In geographically defined areas however, such as the Central Highlands, in-migration and non-sustainable agricultural practices are severely endangering the ecological balance. The coastal areas are also severely affected by population pressures, and the in-shore marine resource stocks have declined significantly due to habitat loss and over-fishing, creating downward pressures on standards of living and an unsustainable future.

41. The ongoing forestry sector loan is still in the early stages of implementation, and the sector policies are currently under review. Future ADB operations in the sector will depend on the review outcome. Water resources development and management will be addressed through operations both at the national level and in selected river basins (Red River and Dong Nai) and areas, with special attention to the Central Region. ADB is participating in a joint effort by the external aid community to assess and prioritize the rehabilitation and prevention needs related to flooding and other natural disasters in the Central Region, and investment projects will be identified within this cooperative framework. Area-based projects to reduce poverty and improve natural resource management are planned in the North Central Coast and Central Highlands, and selected river basins. In the area of coastal management, it is expected that past assistance for fishing ports infrastructure and support services will not be replicated. Future operations in the coastal areas will focus on natural resource preservation and livelihood improvement of the impoverished populations. The potential ADB role in coastal management will initially be explored through TA operations, possibly leading to lending towards the end of the program period.

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