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Countries and Regions Country Partnership Strategies Document
II. Implementation of the Country Strategy and Program8. The last country operational strategy (COS) for Viet Nam, prepared in 1995, was based on the principle of sustainable growth with equity. To this end, it emphasized policy and institutional reform, social and physical infrastructure development, and environmental and natural resource management. Strengthening linkages between urban and rural areas, and between Viet Nam and its neighboring countries in the Greater Mekong Subregion (GMS) were also important elements of the COS. The proposed program represents a transition from the previous COS to the CSP under design and, while retaining the focus on growth with equity, will emphasize support to ease the rural-urban transition, narrow down sector focus, and sharpen targeting on the poor through emphasis on the Central Region of Viet Nam. A. Poverty Reduction9. Poverty reduction in Viet Nam during the last decade has been dramatic and largely associated with economic growth and liberalization, particularly in agriculture. ADB supported this process through an agriculture sector program loan, small-scale rural finance, and investment to upgrade infrastructure (significantly for irrigation and flood protection). Affordable access of the poor to health and education was also promoted. 10. In addition to promoting broad-based pro-poor growth, ADB will start in 2001 to adopt more sharply targeted interventions to further reduce poverty rates. The proposed geographic focus on the Central Region will be carried out at two levels:
B. Thematic Priorities1. Economic Growth11. Rapid economic growth during the 1990s was the result of liberalization, particularly in agriculture, and improved policies and infrastructure. ADB supported this process through three program loans for agriculture, financial sector, and SOE reform. Loans were also provided to upgrade infrastructure (particularly for irrigation and flood protection, national road transport, and ports), upgrade labor force skills, and provide credit and business services to promote crop diversification and the emerging private agroprocessing industry. 12. In the future, pro-poor, sustainable economic growth will be fostered through support for policy reforms and liberalization in the agriculture and financial sectors, SME development, and infrastructure development, the latter emphasizing the Central Region. Policy-based operations will build on the momentum for reform emerging from the recently concluded 9th party congress and recently approved International Monetary Fund (IMF) and World Bank structural adjustment operations. Power sector development will be supported mainly through ordinary capital resources (OCR) lending, subject to implementation of tariff levels that will ensure the financial sustainability of sector utilities. 2. Human Development13. Viet Nam’s achievements in social development are significant, and health and education indicators are well above those of countries of comparable per capita income level (Appendix 2). ADB has supported the provision of population and reproductive health services and of primary health care in remote districts, while assisting in analyzing the policy on the appropriate financing of social services. In the education sector, emphasis has been on lower secondary and vocational and technical education. 14. The Government has emphasized the importance of universal lower secondary education by 2010 and expansion of health care to remote areas. The proposed program will therefore support secondary education and health sector development. While a considerable share of these operations will be national in nature, priority will be given as feasible to investment or pilot implementation in the Central Region. In the urban sector, the traditional focus on water supply and sanitation will be expanded to include other urban services, and reoriented from large urban centers (Ho Chi Minh City) to provincial and district-level towns, again with emphasis on the Central Region, to help reduce migration flows to the main cities.. Depending on the outcome of ongoing economic and sector work, Ssupport for low income housing housing finance may also be considered. 3. Gender and Development15. Gender disparities in Viet Nam are not as marked as those in some other developing countries. However, there are differences in access to economic opportunities and social services, decision-making power in the household, and voice in institutions. The health and education status of ethnic minority women remains low. Where warranted, ADB operations have paid special attention to improving opportunities for women or indigenous groups, notably in access to secondary education. This mainstreaming approach to mainstreaming gender issues will continue. 4. Good Governance16. The Government recently took a number of actions on this front recently, including preparing a revised draft of the Public Administration Reform (PAR) strategy, and agreeing to undertake an assessment of legal needs , jointly supported by the United Nations Development Programme (UNDP), ADB, World Bank, and bilateral aid agencies. The recent 9th CPV congress stressed the importance of the Government progressing with greater vigor in implementing a comprehensive PAR program. 17. ADB has given continuing support in this area, through technical assistance (TA) for public administration reform, capacity building at the Ministry of Planning and Investment (MPI) and at the State Auditor General Office, retraining of legal officers, and recent approval of a TA to assist the Office of Government to review and rationalize its role and functions. ADB is also close to finalizing a strategy for Viet Nam and ADB partnership in governance. TA, however, will not be sufficient to fund the potentially significant adjustment costs that PAR will involve. ADB has confirmed to the Government that it is prepared to support Viet Nam in the areas of governance and public management through possible lending for both PAR and legal reform, in addition to TA. The proposed program therefore includes provisions for a standby PAR loan in 20043, if requested by the Government. 5. Private Sector Development18. The Government’s 2010 strategy embraces the concept of a socialist-oriented market economy – which implies that both State and market institutions will coexist – and commits to giving equal opportunities to all sectors. In the past, ADB public sector operations promoted structural reforms in the agriculture and financial sectors, corporate governance and state enterprise reform, and other preconditions for private sector development, including infrastructure. Private sector group operations focused on expanding productive capacity and social infrastructure in the water supply and higher education sectors. 19. Private sector development will be pursued through support for policy reforms in agriculture and finance, modernization of the governance and legal framework, development of SMEs, and provision of social and physical infrastructure to allow particularly the rural-based labor-intensive enterprises to develop. Through its public sector window, ADB will support the development of a policy and institutional framework conducive to expansion of the private sector. Through its private sector operations, it will foster the forging of private-public partnerships in relevant sectors, particularly in the areas of infrastructure (electric power, wastewater management, and water supply), SME-related projects in the financial sector, and possibly pilot projects in the social sector. The scope for operations in support of private sector development will be further defined through the ongoing private sector assessment. 6. Environmental Protection20. Viet Nam is abundantly endowed with natural resources, but has also intensively exploited them, particularly its forest and inshore marine resources (Appendix 2). ADB operations have assisted the conservation and more rational use of such resources through institutional development, strengthening of capacity, policy reforms at the national level, and investment. Past and current TA operations support implementation of the Water Resources Law and creation of a national water resource council and river basin organizations; loans for n the irrigation, and fflood protection, forestry, and fishing ports sectors have promoted water management infrastructure, reversed forest cover losses, reduced postharvest losses, and promoted offshore fishing. Future operations will focus especially on natural resources management and development in the areas of water and forestry. 7. Regional Cooperation21. Viet Nam has been active in promoting subregional cooperation in the GMS. ADB- funded road transport projects (the Phnom Penh-Ho Chi Minh City highway in the south and the East-West corridor in the center) have been the most tangible sign of Viet Nam’s GMS integration, with approval of the Phnom Penh-Ho Chi Minh City highway in the south and the East-West corridor in the center. Community Action for Prevention of HIV/AIDS1 in Cambodia, Lao PDR, and Viet Nam funded by the Japan Fund for Poverty Reduction (JFPR) was recently approved. Integration has also been–and will continue to be–promoted through soft infrastructure like cross-border agreements to facilitate the flow of goods and people, and through regional TA operations supporting joint approaches to economic monitoring and health, education, and environmental management. 22. ADB recently earmarked additional funds to finance TA and lending operations with a subregional dimension over and above the country indicative planning figure (IPF). On this basis, one project preparatory TA in 2002 and two loan projects have been included in the program. The Kunming-Haiphong corridor in 2003 will complement earlier subregional links developed in the center and south of the country. The GMS Mekong/Lancang River Tourism Infrastructure Development Project in 2002 will support employment generation in rural areas along the Mekong river, mitigate environmental degradation from unplanned and unsustainable development, and support related infrastructure development. The Vietnamese portion of the Telecommunications Backbone Project, developed under ADB TA, to allow interconnection of the national networks of six GMS countries and reduce the “digital divide”, will be implemented in 2002, but will be financed from domestic or bilateral aid sources. ____________________
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