Regions and Countries

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p. 2 of 4 BACK | NEXT I. Current Development Trends and Issues II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Assistance Levels

Country Strategy and Program 2004-2006: Socialist Republic of Viet Nam

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II. lmplementation of the Country Strategy and Program

A. Progress Under the Comprehensive Poverty Reduction and Growth Strategy and Poverty Reduction Partnership Agreement

10. The Poverty Reduction Partnership Agreement (PPA), signed on 25 February 2002 between ADB and the Government, covers a subset of the objectives set in the national comprehensive poverty reduction and growth strategy (CPRGS), whose preparation ADB supported as a member of the poverty task force among development partners. ADB is working with other task force partners to develop an updated poverty assessment and a report on CPRGS implementation for discussion at the December 2003 consultative group meeting. Since many of the PPA indicators and areas of attention coincide with those included in the CPRGS, more detailed information will be available through joint monitoring of CPRGS implementation from 2004.

11. The PPA covers the four priority areas of ADB support to Viet Nam: (i) sustainable growth through agricultural diversification and private sector development; (ii) inclusive social development, with emphasis on health and education; (iii) good governance, especially public administration reform; and (iv) geographic targeting on the poor central region. Many PPA indicators are structural, recorded periodically, and change slowly. Given the complex interactions between social and economic variables, it is also difficult to clearly attribute impacts of government policies and ADB operations. Nevertheless, it is possible to observe progress on all counts. Poverty incidence has declined from 37% in 1998 to about 29% in 2002. In the year since the signing of the PPA, the Government has taken action to increase agricultural diversification and to restructure the research and extension service, with ADB support through an agriculture sector development program. The private sector has continued to grow, with non-state investment increasing from 19.0% of total investment in 2000 to 23.6% in 2002, and the share of the formal domestic sector increasing from 7.3% to 8.0% of GDP over the same period.

12. In the social area, lower-secondary enrollment rates have increased steadily to 86% in 2002. The Government has adopted a bold policy that aims to increase health coverage for the poor from 1.5 million to 15.0 million people, and is creating a health fund for the poor. The minimum wage for state employees, which acts as a benchmark for public-sector wages, rose 38% in January 2003. A new regulation on the promotion of civil servants based on established criteria was issued in January 2003. Decree No. 86/2002/ND-CP, issued on 5 November 2002, redefined the functions, powers, and organization of ministries and agencies. Preliminary data suggests that efforts to reduce poverty have had uneven effects in different regions. However, the 2001–2005 public investment plan has increased the capital allocated to the northern mountains, northern central region, and central highlands to 24.3% of the total, up from 20.3% during 1996–2000.

B. Progress in the Country Strategy and Program Focus Areas

13. Progress has been made in implementing the CSP's four strategic priorities:

1. Sustainable growth. ADB operations to support financial and agriculture reform were approved in 2002, and a program loan to develop SMEs is being prepared. The reforms and loan will reinforce private sector development, as embodied in the Government Action Plan for Implementing the Resolution of the Ninth Party Congress, approved under Prime Minister Decision 94/2002/QD-TTg on 17 July 2002. ADB approved two private power projects (Phu My 2.2. and Phu My 3) in 2002, granting $90 million in loans and $60 million in political-risk guarantees. All these will help Viet Nam grow by providing competitively priced power, and will demonstrate private sector participation in infrastructure. Viet Nam was the first signatory to ADB’s Rural Water and Poverty Action Initiative, and has achieved significant reforms for sustainable water use, including national legislation and establishment of an apex body.
2. Inclusive social development. A loan to develop upper secondary education was approved in 2002, and technical assistance (TA) was provided to strengthen capacity in the sector. A second loan to develop lower secondary education is under preparation, in line with ADB’s primary role in supporting the Government’s goal of providing high-quality, universal lower secondary education and expanded access to upper secondary education by 2010. Another TA slated for 2003 explores support for early childhood development and related millennium targets through combined health, nutrition, and pre-school education/child care. Following an advisory technical assistance (ADTA) on making health care affordable for the poor, two project preparatory technical assistance (PPTA) grants approved in 2003 will support preparation of a health care project in the central highlands and a nationwide preventive health project. ADB is helping the Government deal with the prevention and consequences of SARS through a regional TA and reallocation of loan savings under an existing project to procure the necessary supplies.
   
   Gender issues were mainstreamed by ensuring that special attention was paid to economic opportunity, education, health, and other services. Approved projects with this focus included the second Red River basin sector project, the central region livelihood improvement project, and the third provincial towns water supply and sanitation project. ADB will continue to ensure that women participate in design, planning, and development of projects where they are identified as a clear target group. An ongoing TA, supporting preparation of a gender strategy for agriculture and rural development, successfully developed a plan that will become an integral part of the sector’s 2001–2010 strategy. This TA also conducted gender training for sector staff through the Women’s Union. The impact of this sector strategy will be significant, given the widespread participation of women in agriculture and the importance of the rural sector in ADB operations.
3. Gender issues were mainstreamed by ensuring that special attention was paid to economic opportunity, education, health, and other services. Approved projects with this focus included the second Red River basin sector project, the central region livelihood improvement project, and the third provincial towns water supply and sanitation project. ADB will continue to ensure that women participate in design, planning, and development of projects where they are identified as a clear target group. An ongoing TA, supporting preparation of a gender strategy for agriculture and rural development, successfully developed a plan that will become an integral part of the sector’s 2001–2010 strategy. This TA also conducted gender training for sector staff through the Women’s Union. The impact of this sector strategy will be significant, given the widespread participation of women in agriculture and the importance of the rural sector in ADB operations.
4. Geographic focus on the central region. The central region urban environmental improvement project is in an advanced stage of preparation. After some delays in signing TA letters, preparation has started for three other projects: forests for livelihood in the central highlands, central region transport network, and central region water resources. These projects, together with a loan for health for the poor in the central highlands, will address the multiple dimensions of poverty and development in the region.

C. Highlights in Coordination of External Funding and Partnership Arrangements

14. ADB has extensively coordinated with major development partners. Close coordination with the World Bank during the preparation of the country assistance strategy for 2003–2006 confirmed the sector specialization agreed upon when the 2002 CSP was being prepared. ADB provided detailed feedback, exchanged information, and coordinated with other ODA partners—including the European Commission, United Kingdom’s Department for International Development (DFID), the Japan Bank for International Cooperation (JBIC), Australia, and Sweden—when they prepared their country strategies, as shown in the revised coordination matrix in Appendix 1, Table A1.5. ADB plays a key role in the poverty task force, as well as in the ongoing efforts to update poverty assessment and monitor CPRGS implementation.

15. ADB has actively pursued coordination through cofinancing to ensure that (i) all relevant development dimensions are addressed, (ii) additional resources mobilized, and (iii) government transaction costs reduced. ADB’s cofinancing strategy focuses on bilateral agencies whose operations are compatible with ADB priorities: (i) development banks for selected investment components of ADB loans; and (ii) bilateral ODA partners, whose expertise and grant resources can help meet institutional and capacity-building needs linked to ADB operations. ADB is exploring cooperation with JBIC in selected infrastructure projects. A three-year cofinancing plan has been developed with the Agence Française de Développement (AFD) in urban development, finance, SME development, and water resources. Cooperation through cofinancing is ongoing and planned for SME development with Kreditanstalt für Wiederaufbau (KfW), Deutsche Gesellschaft für Technische Zusammenarbeit, and Government of Italy. In forestry and water resources management, cofinancing is planned with the Netherlands; in coastal management, with Sweden and the Netherlands; and in governance, with New Zealand and France. DFID is cofinancing the Vietnamese component of a regional policy-oriented research program to make markets work better for the poor. ADB has worked with the World Bank and JBIC to harmonize procedures in procurement, financial management, portfolio management, and environmental and social safeguards. AFD and KfW have recently joined this effort. The pilot approach was discussed at a regional workshop in Hanoi in January 2003, and at the High-Level Forum on Harmonization in Rome in February 2003.

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