Regions and Countries

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p. 2 of 6 BACK | NEXT I. Current Development Trends and Issues II. The Government's Development Strategy III. ADB's Development Experience IV. ADB's Strategy V. ADB's Assistance Program VI. Risks and Performance Monitoring and Evaluation

Country Strategy and Program Update 2007-2010: Viet Nam, Socialist Republic of

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II. The Government's Development Strategy

A. Development Goals and Strategy

45. Preparation of the new SEDP began in September 2004.34 It involved a wide consultative process35 and adopted, concrete actions to realize the objectives set out in the various sector development strategies, the Comprehensive Poverty Reduction and Growth Strategy (CPRGS), the VDGs, and Viet Nam’s international commitments”. The strategic thrusts of the SEDP were endorsed by the 10th Party Congress in April 2006 and approved by the NA in June 2006.

46. The SEDP envisions Viet Nam as “an industrialized country by 2020”, moving out of a low income country status, and increasing average GDP per capita (about $622 in 2005) to $1,050–$1,100 by 2010. The SEDP is also Viet Nam’s national poverty reduction strategy.36 The SEDP views business development, increased private investment, and increasing international economic integration as crucial in providing the jobs and resources needed to reduce poverty and improve living standards. Public services and infrastructure must be improved quickly. The private sector is expected to help accelerate improvements in public service and infrastructure. The SEDP also recognizes the importance of regional cooperation and integration in attaining MDGs and VDGs.

47. The SEDP’s general goals are to:

• accelerate sustainable economic growth and development
• significantly improve people’s material, cultural, and spiritual life
• create the foundations to boost industrialization and modernization and to gradually develop a knowledge-based economy; and
• improve Viet Nam’s status in the region and in the world

• accelerate economic growth per capita to 7.5–8.0% per annum
• increase per capita income to $1,050–$1,100 by 2010
• maintain national budget revenue at about 21–22% of GDP
• increase exports by 14-16% per year
• increase gross domestic investment to around 40% of GDP

• develop infrastructure
• remove remaining policy and structural barriers to business development
• further administrative reforms
• develop market institutions, including financial institutions and land and labor markets
• develop human resources

• achieve universal secondary education and ensure that 40% of the workforce has received vocational training
• all households will have access to housing (14–15 m2/person), 35% will have access to telephones, and 25% will be internet subscribers
• reduce population growth rate to 1.12% per year in 2010
• create 1.6 million new jobs per year
• limit urban unemployment to under 5%
• increase average life expectancy to 72 years
• reduce child mortality for under 5 years old to 25 per 1000 by 2010
• reduce maternal mortality to 6/10,000
• eliminate food poverty. SEDP includes targeted investments to reach the more vulnerable groups, and to improve urban services outside the main cities to ensure more balanced development

• forest coverage increased to 43%
• 100% of new establishments to use pollution-minimizing technologies and for 50% of all business to meet environmental standards
• 40% of urban areas and 70% of industrial zones to have centralized wastewater treatment systems, 80–90% of solid wastes to be collected, and 60% of hazardous wastes to be treated
• 95% of the urban and 75% of the rural populations to have access to safe water

• improving the regulatory framework (including enforcement mechanisms) for environmental management
• strengthening the capacity of planning agencies to integrate environmental considerations into development planning and management, including more systematic environmental impact assessments
• strengthening environmental planning and monitoring; (iv) increasing publicfinancing for environmental management and protection
• applying the polluter-pays principle throughout the country

B. Resource Mobilization and Investment

52. Viet Nam already has high ratios of investment and resource mobilization to GDP. The challenge is to use these resources more efficiently to increase capital productivity. The planned increase in the share of private sector in total investment will be critical in increasing capital productivity. The domestic private sector, in particular, has generated much higher output and employment per unit of investment than either the state sector of foreign investors.


53. The investment–GDP ratio is estimated at around 40%38 over 2006–2010 (about $140 billion). The share of the state in total investment is expected to decline from 51% (2001-2005) to 45%, with a marked decline in the share of state credits. The share of the private sector is expected to increase from 49% to 55%, with a sharp increase in the share of domestic private investment from 29.8% to 34.4%.

54. The Government aims to limit the fiscal deficit to less than 5% of GDP, with budget revenue equivalent to about 21-22% of GDP. With the anticipated accession to WTO, growth in budget revenue is expected to decline from 17.0% per year (2001–2005), to 12.9%/ per year (2006–2010). Improvement in tax policy and administration will therefore be needed to sustain revenue growth while reducing trade tariffs. The ratio of total external debt to GDP is expected to increase marginally to about 37.5%, but with continuing strong export growth, the ratio of debt service to exports is expected to decline further, from 5.4% in 2005, to 4.3% in 2010.

C. Role of Official Development Assistance

55. Much of Viet Nam’s success in accelerating socioeconomic development has been home-grown, resulting from committed national efforts. Because there is clear national ownership of, and broad public support for, the development and economic reform agenda, sustained success in implementing the development program is expected. While national efforts have driven recent success, private remittances, FDI, and ODA have helped. Total ODA commitments over the last five years to Viet Nam were about $11.1 billion. Actual disbursements were only about $7.8 billion, substantially less than the $9.0 billion targeted for 2001–200539. ODA loans helped finance key infrastructure, social services , and agriculture development projects. ODA-financed TA helped introduce new skills, international best practices, and modern technology. Japan, the World Bank, ADB, and the European Community have been the top four ODA partners for lending and nonlending assistance. NGOs are also increasingly becoming an important source of technical and financial assistance, providing over $100 million in 2005.


56. The Government is expecting ODA inflows of about $11 billion over the next 5 years and has drafted a strategic framework to mobilize and use ODA more effectively. The Government intends to update the legal and institutional framework governing ODA to ensure national leadership and ownership, maximize efficiency and effectiveness, monitor development outcomes, further harmonize procedures, and enhance national and provincial capacity to use ODA resources more effectively, and to eradicate corruption.

D. ADB's Assessment of the Govenment's Development Strategy

57. The SEDP builds on the success in reducing poverty, with an even stronger focus on poverty reduction through increased private sector investment and job growth, combined with targeted programs, (e.g., Program 135, the hunger eradication program) to meet the needs of the most vulnerable groups in society. This fits well with ADB priorities. The aim is to achieve a balance between growth, social equity, and improved environmental management, combined with actions to strengthen governance and improve the effectiveness of public institutions and public service delivery. There is strong emphasis on the need to create jobs in urban and rural (farm and nonfarm) areas, supported by equitable access to infrastructure and human development services, including secondary education and affordable health care. The SEDP includes a strong focus on outcomes, and includes a mechanism for monitoring and evaluating implementation performance.

58. The SEDP whilst building on the achievements of the past plans, taking into account the poverty reduction dimensions, it has significant new characteristics such as greater emphasize on private sector development, linking the SEDP targets with the MDGs and VDGs, and focuses on development outcomes. The SEDP was prepared in a highly participatory manner. The initial drafts were widely distributed and discussed with a wide range of stakeholders including the national and provincial leaders, NA members, CSO representatives, and the ODA community. The final SEDP takes into account the various stakeholders’ suggestions. The SEDP could have been strengthened by:

• greater coherence between sources and uses of funds
• clearer links between SEDP objectives and budget allocations
• better reporting of recent policy and institutional developments

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