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ADB, Viet Nam Sign Three Loans for Education, Financial Sector Reform, and Regional Corridor Improvement Totaling $200 Million

Hanoi, Viet Nam (10 January 2008) – The Asian Development Bank (ADB) and the State Bank of Viet Nam (SBV) today signed three loans totaling $200 million to help Viet Nam develop education sector for the most disadvantaged, continue reforming the financial sector and improve high priority subregional corridor in the south.

Mr. Nguyen Van Giau, Governor of the State Bank of Viet Nam represented the Government while Mr. Ayumi Konishi, ADB Country Director for Viet Nam signed the loans on behalf of ADB.

The $50 million loan for the Lower Secondary Education for the Most Disadvantaged Project will help the most disadvantaged groups of Viet Nam, in particular ethnic minorities and girls, to gain better access to lower secondary education in line with efforts to promote greater social and economic inclusion in the country's development. The Ministry of Education and Training (MOET) is the executing agency of the project.

The project will improve participation of ethnic minorities and girls in lower secondary education in the 103 most disadvantaged districts from the Northern Mountain, Central Highland, and Mekong River Delta regions. It will be achieved through construction of classrooms and semi-boarding facilities, ethnicity-responsive teacher training, pilot testing of school feeding and awareness raising, provision of scholarships for the smallest population ethnic groups, and capacity development of educational planning for targeted assistance for disadvantaged groups. The project will be completed by June 2014.

The second loan signed was for the Third Financial Sector Program building on the earlier two loans provided in 1996 and 2002. This new program supported by a loan of $75 million takes Viet Nam's financial sector to the next stage of development. This third program will specifically support the Government's efforts in three key areas, namely enhancing financial market liquidity, improving the institutional framework for issuance of securities, and strengthening investor and consumer protection. Reflecting Viet Nam's integration into the global economy, this will be supplemented by promoting greater cooperation amongst regional securities regulators in a context of integrating financial markets. The State Bank of Viet Nam is the executing agency for this program.

The third loan is a regional loan of $165 million for Viet Nam and Cambodia. Donor funding for the Viet Nam component is $150 million of which ADB provides $75 million loan, the Government of Australia $25 million grant, and the Government of Korea a $50 million loan. This regional project will complete the Greater Mekong Subregion Southern Coastal Corridor (GMS-SCC) in Cambodia and Viet Nam. The project will rehabilitate transport infrastructure, construct new cross-border facilities, prevent and increase HIV/AIDS and trafficking awareness. The project also includes one component of road maintenance in Cambodia. By reducing travel times and vehicle operating costs (VOCs) along the high priority GMS-SCC, the project will encourage economic activities in the affected provinces, provide employment opportunities for the local population, and improve access to social services.

The project will also improve 96.1km of National highway No. 80 and 63 in Viet Nam and construct two large bridges across the Cái Bé and Cái Lớn Rivers in Kien Giang province. The project components in Viet Nam were expected to be completed by 31 December 2014. The Viet Nam Road Administration (VRA) will be the executing agency of the project components in Viet Nam.

During 2007, ADB has approved 8 loans totaling $1,439 million and technical assistance grants amounting to $22 million for Viet Nam. These figures exclude regional technical assistance projects and private sector operations. At the Consultative Group Meeting on 6 and 7 December, ADB indicated that its work program for 2008 includes loans and TAs totaling in the range of $1.3 to $1.6 billion.

"As Viet Nam is becoming a middle income country in the near future, it is the time to start looking at measures to ensuring the socioeconomic development to be sustainable so that Viet Nam can realize the vision of becoming an industrialized nation by 2020 without being caught by the "middle income country trap," said Konishi. "I do believe the three loans we are signing today are all very important to lay a solid foundation for Viet Nam's future."

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