ADB Loans to Help Viet Nam Improve Healthcare in Poor, Remote Communities

News Release | 22 June 2010

MANILA, PHILIPPINES - The Asian Development Bank (ADB) today approved $60 million in loans for the Viet Nam Health Human Resources Sector Development Program to help the country improve its health services, particularly in poor, remote communities which lack skilled workers and quality health facilities. The Program is cofinanced with an $11 million grant from the Government of Australia.

Viet Nam has improved health standards significantly in recent years and is on track to meet sector-related Millennium Development Goals, but there are still gaps in access and quality of care between urban and rural areas and among regions. It has no system for licensing and registering health facilities; is one of the few countries in Asia without a functioning system for regulating and managing the registration of its health workforce; and government health spending has not kept pace with the country's buoyant economic growth.

In response, the government has begun a series of reforms to improve service delivery, including strengthening the management and training of health workers, as well as financing of its health services. The program loan will support key policy reforms, while the project loan will finance investments linked to, and supportive of, planned policy actions.

"The Program will improve health care services for the poor in remote communities by strengthening the capacity of health facilities, training institutions and health workers to serve their special needs," said Sjoerd Postma, Senior Health Specialist in ADB's Southeast Asia Department.

A $30 million program loan will support reforms such as the Law on Examination and Treatment, approved in 2009, to govern the operation of health facilities and the registration and practice of health professionals; a new plan to upgrade teaching institutions; and the adoption of new models for costing and managing service delivery in district hospitals. A $30 million project loan will support investments linked to planned policy actions in key sector institutions. These include strengthening human resources planning and management; quality improvements at training institutions, and increases in the number of ethnic minority and female students who complete health worker training and return to work in their communities.

ADB has financed six health projects in Viet Nam, but this is the first sector development program. The program approach gives ADB an opportunity to support policy reforms with accompanying investments to address critical quality, efficiency and human resource constraints.

The program loan - which will be released in two tranches with delivery linked to policy action milestones - has a 24-year term, including an 8-year grace period, with an interest rate of 1% per annum for the grace period and 1.5% per annum for the rest of the term. The project loan has a 32-year term, including a grace period of 8 years, with an interest rate of 1% per annum for the grace period and 1.5% per annum for the rest of the term. Both loans are from ADB's concessional Asian Development Fund.

The Ministry of Health is the executing agency for the program and associated project, which is expected to be completed by end December 2015.