Viet Nam: Financial Sector Deepening Program - Subprogram 1

Sovereign Project | 44251-012

Summary

Building on the Post Program Partnership Framework (P3F) of the previous financial sector program cluster, the Financial Sector Deepening Program (FSDP) will support the Government's sector initiatives including deepening the securities markets and developing related market infrastructure, and increasing the role of the non-bank financial sector in the financing of economic activity in Viet Nam. The proposed Subprogram 1 (SP1) of FSDP will focus on developing a well functioning money market, promoting a deeper and more liquid Government bond market, and building capacity within public institutions in accordance with the Government's human resources development plan.

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Project Name Financial Sector Deepening Program - Subprogram 1
Project Number 44251-012
Country Viet Nam
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7895-VIE: Financial Sector Deepening Program - Subprogram 1
Technical Assistance Special Fund US$ 600,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector Finance - Finance sector development - Insurance and contractual savings - Money and capital markets
Gender Equity and Mainstreaming No gender elements
Description Building on the Post Program Partnership Framework (P3F) of the previous financial sector program cluster, the Financial Sector Deepening Program (FSDP) will support the Government's sector initiatives including deepening the securities markets and developing related market infrastructure, and increasing the role of the non-bank financial sector in the financing of economic activity in Viet Nam. The proposed Subprogram 1 (SP1) of FSDP will focus on developing a well functioning money market, promoting a deeper and more liquid Government bond market, and building capacity within public institutions in accordance with the Government's human resources development plan.
Project Rationale and Linkage to Country/Regional Strategy

For the last decade and a half, ADB has supported financial sector development in Viet Nam with three successive clusters of Financial Sector Program Loans (FSPL). FSPL I facilitated the introduction and adoption of basic concepts and systems integral to a market based financial system, and established the foundations for a commercialized banking sector and key financial market infrastructure. FSPL II promoted the development of the non-bank financial sector by developing operational, regulatory and supervisory frameworks for capital markets and related infrastructure, by promoting institutional investors, developing a legal framework for leasing, and introducing an anti-money laundering regime. FSPL III promoted a deeper financial sector by strengthening the operational, legal and regulatory environment for efficient and liquid capital markets. ADB programs and technical assistance have contributed to the emergence of a nascent yet fast growing financial sector capable of intermediating both domestic and foreign savings into productive activities.

Viet Nam has made significant progress in socioeconomic development under Do Moi, (economic renovation programs) and is well on the way to become a more mature middle-income country. The reforms under Do Moi (Phase 1 and 2) have produced faster rates of economic growth, and helped Viet Nam reach (lower) middle income status with income per capita of US$ 1200/person (2010). The country now aspires to reach a higher middle income status with income per capita of at least US$3000/person, and significantly improve human development and reduce poverty by 2020. To achieve these goals, the Government's Socio-Economic Development Strategy (SEDS) 2020 has laid out an encompassing plan to transform Viet Nam into a modern, productive, and equitable economy.

To support economic transformation envisaged under SEDS 2020, efficient and effective intermediation of savings from both domestic and foreign sources is crucial. Recognizing this, SEDS 2020 affirms that financial sector reforms are essential to support the country's progression towards a more productive and mature economy. Continuous financial sector reforms are also viewed as necessary for meeting the economic challenges of an increasingly open economy after accession to the World Trade Organization (WTO). Moreover, compared with low-income developing countries on the one hand, and high-income developed countries on the other, middle-income emerging market economies are the most vulnerable to financial crises and instability, the 2008 credit crisis in the United States notwithstanding. Hence, continuous financial sector reform becomes more critical as Viet Nam is migrating towards a higher middle income status. FSDP will support the Government of Viet Nam in undertaking further financial sector reforms in this new stage of economic development in Viet Nam.

Impact TBD
Project Outcome
Description of Outcome TBD
Progress Toward Outcome
Implementation Progress
Description of Project Outputs TBD
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Satisfactory
During Project Implementation To be updated
Business Opportunities
Consulting Services The PPTA will require 24.5 person months (p-m) of individual consultant services. The breakdown of individual consulting services is as follow: An international money market expert / team leader (4 p-m, intermittent over 6 months), an international monetary policy operations expert (1.5 p-m); an international capital market expert (3 p-m); an international accounting and auditing expert (2 p-m); an international securities settlement expert (1.5 p-m), international securities commission experts (3 p-m), an international insurance expert (1.5 p-m), an international GMRA expert (a firm), and two field coordinators (national, 8 p-m, intermittent over 12 months).
Responsible ADB Officer Stephen Schuster
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SERD
Executing Agencies
State Bank of Vietnam47-49 Ly Thai To Street
Ha Noi, Viet Nam
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 21 Oct 2011
Last Review Mission -
Last PDS Update 10 Dec 2012

TA 7895-VIE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
21 Oct 2011 18 Nov 2011 18 Nov 2011 31 Dec 2012 31 Dec 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
600,000.00 0.00 0.00 0.00 0.00 0.00 600,000.00 21 Oct 2011 334,043.79
Title Document Type Document Date
Financial Sector Deepening Program - Subprogram 1 Technical Assistance Reports Dec 2012

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