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Viet Nam and ADB

ADB's country partnership strategy for Viet Nam is based on promoting job creation and competitiveness, increasing the inclusiveness of infrastructure and service delivery, and improving environmental sustainability and climate resilience.

ADB's Work in Viet Nam

ADB Membership

Joined 1966

Shareholding and Voting Power

Number of shares held:
36,228 (0.341% of total shares)

Votes:
75,342 (0.567% of total membership, 0.870% of total regional membership)

Overall capital subscription:
$500.97 million

Paid-in capital subscription:
$32.51 million

Viet Nam’s socioeconomic development has been remarkable, and the country achieved outstanding growth again in 2018 and 2019. This growth was underpinned by robust domestic consumption, which was boosted by low inflation and rising incomes among the country’s growing middle class. The acceleration of industry, notably manufacturing, driven by sizable increases in foreign direct investment, aided the growth momentum. The signing of the European Union–Viet Nam Free Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership also created more opportunities for the country’s exports.

Viet Nam was one of the founding members of ADB in 1966. ADB has since supported the country in its achievements in reducing poverty and has more recently been helping to guide Viet Nam’s endeavors to address income inequality and socioeconomic disparities, particularly for ethnic minorities and other vulnerable groups. Since 1966, ADB has provided $16.7 billion in cumulative assistance for Viet Nam.

On 1 January 2019, Viet Nam graduated to a Group C country, with access only to regular ordinary capital resources.

Overlooking view of the Ho Chi Minh City, Viet Nam at night

Cumulative loan and grant disbursements to Viet Nam amount to $11.1 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.


ADB-Supported Projects and Programs

In 2019, ADB signed sovereign and nonsovereign projects with Viet Nam, with loans and grants totaling $612.56 million and technical assistance worth $14.72 million. These investments will help the country enhance transport connectivity and urban development, improve access to quality education and health services, support climate change mitigation and environmental sustainability, promote competitiveness of the domestic economy, and integrate Viet Nam into the regional and global economy.

The new initiatives will continue ADB’s track record in helping the Government of Viet Nam deliver development results. From 2010 to 2019, ADB assisted Viet Nam in constructing or upgrading 3,042 kilometers (km) of roads, 173 km of railway, and 1,727 km of power transmission lines. Over this period, the bank also helped provide 231,379 households with new or improved water supply and 112,255 homes benefited from new or improved sanitation. ADB-supported projects also improved irrigation, drainage, and flood management for an area covering 1,390,827 hectares, benefiting more than 2.2 million households.

ADB has been supporting government efforts to strengthen, deepen, and broaden the reach of Viet Nam’s finance sector. These include improvements in the legal and regulatory framework for financial stability, nonperforming loans resolution, and bank restructuring. ADB has backed the government in creating an enabling environment for money market and capital market development. It is supporting policy measures to introduce a market-based approach to financial inclusion through development of microfinance and adoption of financial technology. ADB’s private sector operations have also supported finance sector development through a range of activities, including the Trade Finance Program and credit lines for commercial financial institutions to support small and medium-sized enterprises. ADB also helps strengthen capacity development in the finance sector through technical assistance combined with financing.

In education, ADB assistance has seen 973,340 students (of whom 405,425 are female) benefit from new or improved educational facilities, while 401,518 teachers (of whom 170,340 are female) have been trained to higher quality or competency standards.

ADB is committed to sharing knowledge for effective development in Viet Nam, while leveraging a wider range of financial and technical support, including private sector investment and operational participation.

Ho Chi Minh City–Long Thanh–Dau Giay Expressway

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3.00 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2019, ADB mobilized $3.28 billion of longterm cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Financing Partnerships

Financing partnerships enable ADB’s development partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade Finance Program and Supply Chain Finance Program.

ADB began cofinancing operations in Viet Nam in 1972. Since then, sovereign cofinancing commitments for Viet Nam have amounted to $4.59 billion for 59 investment projects and $132.22 million for 96 technical assistance projects. Nonsovereign cofinancing for Viet Nam has amounted to $8.62 billion for four investment projects.

In 2019, Viet Nam received a total of $10.48 million in grants and cofinancing from the Government of Australia and the Japan Fund for Poverty Reduction for three investment projects.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

Viet Nam is most at risk from the impacts of climate change, with extreme weather events becoming more common. A rapidly aging population also presents major demographic challenges for the government.

Public and publicly guaranteed debt in Viet Nam increased to 63.7% of gross domestic product in 2016. This led to legislative action to curb spending and reduce public debt, including the government imposing rigid ODA disbursement ceilings. Although fiscal constraints eased in 2018 and 2019, ODA disbursement continues to be delayed by lengthy budget preparation and approval processes. Other challenges include complex government procedures and regulations for project processing and procurement practices that limit project readiness.

To address these issues, ADB and other members of the 6 Banks Group are encouraging the government to streamline medium-term investment planning processes, accelerate ODA budgeting to meet disbursement needs, update ODA management and utilization regulations, and strengthen procurement capacity.

Boats in Phong Nha supported by the Greater Mekong Subregion Sustainable Tourism Development Project

Future Directions

ADB is currently preparing a country partnership strategy to support Viet Nam over 2021–2025. The new strategy will incorporate priorities of Viet Nam’s Socio-Economic Development Plan 2021–2025 and ADB’s Strategy 2030. It will also take into account the government’s changing appetite for ODA.

ADB will help Viet Nam build a core pipeline of projects that includes more responsive financing modalities and value-adding innovations and technologies that can leverage either more concessional cofinancing or increased private sector participation, including through public–private partnerships. The bank will continue to support climate change adaptation and mitigation measures to respond to the heightened environmental risks facing Viet Nam. It will also explore the possibility of financing multisector projects at the subnational government level.

This article was originally published in the ADB and Viet Nam: Fact Sheet. Updated yearly, this ADB Fact Sheet provides concise information on ADB's operations in the country and contact information.

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