VIETNAM 85986 COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 WORLD BANK VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 1 INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP STRATEGY FOR THE SOCIALIST REPUBLIC OF VIETNAM FOR THE PERIOD FY12 - FY16 NOVEMBER 7, 2011 FOREWORD I am pleased to present the World Bank Group’s Country Partnership Strategy (CPS) for the Socialist Republic of Vietnam for the period 2012 to 2016. Since economic reforms began in the 1980s there has been remarkable development progress. Growth has averaged 7 percent annually and per capita income has grown from about US$150 to US$1,100. Vietnam has achieved near universal rural electrification; a dramatic increase in school enrollment, including at the secondary and tertiary levels - with gender equity; and significant improvements in infrastructure. Vietnam achieved lower middle income country status in 2009, earlier than initially envisaged. It has been a privilege for the World Bank to partner with the Government of Vietnam over the past several decades in support of improving the lives of the people of Vietnam. In November 2011, the World Bank joined the Government and other stakeholders in a celebration of our partnership. It seems fitting that as the celebration was under way; the World Bank Group was in the process of finalizing its strategy for the next five years of the partnership. Looking ahead, Vietnam faces the challenge of transitioning fully to middle income status and delivering even greater prosperity for all of its citizens. Other countries in the East Asia Region have made this transition. I am certain Vietnam can do the same. The World Bank Group’s CPS supports Vietnam’s overall goal of laying the foundations for a modern, industrialized society by 2020. It is also aligned. with the country’s Socio-Economic Development Strategy for 2011-2020 and its strategic “break-through areas” of promoting human resources, improving market institutions, and advancing infrastructure development. The overall objective of this CPS is to help Vietnam achieve success as a middle income country. The CPS program is organized into three strategic pillars: competitiveness, sustainability, and opportunity; and three main themes: governance, gender, and resilience. The Strategy also continues a process of developing the relationship between Vietnam and the World Bank to better serve the needs of a more mature middle income country. This CPS was prepared in close consultation with the Government of Vietnam, civil society and development partners, including multileral and bilateral donors, and we thank all those who participated for their valuable advice and insights. This document provides a five-year roadmap for the World Bank Group’s engagement in Vietnam. We will work closely with Government to monitor implementation and results on a regular basis and make adjustments as needed. This document is available on the World Bank Vietnam’s website: www.worldbank.org/en/country/vietnam Pamela Cox Vice President – East Asia and Pacific Region The date of the last Country Partnership Strategy was February 1, 2007, and the date of the last Country Partnership Strategy Progress Report was December 21, 2009. CURRENCY EQUIVALENTS (Exchange rate as of October 2011) Currency Unit = Vietnamese Dong US$1.00 = 20,890 FISCAL YEAR January 1 - December 31 IDA and IBRD IFC MIGA Vice President James W. Adams Karin Finkelston Izumi Kobayashi Country Director/Regional Director Victoria Kwakwa Sergio Pimenta Kevin Lu Task Team Leaders/ Myla Taylor Williams/ Simon Andrews Hal G. Bosher Regional Manager Mette Frost Bertelsen Acknowledgements The Vietnam Country Partnership Strategy was prepared under the guidance of Victoria Kwakwa, World Bank Country Director, and Simon Andrews, IFC Regional Manager, by a team led by Co-Task Team Leaders Myla Taylor Williams, Country Program Coordinator (EACVQ), and Mette Frost Bertelsen, Country Officer (EACVF). MIGA participation was led by Hal Bosher, Senior Underwriter (MIGA). Special thanks are extended to the Government of Vietnam CPS Core Team, Development Partners and Civil Society Organizations for their contributions. World Bank Group Core Team: Christian Bodewig (Senior Economist, EASHS), Quang Hong Doan (Senior Economist, EASPR), Steven Jaffee (Lead Rural Development Specialist, EASVS), Abhas Kumar Jha (Lead Urban Specialist EASIN), and Vinh Thanh Nguyen (Water and Sanitation Specialist, TWIEA). World Bank Group Contributors: Keiko Sato (Portfolio and Operations Manager), Jennifer Sara (Sector Manager), Toomas Palu (Country Sector Coordinator, HD), Deepak Mishra (Lead Economist), Sameer Goyal (Country Sector Coordinator, FPD), Dean Cira (Country Sector Coordinator, Urban), Paul Vallely (Country Sector Coordinator, Transport), Douglas Graham (Country Sector Coordinator, Environment), Beatriz Arizu de Jablonski (Acting Country Sector Coordinator, Energy), Pilar Larreamendy (Country Sector Coordinator, Social Development), James Anderson (Senior Governance Specialist), Huong Thi Lan Tran (Governance Specialist), Nguyen Thi Thuy Tran (Operations Analyst), Mai Thi Hong Bo (Partnerships Officer), Valerie Kozel (Senior Poverty Economist), Duc Minh Pham (Senior Economist), Dzung Huy Nguyen (Natural Disaster Management Operations Officer), Habib Nasser Rab (Senior Economist), Lan Van Nguyen, (Operations Officer, IFC), Quang Bao Lam (Senior Country Officer, IFC), Yuling Zhou (Lead Procurement Specialist), Robert Gilfoyle, (Senior Financial Management Specialist), Kien Trung Tran (Senior Procurement Specialist), Daniel Mont (Senior Human Development Economist), Nga Thi Quynh Dang (Trust Fund Coordinator), Viet Tuan Dinh (Senior Economist), Victoria Gyllerup (Senior Operations Officer), Thanh Thi Mai (Senior Education Specialist), Nga Nguyet Nguyen (Senior Economist), Ngan Hong Nguyen (Communications Officer), Chi Kim Tran (Public Information Associate), Moussoukoro Soukoule (Country Program Assistant), Phuong Minh Le (Senior Executive Assistant), Minh Thi Hoang Trinh (Team Assistant), Hoa Chau Nguyen (Team Assistant). ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities Competitiveness Credit ACP Agriculture Competitiveness Project ESW Economic and Sector Work ADB Asian Development Bank EU European Union ADF Asian Development Fund EVN Electricity of Vietnam AEF Aid Effectiveness Forum FDI Foreign Direct Investment AF Additional Financing FIRST Fostering Innovation through Research, AFD Agence Française de Développement Science, and Technology AHIP Avian and Human Influenza Project FLEG Forest Law Enforcement and Governance ASEAN Association of South East Asian Nations FSAP Financial Sector Assessment Program AusAID Australian Agency for International FSDP Forest Sector Development Project Development FSQL Fundamental School Quality Levels BOP Balance of Payments FTA Free Trade Agreement CAS Country Assistance Strategy FY Fiscal Year CC Climate Change GAC Governance and Anti-Corruption CDD Community Driven Development GDP Gross Domestic Product CFAA Country Financial Accountability GDVC General Department of Vietnam Customs Assessment GEF Global Environment Facility CFC Chlorofluorocarbon GFDRR Global Facility for Disaster Reduction and CG Consultative Group Recovery CIDA Canadian International Development GHG Greenhouse Gas Agency GNI Gross National Income CPPR Country Portfolio Performance Review GPE Global Partnership for Education CPRGS Comprehensive Poverty Reduction and GSO General Statistics Office Growth Strategy GTAP Governance, Transparency and Anti- CPRT Country Portfolio and Results Monitoring Corruption Plans Tool GWh Gigawatt Hour CPS Country Partnership Strategy HCFC Hydro chlorofluorocarbons CTF Clean Technology Fund HCMC Ho Chi Minh City CY Calendar Year HCS Hanoi Core Statement DFID Department for International HIFU Ho Chi Minh City Investment Fund for Development Urban Development DO Development Objective HPUTP Haiphong Urban Transport Project DPIP Danang Priority Investment Project HUTP Hanoi Urban Transport Project DPL Development Policy Loan IAS International Accounting Standards DPO Development Policy Operation IBRD International Bank for Reconstruction EMCC Economic Management and and Development ICA Investment Climate Assessment MONRE Ministry of Natural Resources and ICR Implementation Completion Report Environment ICT Information and Communication MPI Ministry of Planning and Investment Technology MSMEs Micro and Small-Medium Enterprises IDA International Development Association MTEF Medium-Term Expenditure Framework IDF Institutional Development Fund MVA Megavolt-ampere IEG Independent Evaluation Group MW Megawatt IFC International Finance Corporation NDTP Northern Delta Transport Project IFRS International Financial Reporting NGO Non-Government Organization Standards NMPRP-2 Second Northern Mountains ILO International Labor Organization Poverty Reduction Project IMF International Monetary Fund NPL Non-Performing Loans INGO International Non-Government NSIS National Statistical Indicators System Organization NTP National Targeted Program IPSAS International Public Sector Accounting OCR Ordinary Capital Resources Standards ODA Official Development Assistance ISR Implementation Status and Results OECD Organization for Economic Co-operation Report and Development JICA Japanese International Cooperation OOG Office of Government Agency OSF ODA Strategic Framework JPPR Joint Portfolio Performance Review PCB Polychlorinated Biphenyl JSAN Joint Staff Advisory Note PCI Provincial Competitiveness Index JSDF Japan Social Development Fund PEFA Public Expenditure and Financial KEXIM Export-Import Bank of Korea Accountability KfW Kreditanstalt für Wiederaufbau PER Public Expenditure Review KTF Korean Trust Fund PFM Public Financial Management LIFSAP Livestock Competitiveness and Food PHRD Policy and Human Resources Safety Project Development LNG Liquified Natural Gas PIR Public Investment Reform MARD Ministry of Agriculture and Rural PMU Project Management Unit Development PPA Power Purchase Agreement M&E Monitoring & Evaluation PPP Public-Private Partnership MDG Millennium Development Goal PRSC Poverty Reduction Support Credit MDTF Multi-Donor Trust Fund PSD Private Sector Development MDTP Mekong Delta Transport Project RD Rural Distribution MDWMP Mekong Delta Water Management RDF Rural Development Fund Project RE2 Second Rural Energy Project MIC Middle Income Country REDD Reduction of Emissions from MIGA Multilateral Investment Guarantee Deforestation and Forest Degradation Agency REDP Renewable Energy Development Project MLF Microfinance Loan Fund RETF Recipient-Executed Trust Fund MOF Ministry of Finance RF3 Third Rural Finance Project MOIT Ministry of Industry and Trade RNIP Road Network Improvement Project MOLISA Ministry of Labor, War Invalids and Social ROSC Report on the Observance of Standards Affairs and Codes RSP Road Safety Project USD United States Dollar SARS Severe Acute Respiratory Syndrome UWS Urban Water Supply SAV State Audit of Vietnam UWSWP Urban Water Supply and Wastewater SBV State Bank of Vietnam Project SDR Special Drawing Right VAS Vietnam Accounting System SEDP Socio-Economic Development Plan VAT Value Added Tax SEDS Socio-Economic Development Strategy VCIS Vietnam Customs Information System SEIER System Efficiency Improvement, VCGM Vietnam Competitive Generation Market Equitization and Renewables VDR Vietnam Development Report SEQAP School Education Quality Assurance VHLSS Vietnam Household Living Standards Program Survey SIL Sector Investment Loan VLAP Vietnam Land Administration Project SME Small-Medium Enterprise VN Vietnam SOCBs State-Owned Commercial Banks VND Vietnamese Dong SOE State-Owned Enterprise VSDS Vietnam Statistical Development SRB Sex Ratio at Birth Strategy TA Technical Assistance VSS Vietnam Social Security TABMIS Treasury and Budget Management VWRAP Vietnam Water Resources Assistance Information System Project TBD To Be Determined WB World Bank TF Trust Fund WBG World Bank Group TFLA Trade Facilitation and Logistics Audit WBI World Bank Institute UK United Kingdom WTO World Trade Organization UN United Nations WWF World Wildlife Fund US United States TABLE OF CONTENTS EXECUTIVE SUMMARY I I. COUNTRY CONTEXT 1 RECENT POLITICAL AND ECONOMIC DEVELOPMENTS REGIONAL AND GLOBAL CONTEXT MEDIUM-TERM ECONOMIC PROSPECTS II. DEVELOPMENT AGENDA 6 COMPETITIVENESS ENVIRONMENTAL AND NATURAL RESOURCE SUSTAINABILITY POVERTY AND INEQUALITY VULNERABILITY GOVERNANCE III. GOVERNMENT PRIORITIES 13 IV. VIETNAM-WORLD BANK GROUP PARTNERSHIP 15 LESSONS AND FEEDBACK CPS PRINCIPLES OF ENGAGEMENT CPS ENGAGEMENT FRAMEWORK AND EXPECTED RESULTS IMPLEMENTING THE FY12-FY16 CPS DEVELOPMENT PARTNERSHIPS AND AID EFFECTIVENESS V. RISKS 36 Annexes ANNEX 1: RESULTS MATRIX 40 ANNEX 2: VIETNAM CPS FY07-FY11 COMPLETION REPORT 51 ANNEX 3: COUNTRY-AT-A-GLANCE 117 ANNEX 4: SELECTED INDICATORS OF BANK PORTFOLIO PERFORMANCE AND MANAGEMENT 120 ANNEX 5: INDICATIVE FY12-FY14 LENDING PROGRAM 121 ANNEX 6: INDICATIVE FY12-FY14 AAA PROGRAM 123 ANNEX 7: SOCIAL INDICATORS 125 ANNEX 8: PROGRESS TOWARD THE MILLENNIUM DEVELOPMENT GOALS 126 ANNEX 9: GENDER IN VIETNAM 128 ANNEX 10: KEY ECONOMIC INDICATORS 130 ANNEX 11: KEY EXPOSURE INDICATORS 132 ANNEX 12: OPERATIONS PORTFOLIO (IBRD/IDA AND GRANTS) 133 ANNEX 13: STATEMENT OF IFC’S HELD AND DISBURSED PORTFOLIO 137 ANNEX 14: VIETNAM COUNTRY SURVEY 138 ANNEX 15: STAKEHOLDER CONSULTATIONS 141 ANNEX 16: PUBLIC FINANCIAL MANAGEMENT IN VIETNAM 150 ANNEX 17: OVERVIEW OF MAIN TRUST FUNDS 155 ANNEX 18: THE BANK’S DEVELOPMENT PARTNERSHIPS IN VIETNAM 158 ANNEX 19: DEVELOPMENT PARTNER ACTIVITIES IN VIETNAM 160 ANNEX 20: STATISTICAL CAPACITY AND M&E SYSTEMS 166 ANNEX 21: COUNTRY FINANCING PARAMETERS 169 TABLES TABLE 1: KEY ECONOMIC INDICATORS 4 FIGURES FIGURE 1: POVERTY TRENDS IN VIETNAM 1993-2008 8 FIGURE 2: VIETNAM CPS RESULTS OUTCOMES AND INDICATORS 21 BOXES BOX 1: URBANIZATION OPPORTUNITIES AND CHALLENGES 10 BOX 2: MAINSTREAMING GOVERNANCE 20 BOX 3: EMPOWERING LOCAL WOMEN AND IMPROVING RURAL ROAD MAINTENANCE 22 BOX 4: EMCC TO SUCCEED PRSC SERIES 23 BOX 5: WORLD BANK’S INFRASTRUCTURE STRATEGY IN VIETNAM 24 BOX 6: ADDRESSING VIETNAM’S REMAINING POVERTY AGENDA 29 BOX 7: ENSURING FIDUCIARY AND INSTITUTIONAL DEVELOPMENT 31 BOX 8: FIDUCIARY RISKS 32 Executive summary 1. This is the World Bank Group’s first Country Partnership Strategy (CPS) for Vietnam since it became a lower middle-income country in 2009. Vietnam became IBRD-eligible in 2007 and received its first IBRD loan in 2009. The CPS will support implementation of Vietnam’s new five-year Socio-Economic Development Plan (SEDP) for 2011-2015. It combines continuity from the previous CPS program with the introduction of some strategic shifts that will likely take more than one CPS period to yield significant change. These shifts are primarily intended to sharpen strategic focus within the Bank’s program, enhance operational efficiency, and deliver development results faster. 2. Vietnam has achieved remarkable development success over the last 25 years. Reforms introduced in 1986 have transformed the country from a centrally planned to a more market oriented economy. This has spurred rapid growth (averaging 7.3 percent during 1990-2010) and significant poverty reduction. Vietnam’s per capita income has increased more than eleven-fold to US$1,130 in 2010, and the poverty headcount ratio has fallen from 58 percent in 1993 to 14.5 percent in 2008. The country has already attained several of its original Millennium Development Goals (MDGs) and is likely to achieve a few more by 2015. There have been dramatic improvements in the welfare of the average Vietnamese citizen. 3. In recent years, however, Vietnam has found it more difficult to maintain high levels of growth with macroeconomic stability. This reflects in part its deeper integration into global markets with World Trade Organization (WTO) accession in 2007 and recent global crises. However, the more important explanation is a reliance on public investment, channeled largely through a weak state enterprise sector and financed by massive credit expansion, to drive growth. This has led to an accommodating macroeconomic policy stance, inefficient public investments and a high level of indebtedness in the state sector. Banking and financial sector risks have therefore become elevated. The economy has suffered episodes of macroeconomic instability with high levels of inflation, depreciation and instability of the currency, and signs of significant internal capital flight. Since early 2011, the Government has been implementing a comprehensive stabilization program (Resolution 11) which has begun to reestablish macroeconomic stability. A plenum of the Communist Party of Vietnam in October 2011 reaffirmed the Government’s commitment to sustaining macroeconomic stability and set three aspects of economic restructuring as priorities for the next five years. These are restructuring of (i) public investment; (ii) the financial sector with focus on the commercial banking system and financial institutions; and (iii) state- owned enterprises with focus on economic groups. Action on this will be important for tackling the structural drivers of macroeconomic instability and enhancing the economy’s efficiency. 4. Vietnam’s aspirations to avoid the middle income trap and become a successful middle income country (MIC) will require strengthening the economy’s competitiveness. In addition to recent macroeconomic instability, the business environment is constrained by weak infrastructure, by high costs of interacting with Government agencies, and by a lack of adequate information on policy. Vietnam will also need to begin to build the basis for shifting to higher productivity, product and process VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 I innovation, and value addition as its low-cost labor advantage begins to dissipate. Developing a better educated workforce and strengthening its technology and innovation system will be critical for this. 5. Vietnam has relied on its abundant natural resources for growth, but has not always managed the environmental impacts properly. While the share of Vietnam’s economic growth derived from its natural capital (e.g., fisheries, forestry, and mineral resources) will likely diminish with further industrialization, it will nonetheless remain an important source of growth and employment, especially for the poor. Population growth, industrialization, urbanization, and major changes in patterns of rural development have contributed to deterioration of air and water quality and loss of biodiversity. Vietnam relies on international rivers for 60 percent of its surface water flow. Dry-season water supply is under pressure, and climate change will exacerbate the situation. There is now strong recognition in Government of the need for a more sustainable use of natural resources and the environment. 6. Inequality in Vietnam is beginning to rise, and the pace of poverty reduction has inevitably slowed, with poverty increasingly concentrated in ethnic minority communities. Macroeconomic instability and adverse weather shocks have also increased household vulnerability. Development of Vietnam’s systems for governance and accountability has lagged behind the country’s broader development success, making it more difficult to address these challenges effectively. Progress on these issues – competitiveness, sustainability, persistent poverty and rising inequality, vulnerability, and governance – are critical for making progress on Vietnam’s ambitious development aspirations in the medium and long term. Addressing them is at the core of both the Government’s overall strategy and this CPS. 7. The Government’s development vision for the next decade is laid out in its Socio- Economic Development Strategy (SEDS) 2011-2020. The SEDS gives attention to structural reforms, environmental sustainability, social equity, and emerging issues of macroeconomic stability. It defines three “breakthrough areas”: (i) promoting human resources/skills development (particularly skills for modern industry and innovation), (ii) improving market institutions, and (iii) infrastructure development. The overall goal is for Vietnam to lay the foundations for a modern, industrialized society by 2020. The SEDP 2011-2015, approved by the new National Assembly in November 2011, elaborates the objectives of the SEDS and identifies the specific measures and resources that are needed for its implementation. Aligned with the Government’s overall strategic priorities and goals, the CPS will support the three breakthrough areas of the SEDS and SEDP of promoting human resources, improving market institutions, and advancing infrastructure development. 8. The CPS introduces several new principles of Bank engagement in Vietnam aimed at increasing the Bank’s impact: (i) sharpening strategic focus by reducing program dispersion through consolidation and greater selectivity; (ii) improving operational efficiency, including through the introduction of more systemic approaches, leveraging resources by strengthening policy dialogue and analytical and advisory services (AAA), through synergies with development partners, and across the World Bank Group (WBG); and (iii) accelerating implementation for more timely results. 9. Building on Vietnam’s strong track record of growth and poverty reduction, the World Bank Group will partner with Vietnam in its effort to achieve success as a middle income country. The CPS program will support selected elements of the transitions required for this, notably, from an agrarian economy toward one that is more urban and industrialized; from a focus on quantity toward a greater focus on quality of production and service provision; and from a comparative advantage of low-cost labor, with low value added, to one with a growing share of innovation-led and higher value-added production and services. VIETNAM COUNTRY PARTNERSHIP STRATEGY II 2012 - 2016 10. The CPS program will support investments and policies organized into a strategic framework of three pillars and three cross-cutting themes. The pillars are: (i) strengthening Vietnam’s competitiveness in the regional and global economy, (ii) increasing the sustainability of its development, and (iii) broadening access to opportunity. Key cross-cutting themes are (i) strengthening governance, (ii) supporting gender equity, and (iii) improving resilience in the face of external economic shocks, natural hazards and the impact of climate change. A wide range of instruments will be used, including results-based approaches, a series of development policy operations (DPOs) to succeed the Poverty Reduction Support Credit (PRSC) series concluding with the tenth operation in December 2011, regional IDA operations, and programmatic AAA. The Global Environment Facility (GEF), Recipient Executed Trust Funds (RETFs), and Institutional Development Fund grants (IDFs) for capacity building will complement IDA and IBRD resources. With new challenges emerging in the poverty agenda – e.g., rising inequality, urban poverty, and concentration of poverty in remote ethnic minority communities – the CPS includes a renewed commitment to poverty reduction, including through better understanding of Vietnam’s shifting poverty dynamics, and to new targeted poverty interventions informed by this understanding. Governance and gender lenses will be applied to all operations at an early stage of preparation to seize opportunities for strengthening support in these areas. Resilience emerges as an important theme in light of Vietnam’s greater vulnerability to shocks on several fronts: external shocks at both the macroeconomic and household level, and natural hazards and climate change. The CPS supports a strengthening of Vietnam’s resilience on these specific issues in the respective pillars of the framework. 11. The challenge for the Vietnam program is to achieve results faster. Government is considering newer approaches such as results-based and output-based disbursement, in order to accelerate development results. Vietnam’s National Targeted Programs (NTPs) may be useful vehicles for this. During the CPS period, the Bank and Government will work to assess underlying fiduciary systems capacity and to diversify lending instruments for faster development impact. The Bank will also continue to work jointly with the Ministry of Planning and Investment (MPI) and other donors to address systemic official development assistance (ODA) implementation issues and undertake analyses to learn from well- performing provinces and sectors. At the project level, the Bank and MPI are giving priority to improving project readiness for implementation, accelerating preparation, and managing the existing portfolio proactively. A more streamlined results framework of this CPS will serve as a management tool for the Bank’s Vietnam Country Team. 12. Financing resources available to Vietnam during the new CPS period include an indicative FY12-FY14 IDA allocation of SDR 2.8 billion (equivalent to US$4.2 billion). This is the largest allocation to Vietnam under any IDA Replenishment, in light of Vietnam’s strong performance and the overall increase under the IDA 16 Replenishment. As a blend country, Vietnam will also have access to modest IBRD resources. Proposed FY12-FY14 IBRD commitments total US$770 million. Most of the IBRD resources will be used to finance infrastructure investments. As Vietnam transitions to a more market-based economy with the private sector increasingly a driver of growth, IFC’s program is expected to increase accordingly during the CPS period. MIGA is engaging more actively in Vietnam. Its new instrument in support of public-private partnerships (PPPs) could be useful for the Government to mobilize international financing for priority infrastructure projects. In addition to new IDA and IBRD commitments, resources available to Vietnam during the new CPS period include an undisbursed balance of US$5.7 billion (as of September 30, 2011) on the existing portfolio. 13. Trust Funds (TFs) play a major role in the Vietnam program. FY11 commitments and disbursements reached US$296 million and US$170 million, respectively. The sources of trust funds are expected to change as donors shift their attention to newer areas of support or start to scale VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 III down in Vietnam. Effective and efficient donor coordination will be important for minimizing gaps resulting from these shifts. Selection criteria for TFs have been developed and will be applied more systematically to ensure strategic alignment. 14. As several development partners will end ODA support to Vietnam during the next five years, the CPS will seek ways to support a smooth transition, including through offering financing vehicles for development partners as needed and as appropriate. Partnerships with other development partners, notably large donors such as the Asian Development Bank (ADB) and the Japanese International Cooperation Agency (JICA), and key bilateral collaborators such as the UK’s Department for International Development (DFID) and the Australian Agency for International Development (AusAID), will be strengthened to enhance coordination and help Vietnam make further progress on its harmonization and broader aid effectiveness agenda. 15. Monitoring of CPS implementation and results will be done annually. Adjustments will be made to reflect emerging lessons. 16. There are three main risks to implementation of the CPS program. They are: (i) slowdown in the global economy, to be partially mitigated by continued dialogue with government agencies and stakeholders on how to build buffers to global shocks; (ii) heightened macroeconomic instability, to be partially mitigated by intensified and regular dialogue with Government in consultation with the International Monetary Fund (IMF), including a Financial Sector Assessment Program (FSAP); and (iii) implementation risks, to be partially mitigated by capacity building for public financial management (PFM) and procurement, work with Government on modernizing and simplifying the legal framework for management of Official Development Assistance (ODA), implementation of credible project governance and anti-corruption plans, and technical assistance to strengthen the capacity of Government entities and professions responsible for independent assurance. VIETNAM COUNTRY PARTNERSHIP STRATEGY IV 2012 - 2016 I. COUNTRY CONTEXT 1. Vietnam is a development success approach to state-led development, but also story. Political and economic reforms (Đổi Mới) revised key policy documents to place greater launched in 1986 have transformed Vietnam from emphasis on market processes and non-state one of the poorest countries in the world, with per ownership of economic assets. Prime Minister capita income below US$100, to a lower middle Nguyễn Tấn Dũng has been re-appointed to a income country within a quarter of a century. The second term of office, while the Party General poverty headcount ratio has fallen from 58 percent Secretary, the President, and the Chairman of the in 1993 to 14.5 percent in 2008, and most indicators National Assembly have changed. of welfare have improved. Vietnam has already attained five of its ten original MDG targets and is 3. Over the last quarter of a century, well on the way to attaining two more by 2015 (see Vietnam’s politics and society have gradually Annex 8). At the end of 2010, Vietnam’s per capita evolved towards greater openness and space income was US$ 1,130. Vietnam has also been for civil participation. Public discourse on a applauded for the equity of its development, which range of political, social, and economic issues has has been better than most other comparators. The increased. Provisions are in place to require input country is playing a more visible role on the regional by citizens in certain decisions at the grassroots and global stage, having successfully chaired the level. The ability of the National Assembly to 2009 Annual Meetings of the Boards of Governors perform the role of a check and balance on the of the World Bank Group and the IMF, and carried executive has strengthened. Despite this progress, out the Chairmanship of the Association of South greater openness and opportunity for citizens to East Asian Nations (ASEAN) in 2010. participate in governance is needed to support Vietnam’s long term vision of becoming a modern RECENT POLITICAL AND ECONOMIC industrialized society. DEVELOPMENTS 4. In recent years, Vietnam has faced 2. Vietnam’s most recent political significant economic challenges, as it struggles transition (once every five years) formally to find its footing in a more integrated and began with the Eleventh Congress of the turbulent world economy. Steady integration Communist Party of Vietnam in January into the global economy since WTO accession in 2011. This was followed by elections for local 2007 has brought a higher flow of foreign direct Peoples’ Councils and for the National Assembly investment and increased exports. This integration in May 2011 and finally the endorsement of a has exposed Vietnam to increased commodity new Cabinet by the new National Assembly in price volatility and financial turbulence in the its first meeting in August 2011. The process has global economy as well as the effects of growth also included discussion and agreement on the slowdowns in North America and Europe. With directions for Vietnam on politics, economic and its market-based institutions still not uniformly social development, and on engagement with the developed and a slowdown in the reform effort, region and the rest of the World. The Congress the country has found it increasingly difficult called for a more comprehensive approach to the to cope with this new economic environment. country’s renovation, decided to promote greater Consequently, the economy has experienced citizens’ participation and unity within Vietnam, periodic episodes of macroeconomic instability and to engage proactively in international involving high levels of inflation, depreciation of integration. The Congress re-affirmed Vietnam’s the currency, and significant internal capital flight. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 1 5. The most recent episode of seven months of 2011, the current account posted macroeconomic instability started in the second a US$1.3 billion surplus, compared to a deficit of half of 2010, following delayed withdrawal US$3.2 billion during the same period last year, of the fiscal and monetary stimulus measures and the overall balance of payments (BOP) was introduced to deal with the impact of the global reported to be in surplus by US$5 billion. There financial crisis. In August 2011, inflation reached have been a number of equitizations1 of SOEs in a 33-month high of 23 percent, sovereign bond the banking sector, and more are planned in the spreads hovered around 350-400 basis points, and coming months. Government has also initiated foreign exchange cover was about two months a review of SOEs’ cross-holdings in state-owned of imports. The health of the banking sector has commercial banks. Economic growth has slowed remained a source of concern, in part because but remains robust at 5.6 percent during the first of the build-up of contingent liabilities in state- half of 2011. owned enterprises (SOEs). 8. Implementation of Resolution 11 6. In early 2011, Government began has had some shortcomings. For example, implementing policy measures that have helped efforts to rein in the investment budget have not restore macroeconomic stability. The dong was been sufficiently spelled out, a roadmap for SOE devalued by 9.3 percent against the US dollar on reform is not yet in place, and communication February 11, 2011, and a stabilization package of macroeconomic data and policy decisions is known as Resolution 11 was approved on February still slow and hesitant. The pace of structural 24, 2011. It contains a wide range of monetary and reforms has been somewhat slow, partly due to fiscal policy actions, and commits Government to the fact that the country has been in a period of undertake several structural measures, including transition over the past 12 months, as part of its reforming SOEs, improving communication of 5-year political cycle. Several important policy policy measures, and better protecting the poor actions and pieces of new legislation were also from the impacts of macroeconomic instability. deliberately held up until adoption of the new Specific measures implemented since then include five year Socio-Economic Development Plan an increase of 600 basis points in the policy rate (2012-2016) expected in November of 2011. The over a 7-month period, a significant reduction stabilization achievements to date demonstrate in the growth rate in credit and money supply Vietnam’s ability to address its macroeconomic for 2011 relative to 2010, a reduction in the fiscal challenges. The government has indicated that it deficit through higher revenue, and a cut in public remains committed to implementing Resolution 11 investment expenditure. A modest cash subsidy and to supplementing it with further reforms in the for the poor against electricity price hikes has also months ahead to address the areas of weakness. been put in place. This will be important for sustaining stability. 7. The stabilization effort has delivered REGIONAL AND GLOBAL CONTEXT 2 positive results. In October 2011 monthly inflation eased to 0.36 percent from an average of 9. As one of the most open economies 1.73 percent in the first nine months of 2011, the in the world, Vietnam will continue to be lowest level since August 2010. Foreign exchange considerably affected by regional and global reserves are rising, and the exchange rate premium, events. International trade is equivalent to nearly as high as 11-12 percent during the early months 160 percent of Vietnam’s gross domestic product of 2011, has been nearly eliminated. In the first (GDP). Since WTO accession, Vietnam has received 1. “Equitization” is a partial form of privatization used by the Vietnamese Government. 2. World Bank East Asia and Pacific Economic Update, 2011: Securing the Present, Shaping the Future VIETNAM COUNTRY PARTNERSHIP STRATEGY 2 2012 - 2016 more net foreign direct investment commitments into the global economy has exposed them to than Indonesia, the Philippines and Thailand wider demand and price volatility. Longer-term combined and the country’s future is intricately risks center around the possibility that policy in linked to the health of its regional and global the economies most directly hit by the crisis fail partners. Since the last global economic crisis, to shift focus from short-term crisis management the external environment that Vietnam faces has toward measures that address the underlying evolved rapidly and brought new opportunities structural issues that contributed to the crisis in and challenges. the first place4. 10. Vietnam has developed strong MEDIUM-TERM ECONOMIC PROSPECTS ties in the region, which have delivered important economic benefits. It became a 12. Stabilizing the economy is crucial to member of ASEAN in 1995, and joined the Asia Vietnam’s medium-term growth prospects that Pacific Economic Cooperation forum in 1998. otherwise remain strong. Further interest rate Vietnam deepened regional integration efforts increases in October 2011 and the scaling back of more recently by joining a series of Free Trade growth and investment targets demonstrate the Agreements (FTAs) between ASEAN and Japan, Government’s continued focus on macroeconomic China and Korea (ASEAN+1 FTAs). ASEAN stabilization. The conclusions of the October membership, together with accession to the 2011 Communist Party Plenum recognized the WTO in 2007, should promote a better outcome need for economic restructuring and identified to trade negotiations for Vietnam than if it were restructuring of public investment, of SOEs and to negotiate bilaterally with larger neighboring the financial sector, as priorities for the next five economies. Vietnam’s exports to the US and EU years. This suggests that government will take markets have steadily increased, but East Asian needed actions to return to a more sustainable economies still account for roughly 40 percent macroeconomic environment while laying the of Vietnam’s exports and over 60 percent of foundations for greater efficiency and productivity its imports. In addition, around two-thirds of to drive medium and longer-term growth. foreign investment in Vietnam is estimated to have come from East Asian countries3. Vietnam 13. Vietnam’s economy is expected is also active in regional efforts to coordinate the to gradually return to a more stable use and management of the vast resources of macroeconomic environment and sustain the Mekong River. moderate to high growth rate in the medium- term. The inflation rate, which peaked in August 11. Serious tensions and risks persist in 2011, is expected to continue its downward trend the post-crisis global economy. In the short in the coming months. As shown in Table 1, end-of- run, these could derail the recovery to differing period inflation in expected to reach 19 percent by degrees. Continued very low interest rates in December 2011 and 9 percent by end of next year. high-income countries could induce large and The economy is expected to grow at 5.8 percent volatile flows of capital toward developing during 2011, slower than 2010, given the impact of countries, including Vietnam, that contribute stabilization measures. With robust flow of foreign to destabilizing movements in exchange rates, direct investment (FDI) and planned restructuring food and commodity prices, and asset prices. of the economy, we expect industrial growth to In this environment, the growing integration of remain relatively healthy in the medium-term. Vietnam’s manufacturing and agricultural sectors Similarly, the agriculture sector should continue to 3. Nguyen Tien Dung, “Impacts of East Asian Integration: A CGE Analysis,” Vietnam National University. 4. Global Economic Prospects, World Bank, January 2011. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 3 do well as global food prices are projected to remain 14. Vietnam’s public debt is likely to high in the coming years. Overall, the growth remain sustainable if the current economic rate of the economy is expected to gradually recovery continues and the authorities carry increase to 6.3 percent by 2013. Assumptions on the current fiscal tightening. The 2011 Debt underpinning these projections include no major Sustainability Analysis conducted by the Bank and disruption to the global economy, steady progress the IMF shows public debt declining steadily from on structural reforms, improved implementation 52.8 percent of GDP in 2010, to 47.9 percent of of infrastructure projects, and continued support GDP in 2015. The large fiscal deficits in 2009 and from development partners and foreign investors. 2010 do not affect the overall debt sustainability In the absence of these changes, growth could significantly, as long as the government reverts slow down but is unlikely to fall significantly to the pre-crisis levels of deficit in a few years as below 5 percent, given the resilience of Vietnam’s expected. A loss of access to non debt-creating economy. capital inflows and a slowdown of exports could TABLE 1: KEY ECONOMIC INDICATORS 2008 2009 2010 2011/e 2012/p 2013/p Output, Employment and Prices GDP (% change previous year) 6.3 5.3 6.8 5.8 6.1 6.3 Industrial production index (% change, previous year) 13.9 7.6 14.0 11.0 12.0 12.5 Unemployment rate (%, urban areas) 4.7 4.6 4.4 4.0 4.0 4.0 Consumer price index (% change, period-end) 19.9 6.5 11.8 19.0 9.0 7.0 Consumer price index (% change, annual average) 23.1 6.7 9.2 19.0 10.5 7.5 Fiscal Balance Official fiscal balance(% GDP, excluding off-budget items) 1.2 -5.1 -2.0 -1.1 -1.2 -1.2 General fiscal balance (% GDP, including off-budget items) -1.2 -9.0 -6.4 -3.9 -3.8 -3.6 Foreign Trade, BOP and External Debt Trade balance (BOP definition, $US billion) -12.8 -8.3 -7.1 -7.0 -8.0 -8.7 Exports of goods, ($US billion, fob) 62.7 57.1 72.2 90.6 105.4 122.3 Exports of goods (% change, previous year) 29.1 -8.9 26.4 25.5 16.3 16.1 Imports of goods, ($US billion, fob) 75.5 65.4 79.3 97.6 113.3 131.0 Imports of goods (% change, previous year) 28.1 -13.3 21.2 23.1 16.1 15.6 Current account balance ($US billion ) -10.8 -6.1 -4.0 -4.5 -4.6 -5.1 Current account balance (percent GDP) -11.9 -6.6 -3.9 -3.8 -3.5 -3.5 Foreign direct investment (net inflows, $US billion) 9.3 6.9 6.1 6.8 7.3 7.5 External debt ($US billion) 28.4 36.3 43.7 49.1 51.8 57.1 as percent of GDP 31.4 39.0 42.2 41.0 39.4 39.0 Debt service ratio (% exports of g&s) 2.6 4.5 3.2 3.0 3.2 3.2 Financial Markets Credit to the economy (% change, period-end) 25.4 39.6 32.4 14.0 15.0 15.0 Short-term interest rate (3-M deposits, period-end) 8.1 10.7 14.0 14.0 --- --- Stock market - VN index (Jul 2000 =100) 316 495 485 --- --- --- Source: General Statistics Office, State Bank of Vietnam, IMF and World Bank. e = estimate, p = projections. VIETNAM COUNTRY PARTNERSHIP STRATEGY 4 2012 - 2016 adversely affect Vietnam’s debt dynamics. The ability to manage associated risks. Contingent standard assumptions applied for these shocks liabilities might arise from off-budget statutory are severe, and unlikely to materialize. The largest funds such as health insurance fund, large source of uncertainty and hence, unquantifiable SOEs, and weaknesses in the financial sector. risk, to debt sustainability comes from implicit Collecting reliable and up-to-date information obligations which are not captured under public on contingent liabilities and assessing their fiscal and publicly-guaranteed debt statistics. Neither risks has become a priority for the Government a clear definition nor a reliable estimate of such and the Bank. liabilities is available, limiting the government’s VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 5 II. DEVELOPMENT AGENDA 15. Vietnam has recently entered a new stability, a sound and resilient financial sector, and higher phase of development. Achieving and continued improvements to the investment success will require addressing residual climate will be critical to fostering business challenges from the past, including advancing development and competition. its transition to market and tackling emerging issues related to middle income status as well as 17. The large SOE sector is an important more global challenges such as climate change. part of Vietnam’s state-led economic model but The Bank agrees with the Government on the has become a growing source of inefficiency, key challenges that need to be addressed over weak competitiveness, and a constraint to the next five years. These include economic private enterprise development. SOEs own and competitiveness, sustainability of growth, absorb a far greater share of the country’s assets pockets of persistent poverty and rising (land) and factors (domestic credit) than their inequality, vulnerability, and governance. The share in national output. With recent rapid credit Bank is confident that Vietnam can sustain past growth, the sector has become highly leveraged, progress because of its policy priorities and its and a source of risk to the banking sector. State- demonstrated performance. owned commercial banks (SOCBs) dominate the banking system (approximately half of the COMPETITIVENESS system), the largest accounting for nearly one sixth of the system. Both their capital base and 16. Vietnam’s past rapid growth was made loan portfolio quality are weak. The special possible by improvements in competitiveness privileges extended to SOEs make it more difficult from earlier reforms and from progress for the private sector, large enterprises and small- in provision of economic infrastructure. medium enterprises (SMEs) alike, to participate in Vietnam’s remaining reform agenda is still certain key areas of the economy, thus inhibiting significant, particularly as regards the state competition and associated productivity and corporate sector, and infrastructure access efficiency gains. Weak corporate governance, and quality increasingly lag the requirements limited transparency/disclosure standards, and of rapid growth as does the development of a passive monitoring and oversight framework labor force skills. These factors constrain further further compound the risks. Reforms are needed improvements in competitiveness. Vietnam’s to remove inefficiencies, promote productivity of competitiveness was also derived primarily the SOE sector, and address weaknesses in the from low-cost labor and unsustainable use of financial sector. its abundant natural resources. This advantage will inevitably diminish overtime. For Vietnam 18. Considerable private investment to sustain its high growth record and avoid the will be needed to raise productivity and so-called “middle income trap,” further reforms value addition in Vietnam’s industry and and investments are needed to tackle remaining agriculture and to begin to shift the country’s inefficiencies in the economy, and strengthen core competency from natural resource competitiveness. In addition, the bases for the utilization to innovation and knowledge- economy’s competitiveness will need to shift base industry and services. But the quality of increasingly to higher productivity, product and Vietnam’s infrastructure is low, and skilled labor process innovation, and value addition as its low- is generally in short supply. Though access to cost labor advantage dissipates. Macroeconomic electricity is widespread, power cuts are frequent VIETNAM COUNTRY PARTNERSHIP STRATEGY 6 2012 - 2016 in certain parts of the country. Other aspects of in three areas: (i) systems and capacity to infrastructure quality, especially those related accurately measure the status of natural capital to transport and logistical services, also inhibit and economic returns; (ii) incorporation of competitive investment. Vietnam has seen environmental considerations into planning remarkable increases in enrollments at primary, and decision making; and (iii) strengthening and secondary and tertiary levels, but the quality of enforcement of legal and regulatory frameworks. education needs to be strengthened and made more relevant to labor market needs. This will 21. Much of Vietnam’s past growth has help address the limited availability of graduates been derived from its natural resource wealth. with the right sets of skills and competencies for As Vietnam industrializes, its dependence on productive employment. Challenges in how the natural capital will diminish, yet for the foreseeable education system is structured and managed and future a significant part of Vietnam’s wealth the way its resources are spent must be addressed. generation will depend on its natural resources, and this is especially so for the poor. A recent ENVIRONMENTAL AND NATURAL RESOURCE review of the state of Vietnam’s natural resources SUSTAINABILITY and their management identified several issues5. For example, marine capture fisheries, which 19. Vietnam’s economic growth has contribute about 5 percent of Vietnam’s GDP, are generated environmental risks. Population in decline, with decreasing yields and signs that growth, industrialization, urbanization, and some fisheries may be reaching tipping points into major changes in patterns of rural development rapid decline. Rapid expansion in aquaculture has have had adverse impacts. This is most obvious brought with it major challenges in environmental in water, air, and biodiversity. Water pollution and disease management. Forest cover nationally is becoming more acute in many of the main is believed to be increasing slightly, yet there is rivers and coastal zones of the country, and this also evidence of decrease in mature and native has a range of costs and impacts with regard to forests. Vietnam’s wood processing industries health, availability of clean water for industry rely heavily on imported raw materials and could and human use, and impacts on fisheries and be exacerbating deforestation in other countries conservation. Insufficient investment and within the region. Major challenges are emerging lack of sustainable financing for critical urban in relation to water resources management, with investments in drainage, water supply, solid evidence of depletion of groundwater aquifers in waste management, urban transport, and urban the Mekong Delta and Central Highland regions sanitation are rapidly contributing to water and growing competition in water use among and air pollution in urban areas. Impacts on agriculture, aquaculture, conservation flows, health due to suspended particulates and other industry, and human consumption. Vietnam relies pollutants are a growing concern for human on international rivers for 60 percent of its surface health in Hanoi and Ho Chi Minh City water flow, and planned or proposed upstream investments could substantially alter water and 20. Natural habitats are declining. sediment flows. Dry-season water availability This loss of ecosystems, combined with is already under pressure. Climate change will poaching of wildlife, is leading to extinctions accentuate these effects. There are at present and loss of biodiversity, which also have limited incentives for efficient water use and economic consequences. To address these complex challenges of inter-provincial and other issues, institutional strengthening is needed coordination of water resource management. 5. Vietnam Development Report (VDR) 2011: “Managing Natural Resources” VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 7 POVERTY AND INEQUALITY to ensuring environmental sustainability; access to hygienic sanitation in rural areas, despite good 22. Vietnam has an impressive record of progress in ensuring access to clean drinking sustained rapid poverty reduction over the past water; and reducing the HIV/AIDS prevalence rate, 20 years. The poverty headcount (percent living albeit low at 0.28 percent for all age groups in 2010 below the poverty line) fell from 58 percent in 1993 (see Annex 8). to 14.5 percent in 2008 6 (Figure 1). Preliminary results from the 2010 Vietnam Household Living 23. The impressive national averages Standard Survey (VHLSS) suggest continued mask differences across regions and social progress at reducing poverty. Poverty reduction groups, and an emerging issue is signs of rising has been accompanied by widespread access inequality. There is a large and growing gap in to basic services, including primary and lower income and non-income indicators of well-being secondary education, electricity, and clean water between the poorest households and the better supply. Workers are moving out of agriculture into off, as well as a persistent gap between different more highly paid employment in services, trade, regions of the country and between urban and rural and industry: in 2002, 56 percent of the labor force households. The rich-poor gap (ratio of average reported working in agriculture, almost exclusively income in the richest 20 percent of the population to on their own farms; by 2010 the share of labor force the poorest 20 percent of the population) has risen in agriculture had fallen to 41 percent. Vietnam from 8.1 in 2002 to 9.2 in 2010 7. Opportunities for has already achieved five of its ten original MDG the rural population are diminished by their more targets – those related to reduced poverty and limited access to basic services and to financial, land, hunger, gender equality in school enrollment, and information resources. Rural-urban migration, reduced maternal mortality, and malaria control. an important source of growth as people shift from Two more – those related to universal primary less to more productive employment, is expanding education and reduced child mortality – are likely the pressures on urban infrastructure and services, to be achieved. However, progress has been while employment in urban and peri-urban areas slower on the other three targets – those linked creates new vulnerabilities with less stable jobs and Figure 1: Poverty Trends in Vietnam 1993-2008 100 80 Poverty Rate (% poor) 60 40 20 0 1993 1998 2003 2008 Year of Survey Kinh/Hoa Ethnic Minority National 6. Based on successive rounds of the Vietnam Household Living Standards Survey (VHLSS), carried out by the General Statistics Office (GSO). 7. Source: 2010 VHLSS. VIETNAM COUNTRY PARTNERSHIP STRATEGY 8 2012 - 2016 a rapidly rising cost of urban living. A significant out. Cash transfers linked to education can thus be share of the poor and vulnerable today resides in an important complementary tool to bridge the and around Vietnam’s greater metropolitan areas. gaps in enrollment rates at every level8. Moreover, With rapid urbanization and a common use of further upgrades in basic infrastructure and public eminent domain to meet the land demand for urban service delivery and access, including facilitating development, land acquisition and conversion can wider participation in labor and product markets, have considerable negative social impacts. are needed to improve livelihood opportunities in rural areas and disadvantaged communities. 24. Poverty has become increasingly concentrated among ethnic minorities, who 26. Vietnam has made substantial progress make up nearly 15 percent of the population. in closing some important gender gaps, but key In 2008, 50 percent of minorities lived below the challenges still remain (see Annex 9). No poverty poverty line, compared to only 9 percent of Kinh- gap exists between men and women in the overall Hoa majorities. By 2010, ethnic minorities accounted population, although poverty among the elderly is for 65 percent of individuals in the poorest welfare disproportionately among widows. Net enrollment decile, up from 53 percent in 2006. Children from rates are higher for girls than for boys in primary minority households are less likely to attend school, and secondary education and women have slightly particularly at upper secondary levels, which higher rates of tertiary enrollment. Employment rates perpetuates low incomes and persistent poverty for men and women aged 25-64 were fairly close across generations. at 93.8 percent and 87.8 percent, respectively 9. But there are gender gaps in wage levels, and women 25. Systemic changes in the human are less likely to have wage employment and more development sectors are needed to address likely to be involved in own account work. 56 percent Vietnam’s poverty agenda, as are further efforts of men are engaged in wage employment compared to improve livelihood opportunities. A renewed to 37 percent of women, and estimates suggest that effort is necessary to promote equality in outcomes women in the informal economy earn 50 percent of for all, and to close wide and growing attainment male wages despite similar working hours, education and learning gaps between the poor and non- levels, and seniority 10. There is also a large degree poor and between ethnic minorities and the Kinh of occupational and industrial segregation across majority. A more results-oriented education system the labor force. Impressive improvements have can equip Vietnamese workers with the skills to take been made in the areas of child and infant mortality. advantage of the new opportunities and manage Gender-based violence remains an important issue the employment risks that come with a changing and is rising. labor market, while social and health insurance can help to shield people better from the worst shocks VULNERABILITY impacting employment. Vietnam currently lacks a basic cash transfer program for the poor, which is 27. Vietnam is facing rising vulnerabilities. an important gap in its poverty reduction and social The country is more vulnerable to macroeconomic assistance system. A strengthened social safety net instability, and to the dual challenge of natural can help the chronic poor, respond better to shocks hazards and the impacts of climate change. (including natural hazards or shocks affecting Household vulnerability has therefore increased as domestic prices), and address household liquidity well, especially with the rise in migration to urban constraints that, inter alia, lead to early school drop- areas and resulting changes in employment patterns. 8. World Bank (2011), Vietnam: High Quality Education For All 9. 2008 VHLSS 10. As found by Cling et al. (2010): “The Informal Economy in Vietnam. Study for the Labour Market Project” EU/MOLISA/ILO VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 9 28. Vietnam’s economy remains exposed been adversely affected by endemic animal to a number of external shocks and domestic diseases. Workers in urban areas, including many policy risks. Deeper integration into the global rural migrants, were hit by job losses and falling economy coupled with a highly open economy wages in late 2008 and 2009 as a result of the has meant that global shocks are transmitted global financial crisis. While job opportunities with full force into Vietnam’s economy, with have improved, fuel and food costs have risen effects on household living standards and sharply, and there are widespread concerns about employment prospects. This implies more potential increases in poverty in urban areas. macroeconomic turbulence for Vietnam’s Vietnam has various targeted poverty reduction economy. On the domestic front, Vietnam faces and area-based infrastructure and livelihoods two major risks. One is its policy preference for programs, some of which have remained growth over macroeconomic stability, giving rise unchanged for the last decade. As the country to accommodating fiscal and monetary policy continues to grow and its economy changes, the stances. The other is the gradual build-up of measures included under these programs are at contingent liabilities in the system owing to the risk of becoming less relevant for addressing its inefficiencies in the state-owned enterprises and changing poverty and vulnerability challenges. their close links to the banking sector. New solutions, including in social protection, will need to be developed, based on an updated 29. Household vulnerability is on the rise understanding of Vietnam’s poverty situation. due to demographic changes and the recent period of economic turbulence and rising 30. Located in the tropical monsoon inflation. Farmers face volatile commodity area in South East Asia, Vietnam is one of the prices, are exposed to frequent climate related most hazard-prone areas in the Asia Pacific shocks (floods, droughts, cold spells), and have Region. Major storms, flood events, and other Box 1: Urbanization Opportunities and Challenges Vietnam has a low level of urbanization compared to many other countries in Asia, but its urban population has begun to grow. The country is in an incipient stage of urbanization, transitioning to an intermediate stage with rapid urbanization (currently 30 percent urban and 3.4 percent urban population growth per year). The urbanization process is running in tandem with strong economic growth. Nearly half of Vietnam’s economic output is generated in its six largest urban centers (Hanoi, HCMC, Hai Phong, Da Nang, Can Tho and Baria-Vung Tau) with a total population of approximately 18.5 million people. Ho Chi Minh City and the Southeast region host nearly half (45 percent) of overall manufacturing production. However, heavy and fast growing (higher tech, higher value added) manufacturing activity is more intense in the Hanoi and the Red River Delta Region than in HCMC and the Southeast Region (55 percent and 39 percent, respectively). Industrialization is rapidly progressing in Hanoi and the Red River Delta region due to its proximity to the industrial bases in South China. While urbanization is likely to continue to bring strong benefits to Vietnam in terms of economic growth, greater economic opportunity, and higher productivity, Government will need to manage the trade-offs that will come with rapid urbanization. There is the potential of congestion costs, regional inequalities and rising land and housing prices. Urban poverty and its social impacts can increase, and secondary cities, often with less capacity, have the potential to grow rapidly. Vietnam’s urban planning system continues to be overly based on design principles rather than facilitating the fluidity of land and housing markets and urban mobility. Nevertheless, cities still enjoy relatively good mobility, due in large part to the nearly universal use of the motorbike as the primary means of transportation and traditional highly mixed use land development patterns. But this is changing rapidly, and increased car use would eventually lead to gridlock as a result of current capacity and road designs. While there are plans for urban transport systems in most major cities, a near universal preference for personal transport will compete with plans for urban transit systems. VIETNAM COUNTRY PARTNERSHIP STRATEGY 10 2012 - 2016 natural hazards result in annual economic of Vietnam’s evolving institutional landscape is losses equivalent to between 1 percent and 1.5 the move from a highly centralized hierarchical percent of GDP. Infrastructure and people are system consistent with central planning, to one increasingly concentrated in vulnerable areas such where many decisions are decentralized. This as floodplains and coastal areas, suggesting that devolution of authority has taken place along disaster-related losses will increase in the future. economic lines (to private economic entities), River plain flooding is extensive and prolonged along geographical lines (to provinces and lower throughout the wet season in the large deltas. levels of government) and along functional lines Most of Vietnam’s 2,360 rivers are short and steep, (to hospitals, schools and other service providers). so that heavy rainfall in their basins produces Capacity building at the local level has not kept brief but intense floods. Sizeable portions of the pace with decentralization. country, especially the Central Highlands and Central Coast, are subject to heavy rainfall. An 33. Improvements in basic public service average of six to eight typhoons or tropical storms delivery and access are especially needed of varying intensity strike Vietnam each year, for Vietnam’s poor, vulnerable, or otherwise with more frequent occurrences in the northern disadvantaged people. Even where policies and central coastal region earlier in the season. adopted by the central government reflect Notable achievements in effective ex-post disaster good international practice, implementation at response need to be matched by enhanced the local level is often undermined by limited capacity in preparedness and risk reduction. planning, implementation, and reporting capacities. Delivery capacity constraints are 31. Climate change and variability are particularly evident in disadvantaged provinces posing a serious challenge to development where many of the most vulnerable Vietnamese in Vietnam, with an array of complex and citizens reside. interrelated consequences for every sector of society. Current models point to potentially 34. The accountability system in Vietnam significant impacts on economic activity still relies primarily on upward accountability and/or human health directly resulting from through the hierarchy, resulting in a system progressive temperature increases, changes in that encourages excessive risk aversion. rainfall patterns, sustained sea level rise, and Officials rarely act without explicit authority to do potential shifts in the frequency, severity, and so, as innovation and pro-activity may yield greater geography of extreme weather events. These risks than benefits. From schools to hospitals, changes would have the greatest impacts on the need to strengthen accountability in a way low-lying urban areas, coastal areas, river basins that encourages innovation and performance vulnerable to storm damage, and agricultural is a running theme in Vietnam. Diversifying the sectors. By the end of this century, a sea level accountability system toward mechanisms of rise of between 25 centimeters to 1 meter (from downward accountability is being experimented a baseline sea level as of 2000) is possible. The with on a small scale. In addition, grievance Ministry of Natural Resources and Environment redress mechanisms are underdeveloped. (MONRE) has estimated that a sea level rise of Moreover, with little awareness of legal rights 65 cm could inundate about 13 percent of the and the lack of effective mechanisms to demand Mekong Delta. better services, the citizenry is not well placed to provide pressure from below. GOVERNANCE 35. Within the system of hierarchical 32. Weaknesses in institutional capacity accountability, the official channels face and public sector management continue to their own challenges. In the move to a more constrain Vietnam’s development. A key aspect devolved system of governance, the system VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 11 of accountability is shifting, but not in equal various kinds to be public information, these measure and not always in the most efficient documents are often difficult to obtain in practice. form11. Decentralized structures for looking into corruption can put investigators in the difficult 37. Governance and corruption issues position of examining those with authority are openly discussed in Vietnam. While there over their work. The courts are not widely are areas of progress, there is concern over used and provide little external oversight over corruption. The 2008 VHLSS Governance Module the executive. The National Assembly, which found that two of three respondents believed has been playing an increasingly active role in corruption to be a serious problem, and only a small external oversight, is nevertheless characterized percentage thought things were improving. This by high turnover and with a majority of deputies does not necessarily mean that corruption in all simultaneously holding positions in government. its forms is getting worse. For example, firms that participated in the World Bank’s enterprise survey 36. Vietnam has made progress in in 2005 and again in 2009 gave, on average, lower improving transparency, but challenges assessments of corruption as a problem when remain. With increasing penetration of the doing business, although the percentage saying internet and other media, information and they paid bribes and the amounts they reported opinions are more widely available than ever. paying did not decline.12 The enterprise surveys At the same time, it is difficult for Vietnamese show that unofficial payments are common in many citizens to access information from state bodies, sectors. When asked for innovative proposals for and this in turn constrains public oversight of fighting corruption as part of Vietnam Innovation government-provided services and functions. Day 2009, most proposals addressed imbalances in Although several laws call for documents of awareness and access to information. 11. This is the central theme of the Vietnam Development Report (VDR) 2010—Modern Institutions 12. Source: World Bank enterprise surveys VIETNAM COUNTRY PARTNERSHIP STRATEGY 12 2012 - 2016 III. GOVERNMENT PRIORITIES 38. The Government’s development sustainable development, improvements in vision for the next decade, laid out in its SEDS market institutions, and democracy. 2011-2020, directly responds to all of the development challenges discussed above. 41. A five-year Socio-Economic The SEDS identifies key priorities for the country, Development Plan (SEDP 2011-2015) was including a long-term growth strategy that gives approved by the National Assembly in attention to structural reforms environmental November 2011. It elaborates the objectives of sustainability, social equity, and emerging issues the SEDS and identifies the specific measures and of macroeconomic stability to minimize short- resources that are needed for its implementation. term vulnerability and achieve sustained long- The SEDP 2011-2015 focuses on the broad range term growth. Three major “breakthrough areas” of policies needed to achieve high quality and are noted in the SEDS: (i) promoting human sustainable economic growth. These include the resources/skills development (particularly need to restructure the economy to increase skills for modern industry and innovation), the share of high value-adding economic (ii) improving market institutions, and (iii) activities, improve the living standards of ethnic infrastructure development. The key challenges minority populations, strengthen environmental will be improved design of programs and better protection, and mitigate and prevent the adverse implementation. impacts of climate change. The Plan underlines the need to develop favorable conditions for 39. The SEDS aims to maximize Vietnam’s the private sector and to gradually reduce the long-term welfare through rapid growth in contribution of the state sector to GDP, while conjunction with sustainable development. increasing the contribution from the private Rapid growth is expected to be achieved not sector and FDI. Focusing on the same three only through increased use of labor, natural breakthrough areas as the SEDS, the SEDP resources, and capital, but also by relying more describes how these breakthroughs will be on an improved efficiency of resource utilization achieved in order to create a more competitive and allocation, and technical progress. The SEDS economy. The SEDP also outlines the importance identifies three key determinants for sustainable of environmental protection, climate change development, namely, macroeconomic stability, mitigation, and adaption and building resilience broad-based growth, and environmental to natural hazards. Compared to the SEDP sustainability. Institutional and policy changes are 2006-2010, the new Plan reflects an increased proposed to achieve the ultimate goal through awareness of the risks of environmental and completing the transition to a market economy natural resource degradation. The SEDP could and building modern state governance. have been clearer in two areas: (i) the importance of identifying explicit trade-offs in priorities and 40. The overall goal of the SEDS is for proposed policy measures, particularly in light Vietnam to lay the foundations for a modern, of real resource constraints; and (ii) the need industrialized society by 2020. The strategy sets for greater coherence, integration and linkages out directions for how Vietnam should continue between the national SEDP, provincial SEDPs, and the transformation from a largely agrarian sector plans being developed by the ministries. society to an industrialized, modern nation. The document highlights some critical areas that 42. Through a CPS program aligned with will help Vietnam achieve this goal, including the overall strategic priorities and goals set VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 13 out in the SEDP and SEDS, the World Bank prioritizes how ODA resources are to be spent Group will work with Government to address within each of the SEDP’s three breakthrough directly the development agenda set out areas. The Framework identifies priority targets above. The World Bank Group’s engagement from the SEDP in the areas of economic, social will support the three breakthrough areas of the and environmental development which ODA SEDS and SEDP of promoting human resources, should contribute to meeting. The Bank will improving market institutions, and advancing contribute to reaching these targets through its infrastructure development. Following the cycle existing portfolio, new operations, and analytical of the SEDP and thus the CPS, Vietnam is currently work organized around a CPS Results Framework developing a new Strategic Framework for ODA aligned with SEDP and ODA Strategic Framework for 2011-2015. The ODA Strategic Framework targets (see Annex 1). VIETNAM COUNTRY PARTNERSHIP STRATEGY 14 2012 - 2016 IV. VIETNAM - WORLD BANK GROUP PARTNERSHIP LESSONS AND FEEDBACK disbursement ratios and extensions of project closing dates) remains an issue. Lessons from the CPS Completion Report 45. A number of recommendations for the 43. The FY07-FY11 CPS Completion Report next CPS have emerged from the Completion concludes that overall, the Vietnam program Report and have been directly factored into has delivered most of what was planned in the the design of the new CPS: (i) the WBG needs CPS, and the Bank has played a key supportive to respond to the emerging vulnerabilities role in the development success of Vietnam and challenges in Vietnam; (ii) the WBG should (see Annex 2). As discussed above, Vietnam maintain a demand-driven focus within a reached its key strategic objective (as outlined in framework of selectivity that prioritizes the WBG’s the SEDP 2006-2010) of reaching middle income comparative advantages; (iii) the principles status by 2010. The country became IBRD eligible guiding selectivity need to be tightened to in 2007 and received its first IBRD loan in 2009. avoid diffusing the Bank’s program too thinly; IFC activities increased considerably throughout (iv) attention to implementation should be the period. The process of building institutions complemented with greater attention to program for a modern market economy continued, albeit and project design; (v) attention should be given at a slower pace than anticipated in the CPS. to decentralization issues; (vi) commitments on institutional reform should be credible and have 44. The Completion Report rates as much government ownership as possible, while the program performance as moderately still pushing to move the agenda forward; (vii) satisfactory. Across a range of engagement engagement areas for second generation policy areas, the CPS program achieved results in reforms should be chosen more selectively, as line with expectations, however, in other evidenced by challenges experienced with later areas, outcomes were only partially achieved operations in the PRSC series; and (viii) the results due to delays or other obstacles. World Bank framework could be used more forcefully as a tool Group performance is rated as satisfactory. for setting strategic priorities and monitoring The Bank responded promptly and effectively accountability. to unexpected events, such as the food and global financial crises and is responding to Feedback from Country Survey emerging concerns such as climate change. IFC engagement maintained a strategic focus on the 46. In May and June 2010, 335 stakeholders quality of the business environment and finance, in Vietnam participated in a Country Survey 13 while investments more than tripled towards (see Annex 14). More than half of respondents the end of the period, with a particular focus on were from government, while other respondents crisis response. Innovative components were represented academia, bilateral or multilateral introduced in the design of several Bank projects, agencies, non-government organizations (NGOs) thereby setting the foundation for enhanced and media, private sector, and the National impact. Delivery improved with a shorter lag Assembly. Respondents indicated that Vietnam’s between Board approval and effectiveness, most important development priorities are but slow implementation (reflected in low governance, economic growth, and infrastructure VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 15 development, while the highest priorities for the Bank convened a relatively small group of Bank support are poverty reduction, governance, targeted counterparts with day-to-day experience environment, infrastructure, climate change, and of working with the Bank to elicit their views on economic growth and integration14. The survey key priority areas for the Bank in the next five results indicate positive attitudes toward the Bank years, how the Bank could address these areas and its work in Vietnam, with a favorable rating of and what it could do differently in the future. The 7.7 out of 10 for the Bank’s overall effectiveness second round was undertaken in June 2011, when in the country, but they also point to areas for stakeholders gave feedback on a CPS Concept improvement. Results indicate that the Bank Paper, and at the third round, held in October needs to further enhance its impact in the social 2011, stakeholders commented on a draft of the sectors, governance, private sector development, CPS document (see Annex 15). climate change, and poverty reduction. The Bank’s financing and knowledge services are seen to be CPS PRINCIPLES OF ENGAGEMENT its value added, while its weaknesses relate to inflexibility (e.g., making recommendations that 48. The Bank’s assistance to Vietnam has do not take sufficient account of political realities had considerable positive impact. However, a or local conditions, and having bureaucratic combination of factors – rapid program growth policies and procedures). It is hoped that the in recent years, slow implementation at start- Bank’s decentralization in recent years will help up15, and the Bank’s flat country program budget to address these concerns by increasing the – has highlighted the need for the Bank to Bank’s understanding of the local context and its improve its business model for greater impact. responsiveness. The CPS program will therefore aim to: (i) sharpen strategic focus and reduce dispersion; (ii) Feedback from CPS Consultations improve operational efficiency; and (iii) accelerate implementation for more timely results. 47. Stakeholder consultations on the new CPS were held at three stages aligned with key 49. The Bank’s strategic focus has been milestones in CPS preparation. The consultations compromised by engagement across a were aimed at: (i) enhancing broad understanding large number of sectors and sub-sectors. and support for the CPS; (ii) engaging with Operational efficiency has not been maximized, stakeholders in line with the principles of the Paris given (i) significant reliance on a retail approach Declaration and Hanoi Core Statement; and (iii) that channels the Bank’s financing through a benefiting from the insights of a broad group of large number of traditional sector investment stakeholders with knowledge and understanding operations under implementation in all of of the country context. The consultation process Vietnam’s 63 provinces16, with inadequate started upstream during CPS preparation. The first attention to synergy of interventions at the round of consultations was held in January 2011 provincial level; (ii) cumbersome project (prior to initiating the drafting process), where implementation arrangements involving the 13. 46 percent response rate. Country Surveys are conducted prior to preparation of each CPS in Vietnam. As with the CPS itself, the Country Survey follows a five-year cycle to align with the Government’s five-year planning cycle. Survey questions are in multiple choice and ranking formats. 14. Priorities are listed in descending order. 15. Vietnam has had an interesting pattern of implementation: a very slow pace during the first 24 months, and an average pace thereafter. 16. Of the 78 operations under implementation during the FY07-FY11 CPS period, 85 percent were sector investment credits or loans. VIETNAM COUNTRY PARTNERSHIP STRATEGY 16 2012 - 2016 creation of several new implementing entities 52. Selectivity will also be achieved over with each new project, with the result that during time through exit strategies, sequencing, implementation the Bank has multiple sub- and intra-WBG coordination. In some national entities as project counterparts; and sectors the agenda is largely complete (e.g., (iii) an AAA program that does not adequately rural electrification), and Bank support will be leverage Bank financing to influence Government discontinued. Support will also be phased out policy and the way Government uses its own in areas where the Bank has had consistent resources. Timely impact is impeded by long difficulties (e.g., large IT-based operations). preparation and implementation periods for Clearer division of responsibilities with IFC will investment operations. This means significant also be important. For example, Bank support for opportunity cost of delayed results. As of private sector engagement in renewable energy August 31, 2011, the undisbursed portfolio was will be phased out as the IFC program expands. about US$5.8 billion, 48 percent of which was Proper sequencing of support in some sectors will committed in FY08 or earlier. Delays can also lead also help reduce dispersion. For example, in the to project cost escalation, which diverts resources financial sector, towards the end of the CPS period from new initiatives to additional financing and for the World Bank the focus will move from reduces project rates of return. financial infrastructure (e.g., payment systems) to access and market development issues. 50. To sharpen strategic focus and decrease Finally, the Bank will work with Government to dispersion, the Bank’s new CPS program will bring more competition in selecting provinces aim to gradually increase lending program to participate in projects. Clear criteria will be consolidation, use more programmatic AAA, used, including implementation performance and introduce more selectivity. The average of the existing portfolio at the provincial level. size of Vietnam’s IDA-only operations increased Given considerable current dispersion and only slightly from $109.3 million during IDA 14 to lengthy implementation periods, the impact of $115.2 million during IDA 15, peaking at $143.6 this effort at greater selectivity will only become million in FY09. Achieving larger sized operations appreciably visible over time (likely beyond this will require more wholesale approaches including new CPS period). working through Government programs. The ongoing shift to programmatic AAA will be 53. To improve operational efficiency, continued to facilitate more strategic coherence the CPS program will leverage the Bank’s within the AAA program. resources through increased use of systemic and “wholesale” approaches in the Bank’s 51. Greater selectivity will be achieved delivery of financing. In contrast to the more through the application of clear criteria for traditional approach of ring-fencing at the project inclusion in the program. Such criteria will level, systemic approaches would include support include focusing on areas where: (i) the Bank for government programs such as Vietnam’s has a real comparative advantage vis-à-vis NTPs, provincial level programs and strategically other partners; (ii) the likelihood of sustainable integrated (multi-sectoral) approaches to Bank impact through eventual replication without assistance at the provincial level, increased use ODA funding is high; (iii) there is a track record of financial intermediaries and programmatic of successful project implementation at the approaches to lend to cities to meet their local provincial level; and (iv) there are opportunities infrastructure needs, and the introduction of to leverage systemic and/or institutional change. results-based approaches to project design. The discipline needed for more selectivity will This would provide greater opportunity to be facilitated by a more systematic and forward- influence the way the governments (national looking engagement with Government to plan and provincial) spend their own resources and the lending program. also strengthen capacity needed to achieve and VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 17 sustain a program’s results. In addition, the Bank assistance through more strategic partnerships has begun discussions with Government on with other development partners such as the options for consolidating PMUs within provinces existing highly successful partnership with UK and line ministries. This could yield significant DFID on poverty, governance and climate change efficiency gains and more sustainable capacity. 17 and the upcoming partnership with AusAID on infrastructure and Economic Reform. In addition, 54. The Bank will intensify efforts to country-level IDA resources will be leveraged leverage its lending resources through through two regional operations for natural strengthened policy dialogue and AAA that resource management (water and biodiversity, better inform the structural reform agenda to respectively), in collaboration with other be supported by DPOs, as well as investment countries in Southeast Asia. project design, especially in new areas of engagement. An effort will be made to identify 56. The program will also leverage and include in the AAA program issues that support through various global and regional preoccupy policy makers on which the Bank has initiatives in which Vietnam is participating. expertise. The Bank will seek more opportunities Examples include the Water and Sanitation to partner with local think tanks and other Program, the Global Program for Output-Based Government agencies in such work in order to Aid, the Cities Alliance, and the initiatives related enhance chances of impact. Dissemination will be to disaster-resilient cities and agro-weather more systematic using strategic communication advisory services supported by the Global Fund approaches and reaching beyond the executive for Disaster Reduction and Recovery (GFDRR). to the legislative bodies and broader Vietnamese society. Growing priority will be given to just-in- 57. WBI will contribute to the CPS program time policy notes. This will call for flexible, nimble by focusing on addressing key capacity programming of AAA work. development needs in three areas: (i) Vietnam’s transition to a more urban and industrialized 55. The Bank will also leverage its economy, by supporting Government’s efforts to resources by making more use of opportunities strengthen planning and management of cities for synergies in the CPS program across the to promote more sustainable urban development World Bank Group and with other development as an engine of growth; (ii) strengthening partners. Collaboration within the World Bank governance and legislative institutional capacities Group is expected to increase, as Vietnam through WBI’s Parliamentary Strengthening continues its middle income transition and the Program; and (iii) health sector analysis, policy role of the private sector continues to increase. and reform. Additionally, WBI will leverage its IBRD and IFC will strengthen collaboration to south-south platforms to promote knowledge complement respective programs, particularly and experience sharing between Vietnam and in infrastructure, agribusiness, and the financial other countries within and outside the East Asia sector. Increased use of MIGA guarantees can and Pacific Region, such as the regional/multi- offer reassurance for foreign investors, including country Leadership Programs and distance and investors into PPPs, especially those concerned e-learning activities around WBI’s core thematic about regulatory risks. MIGA is working to areas. establish a long-term relationship with the Government in support of the PPP agenda. 58. To strengthen its impact, the The Bank Group will also continue to leverage Bank will continue efforts to accelerate 17. Bank-financed projects have spawned PMUs in all 63 provinces of Vietnam. The Sustainable Development program alone accounts for well over 200. VIETNAM COUNTRY PARTNERSHIP STRATEGY 18 2012 - 2016 implementation of the existing portfolio, broadening access to economic and social with emphasis on improving project start- opportunity. These three areas form the pillars up for all new operations. These efforts will of the strategic framework of the CPS. Three include continued collaboration between MPI strategic themes cut across the three pillars. The and the Six Banks Group18 to address systemic CPS program will support efforts to (i) strengthen ODA implementation issues, replication of good governance, (ii) promote gender equality, and practices in well-performing provinces and (iii) improve resilience in the face of external sectors, and project-level initiatives with MPI. economic and climatic shocks. (See Figure 2.) (See “Monitoring Program Implementation” below.) Pillar 1 on competitiveness will address: (a) Vietnam’s vulnerability to macroeconomic CPS ENGAGEMENT FRAMEWORK AND instability which has structural roots in EXPECTED RESULTS distortions in the SOE and financial sectors and in weaknesses in public financial Strategic Engagement Overview management; (b) the low quality of key infrastructure services due to inefficiencies 59. Building on Vietnam’s strong track in power distribution and transmission and record of growth and poverty reduction, the in water and transport sectors; (c) low value World Bank Group will partner with Vietnam addition in Vietnamese production; and (d) in its effort to achieve success as a middle weak innovation capacity and the related income country. The CPS directly supports low skills base of the Vietnamese labor Government’s 2011-2020 SEDS and 2011-2015 force. Accountability gaps exacerbated SEDP, and is guided by the key challenges by decentralization and transparency in set out above. The CPS program will support public financial management are among selected elements of this multi-faceted transition the governance challenges to be addressed notably, from an agrarian economy toward one under this pillar. that is more urban and industrialized; from a focus on quantity toward a greater focus on Pillar 2 on sustainability will focus on quality of production and service provision; management of water resource and land; from a comparative advantage of low-cost labor, conservation of forests and biodiversity; with low value added, to one with a growing pollution control and the related issue of low share of innovation-led and higher value-added connectivity to sanitation systems; mitigation production and services and towards a greater and adaptation measures in light of Vietnam’s role for market mechanisms in allocating capital high vulnerability to climate change; and and resources to an increasingly important disaster risk management in light of the private sector. In line with the thrust of the country’s increasing exposure to risks posed Government’s five-year SEDP the CPS program by extreme weather events. The CPS program will support investments and policies aimed at under this pillar will address governance (i) strengthening Vietnam’s competitiveness in weaknesses such as unclear and conflicting the regional and global economy, (ii) increasing jurisdiction which undermines enforcement the sustainability of its development, and (iii) of environmental regulation, and limited 18. The Six Banks Group consists of ADB, JICA, AFD, KfW, Korea EXIM and the World Bank. The Group jointly identifies and addresses implementation issues in collaboration with the Ministry of Planning and Investment. Progress is being made in common feasibility guidelines, mainstreaming of a common reporting framework, increasing the Ministry of Finance’s cost norms for local consultants, piloting of advance procurement actions, and TA for contract management and procurement (the latter two with IDF funding). VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 19 access to information which undermines 60. Governance is being mainstreamed as accountability. a priority cutting across the three CPS pillars. The approach to mainstreaming will be based on Pillar 3 on opportunity will support the the following three principles: (i) systematically development and implementation of leveraging the Bank’s lending and analytical government policies to ensure that more activities to support improved governance in citizens can benefit from the country’s Vietnam; (ii) improving project performance development as a MIC. This will involve by better understanding and addressing in efforts to address rising inequality, especially a meaningful (as opposed to mechanical) between ethnic minorities and the rest of way the issues that pose governance risks to Vietnam’s population, and between urban the achievement of projects’ development and rural households; policy reform and outcomes; and (iii) sustaining the effort, including institutional strengthening for social insurance by making periodic adjustments if the approach and social safety nets to reduce vulnerability is not working (see Box 2). This should lead to at the household level; weaknesses in basic a more comprehensive approach to governance, public service delivery and access; and gender as recommended in the CPS Completion Report. equality, a special theme for IDA 16. Box 2: Mainstreaming Governance Ensuring appropriate attention to governance across all pillars of the CPS program will require a combination of project, sector, and country-level approaches, with support from the Bank’s Governance Hub in Bangkok: Project level: Teams will be encouraged to consider the basic questions of how the project might help advance governance (institutional capacity, transparency, accountability, participation, and anti-corruption) in Vietnam, as well as how governance issues may impact project effectiveness. There is no presumption that every project should address every problem, but the decision of whether and how to address governance issues should be a considered one. For each proposed project, Bank teams will be asked to consider early in the preparation process the following questions: • What are the key capacity constraints in this area of work? Is the Bank addressing them in other projects? Can the proposed project do more and if so, how? • What opportunities exist to enhance transparency through this project? Can the project be designed to exploit some of these opportunities and if so, how? • Are there opportunities to strengthen accountability and increase transparency vis-à-vis project beneficiaries and affected people through incorporation of incentives, periodic public reporting and information sharing, meaningful consultations, and feedback mechanisms into the proposed project’s design? • Are there opportunities to empower project beneficiaries and affected people to participate in the proposed project and enhance the quality of outcomes? How will the Bank exploit such opportunities? • What are specific corruption risks for implementation, and what will the Bank do to help mitigate them? In this regard, the Bank’s Operational Risk Assessment Framework will be a key tool. Sector level: While there is no presumption that every project should be a governance project, it is reasonable to expect each of the Bank’s sector teams to integrate more fully governance thinking into their strategic engagement, for true mainstreaming. Key manifestations of weak governance in different sectors or sub-sectors and their causes will be analyzed to inform project design and policy dialogue. Based on this evolving analysis, a small number of priority activities where the Bank can have a meaningful impact will be identified and integrated into the Vietnam work program. Country level: The Country Team will annually review experience, success, and gaps in governance mainstreaming, and adjust course as necessary. VIETNAM COUNTRY PARTNERSHIP STRATEGY 20 2012 - 2016 Figure 2: Vietnam CPS Results Outcomes and Indicators WBG will partner with Vietnam in its effort to achieve success as a middle income country Pillar 1 Pillar 2 Pillar 3 Competitiveness Sustainability Opportunity Outcome 1.1: Improved Economic Outcome 2.1: Improved Natural Outcome 3.1: Increased Management and Business Environment Resource Management (“Green”) Opportunities for the Poor and 1. Macroeconomic Policy Framework: 12. Water resources: Increased water Household Resilience to Shocks Sound macroeconomic framework productivity in pilot areas (%) 20. Livelihoods: Households maintained (yes/no) 13. Land administration and in targeted areas reporting 2. Public Financial Management: management: Time required for improvements in accessibility to Provinces using the integrated Treasury land related transactions - transfer basic productive infrastructure (%) and Budget MIS (TABMIS) system (days) 21. Social protection: TBD at time (number) 14. Forest and biodiversity of CPS mid-term review Financial Sector: conservation: Targeted smallholder 3. Individuals and firms listed in a public plantation area certifiable according credit registry with information on their to international standards for borrowing history from the past 5 years sustainable forestry (%) Outcome 3.2: Improved Basic (%) Public Service Delivery 4. Domestic commercial banks with and Access current financial and balance sheet data Basic Infrastructure: Outcome 2.2: Strengthened on their webpage (%) 22. Rural households with Environmental Protection and 5. Market-based Regulations: SOEs access to (i) electricity in project Management (“Clean”) divested during the 2011-2015 (number) provinces; (ii) an all-season Pollution reduction: 15. Additional wastewater treated road (%) (m3/day) 23. People provided with access Outcome 1.2: Improved Quality and 16. People with access to improved to improved water sources (i) in Efficiency of Infrastructure Services sanitation (number) rural areas in Mekong and Red 6. Energy: Duration of interruptions in 17. Climate change mitigation: CO2 River Delta; (ii) targeted urban 500kV transmission system (minutes per emissions reductions associated areas (number) 100 circuit km) with investments supported (million 24. Education: Grade 5 students 7. Water: Reduced volume of water tons) achieving independent learner physically lost in selected cities (m3/day) status in math and Vietnamese in 8. Transport: Reduced transport times on SEQAP provinces (disaggregated targeted transport corridors by gender) (%) Outcome 2.3: Enhanced 25. Health: Health insurance Preparedness for Natural Hazards coverage among the poort and and Climate Change (“Resilient”) near poor in targeted regions (%) Outcome 1.3: Increased Capacity for 18. Disaster risk management: Innovation and Value Addition Targeted provinces and communes 9. Skills and Innovation Systems: with disaster risk management plans Higher Education students benefitting (number) from improved curriculum, facilities, 19. Climate change adaptation: laboratories and research activities Coherent framework for through TRIG grants (number) prioritization of climate change Agriculture value chains and rural SMEs: adaptation action in key sectors is 10. Farmers in targeted areas adopting available (Yes/No) good agricultural practices (number) 11. Additional jobs created as a result of investments supported (number) GOVERNANCE GENDER RESILIENCE VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 21 Box 3: Empowering Local Women and Improving Rural Road Maintenance Transport challenges in rural areas include under-funding of road maintenance and difficulties in engaging local contractors for routine road maintenance in remote areas. During preparation of the Third Rural Transport Project (cofinanced with DFID), many poor women with seasonal farming responsibilities in ethnic minority communities expressed interest in actively participating as stewards of their local roads. The Bank and DFID launched an initiative to train them in engineering and road building practices and provided formal employment opportunities in road maintenance near their communities. More than 1,500 ethnic minority women have been trained, and many more eagerly await the opportunity. Across the rural road networks, 10-30 women are paid to maintain a 1-2 km section for three months. As a result, women have achieved increased economic power and greater voice in community decision- making and a more visible role in managing affairs at the household level. 61. Gender will be a second cross-cutting Resilience is therefore a third theme cutting theme in the strategic framework of the CPS. The across all three CPS pillars, in the context of the approach is informed by two recently completed macroeconomic policy framework and financial initiatives. One is the Bank’s internal assessment sector soundness (engagement areas under Pillar (a Country Gender Action Plan) of how it could 1 – Competitiveness), climate change mitigation address gender issues more effectively in the CPS and adaptation (engagement areas under Pillar 2 – program, and the other is the Vietnam Country Sustainability), and social protection and facilitation Gender Assessment, conducted by the Bank in of livelihoods for the poor (engagement areas under collaboration with other development partners Pillar 3 – Opportunity). However, unlike governance and Government. (See Annex 9.) The Bank’s and gender which have explicit indicators and support to gender in the CPS has four key elements: milestones integrated into the results framework, (i) to support Government in improving the resilience is captured in the results framework implementation of the Law on Gender Equality and through relevant indicators and milestones related the National Strategy on Gender Equality, in part to macroeconomic stability, social protection, by building gender awareness and capacity within natural disaster risk management, and response to relevant ministries; (ii) to support the development climate change. of a national gender data system by building on the recent development of the National Gender Results Framework Statistical Indicator System; (iii) to apply a gender lens to identify opportunities to integrate gender Pillar 1 – Competitiveness more systematically into Bank operations, as was done in the Third Rural Transport Project (see Box 63. Alignment with Government Strategy. 3), including by making the systematic collection of Vietnam’s SEDS 2011-2020 and the SEDP 2011-2015 data disaggregated by gender a guiding principle; emphasize needed “breakthroughs” in relation and (iv) to help close the knowledge gap through to the development of market-based institutions, quantitative and qualitative research on gender infrastructure, and more skilled human capital. issues. All of these areas of action are cross-cutting Realizing the broad transformation processes in nature and impact. highlighted in the SEDS will require equally transformative changes in the structure and 62. With Vietnam’s vulnerability more performance of public administration, the business evident since 2007, the need to strengthen the environment, and non-farm employment creation. country’s resilience is now a strategic priority. The WBG’s CPS program for the “Competitiveness” The global crisis has exposed Vietnam’s vulnerability pillar is well aligned with the SEDS and supports to external shocks at both the macroeconomic and the Government’s agenda for raising the quality of household level, and globally there is a heightened economic growth and economic management. awareness of risks posed by climate change. VIETNAM COUNTRY PARTNERSHIP STRATEGY 22 2012 - 2016 Pillar 1 - CPS Outcomes / Areas of Engagement 1.1: Improved Economic 1.2: Improved quality and 1.3: Increased capacity for Management and Business efficiency of infrastructure innovation and value addition Environment services n Macro-Economic Policy n Energy n Skills and Innovations Systems Framework n Water n Agriculture Value Chains and n Public Financial Management n Transport Rural SMEs n Financial Sector n Market-based Regulations 64. Outcome 1.1: Improved economic for its effective implementation. IFC activities will management and business environment. The focus on broadening and deepening Vietnam’s Bank, in coordination with the IMF, will continue financial markets as the main mechanism for to contribute to improvement of Vietnam’s capital allocation including engaging with top- macroeconomic management through regular tier and emerging top-tier financial institutions policy dialogue, a comprehensive assessment of to strengthen their capital bases and attract the financial sector (FSAP), annual budget support international banking partners to strengthen and operations and systemic AAA. The Bank will continue develop their long-term competiveness. The Bank to support measures to improve PFM, notably will work closely with the IFC to address priority modernization of revenue collection and reform reforms including on the SOE-related issues of soft of public expenditure management and oversight, budget constraints and weak corporate governance. and reforms to various public investment laws. The Bank and IFC will strengthen dialogue with Efforts will be made to address accountability gaps Government on SOE reform and respond with emerging from decentralization. The Bank and IFC financial support for restructuring of the sector if will provide further support to strengthen financial requested. IFC will continue support to introduction sector soundness, enhance financial infrastructure of global standards of corporate governance and and improve access to financial services, including risk management, and in attracting world-class through capital markets development. This will strategic partners and investors. Other governance include facilitating further autonomy of the State issues to be addressed include transparency and Bank of Vietnam (SBV), strengthening the regulatory disclosure of financial information. The Bank will and supervisory framework, and building capacity work with the accounting and audit professional Box 4: EMCC to Succeed PRSC Series With the PRSC series expected to conclude with its tenth and final operation in December 2011, the Bank has, at the Government’s request, initiated discussions on what could follow: a DPO series of Economic Management and Competitiveness Credits (EMCC). Like the PRSCs, the EMCCs would be multi-year, multi-donor operations starting in FY12 but, like the CPS, with a 5 (rather than 10) year time horizon. The series would focus on critical reforms to enhance competitiveness, central to sustained growth and poverty reduction in Vietnam. Strategic and analytical underpinnings for the EMCCs would be drawn from the SEDS 2011-20, the Competitiveness Pillar of the CPS, the National Competitiveness Report, and recent Vietnam Development Reports. Competitiveness is a function of many factors, but one of the lessons from the PRSC series is the importance of a focused reform agenda under one series of budget support operations. The EMCCs would therefore focus on reforms to strengthen (i) macroeconomic stability and (ii) institutions for public sector governance and private sector development. They might also address cross- cutting issues related to the policy framework for infrastructure and skills critical to enhancing competitiveness, to complement investment operations in these areas. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 23 bodies and regulators to strengthen the quality AAA on urban development. WBI will support the of corporate financial reporting by following up program with capacity building in urban planning on recommendations from the Report on the for city officials. Support for a more competitive Observance of Standards and Codes (ROSC) on transport sector will include financing for upgrading Account and Audit completed in 2009. IFC will of the national road network, investments in urban continue to support improvement of the business transport infrastructure and mass transit systems, and environment through investment climate advisory technical assistance in the areas of trade facilitation, service activities focused on regulatory reform and coastal shipping services, and logistics. Greater will support the transition of the Vietnam Business attention will be given to policies and tools for more Forum to a self sustainable platform for dialogue effective road asset management, addressing poor between Government and businesses. project and contract management and developing institutional and regulatory frameworks for multi- 65. Outcome 1.2: Improved quality and modal transport. With Vietnam a priority for MIGA, efficiency of infrastructure services. Considerable its Asia hub in Singapore will facilitate deeper challenges remain in improving the quality and engagement. MIGA’s Political Risk Insurance is efficiency of energy, water, transport-related, particularly attractive to investors in the infrastructure and other services. In the energy sector, through sector, so MIGA will contribute to improved quality complementary DPOs and sector investment loans and efficiency of infrastructure services. In addition, (SILs) the Bank will continue to support transmission MIGA will launch several new products, including and distribution with emphasis on issues of guaranteeing Government’s payment obligations operational efficiency, market competition, and related to PPPs for priority infrastructure projects. The transparent and cost reflective electricity pricing, CPS program will support Government’s plan to scale while the IFC will promote energy efficiency. The up public investment by mobilizing private resources Bank will finance investments supporting efforts to for infrastructure development, including through improve quality and efficiency of water supply, as the establishment of a sustainable framework for well as integrated urban development initiatives and implementation of pilot PPP projects. IFC is in larger cities, covering urban planning, municipal providing advisory services on PPP transactions and management and the integration of major will invest in infrastructure projects, including as an infrastructure and basic services to make these anchor investor in large-scale strategic industrial cities more attractive venues for investment. Project infrastructure projects. To mainstream governance design will be informed by ongoing programmatic in this pillar, accountability, participation, and Box 5: World Bank’s Infrastructure Strategy in Vietnam During the CPS period, the Bank’s strategic priorities in the infrastructure sectors in Vietnam will be to: • Go beyond considerations of access to emphasize the improved quality of public energy, water, and transport services; • Enhance effective O&M systems for physical and operational sustainability in transport operations, household water supply, irrigation systems; • Connect the last remaining pockets of the population that lack access to basic services and economic opportunities through provision of rural water supply and sanitation, and rural access roads; • Fill the missing middle in the transport network by supporting provincial roads, and thereby link rural communities with district and provincial centers; • Generate quality growth by combining infrastructure investments with policy reforms (e.g., power sector reforms), and policy and capacity development support for the Ministry of Trade, Ministry of Construction, and selected cities; • Enhance resilience of infrastructure and productive assets to climate change and natural disasters; • Reduce the carbon footprint of Vietnam’s economy by supporting renewable energy, energy efficiency, and cleaner technology options for urban transport; • Do more integrated urban development planning, linked to regional development VIETNAM COUNTRY PARTNERSHIP STRATEGY 24 2012 - 2016 transparency issues will be addressed based on risk and scope for improving governance by enhancing level and entry points of specific sectors and projects. school autonomy and accountability of education providers for learning results, and opportunities to 66. Outcome 1.3: Increased capacity for improve spending efficiency and make it responsive innovation and value addition. A central element to labor market needs. Strengthening capacity of Vietnam’s innovation agenda is strengthening for measuring outcomes in the education system labor market skills by reforming how the education through student learning assessments at all levels and training system is managed. The program will will also remain central to the program. A new include the last in a series of three Higher Education area of engagement for the Bank will be support, DPOs addressing university governance (including through both AAA and investment lending, autonomy, accountability, and financing). Bank for reforms in Vietnam’s innovation systems to support will gradually shift from support for modernize and expand capacity. Support will be expansion of supply of infrastructure and inputs, provided via investment lending for innovations towards strengthening the education system as a in selected industries where there is potential to whole and factors that impact service delivery, with a benefit large numbers of the population, and for focus on adjustments to the finance and governance the development of business incubation programs systems. Programmatic analytical work will lay the that leverage regional and sectoral approaches to foundation for this shift, with a focus on skills needed facilitate development of innovative enterprises. for economic growth and an assessment of the ability The Bank will collaborate with IFC to support of Vietnam’s education system to deliver needed development of micro, small, and medium competencies. This will include an examination of enterprises and in building competitiveness in the structure of the education and training system select industries. The Bank will remain engaged in Pillar 1: Indicative World Bank Group Instruments DPOs: EMCC series, Power Sector Reform series, and Higher Education series SILs: Portfolio: Financial Sector Modernization and Information Management System, Public Financial Management, Tax Administration Reform, Third Rural Finance, Second Transmission and Distribution, System Efficiency Improvement, Trung Son Hydropower, Renewable Energy Development, Urban Water Supply, Danang Priority Investment, Urban Upgrading, Urban Water Supply and Wastewater, Local Development Investment Funds, Ho Chi Minh City (HCMC) Investment Fund, Project Preparation Facility, Road Network Improvement, Mekong Delta Transport, Northern Delta Transport, Expressway Development DaNang-Quang Ngai, Hanoi Urban Transport, Haiphong Urban Transport, Higher Education 2, School Education Quality, New Model University, Agriculture Competitiveness, Livestock Competitiveness and Food Safety, ICT development. Pipeline: Distribution Efficiency, Mekong Delta Urban Upgrading, Medium Cities Development, Danang Sustainable City Development, Road Asset Management, Dau Giay-Phan Thiet Expressway, Inclusive Innovation, Fostering Innovation through Science Research and Technology, Higher Education 3 AAA: Vietnam Development Reports, Programmatic Public Finance Reviews, FSAP, Science and Innovation; Programmatic AAA in Financial Sector, Infrastructure Finance, Agriculture, Skills and Education System, and Governance and Anti-Corruption; Global Knowledge Transfer, Country and Sub-National Financial Management Assessments, Vietnam Knowledge Platform, and Trade Facilitation and Logistics Assessment TFs: IDFs for Financial Management and Procurement Capacity Building, Multi-donor Trust Fund (MDTF) for Public Financial Management, MDTF for PFM, TFLA, FIRST Initiative for Financial Sector Capacity Building WBI: Training programs for MPs on legislative process and budget oversight IFC: Agricultural Competitiveness, Secured Transactions, Credit Bureau and Capital Markets, Better Work Vietnam, Tax Administration Simplification, Regulatory Simplification/Licensing Reform, PPP Advisory VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 25 promoting upgrades and value-addition in Vietnam’s 68. Outcome 2.1: Improved natural resources agriculture sector, including through support for management. The Bank’s program related to water public-private partnerships for technology transfer, resources management will continue to provide and ongoing operations financing agricultural support for the upgrading and extension of physical research, advisory services, and capacity building infrastructure (including for irrigation, urban drainage, and incentives to raise product quality and ensure and inland waterway transport). Increased attention will food safety. Bank-IFC collaboration will seek to be given to strengthening institutional arrangements strengthen the enabling environment and capacity and incentives for more efficient water use and greater for agro-industrial development. AAA work will financial sustainability of services. For example, support therefore support policy and institutional reforms will be provided to pilot measures to improve on- needed to accelerate and manage structural change farm water use efficiency, apply institutional models in Vietnamese agriculture, agricultural services, and for improved irrigation and residential water supply agribusiness. Part of the expected structural change delivery, and strengthen capacities for river basin, would relate to the respective roles and forms of inter-provincial, and coordinated trans-boundary interaction among public, private, and collective water resources management. Sector governance entities in the sector. will be improved through development of water user organizations to make collective decisions on water Pillar 2 – Sustainability use and mitigate potential conflicts. The program will include an investment operation to enhance 67. Alignment with Government Strategy. biodiversity conservation in marine and coastal areas, Vietnam’s SEDS and SEDP point to the need to promote sustainable fisheries management, and strengthen the protection of natural resources bring about improvements in aquaculture practices and the environment, to mainstream this in and governance. The Bank will continue to support development planning, and to implement improved governance through strengthening measures to address natural hazards and climate the transparency of Vietnam’s system for land change. Growing recognition of Vietnam’s administration, while stepping up support related vulnerability to extreme weather events and the to land use planning and development of more country’s growing contribution to greenhouse efficient land markets in urban, peri-urban and rural gas (GHG) emissions has led to the development areas. Support will continue in selected areas related of adaptation and mitigation strategies. The WBG’s to forestry and biodiversity conservation, including CPS program on “Sustainability” will assist the continued support to high-quality smallholder agro- government and other stakeholders to translate forestry plantations, forest law enforcement and this increased recognition in the SEDP/SEDS of risks governance, Vietnam’s readiness to participate in associated with the environment, natural resource the Reduction of Emissions from Deforestation and degradation, and weather/climate into improved Forest Degradation (REDD) Program, biodiversity strategies, improved governance arrangements, conservation and other measures through the Vietnam and priority investments. Conservation Fund, and efforts to reduce the illegal Pillar 2 - CPS Outcomes / Areas of Engagement 2.1: Improved natural resource 2.2: Strengthened 2.3: Enhanced preparedness management environmental protection and for natural hazards and climate management change n Water Resources Management n Pollution Reduction n Disaster Risk Management n Land Administration and n Climate Change Mitigation n Climate Change Adaptation Management n Forest and Biodiversity Conservation VIETNAM COUNTRY PARTNERSHIP STRATEGY 26 2012 - 2016 trade of wildlife and timber products. Instruments will policy actions in the industrial sector, demand-side include GEF and regional IDA operations. energy efficiency measures (including tariff reforms), providing capital lines and advisory services, as 69. Outcome 2.2: Strengthened well as awareness raising and strengthening of the environmental protection and management. The regulatory environment, and analysis of low-carbon Bank will support measures for pollution reduction growth strategies. The program will also support and prevention from various sources in order to climate change mitigation measures in relation to improve the physical environment, and mitigate transport, urban development, and agriculture. adverse health and economic impacts. For example, the program will support the safe disposal of hospital 70. Outcome 2.3: Enhanced preparedness waste, investments and capacity building for for natural hazards and climate change. The Bank pollution control enforcement at selected industrial continues to fill a financing gap for post-disaster parks, the introduction of compressed natural gas reconstruction, helping to improve prioritization public buses, improved systems for waste water and of budgetary resources promoting the principle solid waste management, and measures to manage of “build back better.” The Bank’s support will livestock waste and promote safer use of pesticides. increasingly focus on strengthening capacities GEF-funded programs will develop national capacity to anticipate and reduce the impact of extreme to manage polychlorinated biphenyls (PCBs) and weather events. Hence, the Bank will support Montreal Protocol projects to phase out the use of strengthening of hydro-meteorological services and ozone-depleting substances with a focus on hydro early warning systems, investments to reduce storm chlorofluorocarbons (HCFCs) and methyl bromide. and flood risks in highly vulnerable areas, scaling WBG support for climate change mitigation is strong up of community-based disaster risk management, on both the IFC and Bank side and will include policy improvements in area-based and urban disaster risk dialogue, investments and a more specific focus on planning and mapping, and agro-weather advisory enhanced energy efficiency – including through services. Technical assistance will be provided to the development of renewable energy sources, assist Government in developing a comprehensive Pillar 2: indicative World Bank Group Instruments DPOs: Climate Change series, Power Sector Reform Series SILs: Portfolio: Water Resources, Mekong Delta Water Management, Forest Sector Development, Land Administration, HCMC Environmental Sanitation, Coastal Cities Sanitation, Urban Water Supply and Wastewater, Danang Priority Investment, Hospital Waste Management, Hanoi Urban Transport, Haiphong Urban Transport, Renewable Energy Development, Natural Disaster Risk Management, Avian Flu and Human Influenza Pipeline: Irrigation Modernization and Rehabilitation, Coastal Resources for Sustainable Development, Regional Wildlife Conservation, Mekong Delta Urban Upgrading, Medium Cities Development, HCMC Environment and Sanitation Phase 2, Danang Sustainable City Development, Industrial Pollution Control, Managing Natural Hazards AAA: Programmatic Climate Change AAA, Green Urban Transport, GHG Assessment for Danang TFs: GEF Critical Ecosystem Partnership, GEF PCB management, GEF Cleaner Production Energy Efficiency, Montreal Protocol National CFC & Halon Phaseout, Low Carbon Development Study TF, Eco2Cities, REDD Program, Capacity building in Key ministries for dealing with Climate Change, PHRD Disaster Management, AusAID Urban Resilience in Can ThoSpatial Dimensions of Urban Poverty, GFDRR WBI: Training program for MPs on climate change, and capacity building for urban planning for sustainability IFC: Energy Efficiency and Cleaner Production Financing, Environmental and Social Risk Management for the Financial Sector, Waste Management, Corporate Governance, Green Building VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 27 disaster risk financing strategy. Through TFs and and expand its coverage, develop social assistance, a series of DPOs, the Bank’s program will support and improve targeting and management of strengthening governance for addressing climate poverty reduction programs. change through capacity building for climate change-related analysis, planning, and M&E in five 72. Outcome 3.1: Increased opportunities targeted ministries, as well as for enhanced inter- for the poor and household resilience to ministerial coordination. It will support a series of shocks. Building on insights from new poverty studies pertaining to climate change adaptation analysis, the Bank will support Government in its in various sectors, emphasizing the scope for ‘no efforts to further strengthen poverty reduction regrets’ types of measures19, while also assisting and social protection policies, and to improve Government to better understand costs, benefits, the livelihood and earning opportunities for risks, and alternatives to proposed investments. the remaining poor and vulnerable, many of whom are ethnic minorities. Analytical work will Pillar 3 – Opportunity be undertaken to underpin future investment lending focused on regions with very high rates 71. Alignment with Government Strategy. of poverty, with support combining upgrades The CPS program under the “Opportunity” pillar in basic productive infrastructure, measures is aligned with the strategic development agenda to enhance/diversify livelihood opportunities, laid out in the SEDP and the SEDS, including and additional measures emerging from the efforts to create equal opportunities for access analysis/shocks. Programmatic AAA is underway to resources for development, basic services, and in poverty analysis and M&E capacity building social welfare in rural and urban areas, to continue and social protection. Complementary support with policies for sustainable poverty reduction will be provided by both IFC and the Bank to (especially in the poorest districts and among strengthen financial inclusion and the provision ethnic minorities), and to improve the quality of of and access to micro-finance and other financial social services. Recognizing the importance of skills services for the urban and rural poor as well as to finding productive and stable employment, rural micro enterprises and SMEs. IFC investment Government has made improving the quality of and advisory engagements will focus on: (i) human resources one of the three break-through supporting development of a viable commercial priorities of the SEDS. Government is in the process microfinance industry to improve access to of adopting its first ever Social Protection Strategy finance for Vietnam’s base of the pyramid and which sets out strategic development directions rural population; and (ii) increasing opportunities for the period 2011-2020. These include efforts to for the base of the pyramid by supporting promote stable and more productive employment, investments with supply chain linkages into rural make the social insurance system more sustainable economies and by increasing private sector- Pillar 3 - CPS Outcomes / Areas of Engagement 3.1: Increased opportunities for 3.2: Improved basic the poor and household resilience infrastructure and public service to shocks delivery and access n Livelihoods n Basic Infrastructure n Social Protection n Education n Health 19. For example, adaptive management practices at household and community levels, efficiency gains, and infrastructure rehabilitation. VIETNAM COUNTRY PARTNERSHIP STRATEGY 28 2012 - 2016 oriented education. Informed by the ongoing particular by the poor and the near-poor. Given AAA, the Bank will also step up its investment their importance in driving vulnerability to financing for further development of the social shocks, food security will be a focus of analytical protection system, inter alia to establish linkages work and policy advice. Access to information and between assistance, insurance, and programs ability to exercise rights as provided by law will aimed at improving the earning opportunities of be critical for success in expanding opportunity. the working poor. The Bank anticipates this could The CPS program will therefore strive for more involve the design of a new social assistance cash open access to official information and support transfer program targeted at poor households. Government’s efforts to strengthen capacity for Bank support will also focus on reducing the risk and awareness of citizen’s rights. of transmission of poverty from the current to the next generation by promoting better access 73. Outcome 3.2: Improved basic of children from disadvantaged backgrounds infrastructure and public service delivery and to early childhood education and development access. The program will continue to support services. Recognizing the growing challenge of the provision of basic infrastructure and related population aging in Vietnam, the program will services in rural and urban areas. Continued contribute to Government’s efforts to enhance support will be provided through financing the financial sustainability, fairness and coverage of investments in rural areas to connect of the contributory social insurance system as well communities to basic access and improved all- as to develop mechanisms to expand coverage weather roads and strengthen the management of workers, including in the informal sector. It and maintenance of the rural road network in will support Government’s efforts to expand provinces throughout northern and central coverage and utilization of health insurance, in Vietnam. Efforts will continue to sustainably Box 6: Addressing Vietnam’s Remaining Poverty Agenda In light of remaining as well as new poverty challenges, Vietnam is working to reframe its strategy to reduce poverty, vulnerability, and inequality with the specific aim of (i) ensuring more rapid progress for those left behind, with particular focus on ethnic minority households; (ii) consolidating gains and ensuring sustainable progress for lower income households and the near poor; and (iii) addressing new challenges, including rising inequality across regions and social groups, new vulnerabilities, and challenges linked to rapid urbanization and an emerging group of urban poor and vulnerable households. The Bank launched a Programmatic Poverty Assessment for Vietnam in FY11, working in collaboration with country partners and building on a strong and ongoing program of technical assistance and capacity building for data collection and poverty analysis. The Programmatic Poverty Assessment aims to stimulate debate and new thinking in Vietnam on a second generation of poverty issues more relevant for Vietnam’s emerging middle income economy and rapidly changing social and cultural environment. The findings of the assessment will inform the development of the Bank’s future program. The Bank’s operational program in Vietnam will retain a strong focus on helping Vietnam address its remaining and new poverty challenges as a middle income country. First, there will be several interventions with a direct poverty reduction objective. Second, many World Bank-supported sectoral interventions will be targeted to the poor and near-poor and to remote regions and regions with high ethnic minority poverty. For example, regional health projects will continue to finance subsidized access to health insurance for the near-poor and thus address one of the major shocks that risk pushing vulnerable households back into poverty. Education interventions supporting full-day schooling or early childhood education and school readiness will be targeted to poorer regions, typically with high ethnic minority population shares, and attempt to provide opportunities for the next generation to escape poverty. Equally, rural and urban infrastructure interventions will focus on poor communities and neighborhoods and aim to help provide access to basic services and markets for the poor and disadvantaged. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 29 Pillar 3: Indicative World Bank Group Instruments SILs: Portfolio: Second Northern Mountains Poverty Reduction, Third Rural Finance, Second Rural Energy, Rural Distribution, Third Rural Transport, Mekong Delta Transport, Red River Delta Rural Water, Mekong Delta Water, Urban Water Supply, Urban Upgrading, Danang Priority Investment, Coastal Cities Sanitation, Urban Water Supply and Wastewater, ICT Development, School Education Quality Assurance, Regional Health Projects (Mekong, Northern Upland, Central North), HIV/AIDS Prevention, Inclusive Innovation Pipeline: Social Protection Systems, Central Highlands Poverty, School Readiness Promotion,* Mekong Delta Urban Upgrading, Medium Cities Development, Danang Sustainable City Development, Rural Sanitation and Water Supply,* Health Sector Governance Strengthening, North East and Red River Delta Regional Health* AAA: Programmatic AAA in the areas of Poverty Reduction, Social Protection, Skills and Education System, and Health; Quality Education for All Policy Dialogue TFs: Governance and Poverty Policy Analysis and Advice Programme TF (GAPAP), Japan Social Development Fund (JSDF) for Quality Education for Ethnic Minority Children, GPE New School Project, Nordic TF on Human Rights IFC: Microfinance: Capacity Building to MFIs, Payment Systems, Mobile Banking. Coffee Farmer Training Center (with ECOM) * Results-based or output-based approach operations increase access to water supply and sanitation 74. The IFC’s program for promoting services (including through results-based inclusive economic growth is aligned with the approaches), and upgrade the living conditions opportunity pillar. Investment and advisory in poor urban neighborhoods. With an ongoing engagements will focus on: (i) supporting the investment operation the Bank will continue to development of a viable commercial microfinance support improvement of learning outcomes and industry to improve access to finance for Vietnam’s education completion for primary education base of the pyramid and rural population; and students, particularly disadvantaged primary (ii) increasing opportunities for the base of the education students, through co-financing of pyramid to participate in Vietnam’s growth by the Government’s full-day schooling reform supporting investments with supply chains program and the promotion of greater school linkages into rural economies and by increasing readiness. Measurement of the quality of service private sector-oriented education. delivery and learning outcomes through student assessments will be central to these efforts. The IMPLEMENTING THE FY12-FY16 CPS Bank will also continue to support Government’s efforts to expand health insurance coverage Implementation Challenges among the near-poor, as well as efforts to improve the delivery of health services, including 75. The main challenge for Vietnam through a planned investment operation aimed program implementation is to achieve results at improving governance of the health sector. faster. This has become more pronounced with Bank support will transition from traditional the recent growth in the program. For the IFC, essential infrastructure investment and a single one of the main challenges to implementation issue disease project approach towards national is the fact that the private sector in Vietnam level engagement in policy and institutional is still relatively small and underdeveloped. capacity strengthening support, including on Considerable capacity building is required in quality management (see Box 6). areas of corporate governance, capital efficiency, VIETNAM COUNTRY PARTNERSHIP STRATEGY 30 2012 - 2016 and professionalization of management. IFC may be useful vehicles for these new approaches. is addressing this by seeking to engage with During the CPS period, the Bank and Government leading private sector groups and entrepreneurs will work to assess underlying fiduciary systems to help them tackle these constraints and set capacity and to diversify lending instruments for standards for Vietnam’s emerging private sector. faster development impact. For the Bank, while the quality of portfolio implementation continues to be satisfactory 76. Capacity at sub-national levels is as evidenced by the review of Implementation weak across a range of skills. These include Completion Reports (ICRs) by the World Bank’s technical, project management, and fiduciary Independent Evaluation Group (IEG)20, the country skills (procurement and financial management would benefit significantly if implementation of – see Box 7). There is also a lack of depth of its investment program were accelerated and quality suppliers and service providers. For the development objectives achieved at a much faster Bank’s portfolio, these capacity constraints are pace. Government has renewed its efforts by: (a) evident in procurement delays, quality of project revising its ODA implementation regulations, and management oversight, weaknesses in financial (b) working even more closely with development management (reporting and internal controls) and partners to sharpen the focus of ODA. Newer safeguards, and civil works contract administration. approaches to operations, such as results-based and output-based disbursement, are being 77. During the CPS period, the Bank discussed. Vietnam’s National Target Programs will continue to work jointly with MPI and (in place for the past several years to reduce other donors to address systemic ODA poverty and improve the quality of basic services implementation issues. This work will include: such as rural water supply, education, and health) (i) support for revision of Decree 131, adopted Box 7: Ensuring Fiduciary and Institutional Development The use of country systems is a key indicator of the Paris Declaration as adopted in Vietnam through the Hanoi Core Statement (HCS). Currently around 58 percent of Bank funds are disbursed through the government public financial management (PFM) systems, exceeding the HCS target of 50 percent. This is largely due to financing via the Bank’s development policy lending which is in the form of direct budget support and fully relies on the country PFM systems. Most PMUs are formally integrated into the country system in that they are managed by a senior government official accountable to the responsible line agency, comprised of seconded, functional department staff, and primarily subject to Vietnamese laws on public investment management. While almost all Bank-financed investment projects are off-budget, they are reported to the national legislature, and elements of the government system – such as budget execution procedures for counterpart funds, expenditure verification by State Treasury, government accounting classifications, controls and “cost norms,” and interim reporting using the Aligned Monitoring Tool – are employed whenever feasible. In addition, because the World Bank projects are funded outside the country’s treasury system, Bank resources are consistently tracked using designated or special accounts. Separate annual financial statements are required and are subject to audit by independent audit firms. The Bank aims to support strengthening of country fiduciary systems and increase their use. Program-based and results-based operations are being discussed with Government. Efforts will also be made to engage the State Audit of Vietnam as auditor, particularly in cases where project design or procurement is not complex. 20. All of the 35 ICRs of Vietnam operations reviewed by IEG have been rated satisfactory or moderately satisfactory for development outcome, with zero disconnect vis-à-vis the final ISRs. This is the strongest evaluation record of any IDA borrower. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 31 in 2006 as the main legal framework for a number of lessons that will be shared with management of ODA in Vietnam; (ii) continued other provinces, and additional provincial-level implementation of the Six Banks’ 12-point Joint portfolio reviews will be conducted. The portfolio’s Action Plan; (iii) a study of options for streamlining performance also differs by sector, with some project management unit (PMU) arrangements; sectors having a good record of faster and quality and (iv) continued analytical work and support results. Lessons are now being studied and will for the development of national fiduciary and also be applied to improve the overall portfolio. safeguards capacities. This support will include (i) PFM capacity building, including the ongoing 79. At the project level, MPI and the Bank Bank-financed PFM operation and the related are giving priority to improving projects’ multi-donor TF, IDF grants, and with the planned readiness for implementation, accelerating introduction of results-based and output-based their preparation, and managing the existing financing; and (ii) procurement capacity building, portfolio proactively. Readiness, in terms including through continued policy dialogue of detailed design, procurement and PMU with relevant government authorities and the Six arrangements, is being jointly assessed through Banks, ongoing and planned IDF grants, TA for systematic reviews of the lending pipeline. development of bidders’ protest mechanisms, Implementation of the Bank-financed Project and governance and anti-corruption (GAC) action Preparation TA Facility needs to be improved to plans for high-risk projects. make financing for project preparation available in a timely manner. Proactive management of the 78. The Bank is also undertaking analyses existing portfolio includes (i) major restructuring to learn from well-performing provinces and and partial cancellation, not necessarily limited sectors. Provincial governments are now charged to problem projects, with the aim of faster with more responsibility in managing investment implementation and therefore development operations. Despite limited capacity, some impact; (ii) a high-level review meeting between provinces manage the portfolio better than their the Bank and Government semi-annually, with the peers. A recent initiative to focus the portfolio Prime Minister’s Office directing the agreed follow- review at the provincial level has produced up actions; (iii) provincial portfolio reviews in a Box 8: Fiduciary Risks As noted in the CPS Completion Report (Annex 2) and also discussed in Annex 16, Vietnam has made good progress in establishing a sound public financial management (PFM) system and is committed to addressing the remaining PFM reform agenda. The level of project financial management performance across the Bank’s investment lending portfolio exhibits some weaknesses, particularly in decentralized and geographically dispersed projects. Lack of coordination between project management units and relevant government agencies contributes to implementation delays, and follow-up of audit issues can be slow. Partly this reflects the fact that Vietnam’s public procurement legal framework falls short of internationally accepted standards and acknowledged good practices. In addition, many implementing agencies still lack the necessary capacity. A number of issues have been noted, including dominance of dependent SOEs in the market, frequent occurrences of conflict of interest, weak contract management, collusion, and local authorities’ insistence on following government procurement procedures or implementing “dual” procedures under Bank-financed projects. This situation leads to procurement delays, irregularities, and non-compliance. During the CPS period, the Bank will continue to support progress on the PFM and procurement reform agenda, build institutional capacity, and improve aid effectiveness. Ongoing capacity building in financial management and procurement will be conducted for government agencies, project staff, and audit firms to reinforce the Bank’s requirements and to address cross-cutting issues identified during Bank prior and post reviews and audits. Bank risk-based and joint fiduciary supervisions will continue to be conducted and measures incorporated in project arrangements to mitigate fiduciary risks. VIETNAM COUNTRY PARTNERSHIP STRATEGY 32 2012 - 2016 selected number of provinces; (iv) sectoral portfolio the medium and longer term to allow Vietnam reviews with line ministries; and (v) a realistic to base its funding and expenditure decisions on assessment of the implementation progress, economic rather than financial rates of return. To downgrading of project ratings in Implementation facilitate Vietnam’s transition to IBRD, the Bank’s Status and Results Reports (ISRs) if deemed Treasury will be providing several types of training necessary, and allocation of additional supervision to government officials early in the CPS period. An resources if needed to improve implementation. indicative IDA and IBRD lending program for FY12- FY14 is shown in Annex 5. IDA, IBRD, and IFC Resources 82. In FY11, IFC’s commitments in Vietnam 80. An indicative IDA 16 allocation 21 reached US$700 million and mobilization of about SDR 2.8 billion22 (equivalent to reached more than US$200 million. It is US$4.2 billion) would be available to support expected that IFC’s portfolio for both investment Vietnam’s economic and social development and advisory services will continue to increase in FY12-FY14. This would be the largest IDA throughout the CPS period. allocation to Vietnam of any IDA Replenishment, reflecting Vietnam’s strong performance as well 83. Infrastructure will likely continue to as the increase in overall IDA resources mobilized account for the largest share of Bank lending for IDA 16 compared with IDA 15. Vietnam could (especially IBRD), given the vast infrastructure also receive additional IDA resources through its needs for supporting Vietnam’s rapid growth. participation in IDA regional projects. The share of The IFC also expects infrastructure to become DPOs in the FY12-FY14 IDA program is currently an increasingly big part of its portfolio as the estimated at about 25 percent and could rise if private sector plays a more important role in policy reform momentum increases. building and financing infrastructure. In addition to infrastructure, the IDA program will also 81. Proposed FY12-FY14 IBRD commitments support Vietnam’s unfinished structural reform total US$770 million, of which around US$280 agenda, human development, natural resource million is planned for two DPOs, and the balance management, and measures to address climate for SILs. Most of these resources would likely change. FY15-FY16 lending plans will be elaborated support infrastructure development. FY15-FY16 in the CPS Progress Report in mid-FY14. IBRD commitments are anticipated to be in the range of US$300 million to US$550 million for SILs, and an Monitoring CPS Implementation additional $100 million to US$150 million for DPOs. Actual commitment volumes in the FY13-FY16 84. The results framework of this CPS will period are indicative only and will be determined serve as a management tool for the Bank’s annually, depending on how government demand Vietnam Country Team. Its design is streamlined and macroeconomic policy and performance to make it a useful monitoring tool. Progress evolve in the course of the CPS period, and on IBRD’s towards achievement of the CPS outcomes will be lending capacity and demand from other borrowers. monitored annually. The review will be facilitated While the current preference of the Ministry of by the Country Portfolio and Results Monitoring Finance is to allocate IBRD resources to revenue- Tool (CPRT), a web-based system for monitoring generating sectors, this is expected to change over progress toward CPS outcomes. The CPRT is 21. For IDA16 allocations, only FY12 allocation is firm, and allocations in FY13-14 are indicative and can change depending on total IDA resources available in FY13 and 14, the IDA resource allocation process, and exchange rate changes between the SDR and the dollar. 22. Of which 3 percent is assumed to be hard-term IDA. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 33 populated with data from ISRs and the Bank’s 87. Implementation of the Vietnam trust existing information systems, and can therefore fund portfolio has been successful, but some provide real-time links between the lending improvements are needed. These include more portfolio performance and AAA to progress strategic alignment and realistic assessment of the toward CPS outcomes. For the data forming the time needed for implementation and achievement basis of these progress reviews to be current, the of results. Selection criteria have been developed Country Team will ensure timely updates of ISR and will be applied to TFs more systematically by results indicators. the Bank’s country team, and TFs will be included in portfolio performance reviews. Vietnam is central Trust Fund Program and Strategy to the regional efforts to improve mobilization and utilization of TFs. 85. Trust Funds are a very important financing source for the Bank’s country DEVELOPMENT PARTNERSHIPS AND AID program in Vietnam. A significant part of trust EFFECTIVENESS fund resources is used to support Bank investment projects and policy operations through co- 88. Vietnam is not an aid dependent financing, project preparation, and background country – in 2010, ODA accounted for less than analytical work (see Annex 17). Trust funds also 5 percent of the country’s gross national income play an important role in knowledge transfers to (GNI) (see Annex 3) – but there is no question Vietnam by supporting joint analytical work with that the country has used ODA effectively in Vietnamese research institutions and think tanks, support of its development. With Vietnam’s new capacity building, and training activities. Trust status as a lower middle income country, several funds also help the country pilot innovative ideas development partners have announced plans such as the JSDF Trust Fund on Early Childhood to scale down their activities or exit the country Care and Development, and provide emergency within the next 3-5 years. Other partners have support such as for Avian Influenza. TFs can thus indicated that they will gradually transform their help to leverage Bank resources further and are relations with Vietnam to focus more on trade and used as a unique platform for donors to provide commercial activities, including FDI from private joint assistance, e.g., the PRSC series. companies originating in donor countries. This CPS period will therefore witness a transformation 86. The sources of trust funds are of Vietnam’s ODA landscape to a smaller number expected to change as Vietnam develops, and of traditional development partners, and less grant donors shift their attention to newer areas and highly concessional resources. The Bank will of support or start to scale down in Vietnam. work with Government to ensure that this transition Some donors have recently expressed their is smooth and where appropriate, offer co-financing intention to shift their focus to emerging issues opportunities for partners who may find this useful such as climate change, while others are scaling as they reduce their field presence. The Bank will down or exiting Vietnam over the next several also begin planning for continuing important parts years. Development partners and the Bank are of its program for which donor funding might end carefully reviewing the impacts of such a shift for during the CPS period. Vietnam’s SEDP through the work of developing the new ODA Strategic Framework. At the same 89. The planned exit of several development time, the shift calls for even stronger attention partners does not diminish the importance of to the effectiveness of aid. To this effect, the Aid continuing to improve coordination among Effectiveness Forum and other partnership groups partners and strengthen harmonization have been working closely with the Ministry of with Government programs, approaches, Planning and Investment to intensify the synergy and procedures. Vietnam has made significant among the development partners’ programs. progress in coordination and harmonization, as VIETNAM COUNTRY PARTNERSHIP STRATEGY 34 2012 - 2016 the first country to localize the Paris Declaration series comes to an end, the Bank is committed to in 2005 resulting in the Hanoi Core Statement. A making the successor operations take on a strong recent evaluation of the Hanoi Core Statement role in donor coordination around policy reform in identifies some of the reasons for success, including the next CPS period. A special effort will be made to strong national ownership, impressive poverty strengthen coordination and partnership with other reduction records (giving development partners the large development partners in Vietnam, notably the confidence that their money is well spent), absence ADB and JICA. This will be done through regular of aid dependency (making donor conditionalities consultations and exchange of information on ineffective) and a limited timeframe for ODA (making strategy and programming and by inviting ADB and the Government eager to spend the resources well). JICA to provide inputs and comments at various As the timeframe for both the Paris Declaration and stages in preparation of projects in areas where the Hanoi Core Statement draw to a close, the Bank they are actively engaged. The Bank will ensure is supporting the Government in the development that in joint areas of activity with ADB and JICA, and of the next round of Aid Effectiveness initiatives. indeed with other development partners, the Bank’s value addition is clearly established and will seek to 90. Vietnam’s apex partnership forum coordinate messages to Government on related is the Consultative Group (CG). The Bank and policy issues. The Bank will also continue its close Government co-host the annual CG Meeting (in collaboration with the UN in shared engagement Hanoi) and mid-year CG (in a province). Nearly all areas and through joint support for capacity multilateral and bilateral donors participate as do building. international NGOs. Development partners are discussing with Government how to transform the 92. Government is taking two initiatives to CG from a resource mobilization forum to a forum improve aid effectiveness and harmonization. for more effective high level policy dialogue. In One is the development of a new ODA Strategic conjunction with the CG, the Government and Framework (OSF) for 2011-2015. The OSF is donors also co-host the Aid Effectiveness Forum, the aimed at laying out the Government’s policies and Vietnam Business Forum, and the Anti-Corruption guidelines for the mobilization, management, and Dialogue. The Vietnam Business Forum, co-chaired utilization of ODA and less concessional loans in by the Government and IFC, will continue to be the context of the country’s newly attained MIC an important platform for dialogue between the status. The OSF is expected to be approved by Government and the private sector on private the Prime Minister in November 2011. The other sector development and regulatory reform issues. initiative is the ongoing revision of Decree 131 It is also an important forum for development on management and utilization of ODA, led by of Vietnam’s local chambers of commerce and MPI. The Bank is actively supporting this process business associations. After several years of IFC through provision of technical assistance. funding, this forum will transition to one led and funded by private sector participants. This transition 93. The World Bank continues to have a is expected to be completed by January 2012. fruitful and open relationship with civil society. Besides the regular dialogues and consultations 91. The Bank is also actively involved with CSOs on Bank policies and projects, and in a number of other donor/government engagement with CSOs on project implementation, coordination fora in Vietnam. These include the the Bank has been providing financial and technical Aid Effectiveness Forum, the majority of Vietnam’s resources, including the Vietnam Innovation Day 18 currently active Sectoral and International and the Civil Society Fund, to CSOs to promote Partnership Groups, and the Six Banks Group (see innovation at the grassroots level. The Bank will find Annex 18). The PRSC series has also continued opportunities to facilitate stronger participation to serve as an important vehicle for both policy of civil society in various mechanisms for dialogue dialogue and donor coordination. As the PRSC between development partners and Government. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 35 V. RISKS Slowdown in the Global Economy macroeconomic instability, fueled by external shocks and rooted in structural distortions in 94. Since its accession to the World Trade the economy. Recent growth has been driven Organization in 2007, Vietnam has become by factor accumulation financed by easy credit highly exposed to regional and global economic generating inefficiencies of investments, highly shocks. It is highly integrated with the rest of leveraged SOEs, doubtful portfolio quality in the the world, with international trade constituting banking sector, and rising risks of financial sector nearly 160 percent of its GDP and foreign direct instability. With the country in a political transition investment and remittances together adding up to during the past 12 months, Government initially as much as 20 percent of GDP. A global recession found it difficult to undertake tough measures to or a period of prolonged growth slowdown could stabilize the economy, such as cutting back on have a dramatic impact on Vietnam’s exports and public investments or keeping real interest rates industrial output, as was demonstrated during the positive, as such measures would have adversely 2009 global economic crisis. affected the bottom line of the corporate sector and increased the non-performing loans of the 95. Unlike in 2009, when the Government banks. As a result, there was a significant build-up responded with a large and timely stimulus of contingent liabilities in the system. However, package to stave off an economic crisis, the this risk has eased following the completion of fiscal headroom is now limited. Therefore, if such the political transition and appointment of a new a scenario were to materialize, it could lead to a administration that is keen to address many of the slowdown in implementation of the CPS program for outstanding structural problems. several reasons, including a shortage of counterpart funds resulting in diversion of government funds 97. Addressing these structural problems from investment operations in the CPS program will take time, and continued macroeconomic aimed at supporting long-term growth. Since the instability is therefore a possibility during the factors driving the risk of contagion are external and next CPS period. Continued high inflation would on a global scale, risk management measures include increase Bank-financed project costs and therefore continued dialogue with government agencies also the need for additional financing operations aimed at building better buffers against global shocks to ensure that project development objectives through improved domestic policy and economic can be met. This would divert IDA resources management (e.g., increased foreign exchange from planned operations and put some program reserves and more fiscal space to be able to finance a objectives at risk. In addition, macroeconomic stimulus if needed), strengthened debt management instability could compromise the impact of poverty capacity (a Debt Management Performance reduction efforts under the CPS program. The Assessment report for Vietnam is under preparation), FSAP planned for 2012 will help identify financial and improved public financial management practices sector vulnerabilities and structural weaknesses (a Public Expenditure and Financial Accountability more comprehensively and can form the basis of self-assessment is also underway). a detailed reform program to make the financial sector more resilient in the long term. Heightened Macroeconomic Instability 98. Dialogue with Government, in close 96. During the past five years Vietnam collaboration with the IMF, will be stepped up has been experiencing recurring episodes of during the next CPS period. Regular monitoring VIETNAM COUNTRY PARTNERSHIP STRATEGY 36 2012 - 2016 and analysis of macroeconomic and financial reduce risk of corruption, and improve systems indicators, including debt sustainability analysis of prevention and detection of collusive and and encouragement for greater accountability corruptive practices; and (iii) internal audit capacity and transparency in macroeconomic and financial building in the Finance Ministry’s Inspectorate, as management, will remain a core part of the Bank’s well as other ministries and agencies, with a focus engagement. There will also be ongoing support on risk-based audits and effective implementation to Government to address medium-term structural of audit recommendations. distortions in the economy through investment and development policy lending, and analytical 101. A specific risk to implementation of and advisory services. At the request of the the Bank’s portfolio is project-level corruption, Ministry of Finance, the Bank is preparing a Debt given the fiduciary capacity constraints and Management Performance Assessment report and systemic corruption risks discussed above. In a Reform Plan Mission is scheduled in December addition to fiduciary mitigation measures (see 2011. An FSAP planned for 2012 will help identify Box 8 above), the country team will ensure that financial sector vulnerabilities as a basis for further project governance and anti-corruption plans World Bank Group support. are credible and implemented fully. Progress in implementation of these plans will be monitored Implementation Risks and measures agreed to address any gaps. Internal audit functions and capacity building will continue 99. Timely development impact of the to be incorporated in all projects when feasible. Bank’s portfolio is at risk mainly due to the slow Efforts to strengthen institutional governance and implementation of investment operations. As systematically take advantage of opportunities discussed above, the Bank is working closely with to enhance transparency, accountability and Government to improve the ODA management citizens’ participation in projects should also help system, strengthen the procurement legal reduce corruption risks. The Bank will prepare framework as well as implementation capacity, and sector-specific governance assessments to better address project-level issues jointly with the Ministry understand the key challenges affecting sector of Planning and Investment on a systematic basis. efficiency and inform project design. These measures will become more critical as the Bank 100. A relatively good legal framework on moves to design projects with greater reliance on anti-corruption is in place, but implementation country systems. needs to be strengthened. Conflicts of interest are widespread, and oversight institutions such as 102. A CPS Progress Report will be the Judiciary, National Assembly, and State Audit prepared in mid-FY14, as a mid-term review are not fully independent from the Executive. of CPS implementation. It will assess progress During the CPS period, the Bank will continue to date toward achievement of CPS outcomes as a multi-pronged approach to managing this gauged by indicators and milestones in the CPS systemic risk to the CPS program. This approach results framework, and incorporate adjustments will include: (i) continued technical assistance to as needed to the strategy and program in light State Audit, the Government Inspectorate, and of changed circumstances, including (but not the National Assembly to strengthen assurance limited to) a slowdown in the global economy, and oversight; (ii) policy dialogue on measures to heightened macroeconomic instability, and improve transparency in public administration, implementation issues. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 37 VIETNAM COUNTRY PARTNERSHIP STRATEGY 38 2012 - 2016 ANNEXes VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 39 40 Annex 1: RESULTS MATRIX CPS Outcome Indicators Milestones World Bank Group Program (indicative) Pillar 1: Competitiveness SEDP indicators: GDP annual growth of 7.5-8%; inflation in secure limit; labor productivity increased by 50%; Total Factor Productivity; energy loss over GDP reduced to 2.5-3%;annual export turnover growth of 12.1%; average rate of capital mobilization for State budget reaches 25.1-25.4%;38% urbanization rate; 55% trained labor rate;300 students over 10,000 people; real income in 2015 will be 2-2.5 times that of 2010; urban unemployment rate reduced to approx. 4% Outcome 1.1: Improved Economic Management and Business Environment SEDS Goal 1: Improve Market Institutions in Accordance with a Socialist Oriented Market Economy, Ensure Macroeconomic Stability, and Effectively Mobilize and Utilize Resources 1. Sound macroeconomic framework Macro-Economic Policy Framework 1, 3 Ongoing: maintained as evidenced by (i) - Policy dialogue with Government stakeholders (SBV, MOF, MPI) Fin Sector Modern & Info Mgnt System (FY09) (P088759) moderate credit growth and informed by the Bank’s regular macroeconomic monitoring and Public Financial Management Reform (FY03) (P075399) strengthened loan portfolio; (ii) fiscal reporting Tax Administration Modernization (FY08) (P099376) consolidation through more efficient - Debt sustainability analysis conducted jointly with IMF annually Rural Finance 3 (FY08) (P100916) investment and improved revenue - Debt Management Performance Assessment conducted by 2012 IFC Vietnam Licensing Simplification (2009-2012) effort. 3 and input provided to Government Debt strategy IFC Capital Market Phase I (2008-2013) Baseline: - Modern approaches to management of public debt and SOE Pipeline: (i) 31 % annual credit growth rate liabilities adopted including (i) integrated recording of debt; and (ii) PRSC 10 (FY12) (2008-2019 average) processes for identification and analysis of fiscal risks by 2013 (PFM) EMCC 1 (FY13) (ii) fiscal deficit 5.5 % of GDP per year - Annual analytical EMCC report on promoting reforms to address EMCC 2 (FY14) (2008-2010 average) binding constraints to competitiveness IFC Tax Simplification for MSMEs (2012-2016) Target: - Vietnam Knowledge Platform with Government and civil society IFC Capital Market Phase II (2012-2016) (i) <20% annual credit growth rate established to promote dialogue on economic management by IFC Credit Bureau Phase II (FY12-FY16 average) 2013 IFC Collateral Registry Phase II (ii) fiscal deficit less than 4 % of GDP Public Financial Management 1 IFC Microfinance (2012-2016) per year (FY12-16 average) - Prioritized Implementation Plan adopted by end 2012 for the AAA: Programmatic Public Finance Reviews, Country and Financial Development Strategy (2011-20) Sub-National Financial Management Assessments, Vietnam - Treasury and Budget Management Information System (TABMIS) Development Reports, Vietnam Knowledge Platform, developed with enhanced functions by 2013 (PFM) FSAP, Taking Stock, Programmatic Financial Sector AAA, - TSA implemented in all Banks serving Treasury by 2013 (PFM) Enhancing Roles of MSMEs, Programmatic Governance - Robust Internal Audit function to strengthen internal controls in MOF and Anti-Corruption TA, Capital Market Development, and at least three key line ministries established by 2013 WBI Training programs for MP’s on legislative process and budget oversight 1. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Governance 2 Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Gender 3 Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Resilience CPS Outcome Indicators Milestones World Bank Group Program (indicative) 2. Provinces using the integrated - Vietnamese Standards on Auditing updated to align with International Trust Funds: MDTF for Economic Management and Treasury and Budget Management Standards on Auditing by 2013 Competitiveness Credit, MDTF to Support Public Financial Information System (TABMIS)1 - Simplified procedures and strengthened IT systems for tax Management Modernization 2, Cofinancing RETFs to PRSC Baseline: 30 (2010) administration resulting in increased share of VAT refund requests 10, Financial Sector Modernization and Info Management Target: 63 (2015) processed within 15 days from 67% in 2009 to 90% in 2013 and tax System, Tax Admin Modernization audits resulting in additional tax assessments of 70% by 2013 (Tax 3. Individuals and firms listed in a public Administration Project) credit registry with information on their - VAT registration threshold introduced, Risk-based Audit applied borrowing history from the past 5 years resulting in $19 mil savings for micro and small-medium enterprises Baseline: 29.8 % (2011) (MSMEs) by 2015 (IFC) Target: 40% (2015) - Simplified accounting regimes for Business Households, SMEs resulting in tax registered businesses increase from 37% to 47% by 2015 (IFC) 4. Domestic commercial banks have - Programmatic Public Finance reviews conducted by 2013 current financial and balance sheet data - First Public Expenditure and Financial Accountability (PEFA) on their webpage 1 assessment completed to serve as baseline for monitoring PFM Baseline: 49% (2011) progress by 2013 Target: 74% (2015) Financial Sector - FSAP conducted by December 2012 5. SOEs divested during the 2011-2015 - Technical specifications for the modernized IT database system at period SBV completed by 2013 (Financial Sector Modernization and Info Baseline: 0 (2010) Management System Target: 450 (2015) - Strategy for Public Credit Registry completed by 2013 (TA) - Enhanced framework for credit risk management adopted using both quantitative and qualitative criteria by 2013 (PRSC 10, Financial Sector TA) - All financing institutions participating in rural finance program compliant with accreditation scheme (RF3) 1 - Risk management system for two main state owned commercial banks improved by 2013 (RF3) - Best practice on bond trading and bond issuance introduced by 2013 (IFC) - Action plan to improve government bond market in place by 2013 (PRSC) - 7 banks with Annual Reports prepared by International Financial Reporting Standards (IFRS) by 2013 up from 5 banks in 20111 1. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Governance 2. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Gender 3. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Resilience 41 42 CPS Outcome Indicators Milestones World Bank Group Program (indicative) Market-based Regulations1 - Time bound plan to separate state-ownership rights from regulatory function in SOEs in place by 2013 (PRSC 10) - Vietnam Development Report (VDR) on SOE published - MOF publishes every six months a report on SOEs operational performance - 30 licenses/permits cut-down or simplified by 2013 (IFC) - 20% reduction in compliance costs for MSMEs by 2012 (IFC Outcome 1.2: Improved Quality and Efficiency of Infrastructure Services SEDS Goal 5: Quickly Develop Infrastructures, Especially Transportation Infrastructures 6. Duration of interruptions in 500kV Energy Ongoing transmission system per 100 circuit km - No single electricity generation company owning more than 40 Transmission and Distribution 2 (FY06+AF FY11) (P084871) Baseline: 15.43 minutes (2010) percent of capacity by 2015 (Power Sector DPO) 1 System Efficiency Improvement, Equitization & Renewables Target: 13% improvement (2015) - Contracts for 90% of demand for non build-operate-transfer (FY02+AF FY10) generation based on pricing methodologies and standard format Trung Son Hydropower Project (FY11) (P084773) published by MOIT by 2014 (Power Sector DPO) 1 Renewable Energy Development (FY09) (P103238) - Scada Energy Management System in place by June 2014 (TD2) Pipeline - 502 km 500kV and 180 km 220kV transmission lines constructed in Power Sector Reform DPO2 (FY12) Mekong Delta, HCMC area and greater Hanoi area by June 2014 (TD2) Power Sector Reform DPO3 (FY14) - Expansion of transformer capacity by 2500+3370 MVA (500/220) and Distribution Efficiency (FY13) (P125996) 2625 MVA 220/110) by June 2014 (TD2) Trust Funds: Cofinancing to Renewable Energy - Procurement of 260 MW Trung Son dam main contracts completed by 2013 7. Reduced volume of water physically Water Ongoing lost from water supply system in selected - Water companies supported have a working ratio of less than 0.90 Urban Water Supply (FY05) (P073763) cities (i) in HCMC (UWSW) Urban Water Sup & Wastewater (FY11) (P119077) Baseline: 27,300 m3/day (2011) - Database of water utility performance published by 2014 (UWSW) 1 Local Development Investment (FY10) (P094055) Target: 125,000 m3/day (2015) - Non-revenue water reduction program implemented in HCMC (UWS) HCMC Investment Fund (FY07) (P104848) Pipeline Mekong Delta Urban Upgrading (FY12) (P113904) Medium Cities Development (FY12) (P116398) Danang Sustainable City Dev (FY14) (P123384) Trust Funds: Cofinancing to Urban Upgrading 1. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Governance 2. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Gender 3. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Resilience CPS Outcome Indicators Milestones World Bank Group Program (indicative) 8. Reduced transport times on targeted Transport Ongoing transport corridors: - 336 km of national roads and short bridges improved and 850 km Road Network Improvement (FY04) (P059663) (i) Road Network Improvement maintained by 2013 (RNIP + MDTP) Mekong Delta Transport (FY07) (P083588) Program - 250 km of Mekong Delta waterways and 200 km waterways between Northern Delta Transport (FY08) (P095129) Baseline: Details available sep. Quang Ninh -Viet Tri and Hanoi-Lach Giang improved by 2013 (NDTP Expressway Danang- Quang Ngai (FY11) (P106235) Target: 15% decrease (2012) & MDTP) Project Preparation Facility (FY10) (P118610) - Major arterial urban roads constructed in Danang (7 km), Hanoi (5 km) Danang Priority Investment (FY08) (P086508) (ii) Hanoi 2nd Ring Road and Hanoi Urban Transport (FY10) (P083581) Baseline: 28 min (2011) Haiphong (10 km) by 2014 (DPIP, HUTP, HPUTP) Haiphong Urban Transport (FY11) (P111548) Target: 22 min (2015) - Contract awarded for Danang – Quang Ngai Expressway and Road Safety (FY05) (P085080) concession awarded for Dau Giay – Phan Tiet Expressway by 2013 Pipeline (iii) National Highway 91 (MDTP) - 50 black spots on 600 km of road treated for improved road safety by Mekong Delta Transport AF (FY13) (P126605) Baseline: TBD by June 2012 2013 (RSP) Road Asset Management (FY14) (P123961) Target: TBD by June 2012 - Governance in transport sector review completed by 2013 and Dau Giay – Phan Tiet Expressway (FY14) (P123961) Governance and Transparency Action Plans for transport projects AAA TFLA, Programmatic Infrastructure Finance satisfactorily implemented1 Trust Funds: TF Infrastructure Policy and Sector Support, - Trade facilitation and logistics audit (TFLA) conducted by 2013 cofinancing RETFs to Rural Transport 3, Mekong Delta Transport, GEF – Hanoi Urban Transport Outcome 1.3: Increased Capacity for Innovation and Value Addition SEDS Goal 3: Comprehensively Develop Agriculture Towards Modernity, Efficiency and Sustainability SEDS Goal 4: Strongly Develop Service Industries, Especially Services That Offer High Value, Great Potentials and Enhanced Competitiveness SEDS Goal 9: Improve the Quality of Human Resource, Reform Comprehensively, and Rapidly Develop in the Areas of Education and Training 9. Higher Education students benefitting Skills and Innovation Systems Ongoing from improved curriculum, facilities, - 300 curricula revised, 20,000 staff receiving training, 95 laboratories/ Higher Education 2 (FY07) (P079665) laboratories and research activities libraries upgraded etc. by 2013 (HE2) School Education Quality Assurance (FY09) (P091747) through TRIG grants (number) - Vietnamese-German Model University established with an updated New Model University (FY10) (P110693) Baseline: 200,000 (2010) charter by 2013 (NMUP) 1 Agriculture Competitiveness (FY09) (P108885) Target: 250,000 (2013) - Government research institute conversion to semi-autonomous status Rural Finance 3 (FY08) (P100916) according to agreed roadmap (FIRST) 1 Livestock Comp & Food Safety (FY10) (P090723) - Workforce benchmarking and employer surveys completed by 2013 ICT development (FY06) (P079344) - 100% of higher education institutions disclosing information on the institution’s staff, academic programs, finances and expected learning outcomes on their websites by 2013 (up from 90% in 2010)1 1. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Governance 2. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Gender 3. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Resilience 43 44 CPS Outcome Indicators Milestones World Bank Group Program (indicative) 10. Farmers in targeted areas adopting - Technology innovation fund pilot initiated (FIRST), challenge fund Pipeline good agricultural practices (number) launched for at least one area (Inclusive Innovation Project) and Higher Education DPO 3 (FY13) (P116354) Baseline: 0 (2011) virtual incubation pilot program implemented by 2013 (TA) Private Higher Educ Loan Fund (FY14) (P117395) Target: 23,500 (2015) - Policy and plan to establish a multi-tiered higher education structure Higher Education 3 (FY14) specifying roles of different types of higher education institutions Inclusive Innovation (FY13) (P121643) 11. Additional jobs created as a result of operating under different ownership models by 20131 Fostering Innovation through Research, Science and investments supported - Decrees supporting the implementation of the Law on Gender Technology (FY13) (P117394) Baseline: 32,142 (2011) Equality and the National Strategy on Gender Equality developed2 AAA: Programmatic Skills and Education System, Target: 100,000 (2015) Agriculture Value Chains and Rural SMEs Science and Innovation AAA, Programmatic Agriculture - 50,000 farmers trained in new farming practices and 50,000 Competitiveness Bank-OECD smallholder producers benefiting from critical infrastructure by 2013 joint innovation review of Vietnam, Global Knowledge (ACP) Transfer, Agro-industry Strategy - 40% of slaughterhouses supported by the project operation at the Trust Funds: Business Incubation and Green Technology, national hygienic standards (LIFSAP) Russian TF Educational Quality Assessment, Cofinancing - Cumulative investments made by rural enterprises under rural finance to Second Higher Education, cofinancing to Agricultural project reach $270 million by 2013 (RF3) Competitiveness, KTF – Workforce Development - 43,600 SME borrowers from the Rural Development Fund by 2013 (RF3) - Vietnam SME Development Plan and Roadmap for 2015 developed by 2012 Pillar 2: Sustainability SEDP indicators: 42.5% forest coverage in 2015;70% of industrialized and export processing zones with wastewater treatment plants, 85% solid waste collection rate; 85% medical waste collection rate; 80% severe environment polluters regulated Outcome 2.1: Improved natural resources management (“Green”) SEDS Goal 11: Protect and Improve Quality of the Environment, Proactively and Effectively Respond to Climate Change, as well as Prevent and Fend off Natural Disasters. 12. Increased water productivity in pilot Water Resources Management Ongoing: areas - 2 provinces have water resources management plans that consider Water Resources (FY04) (P065898) Baseline: TBD at start of MDWM impacts on upstream development and climate change by 2013 Forest Sector Development + GEF(FY05) (P066051) project (MDWMP) Mekong Delta Water Management (FY11) (P113949) Target: 20% improvement (2015) - Irrigation management transfer piloted in three schemes and Land Administration Project (FY08) (P096418) 1. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Governance 2. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Gender 3. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Resilience CPS Outcome Indicators Milestones World Bank Group Program (indicative) 13. Time required for land related irrigation modernization principles introduced in six large schemes by Pipeline: transactions - transfer 1 2013 (VWRAP) Forest Sector Development AF (FY12) (P126542) Baseline: 44 days (2007) - Primary and secondary canals rehabilitated in the Mekong Delta to Coastal Resources for Sust. Devlop. (FY12) P124702) Target: 10 days (2015) improve conveyance and storage capacity by 2013 (MDWMP) Irrigation Modernization and Rehabilitation (FY15) - Coastal and marine database systems provide regular and reliable data Regional Mekong Water Resources (FY13) 14. Targeted smallholder plantation area for fisheries planning and management by 2015 (CRSDPl) Regional Wildlife Protection (FY13) certifiable according to international - 1,000 coastal farmers and fishermen trained in good aquaculture/ AAA: Programmatic Governance and Anti-Corruption TA standards for sustainable forestry1 agriculture Trust Funds: REDD Program, Vietnam Conservation Fund, Baseline: 0% (2010) practices and in sustainable near shore capture fisheries through co- Cofinancing to Land Administration, Forestry TF, GEF Target: 50% (2013) management arrangements by 2015 (Coastal Resources for Sustainable Critical Ecosystem Partnership Development Project) Land Administration and Management 1 - 86 district land administration offices operational by 2013 (VLAP) - 1,696,000 ha of cadastral mapping available in digital form by 2013 (VLAP) - 3,000,000 Land Use Right Certificates in line with Land Law issued by 2013 (VLAP) Forest and Biodiversity Conservation - 8,000 Ha of additional smallholder plantation area supported (FSDP AF) - Management effectiveness of Special Use Forests will improve as measured by Management Effectiveness Tracking Tool by 2013 (FSDP) - Drivers of deforestation study completed by 2013 (REDD Program) Outcome 2.2: Strengthened Environmental Protection and Management (“Clean”) SEDS Goal 11: Protect and Improve Quality of the Environment, Proactively and Effectively Respond to Climate Change, as well as Prevent and Fend off Natural Disasters. 15. Additional wastewater treated Pollution reduction Ongoing (m3/day) - 8.40 km wastewater interceptor and 59.5 km of sewers completed HCMC Environmental Sanitation (FY01) (P052037) Baseline: 0 (2011) in HCMC by 2013 (HCMC Environmental Sanitation+Vietnam Urban Coastal Cities Sanitation (FY07) (P082295) Target: 14,200 (2015) Upgrading Projects) Urban Water Sup & Wastewater (FY11) (P119077) - Completion of the drainage, wastewater collection and wastewater Danang Priority Investment (FY08) (P086508) 16. People with access to improved treatment plants in Nha Trang, Quy Nhon and Dong Hoi by 2014 Urban Upgrading (FY04) (P070197) sanitation (number) (CCSP) Local Development Investment (FY10) (P094055) 1. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Governance 2 Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Gender 3 Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Resilience 45 46 CPS Outcome Indicators Milestones World Bank Group Program (indicative) Baseline: 680,000 (2011) - Danang wastewater treatment plant constructed by 2014 (DPIP) HCMC Investment Fund (FY07) (P104848) Target: 2,500,000 (2015) - 150 km of drainage constructed in low income urban areas completed Project Preparation Facility (FY10) (P118610) and 4,144 ha benefitting from improved drainage coverage and flood Hospital Waste Management (FY11) (P119090) protection measures by 2013 (Vietnam Urban Upgrading Project, Pipeline UWSWP) Mekong Delta Urban Upgrading (FY12) (P113904) - Inventories of PCBs are carried out in all regions by 2014 (GEF PCB) Medium Cities Development (FY12) (P116398) - Feasibility studies completed for central effluent treatment plants for Danang Sustainable City Dev (FY14) (P123384) supported industrial parks by 2013 (Industrial Pollution Control Project) HCMC Env. & Sanitation 2 (FY14) (P127978) - Compliance with the CFC, MBr, HCFC and Halon phaseout schedule Industrial Pollution Control (FY13) stipulated in the Montreal Protocol Northern Mountains (FY14) - 30 health care waste management plans approved by regulatory Trust funds: GEF PCB Management Project (FY09) authority by 2013 (Hospital Waste Management Support Project) (P099460), Cofinancing to Urban Upgrading, GEF – Coastal Cities Environmental Sanitation, GEF – Coastal Cities Project, National CFC and Halon Phase-out Plan, Preparation for HCFC Phaseout Project Stage 1 17. CO2 emissions reductions compared Climate Change Mitigation Ongoing to business as usual scenario associated - Action plan to improve energy efficiency in key industry launched by Hanoi Urban Transport (FY10) (P083581) with investments 2014 (GEF Clean Production and Energy Efficiency) Haiphong Urban Transport (FY11) (P111548) Baseline: 0 - Demand side management/demand load control regulation Renewable Energy Development (FY09) (P103238) Target: 1.5 million tons (WB) + 1 established by 2013 (Power Sector DPO) IFC E&S Risk Management for Banking Sector (2011-2014) million tons (IFC) (2015) - Regulations establishing roadmap for energy efficiency measures and IFC Energy Efficiency Loans and Technical Assistance to Local operationalize benchmarking in key energy-intensive industrial sectors Banks (2008-2013) by Dec 2013 (CC DPO IFC Equity investments in energy related industries (2012) - Regulation on environmental and social risk management for banking Pipeline sector issued by SBV by 2013 (IFC) Power Sector Reform DPO2 (FY12) - Integrated urban transport plans for HCMC and Haiphong by 2013 Climate Change DPO 1 (FY12) (P122667) (Eco2Cities) Distribution Efficiency (FY13) (P125996) - Bus Rapid Transit System developed in three Hanoi corridors by 2015 Climate Change DPO 2 (FY13) (HUTP) Power Sector Reform DPO 3 (FY14) - Line 2 Bus Services in Haiphong (3,400 passengers/day) upgraded by Climate Change DPO 3 (FY14) 2015 (HPUTP) Danang Sustainable City Dev (FY14) (P123384) - Reference scenario for low carbon development endorsed (CC DPO) AAA: GHG Assessment for Danang, Green Urban Transport, - 400 MW of renewable energy capacity installed by 2013 (REDP) Programmatic Climate Change AAA - Climate innovation center to support adoption of green technology in Trust Funds: GEF Clean Prod & Energy Effic (FY12) (P116846), 1. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Governance 2. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Gender 3. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Resilience CPS Outcome Indicators Milestones World Bank Group Program (indicative) private sector established by 2013 Vietnam Climate Change Partnership, Eco2Cities, Business Incubation and Green Technology, Integrated Planning for Urban and Transport in HCMC Outcome 2.3: Enhanced Preparedness for Natural Hazards and Climate Change (“Resilient”)3 SEDS Goal 11: Protect and Improve Quality of the Environment, Proactively and Effectively Respond to Climate Change, as well as Prevent and Fend off Natural Disasters. 18. Targeted provinces and communes Ongoing with disaster risk management plans 3 Water Resources (FY04) (P065898) Baseline: 0 provinces Natural Disaster Risk Management (FY06 + AF FY10) 0 communes (2011) (P073361) Target: 10 provinces Northern Mountains Poverty Reduction 2 (FY10) (P113493) 100 communes (2015) Avian Flu and Human Influenza (FY07 +AF) (P101608) Pipeline 19. Coherent framework for - M&E system for National Strategy on Disaster Risk Management Climate Change DPO 1 (FY12) (P122667) prioritization of climate change established by 2013 (GFDRR) Managing Natural Hazards (FY12) (P118783) adaptation action in key sectors is - Multisectoral Avian Influenza simulation exercises conducted and Climate Change DPO 2 (FY13) available 3 reviewed at district level in selected provinces (AHIP AF) Climate Change DPO 3 (FY14) Baseline: No (2011) Climate Change Adaptation 3 AAA: Programmatic Climate Change AAA Target: Yes (2015) - Adaptation methodology to guide prioritization finalized and application initiated by 2013 (CC DPO) Trust funds: Eco2Cities, Disaster Risk Financing Strategy - Coordinated program with statutory framework for integrated water (GFDRR), Agricultural Risk Management Information management in place by 2013 (CC DPO) System (GFDRR), Vietnam Climate Change Partnership, - National coordination platform for Disaster Risk Reduction and Climate Cofinancing TFs to Natural Disaster Mitigation, GFDRR – Change Adaptation established by 2013 (CC DPO) Disaster Risk Management Capacity Building Program, AHI - Five key ministries update climate change preparedness/response Control and Preparedness TFs, cofinancing TFs to Natural strategies based on improved analysis, clearer prioritization and time- Disaster Risk Management, Urban Resilience in CanTho framing, and clearer delineation of the roles and responsibilities of (AusAID) different stakeholders by 2013 (Vietnam CC Partnership TF) - Climate change adaptation studies completed 1. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Governance 2. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Gender 3. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Resilience 47 48 CPS Outcome Indicators Milestones World Bank Group Program (indicative) Pillar 3: Opportunity SEDP indicators: Average poor household rate reduced by 2-3% per annum; Human Development Index will stay at advanced medium level; 8 doctors per 10,000 people; 30 sick- beds per 10,000 people; 96% rural population provided with hygienic water; 98% urban population provided with hygienic water Outcome 3.1: Increased Opportunities for the Poor and Household Resilience to Shocks 3 SEDS Goal 3: Develop Geographic Regions Harmoniously and Sustainably, and Build Urban and Rural Areas That Meet Our New Standards 20. Households in targeted areas Livelihoods 3 Ongoing reporting improvements in - 100 pilot livelihoods subprojects are up and running (NMPRP-2) Northern Mountains Poverty 2 (FY10) (P113493) accessibility to basic productive - 60% of women and ethnic minorities satisfied with public representation Rural Finance 3 (FY08) (P100916) infrastructure (%) and service delivery in targeted Northern Mountains communes Road Safety (FY05) (P085080) Baseline: n/a (2011) (NMPRP-2) 2 Urban Upgrading (FY04) (P070197) Target: 60 % (2015) - A national database on poor/near-poor households maintained and Pipeline 21. Social Protection indicator available on timely basis for usage by relevant ministries, agencies for Social Protection Systems (FY13) (P123960) (to be established by CPS Progress targeting, monitoring and evaluating purposes 1 Coastal Resources for Sust. Develop. (FY12) (P124702) Report) - Full implementation of national gender indicator system by 2013 2 Central Highlands Poverty (FY14) (P128072) - Elaboration of a multi-sector poverty reduction program for Central School Readiness Promotion (FY12) (P117393 Highlands by 2013 (Central Highlands Poverty) Mekong Delta Urban Upgrading (FY12) (P113904) - 16,000 micro-finance sub-loans to first time borrowers by 2013 with IFC Microfinance (2012-2016) more than 40% of microfinance sub-loans to women borrowers (RF3)2 IFC Vietnam Better Work Phase II (2012-2013) - More than 40,000 loans made for house improvements for poor AAA: Programmatic Poverty Assessment, MOLISA M&E households (disaggregated by gender of household head) by 2013 Support, Programmatic Social Protection (VUUP)2 Trust Funds: Social Protection 3 Gender issues in Labor and Social Protection during - Design of a Social Protection program to be piloted completed by 2013 Vietnam’s transition to a MIC - National Assembly adopts amendments to the social insurance law based on input from World Bank TA by 2013 - Fatality rates on targeted corridors reduced from 8.3 to 6 per 100 million vehicle km by 2013 (Road safety) - Improved working conditions and labor relations for 500,000 workers by 2014 (IFC) 1. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Governance 2 Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Gender 3 Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Resilience CPS Outcome Indicators Milestones World Bank Group Program (indicative) Outcome 3.2: Improved basic infrastructure and public service delivery SEDS Goal 8: Firmly Develop Healthcare and Improve the Quality of Medical Provision to the People SEDS Goal 9. Improve the Quality of Human Resource, Reform Comprehensively, and Rapidly Develop in the Areas of Education and Training 22. Rural households with access Basic Infrastructure Ongoing to - 32,000 km of low voltage lines and 32,000 km of medium voltage lines Rural Energy 2 (FY05+ AF FY09) (P074688+ GEF) (i) electricity in project provinces Rural Distribution (FY08) (P099211) and 1,706 km of distribution lines rehabilitated or constructed in project Baseline: 87.3 % (2011) areas by 2014 (RE2+RD) Rural Transport 3 (FY06) (P075407) Target: 90 % (2014) - 900 MVA transformer capacity in rural grids installed and more than Mekong Delta Transport (FY07) (P083588) (ii) an all-season road 250,000 KVA distribution substations rehabilitated or constructed by Red River Delta Rural Water (FY06) (P077287) Baseline: 78 % (2010) 2014 (RD+RE2) Mekong Delta Water (FY11) (P113949) Target: 81 % (2014) - 3000 km of rural road constructed or rehabilitated by 2014 and 315 Urban Water Supply (FY05) (P073763) 23. People provided with access to km of road improved to all-weather standard and 58 km of waterways Danang Priority Investment (FY08) (P086508) improved water sources improved by 2013 in Mekong Delta (Third Rural Transport Project+MDTP) Urban Upgrading (FY04) (P070197) (i) in rural areas in Red River and - 20 rural communities in Red River Delta that have functioning, well Coastal Cities Sanitation (FY07) (P082295) Mekong Deltas operated and maintained water supply schemes by 2013 (Red River Delta Urban Water Sup & Wastewater (FY11) (P119077) Baseline: 0 (2009) Rural Water) Project Preparation Facility (FY10) (P118610) Target: 1,100,000 (2015) - 25 rural water supply systems constructed and expanded by 2013 ICT Development (FY06) (P079344) (ii) in targeted urban areas (MDWMP) - 16,275 new piped household water connections by 2013 Pipeline Baseline: 393,000 (2011) (UWSWP+ Danang+Mekong Delta Urban Upgrading Project) Rural Transport 3 AF (FY12) (P113498) Target: 1,121,000 (2015) Rural Sanitation and Water Supply (FY14) (P127435) - Basic infrastructure for e-government established in MIC, GSO, Hanoi and Mekong Delta Urban Upgrading (FY12) (P113904) Danang by 2013 (ICT) 1 Medium Cities Development (FY12) (P116398) - At least 1500 ethnic minority women effectively carrying out road Danang Sustainable City Dev (FY14) (P123384) maintenance and erosion prevention by 2013 (Third Rural Transport Northern Mountains (FY14) Project) 2 Regional Mekong Water Resources (FY13) Mekong Delta Transport AF (FY13) (P126605) AAA: Rural Broadband TA, Programmatic Governance and Anti-Corruption TA Trust Funds: Cofinancing RETFs to Rural Distribution, Rural Transport 3, Mekong Delta Transport, Coastal Cities Sanitation 1. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Governance 2 Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Gender 3 Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Resilience 49 50 CPS Outcome Indicators Milestones World Bank Group Program (indicative) 24. Grade 5 students achieving Education Ongoing independent learner status - Students receiving at least 30 periods per week in SEQAP provinces Mekong Regional Health Support (FY06) (P079663) (SEQAP provinces) (disaggregated reach 57% by 2015, up from 48% in 2010 (SEQAP) Northern Upland Health Support (FY08) (P082672) by gender) 2 - 23% of principals/vice-principals receiving at least 5 days of training per Central North Region Health (FY10) (P095275) (i) in Vietnamese year by 2012, up from 19% in 2010 (SEQAP) Hospital Waste Management (FY11) (P119090) Baseline: 55.8% in 2007 - 70% of schools in SEQAP provinces with at least 1 toilet cubicle on site HIV/AIDS Prevention (FY05) (P082604) Target:66% in 2015 by 2015, up from 56% in 2010 (SEQAP) School Education Quality Assurance (FY09) (P091747) (ii) in math - Active learning material developed for two primary grades by 2013 Project Preparation Facility (FY10) (P118610) Baseline: 70.5% in 2007 (GPE-New School Project) Road Safety (FY05) (P085080) Target: 80% in 2015 25. Health - Baseline school readiness assessment completed by 2013 (School Avian and Human Influenza (FY07 + AF) (P101608) insurance coverage among the Readiness Promotion Project) Pipeline poor and near poor (%) 3 Health North East and Red River Delta Regional Health (FY13) (i) Poor - Different options for health insurance payment mechanism developed Health Sector Governance (FY14) Baseline: by 2013 3 School Readiness Promotion (FY12) (P117393) 29% Mekong (2008) - Share of district hospitals in claims reimbursed by health insurance is Target: 44% or more by 2013 (Central North Region Health Project) AAA: Quality Education for All Policy Dialogue, 90% Mekong (2012) - 80% of eligible provincial district health staff have successfully Programmatic Skills and Education System, Programmatic (ii) Near poor completed training provided (Northern Upland Health Support Project + Health AAA, Programmatic Poverty Assessment Baseline: (2008) Mekong Regional Health Support Project + Central North Region Health Trust Funds: 7% Mekong Project) AHI Control and Prevention TFs, HIV/AIDS Prevention TF, 10% Central North - 70% of district hospitals provide full set of health services according to HIV AIDS Return on Investment, EC-financed Vietnam 20.4% Northern Upland national norms by 2014, up from 51% in2010 (Northern Upland Health Health Care Support to the Poor of the Northern Uplands Target: (2015) Support Project) and Central Highlands, JSDF – Improving Quality 50% Mekong (2012) - 100 district hospitals and district prevention health centers constructed, Basic Education for Ethnic Minority Children in three 40% Central North renovated and/or equipped by 2014 (Northern Upland Health Support disadvantaged provinces, cofinancing to Mekong Health 70% Northern Upland Project + Central North Region Health Project + Avian and Human Support, IDF – Improving Effectiveness and Sustainability Influenza Project) of Social Health Insurance, KTF – Vietnam Health System - 70 standard tests can be performed by preventive health centers by Governance Strengthening, HRBF – Developing Results 2012 (Mekong Regional Health Support Project) focused Health Care financing mechanisms in Vietnam, - Review of health sector governance by 2013 1 GPE-New School Project (P120867) - 90% of provinces prepare high quality HIV/AIDS Provincial Action plans and establish adequate M&E systems by 2013 (HIV) 1. Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Governance 2 Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Gender 3 Outcomes, Areas of Engagement, Indicators and Milestones that are related to cross-cutting theme Resilience Annex 2: VIETNAM CPS FY07-FY11 COMPLETION REPORT Date of CPS Board Discussion: February 1, 2007 (Report No. 38236-VN) Date of Progress Report: November 24, 2009 (Report No. 51659-VN) Period Covered by the CPS Completion Report: July 2007 to June 2011 CPS Completion Report prepared by: Luis Alvaro Sanchez, Consultant Mette Frost Bertelsen, Country Officer, EACVF Under the guidance of: Myla Taylor Williams, Country Program Coordinator, EACVQ Victoria Kwakwa, Country Director, EACVF With inputs from members of the Vietnam Country Team EXECUTIVE SUMMARY During the 2007-2011 CPS period, Vietnam attained lower middle-income status, continued to reduce poverty, and advanced institutional reform in line with the strategic objectives set out in Vietnam’s Socio-Economic Development Plan (SEDP) 2006-2010. The country became IBRD eligible in 2007 and received its first IBRD loan in 2009. By the end of the CPS period, three key challenges have emerged: (i) the sustainability of growth in the face of increased vulnerability to macroeconomic instability and adverse climatic shocks; (ii) concerns about its quality of growth in the face of unreliable infrastructure, and (iii) a slowdown in poverty reduction, particularly in remote ethnic minority communities. The Country Team rates aggregate progress toward achieving CPS outcomes as moderately satisfactory. Across the broad range of engagement areas, the CPS program achieved results in line with expectations, without reversals or deficiencies. However, program delivery fell somewhat short of the ambitious and broad institutional transformation goals set out in the CPS. With hindsight, the expectations for institutional transformation did not take the constraints of the political economy and less favorable external environment of the country fully into account. One aspect of the reform agenda, the share of SOEs in GDP, has indeed declined during the CPS period. Nonetheless, the broader transformation of the role of the State in the economy from producer to regulator (the overall objective of the CPS) has not been completed. The reasons for this are complex and relate to factors of ideology, political economy, and the government’s concept of a socialist market economy, which reserves considerable powers of leadership and intervention for the state. However, a combination of analytical work, technical assistance and policy dialogue has set the basis, albeit with some delay, for delivering second generation institutional reform in the next CPS, but priority areas will need to be selected with care. The Country Team rates World Bank Group performance as satisfactory. The WBG program grew in scope and size, aided by the greater availability of IDA and IBRD resources. The Bank responded promptly and effectively to unexpected events, such as the food and global financial crises, and is responding to emerging concerns such as climate change. Access to IBRD resources financed budget support in 2009 and 2010 that helped the authorities soften the impact of the external crisis. IFC engagement maintained a strategic focus on the quality of the business environment and finance, while investments more than tripled towards the end of the period. Innovative components were introduced in the design of several projects, thereby setting the foundation for greater future impact. Delivery improved with a shorter lag between Board approval and effectiveness, but slow implementation (reflected in low disbursement ratios and widespread extensions of project closing dates) remains an issue. The Bank continues to be one of Vietnam’s key development partners delivering results across a broad range of engagement areas in collaboration with others. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 51 I. DEVELOPMENT OUTCOMES in one of the most competitive regions in the world and ranks lower than most of its neighbors. Its 1. The 2007-2011 CPS was implemented improved ranking also masks great variation across during a period of continued economic growth different aspects of the business environment. For despite various external shocks, including example, Vietnam scores very well on access to the global financial crisis, enormous volatility credit and contract enforcement, but very poorly in commodity prices, and several damaging on protecting investors and collecting taxes, and typhoons. In 2009, Vietnam reached a per implementation of reform is slow. Issues such as capita income of USD1,010 (World Bank Atlas corruption, red tape, and lack of transparency are methodology), thereby surpassing the USD 1000 still high on the list of investors’ concerns. Despite per capita target set for 2010 in the SEDP, and some signs of modernization and an emerging crossing the Bank’s threshold for (lower) middle trend of urbanization, structural transformation of income country status. the economy has not been profound. Vietnam has continued to rely on exports of agricultural, mineral 2. Vietnam’s economy grew at an average and other commodities and of light manufactured of 6.7 percent per annum in real terms over goods featuring low value addition and use of low the 2007-2010 period. The 2008 global crisis skilled workers. hit Vietnam when the economy had stabilized after a period of overheating in 2007, resulting 4. Vietnam’s integration into the global from massive capital inflows. Facing a decline in economy deepened, but there are concerns foreign direct investment (FDI) commitments and about the quality of growth and efficiency of expecting sluggish external demand for exports public investment. Exports expanded briskly in the wake of the global crisis, the government from $47.6 billion in 2007 to $71.6 billion in 2010. shifted policies toward supporting growth. An increase in FDI helped the country’s integration Monetary policy was loosened and a sizable fiscal into the regional and the global economy. Food package (5 percent of GDP) was executed. As a and agricultural products continue to be major result, Vietnam’s real GDP grew by 5.3 percent drivers of exports. Yet, many of Vietnam’s export in 2009, one of the better performances in products are sold at lower prices than those of developing Asia, but lower than Vietnam’s growth major competitors due to low or uneven quality rate of 6.3 percent in 2008, and also its lowest since and the virtual absence of recognized brands or 2000. Robust growth in manufacturing supported geographical indicators. This has constrained by resilient external demand for Vietnam’s exports translation of Vietnam’s enormous agricultural also helped support growth in 2009. By 2010, export growth into a significant increase in wealth growth had recovered to 6.8 percent, partly on among the majority of farmers. Furthermore, in the back of a commodity price surge, strong some cases (e.g., aquatic products) this export export performance, and continued loosening of expansion has been accompanied by insufficient monetary policies during the last quarter of 2010. attention to adverse environmental impacts. In addition, growth has been underpinned by 3. Indicators of Vietnam’s ability to high levels of public and private investment (42 create an enabling business environment have percent of GDP in 2010, of which 16 percent improved. According to the 2011 Doing Business is public and 26 percent private), and the high Database, Vietnam was the fastest reformer in Incremental Capital Output Ratios are raising South East Asia from 2005 to 2010, ranked 78 of concerns about the effectiveness of public 183 economies in 201123. Nevertheless, Vietnam is investment, in particular. 23. The 2010 World Competitiveness Report ranks Vietnam above many other countries with higher per capita incomes. The 2009 IFC Enterprise Survey positions Vietnam well with comparator countries in the world. VIETNAM COUNTRY PARTNERSHIP STRATEGY 52 2012 - 2016 5. The positive trend in reducing 7. Macroeconomic volatility has poverty continued, even if the pace slowed. emerged as a major concern. The direction Vietnam is widely acknowledged for its high of macroeconomic policy has undergone and sustained poverty reduction. Poverty fell various adjustments over the CPS period. The from 58.1 percent of the population in 1993, to Government initially aimed at stabilizing the 28.9 percent in 2002, and to only 14.5 percent economy as inflation peaked at 20 percent in 2008 by 2008. Early estimates from the 2010 Vietnam (with food prices increasing by 28 percent that Household Living Standards Survey (VHLSS) year). As the global financial crisis hit, the focus suggest that poverty is continuing to fall, albeit turned to accommodation in early 2009, switched at a slower rate than the first half of the 2000s. again but briefly to stabilization at the end of It is increasingly concentrated in remote rural 2009, reversing to accommodation again by the areas and among certain social groups (especially middle of 2010, driven by political transition in ethnic minority populations). The slower pace 2010-2011. Inflationary pressures followed the of poverty reduction reflects the increasing inflow of external resources that came in after challenges of reaching core poverty groups the WTO accession and put pressure on the largely disconnected from the economy and its country’s absorptive capacity. In addition, the sources of growth. There are growing concerns food crisis and the global financial crisis required about poverty and, in particular, vulnerability in countervailing policies which, while successful in Vietnam’s cities and peri-urban areas due to a meeting short-term objectives, induced volatility rising urban population (including a heavy influx in the macroeconomic environment. In addition, of migrant workers), increasing demand for urban while the government has avoided major crises services, and a continuing rise in the cost of living. in the difficult environment during the past few Urban issues are emerging as one of the priority years, the instability revealed weaknesses in the concerns for the authorities. fiscal strength of the State Owned Enterprise (SOE) sector, most clearly illustrated by the 6. Awareness of environmental and recent problems of Vinashin, the shipbuilding climate-related risks has increased. The economic group. The country’s credit rating basic institutional and legal framework for was downgraded by Fitch and Moody’s as well environmental protection has been laid out, partly as S&P in 2010. The immediate priority for the through the Amended Law on Environmental country is to address the risks to macroeconomic Protection, effective in 2006, and the National stability and, in doing so, re-establish the Environmental Protection Strategy up to 2010 and confidence of the markets and build buffers related vision for 2020. In addition, the Government that may cushion the impact of future adverse adopted its National Target Program to Respond shocks. The Government recognizes this and to Climate Change in December of 2008. Various has taken an important step in this direction by sector strategies have addressed environmental adopting Resolution 11, which lays out a plan or climate change concerns such as those related to tackle the recent macro-economic instability to water, natural disaster management, and and also address some of the underlying energy. This institutional strengthening sets a drivers of recurring instability. The measures more solid basis for addressing the mounting adopted under the Resolution 11 have started environmental vulnerabilities that include to show results towards regaining Vietnam’s continued degradation of natural resources, macroeconomic stability, but issues remain in the impact of pollution on human health, and relation to the investment budget, reforms of the weak monitoring systems and enforcement of state-owned enterprises and measures on better rules. However, despite the growing awareness communication with the market. Therefore, initial of environmental issues, it remains to be seen success notwithstanding, there are reasons to whether the legal and regulatory changes will be remain vigilant and avoid premature withdrawal effectively implemented. of the stabilization measures. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 53 II. PROGRAM PERFORMANCE of SOEs has been a fixture of the PRSC dialogue; the slow progress reflects the government’s policy 8. The commitments made in the CPS and stance that the large economic groups are important related results matrix - as amended by the CPS vehicles for competing in a WTO environment. Progress Report in 2009 - form the basis for assessing the contribution of the CPS program 11. The CPS scaled up engagement to the achievement of Vietnam’s development in higher education and human capital objectives. Appendix 1 takes detailed stock of development as part of the effort to support the achievement of results and identifies the greater competitiveness. The first operation in corresponding delivery instruments and lessons the Higher Education DPO series supported the learned for each outcome area. The main findings development and implementation of an adequate from this stocktaking are discussed below. Details institutional framework for improved higher are presented in Appendix 1. education, which the Second Higher Education DPO and the New Model Universities Project will Pillar 1: Improving the Business Environment support further. The IFC has also been actively involved in human capital development through 9. The CPS period saw a number of its advisory work, including through raising the improvements in the business environment. capacity of trainers and supervisors in garment A simplification of rules for businesses fostered a and corporate governance activities and through rapid increase in small and medium enterprises financial services. (SMEs). Furthermore, the share of the SOE sector in the economy declined marginally with the 12. The program delivered solid results in equitization24 of close to 1,000 public enterprises. the financial sector within the limits imposed by IFC advisory services, with the support of a multi- a slow-moving institutional agenda. The 2010 donor Trust Fund, worked with the authorities revisions of the laws on Credit Institutions and on on promoting business procedure simplification. the State Bank should allow Vietnam to address The Bank focused on simplifying procedures and concerns about the strength and sustainability of improving compliance in tax and customs that led the financial sector. Preparation of these laws was to greater client satisfaction, as shown in recent aided by technical assistance (IDF grant and FIRST surveys. In addition, innovation is beginning to Initiative) and analytical work that also supported receive greater attention as part of a strategy for changes in regulations on loan classification and greater involvement in private sector development, provision, prudential ratios for the safer operation of broadening its scope beyond a focus on Doing commercial banks, and disclosure and supervision. Business indicators. Although these laws came later than expected, efforts are making headway at transforming the 10. However, the governance of SOEs way SBV, the Credit Information Center and Deposit remains a concern for the quality of the business Insurance of Vietnam conduct their core functions. environment. The State Capital Investment In addition, progress in improving the inter-bank Corporation created to enhance the governance payment system has provided a technical and of the remaining public enterprises does not cover institutional platform for fast, timely and safer the large economic groups, whose increasing clearance and settlement of financial transactions importance is raising concerns about an uneven among banks and between regions. The IFC made playing field for the state and private corporate good progress on promoting moveable asset sectors and concerns about risks to fiscal and collateral registries to allow micro-borrowers financial sustainability. Improving the governance and SMEs to post moveable assets as collateral. 24. “Equitization” is a partial form of privatization used by the Vietnamese Government. VIETNAM COUNTRY PARTNERSHIP STRATEGY 54 2012 - 2016 In addition, they provided support to improve investment activities by scaling up advisory services the institutional framework for access to finance delivered to the financial sector, with a focus on risk for SMEs and micro-borrowers. Nevertheless, as mitigation, financial infrastructure sustainability, the owner of five large financial groups, the state and support to banks to standardize the short-term remains a dominant player in finance, and efforts loan process as they shifted away from longer-term to improve the governance of large economic lending. IFC established the Corporate Governance groups would benefit the stability of the financial project in 2008, which aims to improve financial sector. A Financial Sector Assessment Program performance (reduced costs of capital, higher (FSAP) was not carried out as intended during the valuations, and/or improved loan terms), and CPS period, but the Government has now agreed operational efficiency (improved operations and/ to undertake an FSAP. or clearer roles) by promoting better corporate governance practices among companies in Vietnam. 13. IFC increased its commitments in In 2010, IFC launched an energy efficiency financing Vietnam from USD62 million in FY07 to over program proving capital, and advisory services to USD1 billion in FY11, including their asset help banks develop new lending products. management business. Trade finance over the five-year period totaled USD970 million. It 14. The CPS contributed to agricultural and implemented a counter-cyclical strategy that rural development through excellent results in helped clients withstand the market volatility, and increasing access to credit, especially for women25 its active involvement in the financial sector is , and improvements in the efficiency and contributing to improving governance. As a result transparency of the land administration system. of Vietnam’s financial crisis in 2007 and the global In agriculture, the Bank’s efforts are now increasingly crisis and economic downturn that followed in focusing on increased efficiency, sustainability and 2008, other lenders and financiers withdrew from value addition in agricultural supply chains. Vietnam, investment slowed, exports declined, and the government shifted to expansionary fiscal and 15. Vietnam has increased generation monetary policies. IFC launched the Global Trade capacity and reliability while taking the first Finance program in Vietnam, providing guarantees steps towards broader sector reform supported to banks for trade related deals on a per-transaction by the Bank group’s financial as well as advisory basis, and access to trade finance through an engagement. Investments in transmission and extensive global network of bank partners. Focused distribution have helped expand the electricity mainly on the top tier banks, the program has network and its reliability through reduced technical been an important source of long-term liquidity, losses, which jointly with tariff realignment have with over USD500 million lent to SMEs over the improved the financial soundness of the main past three years. The IFC has also introduced the public sector energy holding company (EVN) and sector to new financial products in nascent or enabled it to expand capacity, nearly reaching underserved markets, such as SME and energy the goal of doubling capacity. In addition, a efficiency financing. As the banking sector sought process of improving the institutional foundation to strengthen its capital base in 2009 and 2010, the in energy has been initiated, with the separation IFC engaged top-tier banks to place equity and long- of the transmission, distribution and generation term capital, and supported the transition of the assets and the creation of a dispatch center. This sector to more market-oriented decision-making achievement should help deliver reliable and cost- and governance practices. The IFC complemented efficient electricity over the long term26. 25. The assistance has been delivered by the Rural Finance II and now Rural Finance III. 26. The Bank supported the development of this institutional agenda through the PRSC series and recently through the first Power Sector Development DPL. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 55 16. Increased Bank support in the supported by the Bank, in developing the legal transport sector has financed investments, and regulatory framework for: (i) water supply, by quality improvements, and institutional moving towards a commercial orientation, and (ii) innovation to improve governance. The sanitation, through introducing the ‘polluter pays’ program has progressed well on the development principle as well as cost recovery. Analytical work objectives in the Road Network Improvement on urban issues has been taking stock of the rising Project on improving the road network, as well urban challenges that affect the quality of life as as on addressing challenges in implementation well as competitiveness in line with the emerging of agreements under the Resettlement Action Government priority on urban development. Plan. The Bank has furthermore responded positively to the Government’s request to provide 18. The reliability and adequacy of complementary financing for broadening Highway infrastructure remain a concern, despite recent I, the main corridor linking South and North. gains. The reliability of energy, the quality of Dialogue and technical assistance under the Road water, the reliability and efficiency of transport Safety Project are contributing to a lower incidence networks, and the demand-responsiveness of traffic accidents. Investments to upgrade and effectiveness of public agricultural support multimodal transportation along the two main services are often ranked as some of the main river deltas (the Mekong River and the Red River) constraints to competiveness and quality of life. are on track to expand the length of the waterways The full amount of resources needed to close and the highways. Sector work and policy dialogue these gaps far exceeds what is available from the have supported several initiatives geared towards public sector, so participation of the private sector (a) sustainable financing, including work to assist remains an important component of any strategy the Ministry of Transport with drafting a decree to that seeks greater efficiency of investments and establish a Road Maintenance Fund, (b) assistance resource mobilization. However, the progress to develop an expressway network in Vietnam, towards the stated CPS objective to involve the setting out guidance on key financing, regulatory private sector in financing and management and institutional issues for the organization of new infrastructure has been limited to pilot of the expressway sector in Vietnam, and (c) a initiatives. Both the World Bank and the IFC study on Urban Transportation Investment in have been preparing to play active roles in Medium-sized Cities in Vietnam, which prepared engaging the private sector in infrastructure a strategic framework for small and medium-sized through public-private partnerships. IFC has cities in Vietnam to support the development of invested in two port projects as Public-Private sustainable urban transportation infrastructure. Partnerships (PPPs) and has also been advising Lastly, improving sector governance is receiving on the Nghi Son 2 power plant PPP, all of which increased attention, and to reduce risks of have been successful examples of private sector malfeasance the Bank has introduced the use of participation in infrastructure and go beyond pilot Technical Audits and Governance, Transparency projects. However, work is still needed in terms of and Anti-corruption Plans (GTAP) on all transport convincing the government to recognize these as projects. models for further PPP development. 17. Gaps in provision of water and Pillar 2: Strengthening Social Inclusion sanitation services are being reduced in urban areas. Access to potable water as well as the 19. Rural areas are more connected to number of households with septic tanks stand markets and services, and rural populations around 75 percent (up from 58 percent in 2006) are on average closer to roads and have greater in urban centers in 2009. I n the big cities, over 90 access to electricity. The percentage of the rural percent of the population has access to potable population with access to safe water has also water. In addition, there was good progress, increased (from 62 percent in 2005 to 83 percent VIETNAM COUNTRY PARTNERSHIP STRATEGY 56 2012 - 2016 in 2011). The CPS contribution came through a Additional Bank contributions have centered on series of operations that maintained continuity improving health services and enhancing access to with the previous CPS. Some of the operations are and quality of these services as well as supporting exemplary and innovative, such as the Rural Energy regional blood transfusion centers and safe series, which IEG considers a source of valuable practices in relation to HIV/AIDS. lessons for other countries. The Community Driven Development (CDD) approach used with 21. Ethnic minorities in rural areas are the poorest communities has proven an effective more integrated into development processes, instrument for outreach, as seen e.g. through but big challenges remain. The Bank and the recently completed Community Based Rural several development partners have supported Infrastructure Project. The Red River Delta Rural the government’s priority of empowering ethnic Water Supply project, which has increased access minorities first through self-standing operations to water supply, introduced cost recovery and and more recently through a collective DPO sustainable delivery models for rural water supply series (the P-135), which supports a Government as well as microfinance for sanitation. program in providing basic infrastructure to poor communities by bringing improvements 20. Coverage of affordable quality to different aspects of the planning and health care services and primary education implementation of the program. Reviews of the has continued to increase in both rural and first Northern Mountain Poverty Reduction Project urban areas. The CPS program contributed identified the sustainability of the communal to major progress towards full-day schooling. investments as a risk and therefore the P-135 also Uniform performance standards for teachers are emphasized the need to finance maintenance in in place, building on efforts under the previous order to achieve sustainability. Less progress was CPS. National tests show improvements in the achieved under the program’s livelihoods support performance of primary students and tuition activities. The Government has recently designed in secondary and tertiary education is being the scope and institutional responsibilities under introduced to better reflect market conditions a new National Target Program on Poverty and enhance policies to protect the poor. While Reduction. It is anticipated that many of the retaining its focus on improving quality, work in reforms adopted under P-135 will be carried education is expanding to cover primary education over in the implementation of the new program. for disabled children and pre-school education. While continued refinements in the approach Analytical work contributed to the government’s to infrastructure planning, development and 2020 education strategy. The major concern lies maintenance are anticipated, questions remain with the governance of the education system and as to the best approaches to broaden livelihood informal practices that require parents to make opportunities available to ethnic minority additional contributions to school and teachers. communities. On health, the Bank supported the authorities in drawing operational and policy lessons. This 22. Increased attention was given to led to a revised Health Strategy by law in 2008. the development of a comprehensive social All citizens are now eligible for health insurance protection system. Building on the 2008 Vietnam coverage, with the national budget supporting the Development Report (VDR) on Social Protection and participation of the poor and the informal sector. a policy note assessing Vietnam’s social safety net In addition, the law establishes a framework for in 2010, the Bank and the Government of Vietnam national standards and a unified licensing system deepened their policy dialogue on strengthening for health care practitioners. Effective coverage of both the pension and social assistance systems. On health insurance, including for the poor and the pensions, the Bank has been providing technical near-poor increased from 43.8 percent in 2008 assistance for planned revisions to the Social to an unofficial estimate of 62 percent today. Insurance Law, including on (a) extending pension VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 57 coverage to the informal sector; (b) enhancing the has been scaling up support in this area through fiscal sustainability of the pension system and the investment and technical assistance. administrative capacity and fund management practices of Vietnam Social Security (VSS); and (c) 25. Progress in sustaining and managing introducing a unified beneficiary identification natural resources (especially forest and water) number for VSS programs. Moreover, the Bank and includes an improved institutional setting VSS have been exploring options for supporting and achievement of targeted objectives on administrative reforms in VSS, though a final decision the ground. The direct support on forestry is has not been reached. On social assistance, policy helping form smallholder plantations that meet dialogue has been initiated on strengthening the international standards for sustainable forestry, social safety net through the possible introduction but little data is available on progress in the of a cash transfer program to address chronic forestry sector. Through the PRSC series, the poverty and help the poor and vulnerable better CPS has supported the development of linkages respond to shocks. between the protective and economic functions of forests as well as developing guidelines for 23. Vietnam has made good progress in forest development. In addition, it has helped addressing gender disparities. Less progress clarify the responsibilities for integrated rural basin has been made in mainstreaming gender into the management and the issuance of guidelines for the Bank program. A gender equality law is in place and efficient use of water resources. Support for water under the PRSC series, efforts were made at unifying resource management has been included in a range the legal framework on gender. The country ranks of Bank operations. Less progress has been made in relatively well on gender issues, with major progress the overall protection of critical natural habitats, but being made over the last decade. Nevertheless, a range of small GEF-financed projects contributed gender gaps remain in relation to the forced to protection of selected key protected areas. The retirement age as well as employment and wage Bank furthermore provided TA to the Ministry of levels, especially in the informal economy. Natural Resources and Environment (MONRE) to support their development of a national strategy on Pillar 3: Strengthening Natural Resource and Climate Change, currently in draft form. Environmental Management 27 26. Ambitious programs for redressing 24. The Bank has worked with the the gaps in the management of household Government on a wide range of analytical work sanitation (and less so industrial pollution) as that raised the awareness of the nature and well as for renewable energy are underway. scope of environmental challenges and the The CPS program has been actively involved in capacity to meet them. The 2011 VDR focuses on addressing the gaps in household sanitation with managing natural resources and a country-specific good progress on (a) the legal and regulatory climate change strategy for the Bank has been framework and (b) increasing coverage, considering produced. These two products and related work form the low base from which the work started. A a basis from which to provide greater coherence to lending program is in place to meet remaining ongoing and forthcoming activities on a wide range challenges. In addition, initiatives on industrial of concerns from forestry to water management, pollution included a rich program of analytical land degradation, natural risk prevention, rising work carried out jointly with the Government and urban pollution and global warming. The Bank preparation of an IDA credit on industrial pollution 27. Initially the CPS focused on two result clusters: (a) “Better sustaining and managing natural resources” and (b) “Improved management effectiveness of household and industrial pollution.” The CPS Progress Report from 2009 added a third results cluster on “Improved climate change adaptation and mitigation.” VIETNAM COUNTRY PARTNERSHIP STRATEGY 58 2012 - 2016 (planned for FY13). Industrial wastewater treatment lowering corruption in key services. Towards still needs significant attention, as less than 30 the end of the CPS period, the attention to percent of the wastewater from industrial parks is sector governance was broadening the scope treated in centralized facilities. Progress toward a of the engagement, following a more thematic lower-intensity carbon economy was made through approach. The 2010 VDR on Modern Institutions investments in energy demand side management examined (a) the process of devolution of power and renewable energy development. Achievements to lower levels of government and (b) and the thus far include removing barriers to small scale changing accountability system. The 2010 VDR (up to 30MW) renewable energy development, confirms the significant progress that Vietnam the issuance of a standardized “no negotiations” has made in governance over the long haul, Power Purchase Agreement (PPA) and an avoided- but notes disconnects between devolution and cost tariff formula for small renewable projects to accountability that have opened a wedge, which is connect to the grid. The target of 200MW renewable creating opportunities for corruption. capacity has been met (doubled) by the end of the CPS period. 29. Good progress has been made on the public financial management agenda. 27. During the CPS, both the Government Some of the achievements include piloting an and the Bank increased attention to climate Integrated Chart of Accounts in central ministries change adaptation and mitigation, thus and over half the provinces and publishing forming the basis for a fuller agenda in the next budget execution information in a timely manner. CPS. The Vietnam Program recently developed Contributors to the achievements are the Financial a Climate Change Strategy, which reports on the Management Project, a multi-donor Trust Fund on Bank’s involvement in a range of investments Public Financial Management, and the PRSC series. and analytical work on adaptation and mitigation Existing evaluations of long-term progress in the during the CPS period. Attention to innovation area of PFM and budget processes have been and partnerships has been a key feature of Bank positive, as can be seen in the IEG review of the engagement. Efforts under the Montreal Protocol first eight PRSC operations, the recently concluded Project supported the government in phasing out Country Financial Accountability Assessment chlorofluorocarbons (CFCs) through promoting (CFAA)/Country Procurement Assessment Report, the use of non-ozone depleting substances. In and the 2010 VDR28. However, gaps are likely to April 2011, the Vietnam Government, through remain at the level of medium term planning, the Bank’s support, also obtained the Montreal procurement, internal audit, reporting and the Protocol Multilateral Funds in phasing out hydro modernization of fiscal practices at the provincial chlorofluorocarbons (HCFCs). A Clean Technology and communal levels. The government is Fund (CTF) was approved and an innovative carbon conducting a PEFA self-assessment to support the finance program launched. current agenda, identify gaps, lay out the work ahead and contribute to the preparation of the Pillar 4: Improving Governance new State Budget Law. The Bank is providing the necessary guidance and quality assurance support 28. The CPS program built on an ongoing to the government during the process. agenda of: (a) improving public financial management (PFM), (b) more participatory 30. During the 2009 global crisis, the CPS approaches as a way of modernizing planning scaled up efforts to improve the institutional towards development objectives, and (c) set-up for selecting and implementing public 28. Like in many other countries, the Vietnam process of pushing for reforms through the PFM program has been lengthy, but the program has nevertheless been viewed as delivering substantial improvements over the long haul. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 59 investment. The policy content of the Public somewhat unclear. The 2010 VDR on Modern Investment Reform (PIR) DPO to help the country Institutions finds that administrative corruption mitigate the impact of the global crisis focused is substantial as indicated by surveys. However, on improving the institutional basis for public overall corruption is assessed by respondents as investment, thus responding to a recurrent having remained at the same level or decreased concern of the authorities and the development slightly, with some indicators improving and community regarding the effectiveness of public others deteriorating. Thus, the emphasis on investment. The PIR has successfully supported reducing administrative corruption is on the right legislative amendments (Land, Procurement Law, track, as in the customs and tax projects as has Investment Law, Construction Law and Enterprise been mentioned under pillar 129. Issues such as Law) to overhaul the fragmented and overlapping asset declaration, undertaking compliance audits regulatory framework, although there is still for public procurement, and overall support uncertainty regarding the possible approval of the for selected aspects of the Government’s Anti- Law on Public Investment linked to the second Corruption Strategy received attention through DPO operation. In addition, the Project Preparation the PRSC and progress has been made, although Technical Assistance Facility Project has been put the lack of a supporting monitoring system to track in place to support efforts to ensure readiness for the impact of the implementation to some extent implementation and quality of such investment. impairs assessment of the effectiveness of these Neither the PIR nor the Project Preparation Project efforts. The pace of implementation of the Law on was considered in the initial CPS design but provide Corruption Prevention and Control has been slow. good examples of the readiness of the program to address emerging challenges. III. BANK GROUP PERFORMANCE 31. Pilot efforts at introducing participatory Design planning and execution have been successful. Vietnam’s forceful decentralization drive has 33. The SEDP 2006-2010 laid out a path of transferred considerable power to local authorities transition towards a socialist market economy in the management and use of public resources. and foresaw Vietnam reaching middle-income In this context, the CPS program supported country status by 2010. The WBG anchored the more participatory approaches to planning and 2007-2011 CPS on the SEDP, a strategy it judged execution with success, through several CDD satisfactory in facing the challenges of continued operations and the P-135 DPO. With hindsight, growth and poverty reduction30. The 2007 VDR, however, the World Bank could have engaged Aiming High, laid out the analytical underpinnings more forcefully with the decentralization process of the CPS strategy. The CPS maintained the in terms of increasing capacity and strengthening focus of the previous CAS on: (a) improving the accountability, a weakness noted in the 2010 VDR business environment, (b) social service delivery, on Modern Institutions. The lack of good quality and (c) governance. It added the need to address data in support of planning, monitoring and environment challenges as a fourth pillar, thus evaluation remains an additional weak point. aligning with the four pillars of the SEDP. The commitment to improving the CPS program 32. Understanding of the scope of performance emphasized: (a) higher disbursement administrative corruption increased, but ratios, (b) shorter preparation and effectiveness the impact of anti-corruption measures is lags, and (c) timely delivery of results by reducing 29. The Customs Project was cancelled in FY11 before completion, for reasons shown under Outcome 1.1 in Appendix 1, which also includes lessons learned in relation to the cancellation. 30. The IMF-World Bank Joint Staff Advisory Note (JSAN), discussed by the Board on December 5, 2006. VIETNAM COUNTRY PARTNERSHIP STRATEGY 60 2012 - 2016 project extensions. The design of the results of the CPS program is targeted towards provincial framework took into account the lessons learned and local levels, with a focus on poverty. Historically, from the Completion Report of the FY01-F06 alignment with national priorities has contributed CAS, linking the results more tightly with the to Vietnam’s good performance, as seen by the fact interventions. The FY07-FY11 CPS had a carry-over that all Bank projects completed in Vietnam have program of 37 operations under implementation. been rated as satisfactory or moderately satisfactory The PRSC series remained the main instrument (see Appendix 4). Looking only at this CPS period, of policy dialogue31. It is assessed that the design the program exhibits a similar performance up to of the CPS, including the alignment with the four now: of 18 Bank operations completed between pillars used in the SEDP worked relatively well. 2006 and 2010, 12 were rated as satisfactory and 6 as However, the CPS design could have benefitted moderately satisfactory. Alignment of IFC’s program from having the selectivity criteria set much more has fitted and supported how the private sector has tightly. Nonetheless, the CPS was implemented developed - focusing on financial institutions - both during a period of rapidly growing engagement, building their capital bases and also taking them and accommodating certain emerging needs was into new product areas (SME financing, housing essential in supporting the country. lending, energy efficiency lending) and developing the institutional infrastructure required to improve Implementation access to finance. Later in the five-year period, IFC responded to the global financial crisis by rolling 34. Commitments exceeded expectations out its Global Trade Finance Program, providing under the CPS, driven by larger IDA allocations USD970 million of liquidity to Vietnam’s exporters and access to IBRD financing. The Bank as other financial institutions withdrew. committed a total of USD4,471 million with annual commitments increasing from USD710 million in 36. The program has seen an increase in the FY07 to USD2,348 million in FY11, of which around stock of commitments and some improvements USD1,068 million came from IBRD funding. As of in delivery. The Bank disbursed USD4,695 million the end of FY11, USD5,518 million of IDA resources during the CPS period, going from USD475 million had been committed for disbursement. IFC in FY07 to USD1,170 in FY11. There has been some commitments totaled USD1,800 million over the 5 increase in disbursement rates of SILs from 12.7 year period, including commitments through their percent in FY07, although the FY10 disbursement asset management business. ratio of 18.8 percent could not be sustained in FY11, which ended with a disbursement rate 35. Alignment of the CPS program with of 14.9 percent. Funds disbursed under SILs national priorities has been an important increased from USD374 million in FY07 to USD653 driver of results. With a focus on infrastructure million in FY11. The program has seen a rising and regional/local interventions, the CPS stock of commitments and a larger share of budget program successfully reflects the Government’s support operations. While the slight increase in political priority to seek expansion of services and the disbursement ratio is due in part to the greater opportunities across the national territory. In fact, maturity of the projects under implementation, by the end of FY11, 80 percent of the portfolio by the Country Team has also focused more attention sectors was concentrated in energy (22 percent), on the Bank’s portfolio, including through transport (23 percent), urban (21 percent) and rural joint high level reviews of problematic and at- development (14 percent). In addition, a good share risk projects. Furthermore, an Action Plan was 31. The SEDP 2006-2010 made direct and clear statements regarding the regional development orientation of the plan. To a considerable extent these orientations have been driving the demand for assistance from the Bank and other development partners. With hindsight, the CPS could have paid more explicit attention to these orientations. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 61 developed in the realm of the Six Banks Group development (the Vietnam Business Forum, as a result of the Joint Portfolio Performance the Vietnam Bond Market Association, the Bank Review32, which focuses on reducing common Training Center, various regulatory and tax reform impediments or barriers to implementation, but projects, and the Vietnam Corporate Governance it is not yet clear to what extend this has had a Forum) has provided IFC with credibility and significant impact on implementation. The time presence as a partner for both the private sector and lag between loan approvals and effectiveness was government in Vietnam’s economic development. reduced from 7.6 months in FY07 to 2.6 months in Furthermore, IFC’s ability to combine investment FY11. However, the average lag/delay of 2 years capital and advisory services at the investment in implementing projects identified in the 2007 level has allowed IFC to develop game-changing Portfolio Review remains the same. The number interactions such as IFC’s investment in Vietinbank, of extended projects went from 4 projects in FY07 the first major equitization to be completed after to 9 projects in FY11. Some of the extensions the global financial crisis, and the development of have provided additional financing to cover cost the energy efficiency lending market. increases, especially as a result of high inflation in 2009. However, implementation is still delayed by 38. The WBG program has been responding inadequate readiness for implementation at the to unforeseen circumstances and emerging point of effectiveness as well as by problematic challenges. The Bank provided timely support to procurement practices. IFC’s portfolio performed Vietnam to address the impact of the 2008/2009 well during the financial crisis, with restructurings global financial crisis. In the absence of an IMF associated with project-specific issues rather than program, the Bank was a key interlocutor on policy macroeconomic conditions. issues, including fiscal policy. Additional funding from IBRD sources allowed the government to take 37. Greater attention to upstream an anti-cyclical fiscal stance. The program is now design and innovation is planting seeds for responding to emerging risks such as increased enhanced effectiveness and impact. On the macro-economic volatility through intense policy Bank side, the design of the P-135 DPO as a budget dialogue and analytical work. For IFC, the financial support operation was path-breaking by linking crisis also allowed the institution to play a counter- disbursements to institutional changes needed to cyclical role, providing funding and advice at a time improve delivery of this national program rather when global financial institutions were reducing than disbursing against program expenditures. The their exposure to Vietnam. IFC was able to roll out Project Preparation Technical Assistance Facility new products that unexpectedly met huge demand, Project is another example of focusing on design such as the Global Trade Finance Program, which to facilitate implementation. The shift towards is expected to lead to the development of other sector DPO programs has been accompanied short-term lending products to increase access to by institutional deepening. On the IFC side, finance for rural and agricultural borrowers. IFC’s an emphasis on aligning strategy and project decentralization, placing decision-making and design between IFC’s investment and advisory execution capacity closer to the client and giving business has paid off. Much of the work IFC has client relationship managers a greater role and voice done to develop the public goods of institutional in developing and executing business has been key infrastructure and a framework for private sector in IFC understanding its countercyclical role and 32. The Bank participates in a Joint Portfolio Performance Review (JPPR) with the Six Banks Group and Government every two years. A nine-point action plan was developed to improve the effectiveness of ODA project implementation, and endorsed under a Prime Minister Decision in July 2008. The Sixth JPPR was finalized in November 2009. Implementation progress, jointly monitored under the leadership of MPI, has been uneven to date, with progress on procurement unremarkable. The last Country Program Portfolio Review (CPPR) was undertaken in FY08. VIETNAM COUNTRY PARTNERSHIP STRATEGY 62 2012 - 2016 building its program in Vietnam and identifying with other members of the donor community. the right partners to engage with during a time of The Bank delivered a strong AAA program despite financial crisis. budget pressure. The VDRs are appreciated by the government and development partners35. 39. The Bank program expanded and Although nominally the production of these broadened its coverage. While it was to respond reports absorbs a small amount of resources, a to the emerging needs, the expansion is of concern good share of the other Economic and Sector Work as well. The number of operations in place increased (ESW) feeds into these reports. Arguably, in the from 39 by the end of FY06 to 50 by the end of process, traditional ESW such as public expenditure FY11, and the average size of the new loans has reviews and sector analysis to inform on key expanded partly due to the increased use of DPOs 33. priorities such as competitiveness (agriculture, The administrative cost of a growing portfolio and technology), volatility, structural transformation, lending pipeline is putting pressure on other parts and fiscal and financial sustainability has declined. of the program, notably AAA. The shift to programmatic AAA announced by the CPS Progress Report has been initiated with 40. As intended in the CPS, the PRSC series support for major pieces of work, including on was the main instrument for policy dialogue urbanization, poverty, and food security. between the Government, the Bank and other members of the development community. IV. KEY LESSONS AND RECOMMENDATIONS The PRSC maintained a flexible approach within the range of CPS areas of engagement, with the 42. The Vietnam program continued its emphasis on supporting the policy reform process strong record of development impact across while nurturing strategic breakthroughs. When a broad range of areas, with 32 completed breakthroughs occurred, deepening of the policy projects for which all available development reforms shifted to budget support operations such as outcome ratings were either Satisfactory (S) in higher education, energy, and public investment34. or Moderately Satisfactory (MS) (see Appendix An IEG evaluation found the contribution of the first 4). The World Bank Group’s partnership with the eight PRSC operations to development outcomes authorities and the development community is as well as to the Bank performance satisfactory. In strong. As Vietnam has become a lower middle addition, the PRSC series brought together a large income country and is seeking to become a modern group of development partners (varying from 3 to industrialized economy, new challenges are 11) who contributed 43 percent of total resources emerging that call for the WBG to adjust its business of PRSCs 1-9. The PRSC series overall has received model. Innovations in delivery practices combined favorable reviews, but towards the end of the series with a continued strong partnership with the it has been raised whether the operations focused authorities should allow for a gradual readjustment too much on ‘process’ and too little on ‘action’, a of the program. point that should be considered when designing the new policy lending series to take the place of 43. The WBG needs to respond to the the PRSC. emerging vulnerabilities and challenges in Vietnam with adequate policy and technical 41. The CPS continued the practice of support as well as financial resources. The WBG producing a yearly flagship publication, the has already begun to address macroeconomic, Vietnam Development Report (VDR) jointly environment, climate change and urban 33. The average size of SILs also increased considerably, from USD130 million in FY07 to USD271 million in FY11 (excluding AF). 34. The share of DPLs and additional financing increased from 34% in FY07 to 64% in FY10, but then decreased again to 31% in FY11. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 63 vulnerabilities jointly with the national goal of 47. Commitments on institutional reform increasing the sophistication of the economy should be credible while still pushing to move the through AAA and some operations. To strengthen agenda forward. The CPS committed its support to the response, the WBG must close the gaps a major institutional transformation of the country as that remain from the past CPS (SOE corporate the basis for delivering and sustaining middle income governance, private sector development, etc.). status. The institutional attainments, while notable, fell short of expectations, in part because of the 44. The WBG should maintain a demand- breadth of the agenda. The coming strategy should driven focus within a framework of selectivity take a more realistic and strategic view of the targets that prioritizes those areas where the WBG for institutional reform, identifying to the extent can contribute the most to meeting current possible such targets in dialogue with government. challenges for Vietnam. As noted, alignment Rather than making unilateral commitments that with national priorities has helped the quality lack credible backing from the counterpart, the of program implementation. At the same time, WBG should maintain and strengthen an advocacy the potential areas of new engagement have dialogue through AAA and other instruments been increasing and the tendency is for a further that inform the authorities and the country about expansion to new areas. The WBG needs to carefully institutional options. The outcome of this dialogue select what it supports and how to achieve the can then be introduced into the program gradually best results, including by continuing to support as agreements are reached. the “unfinished” agenda in relation to poverty reduction and provision of basic social services and 48. One of the lessons coming out of the infrastructure to the most disadvantaged. PRSC series (the later operations) and the recent PIR operations is that strong Government 45. The principles guiding selectivity ownership of the reform program is even more need to be tightened to avoid diffusing the important as Vietnam undertakes second Bank’s program too thinly. A selectivity strategy generation reforms which are more complex could focus, for instance, on transferring mature and tend to take longer. Engagement areas for programs to the budget, with the Bank supporting policy reforms should be chosen more selectively well designed new areas of engagement with clear as there are limited resources to tackle increasingly exit strategies for capacity building. Certain criteria complex challenges. Adequate time should be should be met for an operation to be added to the invested to build a strong dialogue underpinned by Bank’s Vietnam program. solid analytical work with the aim of strengthening Government ownership of reforms. 46. Attention to implementation should be complemented with greater attention to 49. Attention should be given to program and project design. Downstream decentralization issues, including the emerging attention to implementation has yielded results, and challenges of urban development. According efforts should continue. However, they should be to the 2010 VDR on Modern Institutions, the complemented by greater attention to design and transfer of fiscal resources and implementation selection of instruments. Such efforts have already power has created a wedge between control been initiated and the Country Team will continue and accountability at the local level, which can its focus on improving design and exploring affect effectiveness and open opportunities for alternative delivery approaches that accelerate the corruption. At the same time, a large portion of the delivery of intended results. investment program of the Bank is implemented 35. Aiming High (2007), Social Assistance (2008); Capital Matters (2009); Modern Institutions (2010) and Natural Resources Management (2011). VIETNAM COUNTRY PARTNERSHIP STRATEGY 64 2012 - 2016 at the local level in line with Central Government 51. The results framework could be used preferences, while the urban development more regularly as a tool for setting strategic challenges are mounting. The new CPS could priorities and monitoring accountability. While evaluate possibilities for supporting capacity the CPS results framework was more aligned with building at the local level, beginning perhaps with the program than the previous CAS framework, it a needs assessment that takes stock of the status was broad and extensive, but, most importantly and impact of the decentralization experience did not take account of the likelihood of delivery and the performance of the Bank program on or monitoring and information requirements. The the ground. It may also seek to contribute to lack of periodic reviews, in the context of recurrent addressing the wedge between the allocation of monitoring, disconnected the results framework responsibilities and the structure of accountability from the program and discouraged ownership at the local level. from the team. A results framework must, to the extent possible, allow the tracking of progress 50. IFC and the Bank should focus on in program delivery, and eventually evaluation. developing sector-specific strategies that Initially, the results framework must be grounded combine the strengths of both institutions. on those elements of the program that are mature This is increasingly important as Vietnam looks to and likely to be delivered. The results framework address the infrastructure gap, the impact of growth can be updated periodically to reflect the evolution and industrialization on the environment and looks of the program. Updating is most relevant when to integrate the rural economy and populations strategies cover a longer period of time, which is into Vietnam’s economic growth. For example, in the case of Vietnam. Lastly, the results approach infrastructure, the two organizations bring more to should be consistent across instruments, and not the table combined than any other development only be applied in the CPS. finance institution. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 65 66 APPENDIX 1: SUMMARY OF VIETNAM 2007-2011 CPS PROGRAM Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome PILLAR I: BUSINESS DEVELOPMENT 1.1 Improved business Status: Partially Achieved Support for strengthening the business environment climate and stronger Justification for Status: the achievements was highly relevant, particularly in the post-WTO include continued equitization, enactment of accession world. Reports are that the quality of competitiveness the Enterprise Law, strengthening of tertiary the business environment improved, with a partial education institutions and higher levels of credit support from the CPS program. With hindsight, channeled to agriculture. With the number of accession to WTO contributed to a higher volatility higher education graduates rapidly increasing, of the economy, given the limited capacity of the the focus of the Bank program has been on economy to absorb capital inflows. In addition, the improving the quality of tertiary education creation of the Large Economic Groups to strengthen and building on the achievements and lessons the competitive position of the country is in fact learned from completed operations. creating an uneven playing field between public and However, the privatization of large state-owned private actors. These events emerged after the design enterprises is behind schedule, Vietnam is not of the CPS, and the PRSC series has taken the issues on yet fully recognized as a market economy and board, albeit only towards the end of the CPS period. a comprehensive competitiveness agenda has These events show the need for a partnership strategy yet to be fully articulated. to be flexible enough to react promptly to emerging Details on progress made under each circumstances that may impair the sustainability of outcome indicator: the macro-economic environment, the quality of the business environment and the CPS program itself. Increase in non-state enterprises Lending: The state remains a dominant player in finance, satisfied with legal and regulatory PRSC 6-9 as the owner of five large financial groups; two of framework, as measured through AAA: which have been equitized, but none of which have Investment Climate Assessments PSD Competitiveness and strategic international partners. The link between (ICAs) Innovation the public banks and the large economic groups has  Satisfaction with the legal and  An ICA was undertaken in 2006 and was never VDR 2007: Aiming High heightened concerns, given that the international regulatory environment published for various reasons. The possibility crisis has evidenced cracks in the balance sheets of of undertaking another ICA is currently being some of the large economic groups, the extent of explored which has yet to be fully determined and disclosed.  Equitization of enterprises with 1,205 enterprises with 100% state ownership Therefore efforts to tighten the governance of large 100% state ownership: (2010) economic groups would increase the stability of the Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Baseline (2006): 2100 enterprises financial sector (with 100% state ownership) Support for strengthening the business Target (2010): 1000 enterprises environment was highly relevant, particularly in  Model privatizations of large SOEs None have been undertaken the post-WTO accession world. Reports are that the quality of the business environment improved, with a Strengthened export orientation Lending: partial support from the CPS program. With hindsight,  Ratio of exports to GDP:  71% (2010) PRSC 6-9, accession to WTO contributed to a higher volatility Baseline (2005): 69% Agricultural Competitiveness of the economy, given the limited capacity of the Target (2010): 72% project economy to absorb capital inflows. In addition, the  WTO commitments met on time  26 countries, including Japan, Australia, AAA: creation of the Large Economic Groups to strengthen Germany and New Zealand have granted VDR 2007: Aiming High, Vietnam the competitive position of the country is in fact market economy status to Vietnam, before WTO Accession (FY07), WTO AAA creating an uneven playing field between public and the end of 12-year period agreed in WTO (FY08), PSD Competitiveness & private actors. These events emerged after the design accession negotiations. However, a few Innovation (FY10) of the CPS, and the PRSC series has taken the issues major developed economies are yet to on board, albeit only towards the end of the CPS officially grant Vietnam market status. There period. These events show the need for a partnership has only been limited progress in meeting strategy to be flexible enough to react promptly retail trade commitments. to emerging circumstances that may impair the sustainability of the macro-economic environment, More efficient customs procedures for Lending: the quality of the business environment and the CPS imports Customs Modernization (cancelled program itself.  Average import customs clearance  Average customs clearance times at ports in FY11, before completion) The state remains a dominant player in finance, times for commercial shipments at have been reduced significantly to 14 hours AAA: as the owner of five large financial groups; two of ports reduced: equivalent of a 75% reduction (2011) VDR 2007: Aiming High which have been equitized, but none of which have Baseline (2004): 57 hours strategic international partners. The link between Target (2010): 32 hours the public banks and the large economic groups has heightened concerns, given that the international Improved employability of Lending: crisis has evidenced cracks in the balance sheets of graduates with advanced degrees Second Higher Education Project some of the large economic groups, the extent of  Ratio of doctorate-qualified  n/a and DPO, which has yet to be fully determined and disclosed. professors to graduate students New Model Universities Therefore efforts to tighten the governance of large in universities (public and non- AAA: economic groups would increase the stability of the public): TF for education quality assessment financial sector Target (2010): 1:25 via standardized tests, VN Skills for Customs Modernization Project Cancelation: Growth – Tertiary Education (FY07) 67 68 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome IDFs and Trust Funds > USD1 The Customs Modernization Project was terminated million: on April 4, 2011 at the client’s request after Second Higher Education Project having disbursed USD1.8 million, or 2.6 percent Co-financing of the allocated credit amount. In contrast to slow disbursement due to significant consultant Improved rural business climate, as Lending: recruitment delays leading to procurement delays indicated in rural ICAs Rural Finance II and III; for Vietnam Customs Information System (VCIS) and  Improved rural business climate  Rural ICA not undertaken Agriculture Competitiveness control equipment components, the institutional  Access to sustainable, rural finance  70% Project; development components of the project showed increased. Coverage of formal P-135 DPOs good implementation progress. Results achieved rural credit services increased : against institutional development performance Baseline (2000): 50% indicators have been extremely positive. A  At least 30-35% of new loans Percentage of end-borrowers who are significant portion of the technical assistance issued to women women under the Microfinance Loan Fund included in the project design has been delivered to (MLF): 42.2% good effect. Importantly, a comprehensive analysis and reengineering of business processes based on Note: The Second Rural Finance Project the implementation of globally agreed standards financed over 400,000 sub-projects, facilitated has been completed and draft bidding documents total investment of USD740 million equivalent, for the procurement of the VCIS prepared. Initial and created over 255,000 new jobs. 37% of progress in operational modernization was the end-borrowers under that project are strengthened by a completed legal assessment women. As of January 31, 2011 the Third and project activities focused on organizational Rural Finance Project: Number of sub-projects restructuring and strengthening. The preparation of financed: 30,784; of which 15,969 by the Rural a comprehensive training strategy was completed Development Fund (RDF), 14,815 by MLF. Total and is being used already. investment generated by the Project: USD 118 However, around the time of the Mid Term million. Number of new jobs created by RDF: Review key counterparts became concerned 32,142 about the possibility that procurement could not be completed and achieve full implementation process for the VCIS within an allowable extension of the closing date and began exploring alternative options that could accelerate VCIS implementation and increase long term sustainability. The GDVC informally advised that it was considering a number of options including the possibility of Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Continuing to support foreign directly acquiring a suitable operational VCIS investment through MIGA’s insurance from a neighboring country as part of a possible facility for investors concerned about bilateral cooperation arrangement. The Mid-Term political risk. Review mission advised the GDVC that the Bank’s  MIGA involvement in Vietnam;  Still limited MIGA involvement. By the end procurement rules would not allow the IDA credit to of the CPS period, MIGA is planning to step be used to support direct contracting of a major IT up their engagement in Vietnam in the near system such as the VCIS. The mission also stressed future. that experience elsewhere suggested such an approach might take considerable time to finalize Enhanced accounting and auditing Lending: and could incur a number of other risks that might professions for better corporate PRSC 6-9 ultimately delay implementation significantly. Given financial reporting AAA: the above context, and based on a review of various  Completion of Reports on  ROSC A&A assessment completed in FY09. ROSC (Accounting & Audit) project restructuring options with key counterparts, the Observance of Standards It was agreed in 2010 not to publish final the Mid-Term Review mission recommended and Codes (ROSC) Accounting draft report. Discussions with government that counterparts consider either continuing & Audit (A&A) assessment counterparts to develop a Country implementation through extending the project by and implementation of its Action Plan based on the ROSC A&A another 3-5 years to ensure sufficient time for full recommendations recommendations are ongoing. and effective deployment or terminating the project as implemented to date. On December 6, 2010, the State Bank of Vietnam, on behalf of the Borrower, notified the Bank of its intention to terminate the project and the remaining credit was cancelled. The termination occurred before the due credit closing date thus allowing the cancelled funds to revert to the Vietnam IDA program. Among number of lessons learned (to be discussed in more detail in the ICR) is the need for additional attention to project ownership and leadership performance by the beneficiary, and the overly optimistic disbursement schedule developed during project approval. The initial 5-year implementation plan with relatively linear disbursement schedule clearly proved to be overly optimistic, given the borrowers limited experience, the need for a two stage procurement process and 69 70 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome the need to undertake complex business process reengineering prior to developing detailed bidding documents for the major ICT procurement. These problems could have been identified sooner and preventive measures taken including increased supervision frequency and intensity and the timing of the delayed Mid-Term Review being conducted closer to the initial schedule. Some project management pro-activeness was, however, constrained by lack of adequate budget to manage such a high risk project. Increased attention to the cumulative impact of procurement delays may have allowed the project to be identified and included in the problem portfolio earlier and therefore drawn additional management attention to the status of the project. 1.2. Financial system Status: Partially Achieved The pace of implementation of the strategy has more efficient, stable and Justification for Status: Key achievements been slow, showing that the CPS seems to have include passage of fundamental legislation overestimated the progress that could have been responsive to the needs of on the Central Bank and credit institutions, made. A similar observation was made regarding business and households partial equitization of state owned banks the previous CPS. The recommendation is to and modernization of the banking payments develop more realistic expectations of what can infrastructure. Financial deepening has also be accomplished during the CPS period and to improved with fast growth in credit over focus attention on a few key priorities. the past few years. However, the laws were approved with a delay and hence some of the Note: A Financial Markets Institutional Development follow-up actions could not be undertaken Project was under preparation but dropped in FY10 within the CPS period. Also there is concern about the health of the banking system given the very rapid credit growth equality of data on the financial sector indicators and concerns regarding the sector’s exposure to SOEs/large economic groups (the health of many of which is also of considerable concern). Furthermore, Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome there has been limited progress on involving the private sector in the financing of infrastructure. Details on progress made under each outcome indicator: SBV transformed into modern Lending: central bank responsible for PRSC 6-9, Payment System & Bank independent monetary policy and Modernization II, Financial Sector bank supervision Modernization & Info Management  SBV Transformed in a modern  Revised SBV Law and Revised Credit System central bank Institutions Law had been approved by mid- AAA: 2010 and both are effective as of January, Financial Sector Strategy, Policy 2011. Implementation is underway. Banks Reform, Support to SBV,  SBV strengthened through  The financial sector modernization and ROSC (Accounting & Audit) management information information management system project IDF and Trust Funds > US1 system and revised structure of for the modernization of SBV, the Credit million: regional branches Information Center and the Deposit IDF for Capacity Strengthening Insurance of Vietnam became effective in of the Vietnam Association of late July 2009. As the project is implemented, Certified Public Accountants, IDF the institutional framework, information for Strengthening Accounting management and business engineering, etc Capacity of State-Owned Banks, will be strengthened. IDF for Development of Legal  Pilot Interbank Payments System  Interbank Payment System has been Foundation of Vietnam’s Banking expanded significantly expanded under the Payment System System and Bank Modernization Project II. Average volume and value of transactions in 2008 increased three and six times respectively compared to 2005.  Action plan for necessary  An FSAP has not yet been undertaken. regulatory overhaul, based on However, it has been agreed with the Financial Sector Assessment Government and is planned to be Program (FSAP)/ROSC finding undertaken in the near future. 71 72 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Financial sector corporate governance Lending: strengthened. PRSCs, Payment System & Bank  3 of 5 State-Owned Commercial  2 of 5 SOCBs have been equitized. Modernization II, Financial Sector Banks (SOCBs) equitized Modernization & Info Management  The share of Non-Performing  NPLs ratio (Vietnam Accounting System (VAS)) System, HCMC Investment Fund, Loans (NPLs) in total banking was 2.3% as of September 2010. The IAS/ Local Development Investment credit to decline: IFRS based NPL numbers are not reported by Fund, Rural Finance II, III Baseline (2005/6): 8-10% SBV. Various estimations (by rating agencies AAA: Target (2010): less than 5% and accounting firms) place International Financial Sector Strategy, Policy Accounting Standards (IAS)/International Banks Reform, Support to SBV Financial Reporting Standards (IFRS) NPLs to (including on AML), ROSC be 3-5 times VAS NPLs for individual banks (Accounting & Audit),  Revised Central Bank and Credit  The Revised SBV and Revised Credit Institutions IDF and Trust Funds > US1 million: Institutions law to provide profit Law was delayed, but approval in mid- 2010. IDF for Capacity Strengthening orientation and full autonomy to It sets a basis upon which to begin working of the Vietnam Association of SOCBs passed by 2008. on improving the governance of financial Certified Public Accountants, IDF for institutions. Strengthening Accounting Capacity of State-Owned Banks, IDF for Development of Legal Foundation of Vietnam’s Banking System Private share of total financing of Note: There is no reliable statistics regarding Lending: infrastructure increased the share of private financing for infrastructure. PRSC 6-9, Water Supply Dev, HIFU The WB AAA on Infrastructure Financing in and LDIFs Vietnam produced in December 2008 noted AAA: that there is limited private sector participation Bond Market Development in infrastructure and Vietnam has yet to establish Roadmap, Financial Sector Strategy a comprehensive institutional framework that IDF and Trust Funds > US1 provides transparent, consistent and clear rules million: of the game for the private sector to participate IDF for Capacity Strengthening in the delivery and financing of infrastructure. of the Vietnam Association of  Municipal financial markets and  Developed with support of the HIFU (HCMC) Certified Public Accountants, IDF for non-subsidized lending facilities and Local Development Investment Funds Strengthening Accounting Capacity developed in selected jurisdictions (water) of State-Owned Banks, IDF for (HCMC) or lines of business (Water) Development of Legal Foundation Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome  Bond market development road  Delayed. The bond market roadmap is of Vietnam’s Banking System map issued by 2007 expected to be issued with PRSC 10 in FY12 1.3. More Efficient and Status: Partially Achieved The institutional breakthrough in the energy sector Reliable Provision of Justification for Status: Major progress has was followed by a sector specific DPO to firm up been made in the institutional transformation the achievements. The dialogue around the PRSC Infrastructure Services of the energy sector, while at the same time provided the entry point. The lesson would seem increasing capacity and financial sustainability. to be that the DPL follows rather than leads policy The agenda on transport has supported reform. Hence the relevance of up-fronting policy building the basic core network in the country dialogue supported by quality AAA in those areas and is on track; although more work is needed that constrain growth and quality of life outcomes. in terms of solid logistics. Availability of water in Considerable attention has been given to urban urban areas has increased, with over 90 percent development through a wide range of operations coverage in large urban centers. Although on water, sanitation, transport and environment; an infrastructure has kept up with demand, emerging trend upon which to build greater synergy it remains a major constraint to continued across urban interventions is seeking to improve economic growth, and the participation of the the strategic and management capacity of urban private sector in construction, management centers (e.g. Vietnam Urban Upgrading Project and and finance was below the original expectations Danang Priority Infrastructure Investment Project). set under the CPS. Details on progress made under each outcome indicator: Efficient and reliable provision Lending: of urban infrastructure services Three Cities Sanitation, Urban (water, wastewater and sanitation, Upgrading, HCMC Environmental telecommunications): Increasing Sanitation, Danang Priority consumer satisfaction with municipal Infrastructure Development, services provided, and rising Coastal Cities Environmental consumer willingness to pay for urban Sanitation, Water Supply infrastructure services Development, VN-HIFU  Increased share of urban Development Local Development households with improved access Investment Fund, Urban Water to water supply and sanitation Supply and Waste Water, Coastal services: Cities (GEF), ICT Development 73 74 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Urban Water Supply: Urban Water Supply: AAA: Baseline (2006): 58% average with 70% with improved access : 90-95% in cities Regional Development & improved access: 75% in big cities and 50-60% in small towns Urbanization, and 20-30% in small towns) Sanitation Management for Urban Sanitation: Urban Sanitation: Urban Areas Households with toilets: 68% IDF and Trust Funds > US1 Households with septic tanks: 76% (higher million: rates in cities) Urban Upgrading co-financing, Wastewater collected and treated: 9% Urban Water Supply Development II Project TA, TFs on Coastal Cities Note: Different definitions are used to measure Environmental Sanitation water supply and sanitation in different settings, which makes is difficult to assess these indicators completely accurately  Improvements in efficiency and  The cost recovery in the water supply sector cost-recovery for target urban is higher than sanitation due to low tariffs and utilities increased costs (for construction and O&M)  Improved capacity of cities and  A benchmarking for water supply companies towns to plan, manage and has been carried out. A similar exercise is to be maintain urban investments implemented on WW and SW management Power demand met in adequate Lending: quantity and acceptable quality, and System Energy, Equitization and improved commercial and financial Renewables; Rural Energy 2, Rural efficiency of the energy sector, as Distribution, Transmission and evidenced by: Cost reflective electricity Distribution 2, Renewable Energy, tariffs for different consumer Trung Son Hydropower, Power categories Sector DPO  Increase Generation capacity:  Generation capacity (at the end of 2010) was AAA: Baseline (2005): 12,000MW 21,542 MW, a little below target mostly due TA for VN Energy Efficient Target (2010): 25,000 MW to delay in construction of new power plants, Program affected by insufficient investment and IDF and Trust Funds > US1 delay in land clearance and compensation. million: Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome The surge in equipment costs and financing System Efficiency Improvement, during 2008-2009 contributed both to Equitization, and Renewables investment shortage and construction delay Project TA, Demand-Side (EVN statistics) Management and Energy Efficiency Project TA, Hydroelectric Power Project Preparation, Rural Energy II Performance improvements in EVN Lending: and affiliated or successor power Power Sector Reform DPL, Rural companies Energy 2, Rural Distribution,  EVN self financing ratio >25%, debt  EVN’s financial performance has improved Trung Son Hydropower, service coverage >1.5 times, debt: compared during the CPS period but is still Equitization and Renewables equity ratio 70:30 somewhat unsatisfactory. The company still Transmission and Distribution II makes net losses, although significantly less AAA: than a few years ago. The GoV has recently TA for VN Energy Efficient updated and increased electricity tariff every Program year as required in PM Decision 21 (2009), IDF and Trust Funds > US1 however generation costs also increased million: significantly due to larger demand growth System Efficiency Improvement, and drought in recent years. The government Equitization, and Renewables recognizes that in addition to completion of Project TA, Demand-Side tariff reform to follow market principle, it is Management and Energy essential to focus on energy efficiency and Efficiency Project TA, Rural saving, demand response/control to reduce Energy II the fast demand growth  Single-buyer electricity market  Pilot for single buyer Competitive Generation in place with an independent Market (VCGM) is being completed, to start regulator and unbundled sector in the second half of 2011 and full VCGM to players start in 2012. Development of regulations and market rules, consultation and approval took longer than expected, but has resulted in greater consensus and understanding and international good practice regulations adapted to Vietnam conditions. 75 76 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Increased diversity in ownership of Lending: generation and distribution with Power Sector Reform DPL, Rural net fixed power assets in non-EVN Energy 2, Rural Distribution, Trung ownership increased from 20% in Son Hydropower, Equitization 2005 to >30% by 2010 and Renewables  Gas operations under regulation  The development of new gas fields has not Transmission and Distribution II and open to private sector kept pace with trends in natural gas demand AAA: participation, and sufficient gas and there are growing concerns about the TA for VN Energy Efficient supply for power and industrial sufficiency of gas supply to existing gas-fired Program use generators and other users. The Chevron deal, IDF and Trust Funds > US1 meanwhile, has been a break-through, as it will million: enable the development of power plants in the System Efficiency Improvement, O Mon complex based on the reserves from the Equitization, and Renewables Gulf of Thailand. However, full build-out of the Project TA, Demand-Side O Mon complex will utilize all of the gas from Management and Energy Efficiency those Chevron-operated fields. In part because Project TA, Rural Energy II of the tight domestic supply outlook, The Government is accelerating its consideration of liquefied natural gas import (LNG) options, and has asked the Bank to provide technical assistance on the current state of the East Asian LNG market, and on sitting possibilities for LNG terminals. The agreement to start work on gas market development has been included as a PRSC prior action. Reduced logistics and transport costs Lending: and improved mobility of cargo and Northern Delta Transport, freight: a. Cost per ton kilometer of Mekong Delta Transport, Mekong inland transport (road and waterway) Transport & Flood Protection, reduced, b. Ship to door transhipment Rural Transport III, Road Network times in selected hubs reduced Improvement  Lengths of waterways improved in  Preparation work is delayed. 539 km waterways IDF and Trust Funds > US1 Red River and Delta were designed and are under procurement million: Baseline: 0 Although there were no transport Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Target (2013): 539 km specific Trust Fund, DIFID Funded  Lengths of waterways improved in  29 km (2011, Mekong Infrastructure Infrastructure Policy and Sector Mekong Delta Development Project) TF included the transport sector Baseline: 0 amongst its components. Target (2011): 401 km  Lengths of highways improved in  22 km (Mekong Infrastructure Development Mekong Delta Project) Baseline: 0 Target (2011): 98 km Transport Medium Term Expenditure AAA: Framework (MTEF) with prioritized Infrastructure Policy/Regulatory investments within budget constraints Reform  Added indicator: Annual MTEF  Transport sector MTEF’s prepared for 2007, Trust Funds > US1 million: prepared for Transport sector 2008, 2010 and 2011. Infrastructure Policy and starting 2007 Sector Co-financing TFs to Rural Transport III, Mekong Delta Transport Infrastructure Development Co-financing PILLAR II: STRENGTHENing SOCIAL INCLUSION 2.1. Better access to markets Status: Partially Achieved The positive results are driven by mature programs, and basic social services for Justification for Status: following the successful especially in rural roads and rural energy. Therefore, efforts during the previous strategy, the WB it may be appropriate to take account of the maturity the rural poor and other development partners continued of the program and the track record in committing to support government efforts to increase the to results, while taking a more tentative approach in availability of basic infrastructure services in new areas of engagement. rural areas, specially roads and electricity. Today access to electricity in rural areas is almost universal and about 80% of the population has access to roads. Progress has also been made in increasing rural access to quality (potable) water and sanitation services, although a significant gap still remains for rural poor. 77 78 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Details on progress made under each outcome indicator: Average traveling time to district Lending: centers in targeted rural areas is Rural Transport III reduced Community-based Rural  Households in targeted  81% (Third Rural Transport) Infrastructure, P-135 DPOs, communities/villages with access Northern Mountain Poverty to motorized transport services for Reduction hire increased : IDF and Trust Funds > USD1 Baseline (2006): 79% million: Target (2011): 84% DFID funded a client executed TF to support the Rural Transport 3 Project Third Rural Transport Project co- financing Increase in the proportion of rural Lending: households with access to electricity Rural Energy II, System Efficiency and information services Improvement, Equitization &  Rural Electrification rate increases:  96.3% at household level, exceeding the target Renewables, Rural Distribution Baseline (2005): 88% of 94% by 2010 (EVN statistics) AAA: Rural Electrification Impact Target (2010): 94% Studies  Investment in distribution,  Investment in distribution 2005-2010 was IDF and Trust Funds > USD1 maintained at >$300 million/year VND22,220 billion (about USD275 million/year million: between 2005 and 2010 at 2007 exchange rate) Rural Distribution Co-financing 1,000 LDUs with an efficiency index of 100 (index calculated based on improvement in billing, collection rates, technical efficiency etc.) by 2010  Improved planning and  Key lessons drawn for planning and institutional institutional arrangement of rural arrangement of rural ICT investment. ICT investment Implementation under preparation. Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Increase in the number of targeted Lending: poor households using improved Red River Delta Rural Water water supplies and sanitation services Supply, Mekong Delta Water  Percentage of rural population  83% of the rural population has access to Resource Management for Rural with access to water increased: hygienic water but only 42% uses water that Development Baseline (2005): 62% meets the national quality standard of clean water by the Ministry of Health standards  Rural Water Supply and Sanitation  4 rural water supply and sanitation enterprises Enterprises established established as pilots (under Red River Delta Rural Water Supply & Sanitation Project) 2.2. Better coverage of Status: Partially Achieved Again, the positive results are driven by mature affordable quality health Justification for Status: Achievements include programs, especially in health and education. It the approval of a revised Health Law that the will be important to focus the future engagement care services and primary CPS program supported and that has facilitated on consolidating results as well as moving towards education for poor and near access to health insurance now estimated to more focus on quality in both education and health poor cover 62 percent of the population (above and to scale up the policy dialogue and institutional the 55 percent target). However, missing data support where possible. The social assistance on key health indicators and health insurance agenda introduced towards the end of the CPS coverage makes it difficult to conclude with period is proving relatively difficult to manage, but certainty whether the outcome has been nonetheless important to pursue further. fully achieved. The road safety statistics are improving. The HIV/AIDS program shows increased use of preventive methods. However, there is a slight increase in HIV/AIDS incidences Details on progress made under each outcome indicator: Percentage of poor and others using Lending: and expressing satisfaction with Mekong Regional Health Support, health services increased from 25% in Northern Upland Health, Central 2005 to 50% in 2010 North Health Support  Coverage of health insurance:  Unofficial sources put coverage at 62% at the AAA: Baseline (2005): 28% end of the CPS period (last official numbers VN Health Issues Paper 79 80 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Target (2010): 50% from 2008: 43.8%) VN Health Policy Notes  Proportion of communes with  65.9% (from 2008, no newer data available VN Implementing Health Insurance doctors and facilities of Ministry of by mid- 2011) Law (FY09) Health: Health Systems Strengthening Baseline (2005): 68% Support (FY11) Target (2010 ): 80% Health Sector Reform TA IDF and Trust Funds > USD1 Mekong Health Support Project co-financing, Healthcare Support to the Poor of the Northern Uplands and Central Highlands, IDF for Improving Effectiveness and Sustainability of Social Health Insurance, IDF for Developing Results Focused Health Care Financing Mechanisms in Vietnam Reduced traffic accidents and Lending: fatalities Road Safety Project  National Road Safety Strategy  First draft of the Performance Based National adopted specifying achievable Road Safety strategy was submitted to the performance targets and a Government for review. financing plan by end-2009 Groups at risk of contracting HIV/AIDS Lending: in participating provinces reporting HIV/AIDS Prevention safer injection practices AAA:  Percentage of at risk groups in  85.9% (2010) HIV/AIDS Strategy participating provinces reporting IDF and Trust Funds > USD1 safer injection practices: DFID HIV/AIDS Prevention Co- Baseline (2005): 20% financing Target (2010): 60%  Percentage of at risk groups in  93.6% (2010) participating provinces reporting condom use: Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Baseline (2008): 93.3%  HIV/AIDS prevalence rate among  0.44% (2010) 15-49 age group: Baseline (2007): 0.41%  Health workers and communities  There is no evidence that stigma and report reduced stigma and discrimination have been reduced; however, discrimination related to HIV/AIDS, there is no specific evaluation among health as measured in bi-annual surveys. workers, no questionnaire on stigma and discrimination towards at risk groups. There is no comprehensive, specific strategy on reduction of stigma and discrimination. Grade 5 learning outcomes Lending: improved, by halving the proportion School Education Quality of pupils below the functional Assurance, Primary Education for reading level from 11% in 2001 to 5% Disadvantaged Children in 2010, with at least a corresponding AAA: improvement for students in the High Quality Basic Education lowest socio-economic level for All, Constraint Assessment-  Percentage of Grade 5 pupils  9.7% (figures are from 2007 and target is Bottleneck below the functional reading level: assessed to have been met, but no new data IDF and Trust Funds > USD1 Baseline (2001): 11% available by mid-2011) million: Target (2010): 5% Basic Education in Vietnam,  Primary school FSQL Index Primary Education for increased nationwide and in Disadvantaged Children, TF districts in the lowest quintile:  71.4 Nationwide (2010) to Support Basic Education in Baseline (2005): 67 nationwide Vietnam, Improving Quality Target (2010): 80 nation-wide  68.3 in districts in the lowest quintile (2010) Basic Education of Ethnic Baseline (2005): 61 in districts of Minority Children in Three the lowest quintiles; Disadvantaged Provinces, JSDF Target (2010): 80 percent of the TF on Early Childhood Care and lowest quintile Development. 2.3. Ethnic minorities in rural Status: Partially Achieved areas more fully integrated Justification for Status: Programs supporting 81 82 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome into development processes greater empowerment of ethnic minorities are most mostly on target; however, poverty reduction amongst ethnic minority groups lags behind reduction in the general population. Details on progress made under each outcome indicator: Under-5 mortality gap for ethnic Lending: minorities reduced 2nd P135-Phase I, Northern  Under-5 mortality rate gap  Data not available Mountains Poverty Reduction between regions: AAA: Baseline (2006): 62.6/1,000 live Social & Land Conflict Management, births in Northern Upland/ Central Crisis Impact Analysis & Social Highland and 7.9/1,000 live births Protection Policy Monitoring and the Delta Regions IDF and Trust Funds > USD1  Effective criteria for poverty  Criteria for budget allocation were set up at million: targeting, both for men and every P135-2 province guiding allocation to be 2nd P135 Co-financing women, under new Program 135 more pro-poor. Output was fully achieved. agreed by 2008  Effective and comprehensive M&E  M&E system for P135-2 was designed and system for Program 135 in place. installed, streamlining underway. P135-2 was the first national program that has an M&E system in place though not all provinces have been able to run it due to technical issues. Thus, this output was partially achieved Control over public expenditure Lending: resources decentralized to communes 2nd P135-Phase II, 2nd Northern  100% of Zone 3 communes  86.1% of Zone 3 communes and 96.3% of Mountains Poverty Reduction and poorest villages in Zone 2 poorest villages in Zone 2 communes act as IDF and Trust Funds > USD1 communes act as investment investment owners (2010) million: owners in Program 135 – Phase 2: 2nd P135 Co-financing Baseline (2005): 15% Target (2010): 100% Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Increase in forestland allocated to Lending: ethnic minorities Coastal Wetlands Protection  Share of ethnic minority  68.4% (2008, no newer data available) and Management , Forest Sector households to which forest land Development allocated: AAA: Baseline (2004): 38.5% Forest Sector Support II, Social & Target (2011) : 75% Land Conflict Management  Average forest area allocation to  16,556 square meters7(2008, no newer data IDF and Trust Funds > USD1 ethnic minority households: available) million: Baseline (2004): 9,626 square 2nd P135 Co-financing meters Target (2011): 18,000 square meters 2.4. Improved policies and Status: Partially Achieved While the program has indeed focused on improving infrastructure to address Justification for Status: Based on reaching the policies and infrastructure to address the needs intended improvements in water and sanitation of urban poor and thereby indirectly migrants in the needs of urban poor and in targeted low-income urban areas. However, urban areas, the program has not tracked possible migrants the program did not track improvements in improvements in access to services specifically for access to social and public services by the urban migrants. Thus, for purposes of results measuring, it poor and migrants. would have been advisable to not include migrants Details on progress made under each specifically in the outcome. However, the focus of outcome indicator: this outcome area on urban poor reflects the current priorities of the government well and might be an area which the government would like to see scaled up in the next CPS period. Increase in the number of targeted Lending: urban poor that use basic water Three Cities Sanitation, Urban supply and sanitation services Upgrading, Urban Water Supply  On-site improvement of targeted  95% of targeted low-income areas met Development , Coastal Cities slum areas; minimum standards (under the Urban Water Sanitation, Priority Infrastructure Baseline (2005): 75% with housing Development Project, 2011) Investment, Local Development meeting minimum Government Infrastructure Fund, PRSC 9-10, standards; HCMC Environmental Sanitation, 83 84 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Target (2010): 100% Urban Water Supply and Waste  Housing improvement and  Over 54.000 home improvement and Water sanitation loans issued to low- sanitation loans issued. The repayment rate AAA: income urban residents in target is about 98% (2011, under the Urban Water Regional Development & cities Development Project) Urbanization Infrastructure Policy/Regulatory Reform, Medium Cities Transport, Sanitation Management for Urban Areas IDF and Trust Funds > USD1 million: Coastal Cities Environmental Sanitation Project co-financing, Urban Upgrading Co-financing Increase in number of unregistered migrants that use basic public services  Design and implement improved Data on provision of services for migrants NA regulation for the provision of basic services, regardless of migrant status 2.5. Vulnerability to natural Status: Partially Achieved disasters and other shocks Justification for Status: The CPS program’s support to reducing the vulnerability to reduced natural disasters and other shocks has lead to preliminary progress in institution building, but the full impact will only visible be during the next CPS period. Details on progress made under each outcome indicator: Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Reduce annual costs of damages Lending: from floods and storms 2006-2010, Coastal Wetlands Protection and compared to 2001-2005 Management, Natural Disaster  Reduced annual cost of damages  Information on the costs and damages from Risk Management floods and storms unavailable Mekong Transport and Flood  Strategy and action plan for  Strategy approved in November 2007 Protection natural disaster risk management AAA: approved VDR 2010: Modern Institutions,  Targeted community populations  Targeted communities reporting improved Agriculture and Rural Economic reporting improved early warning early warning is not yet available & Sector Work, Prioritizing of floods and storms Climate Change Investments,  Forecasting flood with 80%  Flood forecasting earlier than 24 hours is not VDR 2011 – Natural Resources preciseness on Red River 48 hours yet available but is in progress. & Environmental Management, in advance, on Mekong River 3-5 GFDRR TA for Disaster Mitigation days in advance and Preparedness IDF and Trust Funds > USD1 million: JSDF for Innovative Approaches to Community-Based Disaster Risk Management, Natural Disaster Risk Management Project co- financing Improved natural disaster Lending: preparedness at the commune level Natural Disaster Risk Management  Number of Safer Commune Plans AAA: prepared:  10 Safer Commune Plans prepared as VDR 2010: Modern Institutions, Baseline (2005): 0 of Aug. 2008, under the Natural Disaster Agriculture and Rural Economic Target (2010) : 30 Risk Management Project (no newer data & Sector Work, Prioritizing available) Climate Change Investments, VDR 2011 – Natural Resources & Environmental Management, GFDRR TA for Disaster Mitigation and Preparedness IDF and Trust Funds > USD1 85 86 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome million: JSDF for Innovative Approaches to Community-Based Disaster Risk Management, Natural Disaster Risk Management Project co-financing, Natural Disasters Mitigation PHRD co-financing Strengthened bio-security at farm Lending: level Livestock Competitiveness and  Improved veterinary services,  Training of veterinarians and meat inspectors Food Safety including surveillance, control and supported by the Livestock Competitiveness AAA: protection capacity and Food Safety Project is being revised to Agriculture and Rural Economic & reflect changing needs and new regulation. Sector Work IDF and Trust Funds > USD1 million: Smallholder Recovery Assistance from Avian Influenza and Vigilance against further Outbreaks. Avian and Human Influenza Control and Prevention, Avian and Human Influenza Control and Preparedness. 2.6 Modernized Social Status: Partially Achieved Security Justification for Status: Analytical Work on Social Security carried out in 2008 set the basis for a new dialogue and new policy initiatives. However, the Social Security Modernization Project, which has been in the pipeline for several years, is still not delivered. Discussions are ongoing on whether the project can move ahead. Details on progress made under each outcome indicator: Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Added outcome: Policy framework Lending: in place for effective and financially PRSCs 6-9 sustainable social security system AAA:  Adopt Social Insurance Law  Completed under PRSCs 6-7. Social Security Reform TA, Social making the system financially Security Modernization TA viable and extending its coverage IDF and Trust Funds > USD1  Prepare a strategic plan to  Completed under PRSC 8. million: ensure prudential and effective IDF for Capacity Building for investment of social security funds Analysis of Wage and Social  Added output: Introduce single  Not yet introduced Insurance Policies social insurance number for all targeted benefits and social insurance programs Modernization program for social Lending: security system administration PRSC series developed and implementation AAA: initiated Social Security Reform TA, Social  Improve efficiency, performance,  Approach are still in early stages of design in Security Modernization TA and accountability of the context of preparation of the Social Security IDF and Trust Funds > USD1 administration of the social Modernization Project, but progress in project million: security system preparation has been slow due in part to the IDF for Capacity Building for limited experience of the implementing agency Analysis of Wage and Social in preparing Bank projects Insurance Policies Added outcome: Policy framework Lending: in place for effective and financially PRSCs 6-9 sustainable social security system AAA:  Adopt Social Insurance Law making  Completed under PRSCs 6-7. Social Security Reform TA, Social the system financially viable and Security Modernization TA extending its coverage IDF and Trust Funds > USD1  Prepare a strategic plan to ensure  Completed under PRSC 8. million: prudential and effective investment IDF for Capacity Building for of social security funds Analysis of Wage and Social  Added output: Introduce single  Not yet introduced Insurance Policies 87 88 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome social insurance number for all targeted benefits and social insurance programs Modernization program for social Lending: security system administration PRSC series developed and implementation AAA: initiated Social Security Reform TA, Social  Improve efficiency, performance,  Approach are still in early stages of design Security Modernization TA and accountability of in the context of preparation of the Social IDF and Trust Funds > USD1 administration of the social Security Modernization Project, but progress in million: security system project preparation has been slow due in part IDF for Capacity Building for to the limited experience of the implementing Analysis of Wage and Social agency in preparing Bank projects. Insurance Policies Policy framework in place for Lending: expanded coverage of workers PRSC 6-7  Introduce voluntary pension  Completed under PRSC 6-7 AAA: program for farmers and informal Social Security Reform TA, Social sector Security Modernization TA IDF and Trust Funds > USD1 million: IDF for Capacity Building for Analysis of Wage and Social Insurance Policies PILLAR III: MORE SUSTAINABLE MANAGEMENT OF NATURAL RESOURCES, AND REDUCED ENVIRONMENTAL DEGRADATION 3.1. Better sustaining and Status: Partially Achieved managing natural resources Justification for Status: There has been significant progress under the Land Administration Project, which has made it easier for people to access land titles. There has furthermore been improvement in terms Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome of combining forest protection with sustained livelihood and poverty reduction; less progress however has been seen in relation to the protection of critical natural habitats. Also there are concerns about the transparency in the allocation of land titles. Details on progress made under each outcome indicator: Households in buffer zone Lending: communities less dependent on Coastal Wetlands Protection unsustainable harvesting of forests in and Management, Forest Sector buffer zones for their livelihoods Development (IDA & GEF), Chu  Improve detection of and  Forestry Law Enforcement and Governance Yang Sin National Park (GEF) strengthened suppression of (FLEG) country assessment completed and AAA: illegal forest activities training delivered. MOU with Lao PDR on Forest Sector Support II, Social  Increase in household income in cross-border collaboration; MOU with Thailand & Land Conflict Management, buffer zone communities underway. VDR 2011 – Natural Resources &  Expansion of area under  Poverty rate in vulnerable communes reduced Environment Management protection contracts 38% compared with project start. IDF and Trust Funds > USD1  4,662 and 1,214 ha of new mangroves planted million: in forest protection zones and buffer zones, Forest Sector Development Project respectively; 34,395 ha put under protection co-financing, First and Second TF contracts; for Forests co-financing, Reform of State Forest Enterprises Lending: (SFEs) accelerated Land Administration  Improved allocation, titling and  Some improvements made on pilot basis AAA: management of production supported with Vietnam Conservation Fund/ Social & Land Conflict forestland coming out of SFE FSDP grants (51) and GEFs. An update and Management, VDR 2011: Natural reform policy recommendations are under preparation Resources & Environment under FLEG study. Management  About 1 million ha of underused forest land has been reallocated from SFEs. However its allocation to households and local business 89 90 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome is slow and lacks transparency. Nationally, percentage of forest land allocated to households increased from 27% in 2006 to 28-29% in 2008 (23,000 ha under FSDP for the plantation of 22788 ha of forest as of Dec 2008). However, this percentage remains very low in Central Highlands, i.e. 2.5% and 3%. Lower transaction cost and higher Lending: satisfaction among end users of Forest Sector Development improved land administration Project  Nationwide, the percentage of 31 provincial land registration offices AAA: provincial land registration offices established, equivalent to 49% of all provinces. Social & Land Conflict with fully operational one-door However, the development of a database Management, VDR 2011: Natural service provision increased: and the purchase of equipment have not yet Resources & Environment Baseline (2005) 2% been concluded. No District Land Registration Management Target (2010): 50% Offices are operational, but are pending the users’ service training and ‘down and up’ links. 196 commune level access points are operational, equipped with computers and other office equipment, but without up-link and staff training (2011)  Increase percentage of  It is estimated the percentage doubled in households whose land use right 2008 from 16% in 2004 (15% for agricultural certificates are under the names of land and 18% for resident land). However, the either a woman or both spouses indicator was not included in the 2010 VHLSS and therefore no new data is available River basin management Lending: organizations allocating water Water Resources Assistance, resources more effectively Mekong Delta Water Resource  Number of river basins with  The number of River Basin Management Management for Rural operational inter-provincial Organizations increased from 3 in 2006 to 4 Development management at present. However, as was the case at time AAA: of the Progress Report, in general they still VDR 2011 – Natural Resources & operate ineffectively if at all. Environment Management Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome 3.2. Improved management Status: Partially Achieved effectiveness of household Justification for Status: The CPS program has made good progress on the legal and and industrial pollution regulatory framework and cost recovery in the area of household sanitation as well as some progress on increasing the coverage rates, considering the low base from which the work started. In addition, analytical work on industrial pollution was carried out jointly with the Government and preparation of an FY13 lending operation was initiated. However, indicators were not met in this area and less than 30 percent of the wastewater from industrial parks is treated in centralized facilities. Progress toward a lower-intensity carbon economy was made through investments in energy demand side management and renewable energy development. In renewable energy, targets were surpassed for several indicators. Details on progress made under each outcome indicator: Reduced pollution from domestic Lending: wastewater Three Cities Sanitation, Coastal  Percentage of wastewater flows  Less than 10% of urban wastewater flows Cities Environmental Sanitation from cities that is subject to at least subject to at least primary treatment (2011) (IDA & GEF), HCMC Environment primary treatment: and Sanitation, HIFU, Water Supply Baseline (2005): 0 & Wastewater Target (2010): 40% AAA: Sanitation Management for Urban Areas, , VN Sanitation Management for Urban Areas (FY10) IDF and Trust Funds > USD1 million: 91 92 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome IDF for Improving the Institutional Capacity for Water Pollution Control Use of wastewater treatment and Lending: solid waste services increase in target Three Cities Sanitation, Urban cities Upgrading, HCMC Environmental  Average cost-recovery of  In general the solid waste tariffs are in better Sanitation, Coastal Cities wastewater treatment and solid shape with the cost recovery around 60-80%. Environmental Sanitation (IDA & waste collection services increased For the waste water sector, it is necessary GEF), Water Supply & Wastewater, to distinguish between the environmental Hospital Waste Management protection charge (up to 10% of water bill, AAA: defined by Decree 67, not fully applied) and the Sanitation Management for waste water fee (based on a full cost recovery Urban Areas, VN Wastewater approach as defined in Decree 88, applied in Decree (FY07) some cities with as-built waste water facilities). IDF and Trust Funds > USD1 It is noted that the cost recovery in waste water million: is less than 10% IDF for Improving the Institutional Capacity for Water Pollution Control Reduced traffic congestion and Lending: related air pollution in urban Hanoi Urban Transport (GEF) areas with increased use of public AAA: transportation systems VN – Promote Strategic Urban  Improved public bus transport  Detailed design for Hanoi Bus Rapid Transit in Planning system in Hanoi progress, construction to be completed by end 2012  Construction of 15km of Bus Rapid  Not relevant Transit by end 2013  Development of Air Quality  Work is ongoing for Air Quality Management Management System for Hanoi by System for Hanoi, to be completed by end end 2013 2013. Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Improve safe collection and disposal Lending: of PCB oils from 0 (2005) to 57 % PCB Management (GEF) (2010) of PCB oils. Overall PCB waste AAA is quantified (2010). Many analytical studies carried  Safe collection and disposal of PBC  Updated information not available out as part of preparation of PCB oils project  PCB management system in place  The GEF-financed project to improve IDF and Trust Funds > USD1 for Vietnam for priority areas management of PCBs began in 2010 and will million: continue until 2014 by which time needed IDF for PCB Management management systems will be in place  70% industrial zones with Current levels of treatment of industrial Lending: wastewater treatment systems wastewater have not changed significantly and 100% of new industries apply and remain at about 30% (as was the case clean technology at the time of the Progress report). An IDA- IDF and Trust Funds > USD1 financed project on Industrial Pollution million: control is under preparation and will address National CFC and Halon Phase- this problem during the period of the next out Plan, IDF on Water Pollution CPS. Control 100 percent of investment projects Lending: have environmental and social PRSC, PIR I assessments of international AAA: standards, and all sectoral plans and (policy dialogue), TA on Urban regional programs contain strategic Planning Law environmental assessments.  Policies and procedures on public  Articles 8, 20 and 21 in the new Urban participation and consultation Planning Law issued on June 17, 2009 by developed and in use for key Standing Committee of National Assembly sectors requires public participation and consultation, providing the rights and responsibilities of all stakeholders included in urban planning design process and guidelines for the progress of public consultation. Technical support was provided to MONRE on land valuation and 93 94 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome revision of the Land Law along with relevant decrees and guidelines relating to involuntary resettlement and the development of Vietnam’s capacity for implementing them. The Government issued a decree to mandate the timely preparation, public consultation and review of an Environment Impact Assessment (SIA) and a Strategic Environmental Assessment (SEA) Improved energy system efficiency, Lending: with electricity losses reduced to Transmission and Distribution, about 10% in 2010 from 12% in 2005 Rural Distribution System Energy,  Peak demand and electricity  The ICR for the DSM and Energy Efficiency Equitization & Renewables, consumption reduced by Project indicates total peak load demand Demand-Side Management & 120MW and 500GWh through reduction of 310 MW and energy saving Energy (GEF), 2nd Rural Energy DSM activities by 2010 of 2506 GWH (direct and indirect effects), (GEF), Renewable Energy exceeding the target. (Draft ICR report, 2011) Development, Clean Production  By the end of 2009, the T&D losses stood & Energy Efficiency (GEF) at 9.6%. However, in 2010, power T&D AAA: losses slightly increased to 10.25% against TA for Vietnam Energy Efficiency the target of 10%. Some distribution Program corporations did not meet the targets because they are taking over low voltage distribution networks from poor performing local distribution units. (EVN statistics, 2011) Increased capacity and utilization of Lending: renewable energy System Energy, Equitization &  A 200MW increment of  About 400 MW increment of renewable Renewables, Renewable Energy renewable contributing capacity energy contributing to grid from 2005 to Development, to grid in 2010 2010, exceeding the target. During 2009-2010 AAA: only, 250 MW of grid connected renewable TA for Vietnam Energy Efficiency energy generation was added to the system Program (?) during 2009-2010 and 400 MW are under Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome construction. (EVN and MOIT statistics, 2011)  1 million CERs contracted for  As of 2010, 26 CDM projects were registered SAdelivery by 2010 out of 124 submitted projects. The registration rate remain low compared with other countries (22% versus average of 36.7%) (JICA report, 2010) 3.3 Improved Climate Change Status: Partially Achieved Adaptation and Migration Justification for Status: This outcome was only introduced at the time of the Progress Report in late 2009 and therefore there has been limited time to achieve the goals. The progress in terms of sectoral and provincial climate change adaptation strategies is uneven. Studies on climate change have been completed and the Bank has supported the development of a first draft of a government strategy on Climate Change at the very end of the CPS period. The Government has developed a National Target Program to address climate change concerns. The Bank has also scaled up engagement in climate change (including the development of a climate change strategy) and is preparing a DLP series with the first operation planned for early FY12. Progress has furthermore been made in energy (including in alternative energy and loss reductions). Details on progress made under each outcome indicator: Strengthened government capacity Lending: to address challenges posed by Many lending operations of climate change the Bank cover adaptation and  Sectoral and provincial climate  Government capacity has improved but only mitigation priorities (see the change adaptation strategies some sectors and provinces have developed Vietnam Climate Change Strategy 95 96 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome (required under the NTP-Climate climate change adaptation strategies. The for more complete discussion). Change) prepared by 2011, Bank supported the development of the first AAA: and priorities included reflect draft of a national climate change strategy World Bank Climate Change adequate economic cost-benefit at the very end of the CPS period. However, Strategy for Vietnam, Climate analyses. the Government is still slow to take action Change Scale-Up Mekong Delta, in various key policy areas. This will be Water Supply and Sanitation addressed under forthcoming World Bank Responses to Climate Change, Climate Change DPO. EACC, AAA work on Impacts  Analyses on the economic costs of adaptation of Climate Change on Urban were undertaken in a number of sectors, with Drainage Systems and Climate, Bank support, and were completed by 2011 Disaster Resilient Cities work in Hanoi, Can Tho and Dong Hoi and corresponding national tool kit for Local Resilience Action Planning, and many other analytical studies PILLAR IV: STRENGTHENED GOVERNANCE SYSTEMS 4.1 Improved effectiveness of Status: Partially Achieved The progress of the PFM reform agenda has been public financial management; Justification for Status: The Public Financial positive but the pace extremely gradual so that even Management (PFM) program is expected to though the bulk of the goals on the PFM agenda with better budget planning, deliver the anticipated key outcomes, but with is expected to be met over the long-haul, some of execution, and accountability a lag despite considerable supporting technical the narrower goals set under the CPS will be not and revenue collection assistance. From a long-term perspective be met until on during the next CPS. The progress implementation of the PFM agenda has made expected within the coming period can hopefully substantive progress. help advance the use-of-country-systems agenda, Details on progress made under each where progress has been limited. Support for the outcome indicator: implementation of the anti-corruption agenda has been weaker, limited to tracking actions under the PRSC. Elements to access their impact are not Timely and consistent in year budget Lending: available. The 201o Moderns Institutions VDR execution information available to line Public Financial Management took a long view of the institutional development ministries, provinces donors and the Reform, PRSC 9 and identified weak points providing an effective public AAA: platform for dialogue in the country on institutions  Treasury and Budget Management  TABMIS piloted in Central State Treasury, VDR 2010: “Institutions Matter”, and governance issues. Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Information System (TABMIS) Ministry of Finance, and thirty five provinces GAC Implementation, Support implemented at central and local (expectedly 63 provinces by end of 2011) to SEDP Preparation, Support to level treasury and finance offices, National Development Strategy piloted in selected spending units: IDF and Trust Funds > USD1 Baseline (2007): None million: Target (2011): Implementation Public Financial Management throughout government Reform Project co-financing  In-year budget execution  Quarterly budget execution information information available to line posted on the web 45 days after quarter-end ministries, provinces, donors and (2011) the public in a timely and consistent manner: Baseline (2007): None Target (2011): Quarterly reporting of disaggregated data Establishment of PFM performance  Efforts are underway. A baseline self- Lending: indicators assessment by the Government on Public PRSC 9, Public Financial Expenditure and Financial Accountability Management Reform (PEFA) indicators is underway and expected AAA: to be concluded in late 2011 VDR 2010: “Institutions Matter”, GAC Implementation, Support to SEDP Preparation, Support to National Development Strategy IDF and Trust Funds > USD1 million: Public Financial Management Reform Project co-financing Better processes for linking plan and Lending: budget, prioritizing expenditure and PRSC 9, Public Financial integrating capital and recurrent Management Reform, Public expenditure in major public spending Investment Reform (PIR) I sectors AAA:  MTEF mainstreamed Medium-Term Fiscal Framework (MTFFs) VDR 2010 – Institutions, GAC 97 98 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Baseline (2006): Pilots launched and Medium-Term Expenditure Framework Implementation, Support to SEDP Target (2012): MTEF (MTEFs) launched in transport, health, Preparation, institutionalization through the education, agriculture, planning and finance. Support to National Development new State Budget Law is expected These are carried out in four provinces on a Strategy, in 2012 pilot basis. IDF and Trust Funds > USD1 million: Public Financial Management Reform Project co-financing, IDF for Facilitating Ministry of Health Stewardship Role Public sector accounting standards Lending: meeting international standards PRSC 9, Public Financial  Public sector accounting  2011: Not done. Efforts underway to develop Management Reform standards and regulations a roadmap to adopt international public AAA: adopted and mechanism for sector accounting standards (IPSAS), with VDR 2010 – Institutions, GAC regular compliance monitoring plan to adopt the IPSAS cash accounting Implementation, Support to SEDP and update established and standards in late 2011 Preparation, implemented Support to National Development Baseline (2007): Not done. Strategy Target (2011): Adopted for cash IDF and Trust Funds > USD1 accounting. million: Public Financial Management Reform Project co-financing, IDF for Capacity Strengthening for the Vietnam Association of Certified Public Accountants, IDF for Introduction of International Public Sector Accounting Standards. Improved tax revenue collection Ongoing lending operations: with strengthened compliance of tax PRSC 9, Tax Administration administration Modernization  Streamlined/simplified tax  Requirements for business process AAA: Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome processes including registration, reengineering exercise defined and included VDR 2010 – Institutions, GAC collection and payment and in bidding documents for Integrated Implémentation, establishment of service culture Tax Administration Information System. IDF and Trust Funds > USD1 in tax offices (a long-term process, Reengineering of business processes will million: the first stages of which are within be combined with computerization of new Tax Admin Modernization Co- this CPS period). processes. It is expected that the actual re- financing Baseline (2007): No systematic engineering process will start in 2013 and examination of business will be completed by the end of 2014. procedures aimed at simplifying business procedures Target (2011): List of requirements to change business procedures completed. Beyond 2013: Develop IT system to meet requirements and ultimately roll-out the new system. Public procurement managed more Lending: transparently at the central and local PRSC 9, Public Investment Reform levels as evidenced by: Improvements (PIR) in the performance of the Public AAA: Procurement System, as evidenced by VDR 2010 – Institutions, GAC progress on OECD/DAC indicators and Implementation the government’s M&E system IDF and Trust Funds > USD1  Public procurement managed  Compliance and performance indicators are million: more transparently at the central now incorporated in annual procurement Public Financial Management and local levels audits carried out by the Inspectorate. Reform Project co-financing, IDF Baseline (2007): Assessment of PPA is in process of hiring consultants for for Capacity Strengthening for the National Procurement System (i) developing the national standards and Vietnam Association of Certified using OECD/DAC Baseline manual for procurement audits; (ii) updating Public Accountants. IDF for Information System Bench marking the assessment of the legal framework Strengthening Implementation Tool completed in February 2007. for public procurement using OECD/DAC Monitoring and Evaluation of the Procurement Compliance and benchmarking tool. Public Procurement System Performance Indicator system Significant gaps remain between based on OECD/DAC developed Vietnam’s public procurement system and 99 100 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome and piloted. international good practice Target (2011): M&E system in place. Added outcome: Improved government-to-business services through online delivery  E-procurement bulletin in  e-Procurement Bulletin established operation: and well known in the industry, with Baseline (2007): Basic mandatory posting of procurement plans, e-Procurement Bulletin website in bidding opportunities and contract award place and operational information. e-Procurement Bulletin Target (2011): Enhance and had been updated to the daily Public complete putting e-Procurement Procurement Review Newspaper available Bulletin in place, with supporting both online and in hard copies. regulatory framework  Business-related e-services  Business-related e-services have become (e.g., business registration, operational at varying degree in some e-procurement, and business- ministries (Ministry of Industry and Trade, related data dissemination) MOF, etc) and localities (HCMC, Danang, available in Danang, Hanoi, and Haiphong, etc) and are being piloted in other HCMC ministries/provinces. MPI/PPA has been piloting a national e-Tendering system with the participation of several large domestic corporations (e.g. VNPT, EVN, etc) 4.2. Modernized planning Status: Partially Achieved Vietnam has fielded and is implementing a very towards development Justification for Status: It is assessed that ambitious decentralization strategy. The CPS this status is partially achieved based on the could have supported these efforts more as part objectives, with more delivery of P-135 where local participation is a of a strategy to modernize planning, given the role participatory approaches key element and partial progress on the Hanoi of the local authorities in delivering outcomes. Core Statement. As one of the first countries to localize the Paris Declaration, Vietnam showed great will to modernize planning and aid effectiveness. There has been progress in Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome improving aid effectiveness since 2005, but some development partners had expected more results. Remaining challenges include the lack of capacity for strategic policy making and planning at sub-national level and a lack of clarity on what exactly is needed to change current aid practices. Details on progress made under each outcome indicator: Proportion of local development Lending: projects with strong participation of Community-based Rural local people in supervision Infrastructure Development, 2nd  Share of communes and villages  86.1% of Zone 3 communes and 96.3% of P135-Phase II, Northern Mountains in Program 135 that have acted as poorest villages in Zone 2 communes (2010) Poverty Reduction 1&2, Rural investment owners for program Transport III, PRSC 9-10 investments increased Baseline (2005): 15% AAA: Target (2010): 100% VDR 2010 – Institutions, GAC Implementation, Support to SEDP Preparation, Support to National Development Strategy, Social & Land Conflict Management IDF and Trust Funds > USD1 million: JSDF grant for Empowering Farmers for Participatory Irrigation Management, 2nd P135 Co- financing Management of ODA strengthened Lending: and aligned to the Government budget PRSC 9, Public Investment Reform  World Bank Hanoi Core Statement (PIR) DPOs targets on aide effectiveness  Ownership/Operational Development IDF and Trust Funds > USD1 achieved Strategies: B million: 101 102 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Ownership (HCS indicator 1):  Results-Oriented Framework: B Comprehensive Capacity Building Baseline (2005): B to Strengthen ODA Management, Target (2011): A Note: Vietnam has successfully met the IDF on Strengthening Portfolio Performance assessment 2010 target for about half of the alignment Management at Ministry of framework: indicators. The remaining half show either Planning and Investment. Co- Baseline (2005): C progress or no change. Vietnam has made financing TFs to PRSC 5-10, Target (2011): A great progress on the targets on the IDF for Capacity Building for indicators for managing results and mutual Strengthening the Regulatory accountability Framework for the Management of Investment., IDF for Capacity Building for the Management of Construction Contracts Needs-based planning and budgeting Lending: used in education sector Primary Education for  Fundamental School Quality Levels  A fully decentralized needs-based planning Disadvantaged Children (FSQL) used as the benchmark in model (based on “fundamental school quality AAA: prioritizing resources by schools, levels” is now implemented throughout the High Quality Basic Education for All districts and provinces. primary school sector. The “fundamental IDF and Trust Funds > USD1 school quality levels” tool is used as a matter million: of national policy for targeting resources to IDF for Result-based Management the most needy schools based on the real for Vietnam Education Managers. needs. 4.3. Reduced incidence of Status: Partially Achieved While this outcome area is extremely important corruption in key services Justification for Status: Given the presence for the country to address, it is a rather difficult of administrative corruption, the work on tax one to measure progress in as well as to attribute and customs procedures simplification has the Bank’s contribution. It is worth taking into been highly relevant. However, the Customs consideration when designing the results Project has been cancelled because of severe framework for the coming CPS. It is furthermore complications (See Lessons learned under recommended that the next CPS will not limit Outcome 1.1) Progress has been made in the concept of governance to PFM, financial highlighting the relevance of external control, transparency and unofficial payments in tax and and targets were reached in terms of asset customs. Rather, the definition of governance declarations for individuals and firms. However, should be broadened to include transparency, Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome progress on transparency of government accountability and information and be treated as financial information and auditing has been truly cross-cutting rather than having a separate limited. The PCI indicators on bribe paying section in the results framework. among firms show some signs of improvement, but methodology and indicators have been changed slightly since previous surveys. Details on progress made under each outcome indicator: Increased transparency of Lending: government financial information Public Financial Management and strengthened audit functions Reform, Customs Modernization  Government accounts and Marginal improvements since 2007. (cancelled before termination), financial reports audited by SAV Government accounts are now published, ICT, Tax Administration, PRSC 9-10, and the financial statements and and audit reports of key cases have been Public Investment Reform DPO 1-2 audit reports made available to the subject of intensive public debates AAA: the public in a timely manner: at the National Assembly, although there VDR 2010 – Institutions, GAC Baseline (2007): Government remains much room for improvement in Implementation, Support to SEDP accounts made public at the comprehensiveness and timeliness of Preparation, Support to National aggregate level only, and audited publishing of audit reports. Development Strategy by SAV. Individual audit reports IDF and Trust Funds > USD1 not published. Audit reports of million: aggregate budget published Governance and Poverty Policy within 18 months. Government Analysis and Advice Program, financial statements not Public Financial Management produced. Reform Co-financing, TFs to support Target (2011): Government Public Financial Management accounts made public including Modernization, Co-financing TFs routinely publishing of individual to PRSC 5-10, IDF for Capacity audit reports. Audit reports of Strengthening for the Vietnam aggregate budget published Association of Certified Public within 9 months. Government Accountants, IDF for Internal Audit financial statements piloted. Capacity Building for Ministry of Finance Inspectorate, IDF for Strengthening Procurement Audit 103 104 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Decreased prevalence of petty Lending: corruption in the delivery of public Public Financial Management services as evidenced in surveys of Reform, Customs Modernization enterprises and households (cancelled in FY11, before  A risk management system in For Tax Administration: termination), ICT, Tax place for Custom Administration  Pilot exercises for risk-based audit selection Administration, PRSC 9-10, Public and Tax administration (a long- launched in HCMC and Hanoi. Modeling and Investment Reform DPO 1-2 term process, the first stages of development of a risk scoring methodology AAA: which are within the CPS period). for case selection for desk and field audit is VDR 2010 – Institutions, GAC Baseline (2007): Risk currently ongoing. Implementation, Support to SEDP Management Unit in place For Customs: Preparation, Support to National Target (2011): First rudimentary  A legal framework for application of Development Strategy risk management system in place risk management is developed, and risk IDF and Trust Funds > USD1 management organization on three levels million: in customs administration is established Governance and Poverty Policy (Headquarters Risk Management Unit, Risk Analysis and Advice Program, Management Divisions at regional level and Poverty Analysis and Policy Risk Management Teams at Customs sub- Advice Support, Public Financial department level). Management Reform Co-financing,  Proportion of importers and  Client perception and satisfaction with TFs to support Public Financial exporters saying they are satisfied customs performance has been improved Management Modernization, IDF with customs performance: significantly: 53.5% of the clients are satisfied for Capacity Strengthening for the Baseline (2005): 33.9% with customs service and agree that: Vietnam Association of Certified Target (2011): 55% • Customs and import–export rules and Public Accountants regulations are clear and transparent; • Implementation of customs procedures is clear and simple; • Time for customs procedures completion is quick; • Customs staff has adequate capacity to meet job requirements; and • Customs staff attitude is reasonable; and costs are reasonable  PCI panel survey of enterprises,  22.8% of businesses pay bribes during percentage saying it is common registration (PCI, 2010) (note: methodology Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome to pay unofficial payments: and design changed from previous PCIs and Baseline (2006): 69.8% therefore result does not match original indicator completely)  Percentage saying they pay bribes  22.3% of business say they pay bribes to avoid to avoid taxes and regulations taxes and regulation being a major obstacle being a major obstacle: (PCI, 2008) (Note: indicator not included in Baseline (2006): 39.1% the 2010 PCI)  Percentage of firms who say they  34.6% of firms say they pay bribe when pay commissions to get contracts seeking to acquire government contracts with the state: (PCI, 2010) Baseline (2006): 59.1% Increase in the proportion of high Lending: ranking public servants that declare Public Financial Management their asset in accordance with the Reform, Customs Modernization anti-corruption law (cancelled before termination), ICT,  High ranking public servants that  Target achieved: 105,070 people (97%) Tax Administration, PRSC 9, Public declare their asset in accordance declared the first time, 514,525 people Investment Reform DPO 1-2 with the anti-corruption law (96%) continued declaration, 100% agencies AAA: Baseline (2007): 0 people, 0 participated (2010) VDR 2010 – Institutions, GAC agencies Implementation, Support to SEDP Target (2011): more people; 100% Preparation, Support to National of agencies Development Strategy Trust Funds > USD1 million: Governance and Poverty Policy Analysis and Advice Program, Poverty Analysis and Policy Advice Support, Public Financial Management Reform co-financing, TFs to support Public Financial Management Modernization, IDF for Capacity Strengthening for the Vietnam Association of Certified Public Accountants 105 106 Self-Evaluation Summary of Vietnam CPS Program CPS Outcome/Cluster of Outcomes Status And Evaluation Summary Lending and non-lending Lessons and suggestions for the new CPS and Outcome Indicators (baselines Activities that contributed to the and targets) outcome Added outcome: Improved Lending: transparency and efficiency of selected ICT Development public services in Danang and Hanoi AAA: VDR 2010 – Institutions, GAC  More public services available  Online applications of priority public services Implementation, Support to SEDP online are under procurement in Danang and Preparation, Support to National Hanoi (e.g. vehicle registration, driver license, Development Strategy business registration) IDF and Trust Funds > USD1  Construction Industry  Design for CoST pilot program completed in million: Transparency (CoST): Indicators: 2010 and pilot implementation completed Governance and Poverty Policy in early 2011 ahead of time. Governance, Analysis and Advice Program, Transparency and Anti-Corruption Framework Poverty Analysis and Policy included in Northern Delta Transport Advice Support, Public Financial Infrastructure Projects and now standard in Management Reform Co-financing, large transport projects. Hence also included TFs to support Public Financial in Haiphong Urban Transport and Da Nang – Management Modernization, IDF Quang Nai Expressway Project. for Capacity Strengthening for the Vietnam Association of Certified Public Accountants 107 APPENDIX 2: PLANNED LENDING PROGRAM AND ACTUAL DELIVERIES (FY07 – FY11) CAS PLANS (January 3, 2007) STATUS 37 FY Project USD(M) USD(M) IBRD IDA IBRD IDA Year Program 135 - Phase II 50.0 Program 135 - Phase II 50.0 2007 Avian & Human Influenza Control 20.0 Avian & Human Influenza Control 20.0 Higher Education II 60.0 Higher Education II 59.4 Coastal Cities Environmental Sanitation 124.7 Coastal Cities Environmental Sanitation 124.7 Mekong Transport Infrastructure Development 207.0 Mekong Transport Infrastructure Development 207.7 PRSC 6 150.0 PRSC 6 175.0 Mekong Transport/Flood Protection-Supplementary 15.0 Mekong Transport/Flood Protection-Supplementary 25.0 Financing Financing Hanoi Urban Transport 131.8 Additional Actual Projects 50.0 Tax Administration Reform 80.0 HIFU Development GEF-Hanoi Urban Transport 10.9 Subtotal 849.4 Subtotal 711.8 Year Land Administration 50.0 Land Administration 75.0 2008 Northern Delta Transport Development 150.0 Northern Delta Transport Development 170.0 Northern Upland Health Support 60.0 Northern Upland Health Support 60.0 Rural Distribution Project 107.0 Rural Distribution Project 150.0 Rural Finance III 100.0 Rural Finance III 200.0 Danang Priority Infrastructure Development 100.0 Danang Priority Infrastructure Development 152.4 PRSC 7 150.0 PRSC 7 150.0 Agriculture Competitiveness 55.0 Additional Actual Projects Financial Sector Modern. & Info. Management 60.0 Hanoi Urban Transport (moved from FY07) 155.2 Local Development Investment Fund 150.0 Tax Administration Reform (moved from FY07) 80.0 Livestock Competitiveness & Food Safety 65.0 GEF-Hanoi Urban Transport (moved from FY07) 9.8 GEF-Coastal Cities 2.7 GEF-PCB Management 13.4 GEF-Integrated Protected Area/Landscape 5.0 Subtotal 1,068.1 Subtotal 1,202.4 37. Actual, Dropped, or forwarded to a different FY 107 108 CAS PLANS (January 3, 2007) STATUS 37 FY Project USD(M) USD(M) IBRD IDA IBRD IDA Year Renewable Energy Development 100.0 Renewable Energy Development 202.0 2009 School Education Quality Assurance 45.0 School Education Quality Assurance 127.0 Second Program 135 - Phase 2 50.0 Second Program 135 - Phase 2 100.0 PRSC 8 150.0 PRSC 8 350.0 Second Water Supply Development (FY11) 110.0 Additional Actual Projects Hydropower Development 150.0 Agriculture Competitiveness (moved from FY08) 59.8 Social Security Reform 100.0 Financial Sector Modern. & Info. Management 60.0 Natural Disaster APL 2 64.0 (moved from FY08) Red River Delta Rural Water Supply & Sanitation APL 2 96.0 GEF-Coastal Cities (moved from FY08) 5.4 GEF-PCB Management (moved from FY08) 7.0 Rural Energy II - Additional Financing 200.0 Higher Education Reform Support (DPL) 50.0 Subtotal 865.0 Subtotal 1,161.2 Subtotal FY07-FY09 2,782.5 Subtotal FY07-FY09 3,075.4 PROGRESS REPORT PLANS (November 24, 2009) STATUS Year Local Development Investment Funds 190.0 Local Development Investment Funds 190.0 2010 Urban Upgrading - Additional Financing 160.0 Urban Upgrading - Additional Financing 160.0 Livestock Competitiveness and Food Safety 65.0 Livestock Competitiveness and Food Safety 65.0 Second Northern Mountain Poverty Reduction 150.0 Second Northern Mountain Poverty Reduction 150.0 Natural Disaster Risk Management-AF 50.0 Natural Disaster Risk Management-AF 75.0 HCM Environment & Sanitation AF 92.0 HCM Environment & Sanitation AF 90.0 RRD RWSSP - AF 65.0 RRD RWSSP - AF 65.3 PRSC 9 150.0 PRSC 9 150.0 Central North Health Support 65.0 Central North Health Support 65.0 Power Sector Reform DPL 200.0 116.0 Power Sector Reform DPL 200.0 111.8 Project Preparation TA 75.0 Project Preparation TA 100.0 Public Investment Reform 1 500.0 Public Investment Reform 1 500.0 SEIER - Additional Financing 5.0 SEIER - Additional Financing 26.5 New-Model Universities 50.0 100.0 New-Model Universities 180.4 Second Higher Education DPO 50.0 Subtotal 750.0 1,333.0 Subtotal 700.0 1,429.0 CAS PLANS (January 3, 2007) STATUS 37 FY Project USD(M) USD(M) IBRD IDA IBRD IDA Year Trung Son Hydro Power Development 330.0 Trung Son Hydro Power Development 330.0 2011 Third Program 135 -Phase 2 100.0 Third Program 135 -Phase 2 50.0 Haiphong Urban Transport Project 150.0 Haiphong Urban Transport Project 175.0 Hospital Waste Management 150.0 Hospital Waste Management 150.0 PRSC 10 150.0 PRSC 10 Second Public Investment Reform 500.0 Second Public Investment Reform 87.0 263.0 Urban Water Supply & Waste Water 50.0 100.0 Urban Water Supply & Waste Water 200.0 Third Higher Education DPO 50.0 Additional Actual Projects Social Security Reform 100.0 Second Higher Education DPO (moved from FY10) 50.0 Road Network Improvement –AF 230.0 PFMRP - Additional Financing 14.0 Industrial Pollution Control 50.0 Transmission & Distribution II-AF 180.0 Public- Private Partnership Pilot 100.0 120.0 Mekong Delta Integrated Rural Development 160.0 Development of Highland Region and Selected Central 120.0 Coastal Cities Environment-AF 65.0 Province Expressway Development 471.0 143.0 Avian and Human Influenza Protection AF 10.0 Subtotal 980.0 1,320.0 Subtotal 1,068.0 1,280.0 Subtotal ( FY10-FY11) 1,730.0 2,653.0 Subtotal ( FY10-FY11) 1,768.0 2,709.0 Total FY (FY07-FY11) 1,730.0 5,435.5 Total FY (FY07-FY11) 1,768.0 5,784.4 109 110 APPENDIX 3: PLANNED NON LENDING SERVICES AND ACTUAL DELIVERIES (FY07-FY11) CPS PLANS (January 3, 2007) STATUS 38 Year Technical Assistance to the State Bank of Vietnam Economic Sector Works 2007 Financial Sector Development Investment Climate Assessment (ICA) Capital Markets Monitoring and Assistance Skills for Growth-Tertiary Education Vietnam Development Report – Capital Mobilization (2008_ Financial Sector Assessment Program (FSAP) Post WTO accession (WBI, MDTF financed study Country Gender Assessment (CGA) Investment Climate Assessment/Private Sector development Country Social Analysis Infrastructure Strategy/ Related subsector studies &TA Environment Monitor CY06: River Basin Pollution Private Public Partnership for Energy, Transport, water Vietnam Development Report 2007 Ministry of Transport SOE reform issues Health Financing and Strategy Work Vietnam Food Safety and Agricultural Health Action Plan Skills for Growth & Tertiary Education Technical Assistance Development Information Center (VDIC) Poverty and Social Impact Assessment Wastewater Decree Country Social Analysis CA: Vietnam -CDS in Medium-Size Cities Country Gender Assessment/Gender Portfolio Analysis Health Issues Paper Vietnam Development Report – Social Sector Issues (FY09) Policy Note on SP Social Security Reform/Social Protection Vietnam WTO Accession Health Issue Paper Ecological Design Strategy in Haiphong Trade Strategic environment Analysis/Country Environment Analysis Strategic Environmental Assessment Forest Sector Support/PER/Forest Policy/Law Enforcement and Governance Social Security Reform Annual Environment Monitor Report Vietnam Development Report – Natural Resources (FY10) Safeguard Strengthening for Energy Program Water Resources Sector Review Land Policy Dialogues/Nom-Market Land allocation/Land and Credit in Vietnam WBI-Strategic Environmental Assessment Vietnam Development Report – Roadmap for 2010 (FY07) Vietnam Development Report: Governance (FY06) Corporate Governance WBI - Parliamentary and Media Program National Policy Academy Support Public Expenditure Review/Integrated Fiduciary Assessment TA on Public Sector Accounting Standards, State Treasury & State Audit of Vietnam 38. Actual , Dropped, or Forwarded to a different FY CPS PLANS (January 3, 2007) STATUS 38 Year TA for Public Procurement (Implementation of Law, IDF for Public Procurement M&E 2007 Capacity Building Program for MPI and ODA Management Anti-Corruption Diagnostic Study/Evolving Relationship between Government and Society Year NA Economic Sector Works 2008 Priority Infrastructure Investment Water Resources Sector Review Country Environment Analysis Medium Cities Transport Strategy Study Land Policy Stocktaking Improving knowledge and statistics on women Health Policy Notes CFAA 2007 Vietnam Development Report 2008 Vietnam’s Capital Markets Technical Assistance ESMAP- Gas Master Plan Land Policy Dialogue Early Childhood Care and Development Tax Policy Reform Promote Strategic Urban Planning FIRST: Regulation and Guidance for Management Sustainable Regional Master Plans Social Safeguard Policy support WTO Vietnam Infrastructure Finance Capacity Building for Mon. FS Stability MoT Policy advice Rural Development Strategy Social Security Reform 111 112 CPS PLANS (January 3, 2007) STATUS 38 Year NA Economic Sector Works 2009 Expressway Investment Strategy CA: Vietnam- preparation for Danang Urban Plan Vietnam Development Report 2009 Vietnam A&A ROSC FY09 Cluster-Social & Land Conflict Management FY09 Cluster-Policy for Financing Infrastructure PPPs Technical Assistance FIRST: Establishing a national Association of People’s Credit Funds FIRST: International Standard for Supervising Insurance Sector FIRST: Study for Establishing Centre of Security Depository FIRST: Regulation and Guidance for Management of Investment Funds Quang Nam Integrated Development Carbon Finance Assist TA Gas Sector Development Framework Social Security Reform Tax Policy Reform Public Financial Management Reform GAC Implementation Support to PPI Reform in Vietnam VN-Implementing Health Insurance Law VN-Social Security Modernization TA PROGRESS REPORT PLANS (September 24, 2009) STATUS Year t Economic Sector Works Economic Sector Works 2010 Forest Sector Support II Forest Sector Support II Bond Market Development Roadmap Bond Market Development Roadmap High Quality Basic Education for All Constraint Assessment-Bottleneck Constraint Assessment-Bottleneck Vietnam Development Report 2010 Vietnam Development Report 2010 - Institutions Vietnam Financial Sector Strategy Financial Sector Strategy Medium Cities Transport (MOC) Infrastructure Policy/Regulatory Reform * Sanitation Management for Urban Areas Regional Development & Urbanization * Policy for Financing Infra PPPs II Medium Cities Transport PSD Competitiveness and Innovation Agriculture and Rural Economic & Sector Work * Sanitation Management for Urban Areas Policy for Financing Infrastructure PPPs II * CPS PLANS (January 3, 2007) STATUS 38 Year t Policy Banks Reform 2010 PSD Competitiveness and Innovation Social Safety Net Needs Assessment Social & Land Conflict Management * Infrastructure Policy/Regulatory Reform * Vietnam Financial Impact Assessment 2 Fuel Efficiency & Trade Facilitation Technical Assistance Technical Assistance Rural Electrification Impact Studies HIV/AIDS strategy and policy dialogue HIV/AIDS Strategy Provincial/Local ICT Development Hydro Safeguards TA GAC Implementation TA for Renewable Energy Development Support to SEDP Preparation TA for Vietnam Energy Efficiency Program Support to National Development Strategy Provincial/Local ICT Development Vietnam Social Safety Net Assessment Prioritizing Climate Change Investments * FY10 Cluster Social & Land management Support to SBV GAC Implementation * Additional Actual Products: Support to SEDP Preparation * Finance & Enterprise Sector Policy Notes Support to National Development Strategy Social Accountability in Large Infrastructure Vietnam Virtual Learning Program Vietnam Financial Investigations Course Health Sector Reform TA * Future Power Generation IBRD Transition TA Year t Economic Sector Works Economic Sector Works 2011 Economic Sector Works FY09 Cluster-Regional Development & Urbanization (moved from FY10) Education for All/Inclusive Education Program * Cluster-Agriculture and Rural ESW (moved from FY10) Education Business Development Program * Policy Banks Reform (moved from FY10) Health Financing/Gov’t Program (hospital autonomy) * High Quality Education for All Vietnam Development Report 2011 - Nat. Res. & Env. Mgt. Vietnam Development Report 2011 Crisis Impact Analysis & Social Protection Policy Monitoring Technical Assistance Technical Assistance Support to SEDP Preparation * Rural Elect. Impact Studies (moved from FY10) Infrastructure Policy/Regulatory Reform * Hydro Safeguards TA (moved from FY10) Agriculture and Rural Economic & Sector Work * TA for Renewable Energy Development (moved from FY10) 113 114 CPS PLANS (January 3, 2007) STATUS 38 Year t Regional Development & Urbanization * TA for Vietnam Energy Efficiency Program (moved from FY10) 2011 Prioritizing Climate Change Investments * FY09 Cluster-Prioritizing Climate Change Investment (moved from FY10) Social & Land Conflict Management * Support to SBV (moved from FY10) Health Sector Reform TA * Vietnam Virtual Learning Program (moved from FY10) Urban Environment MOC & ACVN FIRST #7040: Enhancing Deposit Insurance (cancelled) READ Health Systems Strengthening Support FSAP Preparatory TA GAC Implementation SBV on-site examination manual Rural Broadband Strategy Phase I Health Systems Strengthening Program II Country Systems in Rural WSS Workshop: Toolkit for PPPs for Highways Additional Actual Projects: Vietnam - ICR ROSC Update Climate Change Scale-up Mekong Delta Transport Sector Portfolio Assessment Enhancing role of MSMEs in Vietnam Country Gender Action Plan & Assessment * Programmatic AAA APPENDIX 4: FY07-FY11 PROJECT CLOSURES AND OUTCOME RATINGs (as of June 30, 2011) ICR IEG Age Approval Original Actual Closing Net No Project Outcome Outcome (yrs) Date Closing Date Date Disconnect 39 Rating Rating Projects closed in FY07 7.5 0% 1 Rural Energy 6.6 30-May-00 30-Jun-04 31-Dec-06 S S 0 2 Agriculture Diversification 8.5 23-Jun-98 31-Dec-04 31-Dec-06 S S 0 3 PRSC 5 na 22-Jun-06 31-Dec-06 31-Dec-06 S S 0 4 National Health Support 10.8 16-Jan-96 4-Oct-03 31-Oct-06 MS MS 0 5 Transmission, Distribution 9.4 20-Jan-98 30-Jun-02 30-Jun-07 S S 0 6 Avian Influenza Emergency 2.9 3-Aug-04 31-Dec-06 30-Jun-07 S S 0 7 Higher Education 8.8 27-Aug-98 30-Jun-05 30-Jun-07 S MS 0 8 Primary Teacher Dev 5.5 20-Dec-01 31-Dec-05 30-Jun-07 HS S 0 Projects closed in FY08 7.9 1 Northern Mountains Pov. Reduction 6.2 25-Oct-01 31-Dec-07 31-Dec-07 S S 0 2 Coastal Wetlands Protection and Mngt 7.8 23-Nov-99 30-Sep-06 31-Aug-07 MS S 0 3 Mekong Delta Water Resources 8.7 4-May-99 30-Jun-05 31-Dec-07 S S 0 4 3 Cities Sanitation 9.1 18-May-99 30-Jun-05 30-Jun-08 S MS 0 5 Program 135 - Phase II na 21-Mar-07 31-Dec-07 31-Dec-07 MS 6 PRSC 6 na 21-Jun-07 31-Dec-07 31-Dec-07 na na Projects closed in FY09 6.0 1 PRSC 7 na 26-Jun-08 31-Dec-08 31-Dec-08 na na 2 Targeted Budget Support for EFA 4.0 28-Jun-05 30-Jun-09 30-Jun-09 MS MS 0 3 Comm-based Rural Infrastructure 8.0 26-Jun-01 31-Dec-07 30-Jun-09 S MS 0 Projects closed in FY10 7.4 1 Regional Blood Transfusion Centers 7.5 16-Apr-02 31-Mar-08 30-Sep-09 MS MS 0 2 Rural Finance II 7.3 30-May-02 30-Sep-08 30-Sep-09 S S 0 3 Second Program 135 - Phase 2 na 21-May-09 31-Dec-09 31-Dec-09 na na 4 Higher Education Reform Support (DPL) na 23-Jun-09 31-Dec-09 31-Dec-09 na na 5 PRSC 8 na 26-Jun-09 31-Dec-09 31-Dec-09 na na 6 GEF - Demand Side Management & Energy na 24-Jun-03 30-Jun-07 30-Jun-10 S 7 Public Investment Reform DPL na 22-Dec-09 30-Sep-10 na na 39. For SILs only 115 116 ICR IEG Age Approval Original Actual Closing Net No Project Outcome Outcome (yrs) Date Closing Date Date Disconnect 40 Rating Rating Projects closed in FY11 7.5 1 Power Sector Reform na 6-Apr-10 31-Aug-11 na na 2 GEF - SEIER na 25-Jun-02 30-Jun-08 31-Dec-10 na na 3 Primary Educ. for Disad. Children 7.7 6-May-03 31-Dec-09 31-Dec-10 S 4 PRSC 9 na 24-Jun-10 31-Dec-10 na na 5 Custom Modernization 5.6 10-Nov-05 30-Jun-11 6 Mekong Transport and Flood Protection 10.5 20-Dec-00 30-Jun-06 30-Jun-11 7 Second Higher Education DPL na 30-Nov-10 30-Jun-11 na na 8 Second Payment System & Bank Modern 6.3 10-Mar-05 30-Jun-10 30-Jun-11 40. For SILs only ANNEX 3: COUNTRY-AT-A-GLANCE Vietnam at a glance 8/31/11 East Lower Key Development Indicators Asia & middle Vietnam Pacific income Age distribution, 2009 (2010) Male Female Population, mid-year (millions) 88.4 1,944 3,811 75-79 Surface area (thousand sq. km) 331 16,302 31,898 60-64 Population growth (%) 1.2 0.7 1.2 Urban population (% of total population) 28 45 41 45-49 30-34 GNI (Atlas method, US$ billions) 99.9 6,149 8,846 15-19 GNI per capita (Atlas method, US$) 1,130 3,163 2,321 GNI per capita (PPP, international $) 2,910 6,026 4,784 0-4 6 4 2 0 2 4 6 GDP growth (%) 6.8 7.4 7.1 percent of total population GDP per capita growth (%) 5.5 6.6 5.9 (most recent estimate, 2004–2010) Poverty headcount ratio at $1.25 a day (PPP, %) 13 17 .. Poverty headcount ratio at $2.00 a day (PPP, %) 38 39 .. Under-5 mortality rate (per 1,000) Life expectancy at birth (years) 75 72 68 Infant mortality (per 1,000 live births) 20 21 43 60 Child malnutrition (% of children under 5) 20 9 24 50 40 Adult literacy, male (% of ages 15 and older) 95 96 87 Adult literacy, female (% of ages 15 and older) 91 91 74 30 Gross primary enrollment, male (% of age group) 102 111 109 20 Gross primary enrollment, female (% of age group) 100 112 105 10 Access to an improved water source (% of population) 94 88 86 0 Access to improved sanitation facilities (% of population) 75 59 50 1990 1995 2000 2009 Vietnam East Asia & Pacific a Net Aid Flows 1980 1990 2000 2010 (US$ millions) Net ODA and official aid 228 181 1,681 3,744 Growth of GDP and GDP per capita (%) Top 3 donors (in 2008): Japan 4 1 924 1,191 12 France 15 12 53 143 10 Germany 0 16 33 112 8 Aid (% of GNI) .. 3.0 5.5 4.0 6 Aid per capita (US$) 4 3 22 43 4 2 Long-Term Economic Trends 0 95 05 Consumer prices (annual % change) .. 36.4 -1.6 9.2 GDP implicit deflator (annual % change) .. 42.1 3.4 11.9 GDP GDP per capita Exchange rate (annual average, local per US$) 0.6 6,482.8 14,167.8 19,126.0 Terms of trade index (2000 = 100) .. 88 100 127 1980–90 1990–2000 2000–10 (average annual growth %) Population, mid-year (millions) 53.7 66.2 77.6 88.4 2.1 1.6 1.3 GDP (US$ millions) .. 6,472 31,173 103,572 4.6 7.9 7.5 (% of GDP) Agriculture .. 38.7 24.5 20.6 2.8 4.3 3.7 Industry .. 22.7 36.7 41.1 4.4 11.9 9.3 Manufacturing .. 12.3 18.6 19.7 1.9 11.2 10.9 Services .. 38.6 38.7 38.3 7.1 7.5 7.5 Household final consumption expenditure .. 84.3 66.4 64.9 .. 5.1 7.7 General gov't final consumption expenditure .. 12.3 6.4 6.5 .. 3.2 7.9 Gross capital formation .. 12.6 29.6 38.9 .. 19.8 12.0 Exports of goods and services .. 36.0 55.0 77.5 .. 19.2 11.2 Imports of goods and services .. 45.3 57.5 87.8 .. 19.5 13.2 Gross savings .. -2.3 30.5 32.7 Note: Figures in italics are for years other than those specified. 2010 data are preliminary. Group data are for 2009. .. indicates data are not available a. Aid data are for 2009. Development Economics, Development Data Group (DECDG). VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 117 Vietnam Balance of Payments and Trade 2000 2010 Governance indicators, 2000 and 2009 (US$ millions) Total merchandise exports (fob) 14,483 72,191 Total merchandise imports (cif) 15,637 84,801 Voice and accountability Net trade in goods and services -173 -7,948 Political stability Current account balance 1,108 -3,999 as a % of GDP 3.6 -3.9 Regulatory quality Rule of law Workers' remittances and compensation of employees (receipts) 2,000 6,626 Control of corruption Reserves, including gold 3,030 12,400 0 25 50 75 100 2009 Country's percentile rank (0-100) Central Government Finance 2000 higher values imply better ratings (% of GDP) Current revenue (including grants) 20.4 26.2 Source: Kaufmann-Kraay-Mastruzzi, World Bank Tax revenue .. .. Current expenditure 15.9 21.2 Technology T h l and dI f Infrastructure t t 2000 2009 Overall surplus/deficit -2.0 -6.5 Paved roads (% of total) 25.1 47.6 Highest marginal tax rate (%) Fixed line and mobile phone Individual 50 35 subscribers (per 100 people) 4 137 Corporate 33 25 High technology exports (% of manufactured exports) 11.0 4.9 External Debt and Resource Flows Environment (US$ millions) Total debt outstanding and disbursed 12,823 43,797 Agricultural land (% of land area) 28 32 Total debt service 1,309 2,766 Forest area (% of land area) 37.7 44.5 Debt relief (HIPC, MDRI) – – Terrestrial protected areas (% of land area) .. .. Total debt (% of GDP) 41.1 42.3 Freshwater resources per capita (cu. meters) 4,508 4,221 Total debt service (% of exports) 7.5 3.5 Freshwater withdrawal (billion cubic meters) .. 82.0 Foreign direct investment (net inflows) 1,298 7,600 CO2 emissions per capita (mt) 0.69 1.3 Portfolio equity (net inflows) .. 128 GDP per unit of energy use (2005 PPP $ per kg of oil equivalent) 3.3 3.7 Composition of total external debt, 2009 Energy use per capita (kg of oil equivalent) 477 689 Short- IBRD, 0 IDA, 6,270 term, 6,645 World Bank Group portfolio 2000 2009 IMF, 83 Private, 4,172 (US$ millions) Other multi- IBRD lateral, 10,010 Total debt outstanding and disbursed – – Disbursements – – Principal repayments – – Bilateral, 11,566 Interest payments – – US$ millions IDA Total debt outstanding and disbursed 1,113 6,270 Disbursements 174 1,206 Private Sector Development 2000 2010 Total debt service 9 87 Time required to start a business (days) – 44 IFC (fiscal year) Cost to start a business (% of GNI per capita) – 12.1 Total disbursed and outstanding portfolio 223 156 ) Time required to register property (days) – 57 of which IFC own account 107 153 Disbursements for IFC own account 25 24 Ranked as a major constraint to business 2000 2010 Portfolio sales, prepayments and (% of managers surveyed who agreed) repayments for IFC own account 18 40 Access to/cost of financing .. 40.5 Access to land .. 25.9 MIGA Gross exposure 46 95 Stock market capitalization (% of GDP) 0.4 19.7 New guarantees 10 0 Bank capital to asset ratio (%) .. .. Note: Figures in italics are for years other than those specified. 2010 data are preliminary 8/31/11 .. indicates data are not available. – indicates observation is not applicable. Development Economics, Development Data Group (DECDG). VIETNAM COUNTRY PARTNERSHIP STRATEGY 118 2012 - 2016 Millennium Development Goals Vietnam With selected targets to achieve between 1990 and 2015 (estimate closest to date shown, +/- 2 years) Vietnam Goal 1: halve the rates for extreme poverty and malnutrition 1990 1995 2000 2009 Poverty headcount ratio at $1.25 a day (PPP, % of population) .. 63.7 40.1 13.1 Poverty headcount ratio at national poverty line (% of population) .. 58.1 28.9 14.5 Share of income or consumption to the poorest qunitile (%) .. 7.8 7.5 7.3 Prevalence of malnutrition (% of children under 5) 40.7 40.6 26.7 20.2 Goal 2: ensure that children are able to complete primary schooling Primary school enrollment (net, %) .. .. 95 88 Primary completion rate (% of relevant age group) .. .. 96 .. Secondary school enrollment (gross, %) 35 .. 65 .. Youth literacy rate (% of people ages 15-24) 94 .. 95 97 Goal 3: eliminate gender disparity in education and empower women Ratio of girls to boys in primary and secondary education (%) .. .. 93 .. Women employed in the nonagricultural sector (% of nonagricultural employment) .. 41 41 .. Proportion of seats held by women in national parliament (%) 18 19 26 26 Goal 4: reduce under-5 mortality by two-thirds Under-5 mortality rate (per 1,000) 55 44 29 24 Infant mortality rate (per 1,000 live births) 39 33 24 20 Measles immunization (proportion of one-year olds immunized, %) 88 95 97 97 Goal 5: reduce maternal mortality by three-fourths Maternal mortality ratio (modeled estimate, per 100,000 live births) 170 120 91 56 Births attended by skilled health staff (% of total) .. 77 68 88 Contraceptive prevalence (% of women ages 15-49) 53 65 74 80 Goal 6: halt and begin to reverse the spread of HIV/AIDS and other major diseases Prevalence of HIV (% of population ages 15-49) 0.1 0.1 0.2 0.4 Incidence of tuberculosis (per 100,000 people) 204 204 204 200 Tuberculosis case detection rate (%, all forms) 37 37 56 54 Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improved water source (% of population) 58 68 79 94 Access to improved sanitation facilities (% of population) 35 47 57 75 Forest area (% of land area) 28.8 .. 37.7 44.5 Terrestrial protected areas (% of land area) .. .. .. .. CO2 emissions (metric tons per capita) 0.3 0.4 0.7 1.3 GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) 2.5 2.9 3.3 3.7 Goal 8: develop a global partnership for development Telephone mainlines (per 100 people) 0.1 1.1 3.3 35.2 Mobile phone subscribers (per 100 people) 0.0 0.0 1.0 101.5 Internet users (per 100 people) 0.0 0.0 0.3 27.5 Personal P t l computers ( (per 100 people) l ) 0.0 0 0 01 0.1 0.8 08 9.6 9 6 Education indicators (%) Measles immunization (% of 1-year olds) ICT indicators (per 100 people) 100 100 150 75 75 100 50 50 25 50 25 0 2000 2005 2009 0 0 1990 1995 2000 2009 2000 2005 2009 Primary net enrollment ratio Ratio of girls to boys in primary & secondary Vietnam East Asia & Pacific Fixed + mobile subscribers Internet users education Note: Figures in italics are for years other than those specified. .. indicates data are not available 8/31/11 Development Economics, Development Data Group (DECDG). VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 119 Annex 4: SELECTED INDICATORS OF BANK PORTFOLIO PERFORMANCE AND MANAGEMENT As of 9/30/11 Indicator 2009 2010 2011 2012 Portfolio Assessment Number of Projects Under Implementation a 46 48 50 51 Average Implementation Period (years) b 3.7 4.1 4.2 4.7 Percent of Problem Projects by Number a, c 10.9 6.3 6.0 9.4 Percent of Problem Projects by Amount a, c 11.2 5.0 5.3 6.3 Percent of Projects at Risk by Number a, d 10.9 8.3 6.0 9.4 Percent of Projects at Risk by Amount a, d 11.2 6.8 5.3 6.3 Disbursement Ratio (%) e 14.8 18.6 14.9 2.8 Portfolio Management CPPR/JPPR during the year (yes/no) No Yes No Yes Supervision Resources (total US$’000) 3,402 3,501 3,884 3,735 Average Supervision (US$’000/project) 66.7 61.4 60.7 66.7 Memorandum Item Since FY 97 Last Five FYs Proj Eval by IEG by Number 38 16 Proj Eval by IEG by Amt (US$ millions) 3,482.2 1,351.1 % of IEG Projects Rated U or HU by Number 0.0 0.0 % of IEG Projects Rated U or HU by Amt 0.0 0.0 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank’s country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank’s portfolio at the beginning of the year: Investment projects only. FY12 is as of September 30, 2011 * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. VIETNAM COUNTRY PARTNERSHIP STRATEGY 120 2012 - 2016 Annex 5: INDICATIVE FY12-FY14 LENDING PROGRAM 41 Vietnam Product Title FY12 FY13 FY14 PILLAR 1: COMPETITIVENESS Outcome 1.1: Improved Economic Management and Business Environment PRSC 10  EMCC 1  EMCC 2  Outcome 1.2: Improved Quality and Efficiency of Infrastructure Services Power Sector Development DPO 2  Mekong Delta Transport Additional Financing  Distribution Efficiency  Power Sector Development DPO 3  Road Asset Management  Dau Giay-Phan Thiet Expressway  Outcome 1.3: Increased Capacity for Innovation and Value Addition Inclusive Innovation  Higher Education DPO 3  Fostering Innovation through Science Research and Technology  Private Higher Education Loan Fund  Higher Education 3  PILLAR 2: SUSTAINABILITY Outcome 2.1: Improved Natural Resource Management (“Green”) Forest Sector Development Additional Financing  Coastal Resources for Sustainable Development  Regional Wildlife Conservation  Regional Mekong Water Resources  Irrigation Modernization and Rehabilitation - Phase 1  Outcome 2.2: Strengthened Environmental Protection and Management (“Clean”) Industrial Pollution Control  HCMC Environment and Sanitation Phase 2  Danang Sustainable City Development  Mekong Delta Urban Upgrading  (Continued) 41. The FY15-FY16 lending program for Vietnam will be elaborated in the Vietnam CPS Progress Report, to be issued in FY14 VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 121 Annex 5: INDICATIVE FY12-FY14 LENDING PROGRAM 41 Vietnam (Continued) Product Title FY12 FY13 FY14 Medium Cities Development  Outcome 2.3: Enhanced Preparedness for Natural Hazards and Climate Change (“Resilient”) Climate Change DPO 1  Climate Change DPO 2  Managing Natural Hazards  Climate Change DPO 3  PILLAR 3: OPPORTUNITY Outcome 3.1: Increased Opportunities for the Poor and Household Resilience to Shocks Social Protection Systems  Central Highland Poverty  School Readiness Promotion  Outcome 3.2: Improved Basic Public Service Delivery and Access Rural Transport 3 Additional Financing  North East and Red River Delta Regional Health System Support  Rural Sanitation & Water Supply  Health Sector Governance Strengthening  Northern Mountains  VIETNAM COUNTRY PARTNERSHIP STRATEGY 122 2012 - 2016 ANNEX 6: INDICATIVE FY12-FY14 AAA PROGRAM 42 Vietnam Product Title Fiscal Year PILLAR 1: COMPETITIVENESS 2012 2013 2014 Outcome 1.1: Improved Economic Management and Business Environment Vietnam Knowledge Platform    FSAP   Programmatic Financial Sector AAA    Financial Sector Soundness   Country and Sub-National Financial Management Assessments   VDR 2012   Enhancing Roles of MSMEs   VDR 2013   Taking Stock/Macro Monitoring    Programmatic Governance and Anti-Corruption TA    Programmatic Public Finance Reviews (by sector)    VDR 2014   Improved Quality and Efficiency of Infrastructure Services Programmatic Infrastructure Finance    Trade Facilitation and Logistics Assessment    Increased Capacity for Innovation and Value Addition Programmatic Skills and Education System   Programmatic Agriculture Competitiveness    Developing Knowledge Partnership    Global Knowledge Transfer  Science and Innovation  PILLAR 2: SUSTAINABILITY 2012 2013 2014 Outcome 2.1: Improved Natural Resource Management (“Green”) Programmatic Governance and Anti-Corruption TA    Outcome 2.2 Strengthened Environmental Protection and Management (“Clean”) (Continued) 42. This annex shows analytical work funded by the Bank’s administrative budget. See Annex 1 for complementary work supported by trust funds. The FY15-FY16 AAA program for Vietnam will be elaborated in the Vietnam CPS Progress Report, to be issued in FY14. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 123 ANNEX 6: INDICATIVE FY12-FY14 AAA PROGRAM 42 Vietnam (Continued) Product Title Fiscal Year PILLAR 1: COMPETITIVENESS 2012 2013 2014 Green Urban Transport    GHG Assessment for Danang  Outcome 1.1: Enhanced Preparedness for Natural Hazards and Climate Change (“Resilient”) Programmatic Climate Change    PILLAR 3: OPPORTUNITY 2012  2013 2014 Outcome 3.1 Increased Opportunities for the Poor and Household Resilience to Shocks Programmatic Social Protection   Outcome 3.2 Increased Capacity for Innovation and Value Addition Programmatic Health AAA   Programmatic Poverty Assessment    Quality Education for All Policy Dialogue    Programmatic Skills and Education System   Rural Broadband TA  Programmatic Governance and Anti-Corruption TA    VIETNAM COUNTRY PARTNERSHIP STRATEGY 124 2012 - 2016 ANNEX 7: SOCIAL INDICATORS VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 125 ANNEX 8: PROGRESS TOWARD THE MILLENNIUM DEVELOPMENT GOALS Goal 1 Eradicate extreme poverty and hunger Progress Status Target Reduce by half the proportion of people Poverty reduced by three-quarters between Already 1 living in poverty between 1990 and 2015 1990 and 2008 achieved Target Reduce by half the proportion who suffer Proportion reduced by more than two thirds Already 2 from hunger between 1990 and 2015 between 1993 and 2008 achieved Goal 2 Achieve universal primary education Progress Status Target Ensure that, by 2015, children In 2009, net enrollment in primary school was 97 Likely 3 everywhere, boys and girls alike, will be percent and 88.5 percent of children who enter to be able to complete a full course of primary primary school complete five years of primary achieved schooling education. Of these, over 90 percent continue to lower secondary education, (no significant differences between regions or between urban and rural areas. Goal 3 Promote gender equality Progress Status Target Ratio of girls to boys in primary, secondary Girls now represent 48.2 percent of students Already 4 and tertiary education by 2015 enrolled at primary level, 48.1 percent at lower achieved secondary level, and 49.1 percent at upper secondary level. Goal 4 Reduce child mortality Progress Status Target Reduce by two thirds the mortality rate Reduced by 58 percent between 1990 and 2009 Likely 5 among children under five between 1990 (down from 58 to 24.4 per 1000). The infant to be and 2015 mortality rate was reduced from 44.4 per 1,000 achieved live births in 1990 to 16 in 2009. Goal 5 Improve maternal health Progress Status Target Reduce maternal mortality by three Fell by 70 percent from 233 per 100,000 births in Already 6 quarters, between 1990 and 2015 1990 to 69 in 2009 achieved Goal 6 Combat HIV/AIDS and other diseases Progress Status Target Halt and begin to reverse the spread of Despite progress in some areas and great efforts Uncertain 7 HIV/AIDS by 2015 by the Government to address HIV over the past ten years, the HIV prevalence rate continues to increase. The HIV prevalence rate is estimated at 0.28 percent for all age groups in 2010. Target Halt and begin to reverse the incidence of Impressive progress on prevention and control Already 8 malaria and other major diseases by 2015 of malaria shows that Viet Nam has already achieved achieved the MDG target on malaria control. Viet Nam is also acknowledged to have done a good job in controlling other epidemics such as SARS, H5N1 and H1N1. VIETNAM COUNTRY PARTNERSHIP STRATEGY 126 2012 - 2016 Goal 7 Ensure environmental sustainability Progress Status Target Integrate the principles of sustainable Viet Nam has shown strong commitment to Uncertain 9 development into country policies and environmental concerns at the international and program; reverse loss of environmental policy level, and significant achievements have resources been made in relation to MDG 7. For example, forest coverage has increased from 27.8 percent in 1990 to about 40 percent in 2010. Target Reduce by half the proportion of people Today, about 83 percent of the rural population Uncertain 10 without sustainable access to safe has access to safe water, up from 30 percent in drinking water and basic sanitation by 1990. On sanitation, less progress - overall poor 2015 conditions and lack of hygiene. For instance, only 18 percent of rural households, 12 percent of rural schools and 37 percent of commune health stations have hygienic latrines which meet the Ministry of Health standards Source: United Nations, Vietnam (based on data available August 2011) VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 127 ANNEX 9: GENDER IN VIETNAM As noted in Chapter I, Vietnam has made the majority Kinh population there is actually a substantial progress on gender equality. Health small reverse gender gap. Also, there is a significant outcomes have improved dramatically. Infant degree of segregation of men and women in their mortality dropped from 44 percent in 1990 to only fields of study, which is connected to significant 16 percent in 2009, with no differences between boy segregation in terms of occupation and industry and girl infants. The decrease in maternal mortality is of employment, as well. Another concern is equally impressive, falling from 233 to 69 deaths per that educational materials still promote gender 100,000 live births from 1990 to 2009. Similar success stereotypes. has been achieved in school enrollment, where the gender gap has been eliminated, and has actually • Health - Women still have less health insurance reversed slightly for tertiary education. There are coverage than men, and they also continue to be still gaps in employment and wages, but they have victims of gender based violence. Over 30 percent lessened, and overall no difference exists in male and have experienced physical abuse, and over 50 female poverty rates. Compared to other countries in percent emotional abuse. Another major concern the region, Vietnam has a high rate of women in the is the rise in sex ratio at birth (SRB) from 106 male National Assembly of about 27 percent. births for every 100 female births in 1999 (the approximate biological norm) to 111 in 2006. SRBs Nevertheless, important challenges related to are highest for higher income groups with better gender remain across sectors. These challenges access to sonograms and sex selected abortions. – in the areas of health, education, employment, For higher parity births among the richest quintile, and participation – are in some cases more subtle, the SRB is 133.1. So this situation -- which is but that does not mean they are not profound. associated with increased trafficking and violence Moreover, they cannot be addressed simply by -- might worsen with economic development. In relying upon a continuation of Vietnam’s recent terms of men’s health, males have much higher impressive economic growth. rates of HIV and AIDS, smoking, and drinking. These challenges include: • Employment - Women’s wages are now about 75 percent of men’s according to the 2009 Labor Force • Poverty - Older women, especially in rural areas, Survey, and women are still highly segregated by are overrepresented among the poor. The major both industry and occupation. Women are also in gender difference in regards to poverty has to more vulnerable jobs, for example, own-account do with widows, who are both poorer and more work and unpaid family labor. In fact, during the numerous than widowers. This points to one key recent economic crisis, women disproportionately difference between men and women, namely, left wage employment for more vulnerable jobs. power over assets. For example, even though a Women also receive less vocational training, 2003 Land Law began a successful effort to include and undertake a disproportionate amount of women on land title certificates, as of 2008 the unpaid work, which is seen as a barrier not only to majority of land title certificates still do not include employment, but also to civic participation. the woman’s name. And while women do have avenues for obtaining credit, access to larger funds • Lower wages, a bigger gender wage gap, and far often requires the kind of collateral that land title worse working conditions prevail in small informal certificates can provide. family-run enterprises and among casual labor. Particularly disadvantaged are migrant women, • Education - Gender education gaps still exists widows, older women, ethnic minorities, and women among certain ethnic minority groups, and among with disabilities. Many of these women are landless VIETNAM COUNTRY PARTNERSHIP STRATEGY 128 2012 - 2016 or lost their land to industrial parks and urbanization. are significant, and should be used as a platform to These are the women who are least able to access the expand gender equality even further by addressing opportunities generated by Vietnam’s integration the more complicated issues that remain. into the informal economy. Many are also unable to take advantage of targeted training or employment Vietnam’s transition to a middle income schemes intended for the poor. country would be assisted by a flexible and trained citizenry that could contribute to the • Participation – There are still signs that women economy and civic life of the nation in the most do not have an equal voice in the public sphere – efficient way possible. To that end, the World for example, low rates of representation in party Bank plans to: committees. But, women’s ability to participate in public decision-making processes goes beyond - Support the Government of Vietnam in the formal political and policy domain. The improving the implementation of the Law on Grassroots Democracy Decree (Decree 79) was Gender Equality and the National Strategy intended to provide a framework to promote on Gender Equality in part by building gender democratic participation at the local level and awareness and capacity within relevant ministries, to emphasize decentralizing decision-making by devoting appropriate resources, and by working within development programs to achieve a closer to build systems of accountability. fit between needs and design. In fact, involving women in development projects and programs - Support the development of a gender data has provided a widely used route to increasing system by building on the recent development of their participation in public life. Still, participatory the National Gender Statistical Indicator System. poverty monitoring points out that many of the barriers that women face higher up in the public - Apply a gender lens to Bank projects to take sector are also encountered at the grassroots level. advantage of opportunities to improve project design and implementation by incorporating the Even with all these challenges, it is important voices, talents, and concerns of both women and to acknowledge Vietnam’s efforts in regards to men. gender equality. Vietnam has recently enacted laws on gender equality and against domestic - Close the knowledge gap through quantitative violence, and this year adopted a national strategy and qualitative data on gender issues. This on gender equality. The successes in the areas of includes research on cultures and norms and health, education, employment, and participation assessing the value of unpaid work in the home. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 129 ANNEX 10: KEY ECONOMIC INDICATORS Indicator Actual Estimate Projected 2006 2007 2008 2009 2010 2011 2012 2013 2014 National accounts (as % of GDP)a Gross domestic products 100 100 100 100 100 100 100 100 100 Agriculture 20.4 20.4 22.2 20.9 20.6 20.2 19.8 19.4 19.1 Industry 41.5 41.5 39.8 40.2 41.1 41.7 41.4 41.2 41.1 Services 38.1 38.2 37.9 38.8 38.3 38.1 38.8 39.4 39.8 Total consumption 69.4 70.9 75.5 72.2 71.4 70.7 70.4 70.4 70.8 Gross domestic fixed investment 33.4 38.3 34.6 34.5 35.6 32.8 33.0 33.0 32.4 Government 15.3 14.2 11.7 14.0 13.5 12.1 12.1 12.0 11.8 Private 18.1 24.0 22.9 20.5 22.0 20.7 21.0 20.9 20.6 Exports (GNFS)b 73.7 76.8 77.2 67.4 76.9 82.9 87.8 91.4 95.1 Imports (GNFS)b 78.3 92.6 92.4 77.6 84.6 89.5 94.5 97.8 101.4 Gross domestic saving 31.7 28.2 24.5 27.8 28.6 29.3 29.6 29.6 29.2 Gross national saving 36.7 37.4 29.4 23.8 32.7 32.1 32.4 31.4 30.1 Memorandum items Gross domestic products 61 71 90 93 104 120 131 146 163 (US$ billion at current prices) GNI per capita 690 780 910 1010 1130 1225 1322 1445 1578 Real annual growth rate (%) Gross domestic products at market prices 8.2 8.5 6.3 5.3 6.8 5.8 6.1 6.3 6.5 Gross national income 7.9 7.7 6.1 4.7 6.3 5.7 5.9 5.6 6.1 Real annual per capita growth rate (%) Gross domestic products at market prices 7.0 7.3 5.2 4.2 5.7 4.6 5.0 5.2 5.4 Total consumption 4.4 15.4 7.9 1.2 4.8 4.4 3.9 4.0 4.1 Private consumption 6.6 16.2 8.1 0.7 4.2 4.1 3.9 3.9 4.1 Balance of Payments (US$ billion) Exports (GNFS) 44.9 54.6 69.7 62.8 79.7 99.3 115.4 133.8 154.9 Merchandise (FOB) 39.8 48.6 62.7 57.1 72.2 90.6 105.4 122.3 141.8 Imports (GNFS) 47.7 65.8 83.4 72.3 87.6 107.3 124.1 143.2 165.1 Merchandise (FOB) 42.6 58.9 75.5 65.4 79.3 97.6 113.3 131.0 151.3 Resource balance -2.8 -11.3 -13.7 -9.5 -7.9 -8.0 -8.8 -9.4 -10.2 Net current transfer 4.1 6.4 7.3 6.5 8.6 8.3 9.4 9.9 10.0 Current account balance -0.2 -7.0 -10.8 -6.1 -4.0 -4.5 -4.6 -5.1 -5.6 Net private foreign direct investment 3.6 12.8 8.7 6.8 8.5 8.4 9.0 9.2 9.4 Long-term loan (net) 1.0 2.0 1.0 4.5 2.1 1.9 1.7 1.5 1.8 Official 0.8 1.6 0.8 3.6 1.7 1.5 1.3 1.2 1.4 Private 0.2 0.4 0.2 0.9 0.4 0.4 0.3 0.3 0.4 Other capital (net, including E&O) -0.2 2.4 1.6 -13.4 -10.4 -2.9 2.3 2.4 2.5 Change in the reserves -4.3 -10.2 -0.5 8.2 3.8 -2.9 -8.3 -8.0 -8.1 Memorandum items Resources balance (% of GDP) -4.6 -15.9 -15.2 -10.4 -10.3 -6.6 -6.7 -6.4 -6.2 Nominal annual growth rate Merchandise exports (FOB) 22.8 21.9 29.1 -8.9 26.4 25.5 16.3 16.1 16.0 Primary 21.0 17.8 23.7 -25.0 12.7 12.8 7.3 8.8 8.2 Manufactures 26.0 30.1 26.8 -5.4 31.4 32.5 19.0 17.6 17.2 Merchandise imports (FOB) 21.4 39.6 28.1 -13.3 21.2 23.1 16.1 15.6 15.5 VIETNAM COUNTRY PARTNERSHIP STRATEGY 130 2012 - 2016 Indicator Actual Estimate Projected 2006 2007 2008 2009 2010 2011 2012 2013 2014 Public Finance (as % of GDP at market prices) Current revenues 27.0 26.1 26.7 24.5 26.2 25.4 25.8 24.9 24.5 Current expenditures 18.5 20.3 19.7 20.9 21.2 21.5 22.1 21.5 21.4 Current account balance/ surplus (+) or deficit (-) 8.5 5.9 7.1 3.6 5.0 3.9 3.7 3.3 3.1 Capital expenditures 8.9 8.4 8.3 12.6 11.5 7.7 7.5 6.9 6.3 Overall fiscal balance / surplus (+) or deficit (-) -0.4 -2.5 -1.2 -9.0 -6.4 -3.9 -3.8 -3.6 -3.2 Foreign financing 1.5 1.6 1.7 3.6 3.4 2.4 2.5 2.1 1.8 Monetary indicators M2/GDP 94.7 117.9 109.2 126.1 140.8 130.0 130.4 130.2 130.2 Growth of M2 (%, year on year) 33.6 46.1 20.3 29.0 33.3 15.0 14.5 14.0 14.0 Private sector credit growth/total credit growth (%) 136 103 110 129 174 116 122 123 126 Price indices (2000=100) Merchandise export price index 140.4 150.5 187.9 165.5 183.2 208.1 233.1 256.4 276.9 Merchandise import price index 124.5 130.9 154.7 136.8 144.4 157.8 172.0 186.6 199.7 Merchandise term of trade index 112.8 115.0 121.4 121.0 126.9 131.9 135.5 137.4 138.7 Real effective exchange rate (US$/LCU)/c 96.9 106 125.8 115.9 114.0 … … … … Consumer price index (annual average, % change) 7.5 8.3 23.1 6.7 9.2 19.0 10.5 7.5 6.0 GDP deflators (% change) 7.3 8.2 22.1 6.0 11.9 17.8 7.6 7.4 7.0 a. GDP at factor cost b. “GNFS” denotes “goods and nonfactor services.” c. “LCU” denotes “local currency units.” VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 131 ANNEX 11: KEY EXPOSURE INDICATORS Indicator Actual Estimate Projected 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total debt outstanding and 19,190 23,100 28,400 36,336 43,707 49,113 51,801 57,093 62,686 disbursed (TDO) (US$m)/ a Net disbursements (US$m) 1,272 3,998 5,303 8,897 5,684 5,589 4,523 4,360 5,246 Total debt service (TDS) (US$m) 1,337 1,686 2,033 3,062 2,763 3,241 4,011 4,520 4,912 Debt and debt service indicators (%) TDO/XGSb 39.4 38.0 37.1 52.8 49.7 45.8 41.6 39.8 38.1 TDO/GDP 31.5 32.5 31.4 39.0 42.2 41.0 39.4 39.0 38.5 TDS/XGS 2.7 2.8 2.6 4.5 3.2 3.0 3.2 3.2 3.0 Concessional/TDO 73.4 72.7 71.9 75.2 71.8 72.7 72.8 72.6 72.3 IBRD exposure indicators (%) IBRD DS/public DS .. .. .. .. 0.0 0.2 0.2 0.2 0.2 Preferred creditor DS/public DS (%)/c 57.0 57.0 61.6 60.4 48.4 53.9 52.8 58.2 60.6 IBRD DS/XGS .. .. .. .. 0.0 0.0 0.0 0.0 0.0 IBRD TDO (US$m) .. .. .. .. 700 803 925 1,133 1,506 Of which present value of guarantees (US$m) .. .. .. .. .. .. .. .. .. Share of IBRD portfolio (%) .. .. .. .. 1.6 1.6 1.8 2.0 2.4 IDA TDO (US$m) 3,593 4,609 5,074 6,270 7,010 8,423 9,815 11,388 13,127 IFC (US$m) 75 70 144 152 335 737 .. .. .. Loans 51 33 96 131 313 659 .. .. .. Equity and quasi-equity / d 24 38 48 21 22 78 .. .. .. MIGA MIGA guarantees (US$m) 128.6 113.7 106.4 99.3 .. .. .. .. .. a. Includes public and publicly guaranteed debt, private non-guaranteed, use of IMF credits and net short-term capital b. “XGS” denotes exports of goods and services, including workers’ remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes equity and quasi-equity types of both loan and equity instruments. VIETNAM COUNTRY PARTNERSHIP STRATEGY 132 2012 - 2016 ANNEX 12: OPERATIONS PORTFOLIO (IBRD/IDA AND GRANTS) Operations Portfolio (IBRD/IDA and Grants) As of 10/18/2011 Closed Projects 55 IBRD/IDA * Total Disbursed (Active) 2,291.35 of which has been repaid 2.03 Total Disbursed (Closed) 4,301.91 of which has been repaid 256.29 Total Disbursed (Active + Closed) 6,593.26 of which has been repaid 258.32 Total Undisbursed (Active) 5,683.55 Total Undisbursed (Closed) 0.00 Total Undisbursed (Active + Closed) 5,683.55 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements a/ Project ID Project Name Development Implementation Objectives Progress FY IBRD IDA Grant Cancel. Undisb. Orig. Frm Rev’d Pillar 1: Competitiveness Outcome 1.1: Improved Economic Management and Business Environment P088759 Fin Sector Modern and Info S S 2009 60 58.54982 1.6720186 Management System P075399 Public Financial Management S MS 2003 68.33 36.45263 14.868496 Reform Proj. P099376 Tax Administration Modernization MS MU 2008 80 80.76432 61.570768 Project P120946 VN-Public Investment Reform 2 # # 2011 87.3 262.7 355.0411 Outcome 1.2: Improved Quality and Efficiency of Infrastructure Services P066396 VN-SYSTEM ENERGY, EQUITIZATION S S 2002 251.51 29.15395 -46.36726 -46.3673 & RENEWAB P084871 VN-TRANS & DISTRIB 2 S S 2006 180 200 243.7289 50.530534 P084773 VN-Trung Son Hydropower Project S S 2011 330 329.175 6.0983333 P104848 VN-HIFU DEVELOPMENT S S 2007 50 32.48178 30.165728 133 134 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements a/ Project ID Project Name Development Implementation Objectives Progress FY IBRD IDA Grant Cancel. Undisb. Orig. Frm Rev’d Pillar 1: Competitiveness Outcome 1.2: Improved Quality and Efficiency of Infrastructure Services P094055 VN-Local Development Investment S MS 2010 190 186.2396 39.217819 7.832395 (LDIFP) P118610 VN-Project Preparation TA Facility S MS 2010 100 98.56328 3.4333333 P059663 VN-ROAD NETWORK IMPROVEMT MS S 2004 225.26 70.98782 53.27343 P083588 VN-MKG DELTA TRANSPORT INFRA MS MS 2007 207.7 166.0636 63.572378 30.29233 DEV P095129 VN-Northern Delta Transport Dev MS MU 2008 170 164.9817 42.59387 P106235 VN-EXPRESSWAY DEVEL Danang- S S 2011 470.49 143.01 614.6565 Quang Ngai P083581 VN-HANOI URBAN TRANSPORT MU MU 2008 155.21 146.1646 99.043062 P111548 VN-Haiphong Urban Transport S S 2011 175 179.2988 -0.600315 Project Outcome 1.3: Increased Capacity for Innovation and Value Addition P079665 VN-2ND HIGHER EDUCATION S S 2007 59.4 20.73511 17.901004 P110693 VN New Model University S S 2010 180.4 191.5046 7.4833333 P100916 VN-Third Rural Finance Project S S 2008 200 77.03553 43.636268 P108885 VN - Agriculture Competitiveness S MS 2009 59.8 47.98946 22.073829 Project P090723 VN-Livestock Competitiveness & S S 2010 65.26 63.43572 30.211872 Food Safety Pillar 2: Sustainability Outcome 2.1: Improved Natural Resources Managements (“Green”) P065898 VIETNAM WATER RESOURCES S S 2004 157.8 38.79902 31.920575 ASSISTANCE P066051 VN - Forest Sector Development Project S S 2005 39.5 12.18804 9.3114251 P074414 VN - GEF Forest Sector Development Proj S S 2005 9 4.270614 4.2706142 4.270614 P113949 VN-Mekong Delta Water Mgmt for S S 2011 160 162.679 1.33E-06 Rural Dev P096418 VN-Land Administration Project U MU 2008 75 64.07193 32.088256 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements a/ Project ID Project Name Development Implementation Objectives Progress FY IBRD IDA Grant Cancel. Undisb. Orig. Frm Rev’d Outcome 2.2: Strengthened Environmental Protection and Management (“Clean”) P052037 VN-HCMC ENVMTL SANIT. S MS 2001 256.34 90.03299 -31.73038 -21.6822 P082295 VN-COASTAL CITIES ENVMT SANIT. S S 2007 190 156.7753 24.484295 P090374 VN-GEF-IF-Coastal Cities # MS 2009 5.35 3.852836 P119090 Hospital Waste Management Support S S 2011 150 152.6558 P085393 VN-GEF-Hanoi Urban Transport Dev MU MU 2008 9.8 8.70522 6.4552197 P083593 VN - National CFC & Halon Phase out Pr S MS 2006 1.26 0.576604 -0.52168 P099460 VN-GEF-PCB Management Project S MS 2009 7 6.215326 1.7153265 Outcome 2.3: Enhanced Preparedness for Natural Hazards and Climate Change (“Resilient”) P073361 VN -Natural Disaster Risk Management S MS 2006 161 64.46116 -19.25942 Project P101608 VN-Avian & Human Influenza Control S MS 2007 30 10.92884 0.3804324 &Prep P103238 VN-Renewable Energy Development S S 2009 202 202.9488 57.504836 Project P116846 VN-GEF-Clean Production & Energy # # 2012 2.374407 Efficiency Pillar 3: Opportunity Outcome 3.1: Increased Opportunities for the Poor and Household Resilience to Shocks P117610 VN - Third Program 135 Phase 2 Support S S 2011 50 50.91403 P113493 VN-2nd Northern Mountains Poverty MS MS 2010 150 139.734 4.2165506 Reduction P085080 VN-ROAD SAFETY MS MS 2005 31.73 18.66172 17.687345 8.114024 P082604 VN-HIV/AIDS Prevention Project S S 2005 35 2.249634 2.1057792 135 136 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements a/ Project ID Project Name Development Implementation Objectives Progress FY IBRD IDA Grant Cancel. Undisb. Orig. Frm Rev’d Outcome 3.2: Improved Basic Infrastructure and Public Service Delivery P079663 VN-Mekong Regional Health Support S S 2006 70 7.719909 -15.31786 Project P082672 VN-Northern Upland Health Support MS MS 2008 60 44.26232 -8.482388 Project P095275 VN-Central North Region Health Support S S 2010 65 60.9244 P091747 VN-School Education Quality Assurance MS MS 2009 127 121.7471 23.959157 P074688 VN-RURAL ENERGY 2 S S 2005 420 198.1727 -30.26948 P080074 VN-GEF-RURAL ENERGY 2 S S 2005 5.25 3.469092 -1.580908 P099211 VN-Rural Distribution Project S S 2008 150 56.39972 -14.13037 P075407 VN-Rural Transport 3 S S 2006 106.25 38.42951 26.24102 18.66403 P070197 VN-URBAN UPGRADING S MS 2004 382.47 265.1926 54.009342 P073763 VN-WATER SUPPLY DEV. MS MS 2005 112.64 68.5769 59.411335 P077287 VN-RRD RWSS S S 2006 111.14 65.50264 -3.811181 P086508 VN-Priority Infra Investment S S 2008 152.438 124.5617 14.378192 P119077 VN-Urban Water Supply and Wastewater S S 2011 200 200.603 0.6666667 P079344 VN -ICT Development MS MS 2006 93.72 5.98 71.35484 69.873192 70.45295 Overall Result 1067.79 6642.61 40.03 5.98 5710.641 850.80396 71.57684 Supervision ratings: HS = highly satisfactory; S = satisfactory; MS = moderately satisfactory; MU = moderately unsatisfactory; U = unsatisfactory; HU = highly unsatisfactory ANNEX 13: STATEMENT OF IFC’S HELD AND DISBURSED PORTFOLIO Amounts in US Dollar Millions Accounting Date as of : 09/30/2011 Commitment Institution LN ET QL + QE GT RM ALL ALL LN ET QL + QE ET RM ALL ALL Fiscal Year Short Name Cmtd - Cmtd - Cmtd - Cmtd - Cmtd - Cmtd - Cmtd - Out - Out - Out - IFC Out - Out - Out - Out - IFC IFC IFC IFC IFC IFC IFC IFC IFC 0 IFC IFC IFC Part 2003/ 2007/ 2008/ 2010/ 2011 ACB-Vietnam 0 0 0 5.00 0 5.00 0 0 0 38.02 5.00 0 5.00 0.00 2009/ 2010/ 2011/ 2012 An Binh Bank 0 0 38.02 39.24 0 77.25 0 0 0 0 27.85 0 65.87 0.00 2008/ 2009/ 2010 Antara 7.00 0.16 0 0 0 7.16 7.00 7.00 0.15 0 0 0 7.15 7.00 2011 CICT 38.75 0 0 0 0 38.75 0 12.28 0 0 0 0 12.28 0.00 2002 CyberSoft 0 0.00 0 0 0 0.00 0 0 0.00 1.05 0 0 0.00 0.00 2003 Dragon Capital 0 0 1.05 0 0 1.05 0 0 0 0 0 0 1.05 0.00 2005 Khai Vy 1.55 0 0 0 0 1.55 0 1.55 0 0 0 0 1.55 0.00 2011 LienVietBank 0 0 0 4.74 0 4.74 0 0 0 36.48 4.74 0 4.74 0.00 2010 Masan Group 0 0 36.65 0 0 36.65 0 0 0 0 0 0 36.48 0.00 1999/ 2009 Nghi Son Cement 34.44 0 0 0 0 34.44 25.48 34.44 0 0 0 0 34.44 25.48 2011/ 2012 OCB Vietnam 0 0 0 5.00 0 5.00 0 0 0 0 5.00 0 5.00 0.00 2006/ 2010 Paul Maitland 10.00 0 0 0 0 10.00 0 10.00 0 1.18 0 0 10.00 0.00 2009 Paynet 0 0.00 1.18 0 0 1.18 0 0 0.00 0 0 0 1.18 0.00 2011 Piaggio Vietnam 21.65 0 0 0 0 21.65 0 0 0 0 0 0 0 0.00 2002/ 2006/ 2008 SABCO 18.33 0 0 0 0 18.33 0 18.33 0 0 0 0 18.33 0.00 2010 SN Power Sing 0 0 1.00 0 0 1.00 0 0 0 0 0 0 0 0.00 2009 SSIT 70.00 0 0 0 0 70.00 0 28.25 0 0 0 0 28.25 0.00 2003/ 2004/ 2005/ 2006/ 2007/ Sacombank 18.00 0 0 99.18 0 117.19 0 18.00 0 79.18 0 97.19 0.00 2008/ 2009/ 2010/ 2011/ 2012 4.00 2011 TVS IBank 0 0 5.00 0 0 5.00 0 0 0 0 0 0 4.00 0.00 2008/ 2009/ 2010/ 2011/ 2012 Techcombank 31.68 0 0 184.84 0 216.52 0 31.68 0 10.68 184.84 0 216.52 0.00 2011 Thien Minh Group 0 0 10.68 0 0 10.68 0 0 0 0 0 0 10.68 0.00 2012 Tien Phong Bank 0 0 0 0.00 0 0.00 0 0 0 0 0 0 0 0.00 2011 VECO 0 9.00 0 0 0 9.00 0 0 0 0 0 0 0 0.00 2002/ 2003/ 2007 VEIL 0 15.45 0 0 0 15.45 0 0 15.45 0 0 0 15.45 0.00 2008 VI Fund I 0 6.93 0 0 0 6.93 0 0 6.65 0 0 0 6.65 0.00 2008/ 2009/ 2010/ 2011 Vietnam Exim 0 0 0 59.14 0 59.14 0 0 0 0 59.14 0 59.14 0.00 2009/ 2011 Vietnam VIB 0 0 0 5.00 0 5.00 0 0 0 0 5.00 0 5.00 0.00 2011 Vietinbank 0 55.63 0 0 0 55.63 0 0 55.63 91.41 0 0 55.63 0.00 Total Portfolio 251.41 87.16 93.58 402.15 0 834.30 32.48 161.55 77.89 426.03 0 701.61 32.48 137 ANNEX 14: VIETNAM COUNTRY SURVEY (May-June 2010) Methodology indicate what they felt were the Bank’s greatest In May-June 2010, 725 stakeholders of the World values and greatest weaknesses in its work and Bank in Vietnam were invited to provide their with which groups the Bank should work more. opinions on the Bank’s assistance to the country by participating in a country survey, the first one 4. The Work of the World Bank: Respondents in Vietnam since FY06. A total of 335 stakeholders were asked to rate their level of importance and participated in the survey (a 46 percent response the Bank’s level of effectiveness across seventeen rate). The majority of respondents (71 percent) areas in which the Bank was involved, such as were from Hanoi. More than half (56 percent) were helping to reduce poverty and helping to bring from government. Other respondents were more about economic growth. fragmented: academia (10 percent), bilateral or multilateral agencies (8 percent), NGOs (6 percent), 5. The Way the World Bank does Business: media (6 percent), private sector (2 percent), and Respondents were asked to rate the Bank’s level of National Assembly Delegates (1 percent). effectiveness in the way it does business, including the Bank’s knowledge, personal relationships, The survey used a mail-in questionnaire in collaborations, and poverty mission. which respondents were asked to indicate their overall attitudes toward the Bank, the 6. Communication and Outreach: Respondents importance of specific areas of the Bank’s work, were asked to indicate where they get information and the Bank’s effectiveness in those areas. about development issues in Vietnam. They were also asked to indicate their level of agreement with a series of statements about the 7. The Future of the World Bank in Vietnam: way the World Bank does business. Respondents Respondents were asked to rate the extent to which were also asked about general issues facing the Bank will play a significant role in Vietnam’s Vietnam, the Bank’s future role, and the Bank’s development and to indicate what the Bank could communication and outreach. The questionnaire do to make itself of greater value in Vietnam. was broken into seven sections: Findings 1. Background Information: The first section asked respondents for their current position, (i) Priorities for Vietnam and Bank Support specialization, familiarity, and geographic location. Respondents indicated that governance was 2. General Issues facing Vietnam: Respondents the most important development priority for were asked to indicate what they thought were Vietnam. It was rated as the most or second most the most important development priorities and important priority for Vietnam by 47 percent of to rate their optimism for the next generation in respondents, a significantly larger share than for Vietnam. other priorities. Those with the highest ratings after governance were economic growth (27 percent), 3. Overall Attitudes toward the World Bank: infrastructure (21 percent), reducing corruption Respondents were asked to rate the Bank’s overall (17 percent), and improving the effectiveness of effectiveness, their agreement with various the law and justice system (also 17 percent). statements regarding the Bank’s programs, poverty mission, relationships, and collaborations As for priorities for Bank support in Vietnam, in Vietnam. Respondents were also asked to respondents gave the highest mean rating VIETNAM COUNTRY PARTNERSHIP STRATEGY 138 2012 - 2016 to helping reduce poverty (8.4 on a 10-point had significantly higher ratings for the Bank’s scale with 1 being not at all and 10 being very overall effectiveness in Vietnam than respondents important). This was followed by encouraging from bilateral or multilateral agencies and private greater transparency in governance (8.1), ensuring sector. Respondents saw the Bank as most that attention is paid to the environmental impact effective in helping to reduce poverty, integrate of Bank supported programs and strategies (8.1), Vietnam into the global economy, strengthening helping to strengthen infrastructure development infrastructure development, and paying attention (8.1), helping to lay the foundation to integrate to the environmental impact of Bank programs, Vietnam into the global economy (8.0), help with all of these areas receiving mean ratings of 7.4 Vietnam adapt to/avert risk of climate change (8.0), on the 10-point scale. helping to bring about economic growth (8.0), and safeguarding against corruption in Bank-funded Interestingly, respondents rated the Bank’s projects with its procurement rules (7.9). effectiveness in a given area on average below the area’s importance, which indicates the The survey data indicate a gap between the Bank needs to enhance even further its impact relative perceived importance of development in priority areas. These “effectiveness gaps” are priorities for Vietnam and priorities for Bank widest for the following work areas of the Bank, in support in Vietnam in three areas: poverty descending order (i.e., the first work area in the list reduction, economic growth, and climate change. has the widest gap): Poverty reduction is rated the most important out of 17 areas for the Bank to be involved in, but • helping to strengthen the education sector seventh out of 20 in its importance for Vietnam. • helping to strengthen the health sector Economic growth is the reverse: fifth out of 17 • encouraging greater transparency in governance areas for the Bank to be involved in, but second • helping to strengthen the private sector among 20 areas important for Vietnam. One could • helping Vietnam adapt to/avert risk of climate infer from this that respondents know the Bank’s change mission is poverty reduction, and while they feel • safeguarding against corruption in projects/ economic growth will continue to reduce poverty programs that the Bank funds with its in Vietnam, and/or keep it from reversing its procurement rules downward trend, they look to the Bank to help • helping to strengthen the regulatory framework address the needs of the long-term poor who are • helping to reduce poverty less able to access the benefits of growth. Climate change is ranked fourth in importance out of 17 (iii) The Bank’s Value Added areas for the Bank to be involved in, but eleventh out of 20 in its importance for Vietnam. A possible Respondents indicated that the Bank’s greatest interpretation is that climate change is considered value to Vietnam was its financial resources a longer term issue that Government cannot tackle (56 percent ranked this the Bank’s greatest or on its own, and the donor community, including second greatest value), followed by knowledge the Bank, should therefore take the lead. (45 percent), implementation capacity (34 percent), and technical advice (31 percent). But (ii) The Bank’s Effectiveness if one considers the Bank’s knowledge (studies and analyses), technical advice, and ability to build Across all respondents, the Bank’s overall implementation capacity as various aspects of the effectiveness in Vietnam received a mean “Knowledge Bank,” then their combined scores rating of 7.7 (the same as in the FY06 survey), significantly exceed that of financial resources as with 1 being very unfavorable and 10 being the Bank’s greatest added value, and in fact exceed very favorable. Respondents from government, 50 percent. And if votes for greatest and second academia, media, other organizations, and NGOs greatest value are combined, the “Knowledge VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 139 Bank” received nearly twice as many votes as in descending order of respondents’ votes, these financial resources. weaknesses are: imposing technocratic solutions without regard to political realities, not exploring This indicates it will be very important that alternative policy options, failing to adapt global the Bank bring cutting edge skills and provide knowledge to local conditions, and being too global knowledge to its engagement in Vietnam. bureaucratic in its operational policies and The competitiveness of the Bank’s financing terms procedures were also considered to be weaknesses will no doubt also be important, especially as IBRD of the Bank. accounts for a growing share of Vietnam’s new commitments and as IDA 16 terms become less Over half of all respondents indicated that favorable for blend countries. the Bank should work more with others in Vietnam, in addition to partnership with the (iv) The Bank’s Weaknesses and Collaboration national government. Specifically, the Bank with Stakeholders should work more with beneficiaries (59 percent of respondents), the donor community (40 percent), Areas deemed to be the Bank’s greatest the private sector (35 percent), NGOs (23 percent), weaknesses all had to do with inflexibility. Listed and the National Assembly (22 percent). VIETNAM COUNTRY PARTNERSHIP STRATEGY 140 2012 - 2016 ANNEX 15: STAKEHOLDER CONSULTATIONS Stakeholder consultations on the CPS FY12-FY16 institutions). Particular issues for the Bank to focus on are being held at three stages aligned with key included advice on a new economic model, reform milestones in CPS preparation: before drafting, of the SOE sector, and re-organizing the economic at the Concept stage and at the Corporate Review information/data system. stage. The consultations have been aimed at: (i) enhancing broad ownership of the CPS; (ii) engaging • Infrastructure: Practically all participants agreed with stakeholders in line with the principles of the that infrastructure development should remain a top Paris Declaration and Hanoi Core Statement; and priority for the Bank. Within the area of infrastructure, (iii) benefiting from the insights of a broad group of focus was mostly on transport (urban transport, rural stakeholders with knowledge and understanding of roads, and expressways were mentioned), but energy the country context. The consultation process for the was also highlighted as very important. CPS FY12-FY16 started with a round of consultations before the drafting process was initiated. The • Strengthening Human Resources: As a new middle main participants have been the Government, income country, Vietnam is in need of human where participants are from central government resources of high quality to intensify the socio- (Government’s Core CPS Team with members from economic development efforts. Three areas were SBV, the Ministry of Finance (MOF), the Office of specifically highlighted as important for the Bank Government (OOG), and MPI, line ministries and other to support in relation to human resources: higher counterpart agencies), local government, and the education, vocational training and capacity building. National Assembly; civil society, where participants include international NGOs/local NGOs and CSOs, • Climate change and natural disaster prevention academia, ethnic minority groups, disability groups, The Bank can provide relevant international women’s groups, media, international and local experience and lessons and help Vietnam with private sector; and Development Partners, including the development of strategies and actions for multilateral and bilateral donors. prevention of and dealing with natural disasters as well as approaches to climate change mitigation and Consultation Round 1: Visioning Workshop, adaptation. January 2011 • Governance and Anti-Corruption: Practically all A CPS visioning consultation workshop was non-governmental participants saw governance held with stakeholders in January 2011. The and anti-corruption as a crucial area for the Bank to workshop was designed to engage the diverse group support. Corruption is seen as a major impediment of stakeholders in discussions of key priority areas to development. Government participants did not for the World Bank in a proactive and interactive mention the issue of corruption, but several did manner. Participants identified and discussed what nevertheless underline the need for a strengthening they thought the Bank’s five key priority areas should of institutions and the importance of the World Bank be during the next five years and their rationale: supporting the Government in this area. • Macro-economic Development: Many participants The Bank sought feedback on its perceived areas mentioned the important role of the Bank in of comparative advantage. Some of the areas supporting the Government’s efforts to secure mentioned were: (i) the level of resources the Bank macroeconomic stability. The Bank is seen as an brings to the table – e.g., for financing large scale important advisor and provider of independent infrastructure, (ii) its global and regional perspective, analytical research and forecasts (conducted when (iii) its close and productive relationship with the possible in cooperation with relevant research Government, and (iv) its ability to take a leading VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 141 role in donor coordination due to its staff size, The workshop demonstrated quite different broad engagement across many sectors, and close perspectives between government, donor, relationship with the Government. and non-government participants. While in general Government emphasizes the importance Participants also discussed and exchanged of the Bank as a source of infrastructure financing, ideas on what areas the Bank should approach other groups look to the Bank as a development differently in the future: institution. Within Government, different agencies also expressed different needs - some ministries • Sustainability and quality of growth: With the put heavy emphasis on large infrastructure while new MIC status, both the Government and the other agencies would like to see more DPOs/ Bank will need to focus more on building increased budget support. Nearly all non-Government sustainability and increasing the quality of growth. representatives emphasized the ‘knowledge’ bank aspects and the importance of the bank as a critical, • Country ownership/systems and financing independent reviewer and adviser on economic and modalities: A number of government participants other policies. While some (mostly Government) felt the Bank should promote more country emphasized the need for more infrastructure, ownership by moving towards the use of country others (non-government) emphasized issues with systems, especially on procurement, as the slow the quality and maintenance of infrastructure and rate of disbursement of Bank projects is seen as the how it is prioritized and financed. All agreed on the greatest source of frustration in relation to their importance of improving human capital, but there cooperation with the World Bank. Interestingly was a difference in views as to whether emphasis though, several of the non-government participants should be put on higher education vs. vocational encouraged the World Bank to promote a more training. With respect to higher education, the efficient and transparent use of public resources importance of governance and accountability issues and cautioned the Bank against relying too much on rather than bricks and mortar was emphasized by country systems. some. Several non-government representatives noted that the efficiency of the state sector is a • Improvement of Program Management Capacity major challenge although the appropriate role and Aid Effectiveness: With other donors slowly for the World Bank in supporting this is less clear. phasing out, many participants found that the Bank Some non-government participants noted that should play a more active role both in supporting the current Bank portfolio was perhaps spread out improvement of program management capacity on a bit too thinly. the Government side and in taking forward the aid effectiveness and donor coordination agenda. Consultation Round 2: Three Sessions on CPS Concept Paper, June 2011 • More independence in policy advice: While the close relationship between the World Bank and On June 6th, 2011, The World Bank hosted three the Government of Vietnam was mentioned as separate rounds of consultations with the WBG’s one of the Bank’s comparative advantages, some most important stakeholders in Vietnam on the participants also felt that the new development CPS Concept Paper43 and its proposed strategic context of Vietnam requires the Bank to adopt a more directions. Below are the main points from each independent voice with the Government in policy session. advice, debate and research. 43. One session with Government (including representatives from MPI, OOG, SBV and MOF as well as from line ministries and the National Assembly), one session with local civil society (including NGOs, media and the private sector) and one session with development partners (including bilateral and multilateral donors and international NGOs). VIETNAM COUNTRY PARTNERSHIP STRATEGY 142 2012 - 2016 Government of Vietnam government on this theme. SEDP and SEDS Implications of MIC Status • The connection to the SEDP and SEDS was • The Vice-Minister raised the questions of whether not as visible in the CPS Concept Note as the Vietnam is truly ready to act as a MIC and whether government would like to see, and they hoped to the WB is ready to support Vietnam as a MIC and see further alignment with the Plan and Strategy not the Low Income Country it was in the past. moving forward. It was, however, appreciated The new roles of both Vietnam and the WB were that all three break-through areas of the SEDP discussed: roles that demand the Government and SEDS (infrastructure, human resources/skills gradually take on a more active leadership and development, and improving market institutions) the Bank slowly start to move away from being were reflected clearly in the CPS – mainly through primarily a source of money and to being more the first pillar on competitiveness, but this should valued for its knowledge products, ideas, and be noted more clearly in the strategy. policy advice. Comparative Advantages and Division of Views on Overall CPS Framework Labor • Overall, most government representatives • Government (MPI) underlined the importance expressed satisfaction with the Concept Note of the Bank (as well as other donors) clarifying and the proposed strategic directions. However, their comparative advantages. This will help several participants noted that while the facilitate division of labor among donors and objective of “enhancing the quality of growth” in relation to the Government’s own programs. was capturing an important aspect, it was Government flagged the need to take a fresh missing the notion of sustainability of growth look at aid modalities and said they would be and that sustainability should not be seen as interested in how the Bank sees various new only pertaining to the environment but rather be options. The new ODA Strategic Framework is an included in the overall objective. MPI and others important step in terms of coordination, and the noted that the term “equality of opportunity” importance of ensuring a high level of alignment was not appropriate and suggested “social between the two documents was underlined. inclusion” instead (as was used in the previous CPS and SEDP). In addition, it was noted that Background Diagnostics it is more important to address access to basic • It was also noted that it would be useful with more services in remote areas and for vulnerable analysis of the regional and global context and groups than to focus on economic inequality. what this context means for Vietnam. Government also encouraged the Bank to be more frank when • While some participants welcomed the idea assessing the weaknesses of government policies of having a pillar that addresses resilience to and the reasons behind and added that this would shocks and how to manage risks, others felt be the most useful way for Vietnam to learn as the it was difficult to understand the idea behind country moves forward. The area flagged as the the fourth pillar and that it would be better most important to include was more analysis on not to separate climate change mitigation and the risks for Vietnam in terms of falling into the so- adaptation into two different pillars. The same called middle income trap and possible tools for was mentioned for social protection, which Vietnam to avoid it. The World Bank Group’s global some participants preferred to have in just one experience makes it highly relevant in advising the pillar44. Participants agreed governance and 44. As a result of the feedback, the Bank team subsequently decided to make resilience a cross-cutting theme rather than a free-standing pillar. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 143 anti-corruption are a very important issue and would be better to aim at reducing dispersion that having it as a cross-cutting theme was a through a stronger regional focus rather than good idea. through thematic selectivity. • A few participants requested an increased IBRD and IDA support to National Target Programs and noted • Government thought it would be useful to have that an analysis of comparative advantages a road map of the transition from IDA to IBRD among donors in relation to the NTPs would be and to have more firm information about the useful. Some participants felt it would be more timeline for decreasing IDA volumes. useful to discuss how best to approach the question of division of labor rather than focusing Private and Public on whether the Bank is too dispersed or not. • Many participants raised the issue of PPPs and what role this will play in Vietnam in the Local Civil Society future. This was an area where the need for both World Bank and IFC support was highlighted Oversight Mechanism and Bigger Role for and especially transport, energy and health Civil Society were flagged as possible sectors for PPPs. As • One of the points that came out strongly was Vietnam moves forward, a clearer definition the idea of creating an oversight mechanism of government’s role versus that of the private for civil society to monitor and supervise both sector will be needed. In relation to transport government agencies and the private sector to (but relevant for all other sectors as well), it was help in the battle against inefficient use of public flagged that the need for resources are huge funds, poor service delivery and corruption in and as both the national budget and aid flows both the public and private sector. It was also only cover a small portion of those investment noted that such an oversight mechanism would needs, it is extremely important to improve the be extremely important in relation to fighting efficiency of both public and private investments. pollution and natural recourse degradation, and that domestic and international enterprises Project Design and Procedures should be monitored to ensure greater • Several line ministries raised the problems environmental sustainability in the future. related to WB procedures and difficult project In general, the importance of broadening designs. It was discussed how to bring down the participation of civil society to be part of preparation time and whether procedures could discussions and debates about the future path be simplified and more could be left to the of the country and how to tackle challenges country itself rather than having to be done by ahead was underlined by many participants. The Bank staff or expensive international consultants. Bank was encouraged to promote a more active role for civil society in the future aid architecture Dispersion (e.g., involving NGOs more in project design, as • The session included discussions about well as implementation and evaluation). whether the WB program is too dispersed and would benefit from more selectivity, or whether Governance and Anti-Corruption it is rather an asset for the Bank to be active • Many organizations mentioned the need for in all sectors and thus that selectivity is not strengthening governance issues in both the something the WB should strive for at this point. public and private sector. Efficient use of funds, It was underlined that it was important to make transparency, social accountability and access sure that a greater selectivity would not happen to information were mentioned as important at the expense of promoting social inclusion issues. There was general concern about the and protection of the most poor and vulnerable systemic, inherent nature of corruption which groups. It was also mentioned that perhaps it was perceived as being widespread at all levels. VIETNAM COUNTRY PARTNERSHIP STRATEGY 144 2012 - 2016 The World Bank Group was encouraged to more support on PPPs in various sectors. It was come out with a stronger position in the CPS on noted that the WBG could be clearer in how it governance and anti-corruption and to be more envisions addressing the private sector. While concrete about the Bank’s plans to address them. some participants promoted a more prominent role for the private sector in Vietnam because of Environment and Natural Resources its capacity to create employment and innovation, • Environmental and natural resource degradation others cautioned against focusing blindly on was flagged by almost all organizations as private sector development as a solution to one of the most serious issues facing Vietnam. everything. The importance of promoting better While it was appreciated that the CPS Concept governance of SOEs was furthermore highlighted. Note proposes a separate pillar for addressing environmental and natural resource concerns, it Development Partners was felt that international donors could do more to promote this area and should scale up their Infrastructure activities in this field. The focus should be on • It was mentioned that infrastructure is still improving governance in relation to managing posing a huge challenge for Vietnam and that natural resources and possibly to create a civil the Bank as one of the largest donors and society oversight mechanism. providers of credits has an important role to play in supporting the government in building Bank More Critical proper infrastructure and services. One of the • It was mentioned that the Government and its key challenges lies in the balance between achievements are praised a lot in the Concept infrastructure “hardware” and “software” – and Paper and while it was recognized that this was while the hardware is important, the software merited to some extend as well as necessary such as for example road maintenance, in some respects, it was also underlined that infrastructure sustainability, power sector it is increasingly important for the Bank to be reform, etc, should not be neglected. more critical of the Government in some areas, in the context of an equal and more mature Environment and Natural Resources relationship between Government and the Bank. • Many participants stressed the importance of breaking the current trend of extensive Views on Overall CPS Framework exploitation of the environment and natural • Most participants agreed that the overall resources and it is necessary to see donors like framework suggested - including the four the Bank move more from talk to concrete action. proposed pillars and overarching objective - seemed appropriate. It was however noted Comparative Advantages and Division of that the interesting part is how the pillars are Labor implemented and what more concretely will be • Many donors raised the need for the Bank (as “filled into” each, which has not yet been clearly well as other donors) to be clearer about their defined at this concept stage. While the Bank comparative advantages and division of labor. was commended for making governance a cross- This includes looking into whether donors could cutting theme, it was not clear enough how the join efforts in various areas in order to reduce Bank would tackle governance issues. It was the number of PDOs, PMUs, and have common also difficult to see which areas are being scaled supervision missions. down, which areas are new for the Bank, and • With Vietnam having reached MIC status, some what are the Bank’s comparative advantages. donors are starting to phase out and/or leave the country. Remaining donors will need to take into Private Sector consideration any possible gaps that arise as a • Several participants highlighted the need for result of other donors leaving. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 145 Views on Overall CPS Framework of new operations in order to ensure greater • Most participants found that the proposed sustainability. overall framework seemed broadly appropriate but that the interesting part would be to see Policy Dialogue how the Bank more concretely shapes the • Several donors raised the question of how to program within the four pillars. Several donors strengthen policy dialogue with the government. mentioned that the terminology used by the While good progress was made with the PRSC, WB as well as the visions and objectives are there is room for further improvement. Donors closely related to their own, which should were looking forward to learning more about hopefully facilitate collaboration. Several donors the Bank’s plans for the EMCC series of DPOs, expressed their appreciation of a pillar dedicated to see what strategic opportunities it opens for to equal opportunity. One participant raised them to engage in specific policy areas together the importance of making sure that poverty with the Bank. reduction is at the core of everything the Bank does and therefore an integral part of all four Consultation Round 3: Three sessions on Draft pillars, thus cautioning against limiting poverty CPS, October 2011 reduction to just being a subtheme of pillar 3. The related issue of rising inequality was flagged On October 5th and 6th, 2011, the World Bank as a very important issue to address as well. hosted the last of round CPS consultations. Participants welcomed the idea of focusing a Like with the second round, three separate pillar on managing risks and building resilience, sessions were held with the most important but concerns were raised as to how to ensure stakeholders – this time on the draft CPS that that the most poor and vulnerable groups are was also shared for the internal WBG Corporate reached under this pillar as well as under pillar 2. Review. In general, there was broad support for • Several participants commended the Bank for the draft CPS and the proposed framework and making governance a cross-cutting theme but principles of engagement from all three groups. noted that governance should come out more The following is a summary of the points raised: strongly in the document. Transparency was mentioned as one of the key elements and a Government concrete entry point to address governance issues. In addition, gender should come out Government Priorities more strongly in the strategy, preferably as • Government underlined the importance a cross-cutting theme. Some of the recent of avoiding fragmentation. Support should work undertaken by the Bank in cooperation especially be directed towards support for the with other donors in relation to the Gender SEDS/SEDP breakthrough areas and look at a Assessment is very good and should be shown few transformative interventions. Infrastructure more directly. needs are most pertinent for Vietnam as a MIC, especially transport. The WBG should direct a lot Civil Society of resources to that. • It would be important to include civil society • Government would like to see an increase in the and flag its important role in development in the estimated IDA and IBRD resources, as financing strategy. It was noted that during the current needs are large. WB Country Director’s tenure, cooperation • Government and especially SBV expressed keen with CSOs has increased, but the international interest in getting guidance through analytical NGOs would like to see this cooperation deepen work and policy advice on how to avoid the so- further. It was furthermore raised that there called middle income trap and would like to see should be a mechanism for more direct civil that included more in the WB program for the society involvement or monitoring in all phases new CPS period. VIETNAM COUNTRY PARTNERSHIP STRATEGY 146 2012 - 2016 • The balance between different instruments was be useful for the Bank to commit an amount of discussed and it was raised that DPOs makes it money every year that is earmarked for capacity difficult for the Bank to see and assess the direct building and strengthening of governance, etc., impact of the money allocated, which is one of within Government agencies. the advantages of investment loan. • The importance of strong donor coordination Development Partners and division of labor was underlined – especially between the three largest donors in Vietnam: Diagnostics ADB, JICA and the WBG. • It was raised that the first chapter of the draft • The need for both Government and the WBG to CPS was missing the political context (and while address the bottle necks in human development it was recognized that there is a limit as to how was underlined and new initiatives outlined much the WBG can go into this, a bit more analysis in the CPS in that area were appreciated. It of the political situation would be appreciated). was questioned why the WB does not support This could focus on the pace of reforms as well as vocational training. the sometimes limited space for dialogue. The • The WB was commended by the Ministry of same was raised for the risk section – here the Agriculture and Rural Development (MARD) for Bank suggests more dialogue with Government being strong on policy advice, reforms, legal as the main mitigation measure, but what if that support, etc. and would like specific support does not help? in preparing for a number of laws/bills coming up in the coming time within MARD’s areas of Comparative advantages/Division of Labor responsibility. They would furthermore like to see • It was pointed out that more analysis of how the the areas of food security policy and agricultural strategy will facilitate the gradual phasing out of competitiveness scaled up further. The Ministry other donors would be useful (e.g., in water and of Natural Resources and Environment (MONRE) sanitation and agricultural/rural development). also expressed interest in more support on In addition, more TA in PFM would make the pollution control. phasing out less abrupt/damaging. • There were a number of questions and Framework comments about comparative advantages. • The pillar framework was seen as well-aligned The Bank was asked how it identified its own with both the SEDS and SEDP. comparative advantages (as this was also a • MARD underlined the importance that difficult exercise for other donors). There were agriculture plays in terms of strengthening the also questions about whether the WBG has Country’s competitiveness and would like to see explicit agreements with other development it come out stronger in Pillar 1. partners on division of labor – e.g. in terms of • The General Inspectorate welcomed the specific sectors and/or geographical areas? In emphasis in the CPS on Governance and found relation to this, it was agreed that the WB should that the right issues had been raised. However, meet urgently with both the UN and with ADB they requested the WBG to be more specific and JICA to discuss division of labor, and how to about what the mainstreaming really means in avoid overlaps and exploit synergies. terms of actual actions. • On a related note, it was pointed out that • MPI was interested in knowing whether all three it would be interesting with a more explicit pillars are seen by the WBG as equally important discussion throughout document and especially or if one is prioritized over others. under each of the pillars on what the WBG can • MPI suggested that in order to make sure add in the different engagement areas – not just that government agencies have the capacity in terms technical support, but also policy advice. to address governance, reform issues and • It was noted that it is not clear in the institutional capacity improvements; it would document how the WBG sees the role of elected VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 147 representatives of civil society, the National This is especially relevant in relation to the Assembly, etc. competitiveness pillar but would be useful throughout the document. Principles of Engagement • Outcome 1.1 aims at “Improved Economic • It was pointed out that while the Principles of Management and Business Environment”. The Engagement of the draft CPS say that the WB will WBG was asked how it will actually make this be more selective moving forward, it is actually happen with all the continuing difficulties and hard to see this selectivity in the description of lack of progress on SOEs and in the financial the program. sector – is this outcome too optimistic? • In relation to the above point, the Bank was • The Bank was requested to make it clearer also asked for what criteria it uses to select to why resilience is cross-cutting – what does engage in (or disengage from) a certain sector it mean to have resilience as a cross-cutting – of course this would presumably be based on theme, as it is applied in a different way in each comparative advantages, but are there other pillar. Governance is more straight-forward as a criteria? For example, the WB was asked whether cross-cutting theme as it will be applied more it uses the progress (or lack thereof) on the MDGs uniformly across the pillars. as a criteria for engagement/exit? • The strong focus on governance was welcomed, • The WB was asked to nuance the statement but it was noted that it was not completely clear that it will consolidate and move towards larger how the WBG will mainstream governance more projects, as it was pointed out that large projects concretely - how will it be applied in practice? is no guarantee of a more efficient and effective • It was furthermore raised that gender seemed implementation. somewhat misplaced under opportunity pillar as • A point was made regarding how to build it cuts across all 3 pillars. in incentives and disincentives in project implementation; i.e., deliberately moving Implementing the CPS funds from provinces that do poorly to better • There were a number of comments addressing performing provinces. It was noted that this is the issue of implementing the CPS and the already being done to some extent, so the Bank resources available for this implementation. A should: a) be more explicit about this approach in clarification of why Vietnam has the highest IDA the document, and b) apply it more consistently allocation ever for the next 3 years was requested, and openly in the future and think more about since Vietnam is now a MIC and it would be more how to how to support good performers. This logical for IDA resources to decrease. In relation also links to new results-based approaches. to this, it was also noted that it could be seen • It was noted that the Bank on previous occasions as paradoxical that Vietnam has such a high has mentioned that it would aim at having more allocation of IDA at the same time as the draft CPS DPOs in the future, yet the draft CPS goes more notes that USD 5.8 billion are undisbursed and into describing support for NTPs, Additional implementation is slow. This makes the story line Financing of existing projects, etc., and does not a bit weak. It seems that less IDA would be easier, go much into describing concrete examples of give more incentive for selectivity as well as for possible future DPOs. Thus, the storyline is not more speedy disbursement, and it would mean clear on where the Bank will do what and why in less undisbursed future resources. The WB was terms of instruments. asked whether it should not consider telling the Government that IDA allocation does not have to Framework be used fully (especially if implementation does • It was noted that it would be interesting not improve?) Finally, there was also interest in with more information about how the WBG seeing more information about where the WBG is will support Vietnam in terms of positioning heading with regards to IBRD, IDA and IFC funds itself in the region, e.g., as part of ASEAN, etc. in the medium (and if possible, longer) term. VIETNAM COUNTRY PARTNERSHIP STRATEGY 148 2012 - 2016 Civil Society Diagnostics & Framework • The Bank was commended for being more frank Role of civil society on various issues, such as governance and the • Some frustration was expressed about the macro-economic situation than previous CPS’s. position and role of civil society in Vietnam by civil • Some concerns were raised about debt society representatives. sustainability and whether this should be flagged • In relation to the above, some participants also more in the CPS as a potential risk. It was also noted felt that the draft CPS did include enough on the that the Bank might want to mention in the CPS role of civil society – in Vietnamese society as a that economic instability could have some impact whole and in implementing the CPS – civil society on social situation, which emphasizes the need organizations should have more important role in to urgently address issues such as rising inflation, preparation, implementation and M&E of projects. corruption, etc., in order to avoid a decrease in • It was noted that while it is positive that there public trust. is now more of a focus on national ownership in • Additional questions were raised to the WBG, the debate about aid and development, national such as: (i) whether it would be useful to include ownership should not be defined narrowly as only low case-high case scenarios in the CPS for the meaning government ownership but should also macroeconomic situation, (ii) whether the Bank be referring to citizen ownership. should have a specific strategy for Mekong Region • In addition, the Bank was requested to be more (like ADB), and whether the Bank is addressing vocal in general (and more explicit in the CPS) poverty among ethnic minorities enough and in about the important role it can play as an advocate the right way in the CPS. Cash transfers might for a bigger space for civil society – the Bank help, but other barriers are just as important should use its position to push for more space and for ethnic minorities (language, prejudice, self dialogue for civil society. perceptions, learning outcomes and motivation in education, etc.). VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 149 ANNEX 16: PUBLIC FINANCIAL MANAGEMENT IN VIETNAM Overview restructuring, pay and employment reform, and institutional development. The PFM reforms hinge Over the past decade, Vietnam has made on seven priorities: budget management, revenue strides in establishing a sound public financial management, debt management, SOE fiscal risk management system. With the adoption of management, financial market supervision and the first organic budget law in 1996 and its government bond market development, public revision in 2002, a legal framework for public asset management, and price management. resource management has been put in place. A centralized treasury system is being set up The overall conclusion of the latest Country with branches extending from the center to all Financial Accountability Assessment (CFAA provinces and districts to provide basic essential 2007) stated that PFM arrangements and financial services to all government agencies. their implementation and performance pose a Steady progress has been achieved in making moderate risk that funds will not be properly the budget more predictable and pro-poor, and controlled or used for intended purposes. the budgeting process more transparent and The CFAA proposed a set of recommendations participatory. Substantial efforts have also been to help the government design and continue made in recent years to improve transparency in implementing reforms and capacity building the use of public resources through disclosure of programs to modernize and strengthen PFM information on detailed government spending and enhance transparency and accountability as well as expenditure policies, regulations and arrangements in support of sound economic procedures. management and improved governance. There is strong ownership in the Vietnamese Even though a series of analytical work, Government of the PFM reform agenda. MOF such as Public Expenditure Review (PER) or is currently engaged, as are other Ministries, in CFAA, have been undertaken every three developing a reform strategy for 2011-2020. to four years, progress and impact of the The strategy aims at (i) maintenance of stability PFM reforms and development initiatives of public finances within the broader economy; can only be measured by establishing an (ii) improved effectiveness of public sector official monitoring framework, and baseline expenditure in achieving policy and service performance measures. The Public Expenditure delivery; (iii) development of effective influence and Financial Accountability (PEFA) measurement by government over key finance markets; and framework provides a recognized measurement (iv) effective and efficient resource mobilization of the performance of the public financial to finance public expenditures. Support to the management of government. Similarly, the Debt implementation of reforms is coordinated through Management Performance Assessment (DeMPA), the PFM partnership group which overarches the adapted from the PEFA framework, but is focused activities of government, donors, and working on debt management issues, would provide groups, meeting half yearly to discuss progress. a baseline assessment of debt management There is ongoing effort among donors to directly capacity. Although the government has agreed align their support with the mainstreaming in principle to introducing these measurement government’s strategies and plans. frameworks through pilot self-assessment process in 2011 (PEFA) and 2012 (DeMPA), no firm PFM remains in the center of Public Sector decision on detailed timeframe and commitment reforms. Other focus areas are organizational of resources have been made. Within the MOF, the VIETNAM COUNTRY PARTNERSHIP STRATEGY 150 2012 - 2016 number of technically-qualified and experienced arrears management, and strengthen expenditure managerial staff needs to be increased to meet management and controls. There are initial staged the reform challenges of the Ministry. Support plans for TABMIS consolidation and expansion, in is needed for Capacity building across sectors both terms of both functionality and coverage, and sub-national government to implement towards the Integrated/Government Financial decentralized PFM reforms. Management Information System (IFMIS). Recent Developments and the Way Ahead Public accounting regulations. In parallel with TABMIS project, a unified Treasury and Budgetary PFM legal and institutional framework. The Chart of Accounts has been developed to provide CFAA reported that since 2004, implementation consistency of classification of revenues and of the 2002 State Budget Law and the 2005 expenditures in budgeting, accounting and Accounting Law has progressed and a State reporting with expenditures classified on an Audit Law has been enacted. However, it also administrative, economic and functional basis. noted that some confusion and overlap in budget This will facilitate accurate and timely financial responsibilities remain in the budgeting system reporting, and the flow of budgetary information which is limiting the participation of sectors between government ministries provinces and the in resource planning, budgeting and budget public. For future TABMIS expansion, development management and confuses accountabilities of a unified and uniform chart of accounts for the between the national and sub-national levels. public sector (including the Spending Units) is Furthermore with the redevelopment of the now envisaged. A staged roadmap for adoption government accounting systems and regimes, the of the International Public Sector Accounting Accounting Law is no longer adequate and needs Standards (IPSAS) is also being developed to align revision, and the basis for accounting needs to be government accounting regimes and practices better defined, however there is no clear plan at with international standards. that this time to revise the Accounting Law. The State Budget Law will be revised and re-submitted Budget development and execution. Vietnam’s to the National Assembly in 2012, expectedly budget coverage is reasonably comprehensive but including a number of critical changes to state still incomplete compared to international practices. administration in Vietnam such as enhanced Budget gaps arise from the lack of clarity in the state decentralization to sub-national government and budget coverage of user fees and charges of many adjusted fiscal authority of central vis-à-vis sub- service delivery units, lack of integration or disclosure national tiers of government in budget approval. of the financial positions of public financial funds, untimely and sometimes inadequate incorporation PFM information systems. The Treasury and of donor financing, and off-budget government Budgetary Management Information System bonds. Budget execution variations arise from such (TABMIS) will progressively address difficulties in practices as revenue underestimation particularly monitoring a fully-consolidated budget as well as for crude oil revenues, keeping the state accounts the fiscal position. TABMIS has been developed open after year end with post year expenditures since 2007, piloted in 2009, and recently rolled- recorded against previous year unused budgets, and out to MOF and treasuries and financial agencies over implementing construction and development in 35 out of 63 provinces. Fifteen largest spending plans. Separate preparation of the recurrent and line-ministries are getting ready to use TABMIS to capital investment budgets hampers effective conduct budget allocations for 2011. It is expected management of resources and the composition of that the system will become fully operational public expenditure remains unbalanced. in 2012 upon its nationwide roll-out. TABMIS will provide the capability to record and control Public expenditure is planned annually and commitments, improve cash management and also for medium-term over five year periods VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 151 but the linkage between the two remains weak. legal framework, poor data availability and limited The ongoing revision of the State Budget Law assessment capacity. introduces Medium-Term Fiscal and Expenditure Framework, to be mainstreamed in the annual Revenue administration. Customs controls budget cycle. There are also initial discussions on are still considered low in productivity, reforming budget planning toward output- and inconsistent and vulnerable to corruption. The program-based budget elaboration. Customs administration will need to change significantly, shifting its mindset from a culture Off-budget-balance expenditures, i.e., of domestic protection and control of all expenditures not counted in the calculation of the transactions to one that facilitates foreign trade budget deficit, include government bonds issued and promotes private sector development. to finance infrastructure projects and education The tax administration is also characterized facilities, recapitalization of entities such as the by low compliance and vulnerability towards Vietnam Development Bank or the Vietnam Social corruption. Five areas of tax administration have Policy Bank, and borrowings by sub-national been identified as in need of special attention: (1) governments and their affiliated entities such the fragmentation of the legal framework related as local development funds. However, these so- to tax administration; (2) the absence of effective called off-budget expenditures in Vietnam can be coordination and information-sharing between considered on-budget in several respects. They the tax administration and other government are included in the budget that is reviewed and agencies; (3) taxpayers’ lack of knowledge approved by the National Assembly, and their about the tax laws and compliance procedures; execution was done through the Treasury and (4) inadequate professional skills and training subject to the same disclosures and scrutiny as of tax administration; and (5) information standard budget expenditures. There are attempts technology system which is lagging behind the under the ongoing revision of the State Budget requirements of a modern tax administration. In Law to adjust budget structure and coverage to be addition, tax laws and policies will need further more in line with the international norms. reforms to broaden the tax base, and to reduce the number of rates and exemptions. Reforms Contingent liabilities might be arising from in the management of revenue are progressing these “off-budget-balance expenditures” and with clearer allocation rules and decentralized other implicit sources. A systemic definition and a responsibilities; however classification of revenue reliable estimate of such contingent liabilities are in line with international standards needs to not available, which limits the government’s ability be introduced, and enhanced consultation on to manage such risks properly. More broadly, as revenue targets is needed to improve the quality Vietnam is reaching middle-income status, it will of revenue budgets. need to engage more long-term finance from both domestic and external sources. Under the recently Public debt management has improved both improved debt management, initial attention in terms of legal framework and institutional from the government on risk management and arrangements. The Debt Management Department monitoring of contingent liabilities has been was established in May 2009 with the role of a observed. Given the recent default of one of the modern debt management office under the MOF. largest state owned Economic Groups (Vinashin), Although not all of the tasks relating to public MOF is planning to strengthen monitoring of fiscal debt management have been consolidated to this risks from the SOEs. However, although considered Department, the organizational structure of the as the country’s lead agency for national and public department is similar to the debt management debt management, MOF has not yet prepared an office according to international practices, with 6 inventory of government contingent liabilities divisions functioning as front office, one division from various sources, due to lack of necessary performing the middle office functions, and one VIETNAM COUNTRY PARTNERSHIP STRATEGY 152 2012 - 2016 division performing the back office functions. for developing consistent and comprehensive Meanwhile, the first-ever Law on public debt asset accounting and asset management policies management was approved by the National in line with international standards and practices. Assembly in June 2009 and came into effect in Further study will be carried out in 2011 to 2010. The Law introduced substantial reforms determine the most appropriate solutions to in managing and monitoring comprehensively address the government’s accounting and asset public debt and government commitments management requirements. (including domestic sub-national debts and on- lending), and addressing many weaknesses in the Independent scrutiny of PFM has significantly public debt management in Vietnam. A series of increased, with external oversight of guiding decrees were adopted in 2010 to facilitate budgetary affairs by the National Assembly the implementation of the law. Special attention is and the recently independent State Audit of now paid to strengthening risk management and Vietnam (SAV). The functional committees and developing forward-looking debt management deputies of the National Assembly, and the local strategy and program. People’s Committees have been given greater prominence in examining, decision-making and Financial market supervision and the oversight of the state budget. There is steady government bond market. At present, expansion of external audit coverage and quality, many agencies participate in financial market and legislative oversight. Encouragingly, the SAV supervision, leading to overlapping responsibilities audit report was made public for the first time and ineffective management and supervision. in 2006, and regularly since, triggering serious There is a need to consolidate market supervision debates where are broadcasted live on the usage functions into a single agency and to separate of state budgets. However, the capacity of these state management and supervision functions. institutions, especially the SAV, is limiting the Vietnam’s government bond market is still small coverage and scope of audits. It is difficult for the scale, low liquidity, and the maturity structure is SAV to manage the increasing workload including skewed toward short-term. The number of market compulsory audit for 100 percent of SOEs, and to participants is relatively small and supporting consider the move towards performance audit. infrastructure, such as depository, clearing and Significantly, the SAV has recently approved information systems, is yet to be developed. an ambitious and comprehensive strategy to Therefore, considerable efforts are required to 2020 (with accompanying implementation develop a full-fledged government bond market plan to 2015) aimed at upgrading its capacity and coordinate it with development of related across the key areas of organizational and legal markets such as capital, security and real estate. framework, human resources, audit planning and A bond market development roadmap is being methodologies (including performance audit), prepared towards these visions. information technology, and external relations. The government’s PFM reform program The country’s public financial management highlights that state assets budget resources system has a range of internal oversight and human resources need to be managed in mechanisms. In the past, the focus was on an integrated way for efficient and effective inspection rather than systematic review to provide service delivery, and reforms are being regular and timely feedback to the management gradually introduced. The legal framework and on the use of public resources. Internal auditing market principles in asset management were is an important element of a sound public financial recently adopted under the Law on State Asset management system, which helps increase Management. The requirements for management effectiveness, efficiency and financial control. reporting systems are being defined, but reform in This issue becomes even more important if the this area has been slow. Initially, attention is needed government intends to decentralize further VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 153 to the local levels. The legal and institutional In addition, the government is establishing a frameworks for the organization and operation State Accounting General function, and working of internal audit are being developed. Although toward producing and issuing annual financial implementation will be challenging, this has been statements, including cash and asset information, a very encouraging step towards establishing in line with international practices. The annual a sound internal audit system in Vietnam in the final accounts need to be issued faster than the coming years. current 18 months, e.g. 9 months, after year end to enhance their relevance to the discussions on Vietnam has increased its level of fiscal the budget of the subsequent year. transparency. Budget plans and budget execution accounts are being made available Good progress has been made in establishing publicly, and there is increasing compliance legislation and the environment for greater with reporting regulations. However there is still financial accountability and transparency room for improvement, particularly in relation of financial information. Regulations on to consistency in quality of reports and their financial disclosures of the State Budget Law, timeliness. The draft budget plan should be Accounting Law and State Audit Law have disclosed before National Assembly’s approval. been issued increasing the scope and range To enhance the quality of financial reporting, of required disclosures by entities at all levels consistency between budget and accounting of government. Information is being made classifications needs to be maintained. The available on public accessible websites. However, number of budget execution reports needs to be implementation remains the challenge. To further rationalized. Content and presentation of financial increase transparency, the content of budget information needs to be improved in line with documentation and the final accounts could be existing government regulations in the publicly enhanced by including analysis, explanations available budget execution reports to make them and information in line with international more informative. Enabled by TABMIS, MOF has practices. Disclosure of financial information, committed to, by 2013, publish monthly and more particularly spending at unit level should be disaggregated budget execution reports on MOF actively monitored to ensure compliance with website 15 days after month end, as opposed to the enhanced disclosure requirements. Published the current practice of publicize quarterly and financial reports should be timely, and a calendar aggregated report 45 days after quarter end. for disclosures issued publicly. VIETNAM COUNTRY PARTNERSHIP STRATEGY 154 2012 - 2016 ANNEX 17: OVERVIEW OF MAIN TRUST FUNDS Vietnam is one of the biggest users of Trust Funds (TFs) in the World Bank. During FY07-FY11, the total amount committed through TFs in Vietnam reached US$726 million, including almost US$700 million for project related activities (project preparation, cofinancing, GEFs, JSDF, and TA for projects), US$15 million for non-lending TA, US$4.7 million for Institutional Development Fund (IDF) activities, and US$2.3 million for Economic and Sector Work. In FY10, the Vietnam Program reached US$100 million in Trust Fund disbursements, ranking 7th in the Bank after Afghanistan, West Bank and Gaza, Ethiopia, China, Indonesia, and Sudan in terms of TF disbursements. In FY11, committed and disbursed amounts from Trust Funds reached US$296 million, and US$170 million, respectively, in Vietnam. Trust Funds by Activity from FY07-FY11 (Amounts in $ mil) Closed Active Total No. Amount No. Amount No. Amount IBRD/IDA Project Related 17 $400.50 43 $400.50 60 $605.40 GEF & Mont. Protocol 5 $11.60 7 $11.60 12 $51.30 Free Standing Capacity Bldg a/ 11 $19.10 6 $19.10 17 $46.90 Institutional Dev. Fund 12 $3.30 7 $3.30 19 $4.80 Econ. & Sector Work 6 $1.60 12 $1.60 18 $5.90 Non-Lending TA 12 $2.20 17 $2.20 29 $15.60 Others b/ 7 $1.60 5 $1.60 12 $4.60 Total 70 $439.90 97 $294.60 167 $734.50 a/ Includes Global Partnership Programs and Regional Programmatic TFs implemented in Vietnam b/ Included activities such as intensive supervision of grant funded activities Source: FY07-FY11Q2 CFP Database and FY11Q3-4 SAP Data Trust Funds are used effectively in support amounted to US$1.219 billion from Development of the Government’s development agenda Partners combined with US$1.475 billion from through the Bank’s Country Program. the Bank side, for a total of US$2.694 billion. In The instrument is also used as a platform for addition to the resources that TFs have brought development partners to work together to to the country, the joint financing mechanism has achieve common goals. Trust Fund resources also provided a platform for the Government and are used to support Bank investment lending as Development Partners to discuss critical policy well as policy operations. A noteworthy example issues. Trust Funds also support the Government has been the joint financing of the PRSC series. in strengthening their fiduciary capacity. For PRSCs 1 - 10, more than 14 development IDFs have among other things been used for partners in Vietnam have joined forces to support public financial management regulatory work, the Government’s efforts to improve public supporting the public procurement framework management, financial sector strengthening, and strengthening internal audit, some of the key poverty reduction policy measures, etc. The areas of concern for both Development Partners total financing mobilized through PRSCs 1-9 has and the Bank. In addition, IDFs have provided VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 155 a platform for joint work between the Bank HIV/AIDS Prevention Project (US$27.7 million): and other donors (such as the working groups This DFID-financed TF co-finances the HIV/ under the Six Bank Initiative). Trust Funds have AIDS Prevention Project which is to assist the furthermore provided emergency support for recipient in establishing and maintaining national, Avian Influenza, and piloting of new approaches provincial and local policies and capacity to for helping disadvantaged children learn better design, implement and evaluate information to name just a few examples. and service delivery programs designed to halt the transmission of HIV/AIDS among vulnerable During the CPS period, the use of trust funds will populations and between vulnerable populations shift in accordance with the new ODA Strategic and the general population, thereby assisting the Framework being developed by Government. recipient in the implementation of its National With Vietnam having recently become a middle Strategy on HIV/AIDS Prevention and Control. income country and with several donors presenting exit plans for their aid programs or shifting their Vietnam Health Care Support to the Poor of focus from more traditional engagement areas the Northern Uplands and Central Highlands to emerging issues such as climate change and (US$16.2 million): The objective of this TF financed governance, the Government has intensified by the European Commission is to increase efforts to utilize its ODA resources more effectively. coverage of essential health services particularly at Trust fund availability to the Government through the commune level, and to improve health service the World Bank will also be affected by this shift. planning, particularly at the district level in the In the context of discussions around the new ODA project Provinces. Strategic Framework, the World Bank is working with other development partners on how to Governance and Poverty Policy Analysis sharpen Trust Fund mobilization for the country and Advice Program (US$7.3 million): This in this changing aid environment and ensure that DFID-financed TF supports the Bank in advising Trust Funds continue to be available to support the clients on evidence-based policy making Vietnam. and implementation. Through the enhanced WB activities and support, the Vietnamese Key Active Trust Funds in Vietnam government’s social inclusion and governance agenda are expected to be further promoted. Mekong Delta Transport Infrastructure GAPAP has four goals: (a) Strengthened Bank Development Project (US$34.7 million): This interaction and advice in a range of Vietnamese Australia-financed TF co-finances the Mekong institutions for data collection, analysis and Delta Transport Infrastructure Development monitoring of critical governance and poverty Project. The project development objective is to challenges over the next 5 years; (b) Well informed assist the recipient in relieving key bottlenecks of policy analyses for discussions with clients on the main transport corridors in the Mekong Delta governance and poverty; (c) Critical inputs to region and improving access of the poor to those the Government on improving transparency, corridors. The grant finances Part C of the project – accountability and social inclusion. This includes connecting the Poor to the Supply Corridors. advice to the Government on performance monitoring; and (d) Broadened and strengthened Third Rural Transport Project (US$39.7 million for dialogue through PRSCs 7 - 10 on governance two grants): These TFs funded by DFID co-finance and results. the Third Rural Transport Project. The objective of the project is to assist Vietnam in improving the Multi-donor Trust Fund (MDTF) to support access (including reducing the costs of access) of Public Financial Management Modernization rural communities to markets, non-farm economic in Vietnam (US$7.1 million): This MDTF is opportunities and social services. financed by six donors: AusAID, the Canadian VIETNAM COUNTRY PARTNERSHIP STRATEGY 156 2012 - 2016 International Development Agency (CIDA), the also helps conducting analytical and diagnostic Danish International Development Agency, the works in the seven key areas, including budget EC, the Netherlands Development Organization, management, budget revenue management, and the Swiss State Secretariat for Economic debt management, financial market supervision Affairs. The TF helps strengthen the recipient’s and bond market development, corporate capacity to implement selected reforms and finance management, public asset management, in managing a technical assistance program. It and price control. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 157 ANNEX 18: THE BANK’S DEVELOPMENT PARTNERSHIPS IN VIETNAM In addition to the semi-annual Consultative recent multi-country evaluation of the Paris Group meetings and related events, the Bank Declaration/Hanoi Core Statement. Its members actively participates in the Aid Effectiveness are also co-chairing the AEF’s thematic groups on Forum (AEF) 45. This is an important vehicle for public procurement (ADB), financial management making aid more predictable, coordinated, and (the Bank), social impact assessment (ADB), and effective. Partners now include the National environmental impact assessment (the Bank). Assembly Office, Sectoral Partnership Groups, The Six Banks Group has been working with International Support Groups, mass organizations Government on several key areas such as drafting and professional associations, international NGOs, the forthcoming Public Investment Law (a key and other development actors. The AEF has two element of the Public Investment Reform Program main objectives: (i) achieving the commitments supported by the Bank); reforming administrative and targets set out in Hanoi Core Statement on cost norms; strengthening the public-private Aid Effectiveness; and (ii) contributing to the partnership framework, country systems in public development of new aid partnerships. procurement, financial management, and social and environmental impact assessments; and The Bank continues to be engaged with reviewing the structure of Vietnam’s PMUs. A Vietnam’s 18 currently active Sectoral and number of analyses on the use of ODA and less International Partnership Groups. Their concessional financing in the transition period effectiveness and engagement vary, as do have been conducted with support from the Bank, their contributions to the formulation and ADB, and JICA. The Bank furthermore participates implementation of sectoral development in a Joint Portfolio Performance Review (JPPR) with strategies and plans. There is a general sense that the Six Banks Group and Government every two the groups could be made more efficient and years and is currently preparing for the next JPPR effective, and AEF has initiated a comprehensive scheduled for late 2011. mapping exercise in order to demonstrate how they function and what impact they have. While the The PRSC has been an extremely important long Bank will not be highly active in all the Partnership standing platform for partnerships for the Bank. Groups, it will take a more active role in selected With its ten consecutive budget support operations, groups in the new CPS period and contribute to the PRSC was the vehicle for an unprecedented making these Partnership fora more relevant and partnership involving 14 development partners meaningful. and more than 15 ministries and agencies. The series supported wide ranging reforms and was There has been considerable progress in rated highly on policy dialogue and impact by coordination and streamlining of procedures independent evaluations. It mobilized around US$ within the “Six Banks Group” in Vietnam. This 1,500 million from the World Bank and around US$ partner group consists of the Bank, ADB, JICA, 1,100 from development partners. Kreditanstalt für Wiederaufbau (KfW), Agence Française de Développement (AFD), and the While addressing some of the weaknesses Export-Import Bank of Korea (KEXIM)46. The Six of especially the later rounds of the PRSC, Banks Group has been actively engaged in the the Bank will seek to build on the success of 45. The AEF, formed in 2010, succeeded the Partnership Group on Aid Effectiveness. 46. JICA and The World Bank represent the Six Banks Group in the AEF’s Executive Committee. VIETNAM COUNTRY PARTNERSHIP STRATEGY 158 2012 - 2016 the series and replicate the main idea in the Vietnam’s recent status as MIC means that some successor operation, the EMCC. The EMCC bilateral donors are starting to phase out. While will focus on macroeconomic stability and this will also lead to a gradual phasing out of some supporting institutions that promote the business of the World Bank’s current partners, at the same environment and public sector governance. While time, it will open up for possibilities for more “silent” the focus of this new platform will therefore not partnerships with some of the development partners, be as broad as the PRSC series, the Bank hopes who will be scaling down their physical presence that it will continue to be a vehicle for successful in Vietnam some time ahead of terminating their partnerships. financial presence in the country. The Bank needs to explore the possibility for such mutually beneficial The Bank has a number of very important partnerships in coming years. bilateral partnerships. One of our most important bilateral partners in Vietnam is DFID, Many of bilateral donors as well as a number who the Bank collaborates with across several of international NGOs are engaged in a operations in the areas of HIV/AIDS, rural transport; variety of innovative and interesting small poverty, governance, gender and most recently operations in Vietnam. The Bank will seek ways CC (see Annex 20). Also worth mentioning is an to use these operations as “incubators” for ideas increasingly important and broad partnership and innovations and learning. The Bank is thus with Australia in the fields of infrastructure and interested in building new partnerships with some economic reform (Annex 20). The Bank will seek of these donors and NGOs to scale up successful ways to explore more such strategic partnerships small operations that use innovative approaches moving forward. and ideas in the World Bank’s own program. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 159 ANNEX 19: DEVELOPMENT PARTNER ACTIVITIES IN VIETNAM Development Activities Financing Areas of Partner Collaboration with the Bank ADB ADB’s Country Strategy and Program is Vietnam receives both Structural Reform consistent with Vietnam’s development resources from the Asian Issues through priorities. ADB’s strategy focuses on Development Fund (ADF) PRSCs, Gender, business-led, pro-poor economic growth, and Ordinary Capital Infrastructure, Health, and its complementary themes of (i) social Resources (OCR). The total Water equity and balanced development and (ii) proposed ADF lending the environment. program for 2011–2012, including one-third Greater Mekong Sub-region (GMS) share, is $755 million. The OCR indicative planning figure (IPF) is $860 million per annum during 2011– 2012. Australia Australia ODA focuses on: supporting Country program estimate Program 135 Phase inclusive growth, improving access to 2011-12: $102.4 million II (P135-II) Structural markets for the rural poor, stimulating reform issues regional trade by supporting major through PRSCs, infrastructure projects, strengthening Transport, Education access to water and sanitation services, helping mitigate climate change challenges, strengthening Vietnam’s human resource foundation, joining Vietnam’s effort in strengthening the health system to combat HIV, emerging infectious diseases and ensuring sustainable health service delivery, providing rural development assistance, supporting a range of community level activities, strengthening governance of institutions, supporting regional programs that address high priority economic and trans-boundary development challenges. A new program strategy is currently under development. Belgium Belgian renewed cooperation with Vietnam The 2011-2015 cooperation places emphasis on the reform of the program between Belgium governmental administration and on water and Vietnam will have a and sanitary facilities. budget of 60 million Euros Canada Canadian CIDA’s current programming Structural Reform responds to the Government of Vietnam’s Issues through PRSCs, poverty reduction priorities and focuses Trade, Education, on improving the enabling environment Public Finance for investment and on supporting rural Management, enterprise development and agricultural agriculture and rural productivity. development VIETNAM COUNTRY PARTNERSHIP STRATEGY 160 2012 - 2016 Development Activities Financing Areas of Partner Collaboration with the Bank Denmark The Danish assistance will contribute to Denmark’s pledge for 2011 Structural Reform poverty reduction in Vietnam through is US$56.43 million Issues through PRSCs, strengthened support for reforms Urban Development, including reforms aimed at improving Rural Development, good governance and the fight against Public Finance corruption as well as continued support Management, for pro-poor economic growth and human Environment resource development. EC According to the EC Country Strategy An indicative amount Structural Reform Paper 2007 - 2013, EC will mainly provide of EURO 304 million has Issues through PRSCs, support to two-focal sectors, namely been allocated for the Health, Education, support for Vietnam’s SEDP and support implementation of the CSP Forestry, Financial to the health sector. EC assistance in these through two successive Sector, Public Finance two focal sectors will be complemented Multi-annual Indicative Management by actions in the field of trade-related Programmes which will be assistance, support to the EC-Vietnam allocated EURO 160 million strategic dialogue and various thematic (2007-2010) and EURO and regional programs. 144 million (2011-2013) respectively. Finland Finland’s strategy 2006-2015 focuses on Finland pledged a total Innovation, two thematic priority areas: i)”Information of 53.5 million Euros for Environment Forestry, Society and Knowledge Economy,” and Vietnam for three years ii) Climate Change and Environment, from 2009 - 2011 including water supply and sanitation and forestry. France/AFD AFD’s action within the framework of France pledged USD 221 Structural Reform the SEDP is based on 4 cornerstones for million for Vietnam for 2011 Issues through PRSCs, this period: (i) To develop and modernize Urban Development, financial, banking and non-banking Agriculture sectors; (ii) To support decentralization and local authorities, (iii) To adapt urban infrastructure and public market services; (iv) To promote a new dynamic in rural economies Germany/ Germany’s strategy concentrates on three Germany has pledged Structural Reform KfW priority areas: (i) Sustainable Economic nearly 300 million Euro for Issues through PRSCs, Development and vocational training; Vietnam for 2011 – 2012 Health, Education, (ii) Environmental policy, protection, Public Sector Reform sustainable use of natural resources, and urban development; and (iii) Health VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 161 Development Activities Financing Areas of Partner Collaboration with the Bank IMF IMF provides support for: (i) tax policy and Tax, Public administration, (ii) public expenditure Expenditure management and fiscal transparency, (iii) Management, monetary and foreign exchange operations, Banking reform, central banking, bank restructuring and Macroeconomic supervision, economic statistics/GDDs, and Stability other areas (policy advisory, training, and technical assistance). Ireland Ireland second country strategy 2011 Ireland has pledged €55 P-135, Mekong – 2015 will support Vietnam’s Socio- million Euros for Vietnam Private Development economic Development Plan and will over the period 2011 - 2015 Fund, Better Work encompass innovation and inclusion. Its Vietnam, Poverty three objectives are: (1) to improve local Impact Assessments, ability to plan and adapt public investment Vietnam resources to the needs of marginalised Development Report groups; (2) to strengthen policy formulation and delivery at central government level in addressing poverty and marginalization; (3) to strengthen the capacity of central government, research agencies and private sector in economic management. Japan Japanese support to Vietnam focuses on i) Japan pledged USD 1,760 Structural Reform promoting growth, ii) improving social and million to Vietnam for 2011 Issues through natural environment, and iii) supporting PRSCs, Infrastructure, institutional strengthening. Rural Development, Education, Health, Banking, Environment Korea Korea’s assistance strategy for Vietnam $3 billion in ODA for Structural Reform focuses on promoting sustainable growth, Vietnam in the 2011-2015 Issues through training human resources, improving period PRSCs, Infrastructure, infrastructure, and developing rural areas Rural Development, Education, Health, Banking, Environment Luxembourg Luxembourg’s Indicative Cooperation The implementation of the Program 2011 - 2015 targets (ii) poverty current Program is based on reduction, (ii) responding to the needs of a an indicative amount of 42 middle income country, (iii) key economic Million Euros over a5-year areas through institutional capacity period. building and human resource development in the banking and finance sector, and (iv) the hospitality and tourism industry. VIETNAM COUNTRY PARTNERSHIP STRATEGY 162 2012 - 2016 Development Activities Financing Areas of Partner Collaboration with the Bank The The Dutch bilateral development activities The Netherlands pledged Structural Reform Netherlands will be clustered around two major US$30.59 million to Issues through priorities: (i) growth and distribution, and Vietnam for 2011 PRSCs, Forestry, Rural (ii) sustainability, energy and climate. Development Norway Norway’s support to Vietnam focuses on: US$10 million for 2011 Structural Reform environment, climate change, sustainable Issues through PRSCs, development and human rights, including Rural Development, workers’ rights Education and Public Finance Management Spain The Spanish Agency for International US$40 million was pledged Structural Reform Development Cooperation has the for Vietnam for 2011 Issues through PRSC following priority areas in Vietnam: (i) fighting poverty; (ii) gender in development; (iii) environment and rural development; (iv) UN Reform, and (v) governance Sweden During the strategy period of 2009 - Sweden’s pledge for 2011 is Structural Reform 2013, Sweden’s regular development US$18.03 million Issues through PRSCs, cooperation with Vietnam is to be phased Governance and Anti- out via a selective cooperation. The overall corruption goal of both the phase-out and the selective cooperation is enhanced democratic governance, greater respect for human rights, and environmentally sustainable development. Key areas of cooperation during the strategy period, therefore, are human rights and democracy, and environment and climate change. Switzerland The 2007-2011 cooperation strategy US$28.9 million pledged for Urban Development, concentrates on 3 main areas: (i) 2011 Public Finance governance; (ii) Rural livelihoods and Management natural resource management; and (iii) economic development with special focus on private sector development UK The UK has committed to continuing DFID is preparing for Structural Reform its support to Vietnam during the last Vietnam’s graduation in Issues through PRSCs, five years of the 10-year Development 2016. It will provide 70 Poverty Reduction, Partnership Arrangement (2011-2016). million GBP for the next five Rural Transport, This support is predicated on continued years Rural Development, commitment by the Government of Education, Governance, Vietnam to poverty reduction; improved HIV/AIDS, Public public financial management and anti- Finance Management, corruption; and respect for human rights, Climate Change including domestic accountability. VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 163 Development Activities Financing Areas of Partner Collaboration with the Bank UN Agencies In Vietnam, the UN has been a strong partner A total of US$ 140.19 Poverty Reduction, in providing social protection services to the was pledged for PAR, Structural issues Vietnamese people, with particular focus on the Vietnam for 2011 through PRSCs, most vulnerable groups such as migrants, people Governance, Gender, with HIV/AIDS, and ethnic minorities. The UN has HIV/AIDs, also supported cross-cutting initiatives relating to HIV, gender mainstreaming, and rights-based development, including youth-related work. US USAID has worked with the Government of US$ 141.62 was HIV/AIDS Vietnam in areas of economic growth, prevention pledged for Vietnam and treatment of HIV/AIDS, and vulnerable for 2011 groups’ access to educational and other social services International Non-Government Organizations (INGOs) Oxfam GB Oxfam’s focus in Vietnam is on education, Post WTO issues, sustainable livelihoods, gender equality, disaster Education, Gender, preparedness, and climate change adaptation. Poverty Assessment, Social Analytical Work CARE Since 1989, CARE in Vietnam has worked with Rural Development, International Vietnamese partners throughout the country to Poverty and implement over 160 different projects in three Livelihoods programming areas: (i) emergency & CBDRM program; (ii) rural development & natural resource management; and (iii) health, HIV/AIDS, AI & social programs. Plan in Plan works to help marginalized children across Child-Centered Vietnam Vietnam, especially those from the ethnic Community minorities in the mountainous regions. Its main Development priorities are to reduce the malnutrition rate, improve health care and provide quality of basic education to children in 17 provinces from the north to the Central Highlands. SNV SNV began working in Vietnam in 1995 and Forest Management, (Netherlands is focusing on two impact areas: (i) increased Market access for the Development production, employment and equitable income poor Organization) opportunities, and (ii) improved access, coverage and quality of basic services. SNV advisory work focuses on renewable energy, smallholder cash crops, forest products, pro-poor sustainable tourism, and water, sanitation and hygiene. VIETNAM COUNTRY PARTNERSHIP STRATEGY 164 2012 - 2016 Development Activities Financing Areas of Partner Collaboration with the Bank Save the Save the Children UK’s strategy focuses Child Poverty, Early Children - UK on programs supporting Vietnam’s micro- Childhood Care and finance, education, HIV, reproductive Development, HIV/ health, disaster response and preparedness AIDS WWF World Wildlife Fund’s (WWF’s) priority Environmental conservation programs in Vietnam Conservation and includes: (i) the Forest Conservation Management of Programme; (ii) the Marine and Coastal Natural Resources Conservation Programme; (iii) the Species Conservation Programme; (iv) the Environmental Education Programme; (v) the Environmental Education Programme: and (v) policy work in Vietnam IUCN IUCN Vietnam’s mission to influence, Marine conservation encourage, and assist Vietnam’s biodiversity conservation and equitable sustainable use of natural resources for improving its people’s quality of life BirdLife BirdLife International in Indochina seeks to Environmental promote the conservation of habitats, sites Conservation and species. East Meets The East Meets West program in Vietnam Rural Water Supply and West supports: education; combating sexual Sanitation trafficking, closing the gap in school infrastructure, medical and health care programs for children, and clean water & sanitation VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 165 ANNEX 20: STATISTICAL CAPACITY AND M&E SYSTEMS Vietnam’s monitoring and evaluation (M&E) Vietnam has taken a number of steps to system was developed during the years of the strengthen use of M&E information and centrally planned economy and inherited the to move towards the use of results-based typical characteristics of this economic model. approaches to planning. The country’s 2006- It emphasizes inputs and outputs. At the core of 2010 SEDP sought to establish a comprehensive the system is a set of cost and technical norms set of indicators within a logical framework. that are developed by the Ministry of Finance The results-based approach was also piloted and line ministries. The norms are reviewed in a number of provinces and line ministries. It and updated regularly by the relevant agencies introduces the use of outcome indicators derived through a time-consuming process. As a result, from the MDGs as well as from the country- these norms are often out of date due to rapid specific Vietnam Development Goals outlined in changes in technology and volatility of prices in Vietnam’s CPRGS. These indicators are not widely a market economy. used due to the absence of an official mandate as well as in some cases limited quality and Another salient feature of Vietnam’s M&E system availability of data. The regulatory foundation is its focus on responsibilities of individual for the reform of the M&E system was introduced agencies, with little attention paid to inter- with the issuance of the Investment M&E Decree in agency issues. M&E is commonly carried out by 2009 and its implementation Circulars in 2010. In regular administrative reports and short inspection addition, the Ministry of Planning and Investment visits, both of which tend to emphasize issues within a is preparing a Planning Decree which is expected given agency’s administrative borders. Strategically to institutionalize many aspects of a results- important inter-agency issues are commonly dealt based M&E system. However, the M&E framework with by inter-ministerial committees, which merely is actually not being used for monitoring SEDP play a coordinating role with limited influence on performance, as the framework was seen by resource allocation and use. As a result, the majority some ministries as a result of technical donor of development outcomes which commonly go assistance that was only institutionalized by MPI beyond a given agency’s boundaries are either not but lacked the legal status or authority to guide the main objective of the M&E, or their monitored other ministries or provinces. Donors have mainly progress does not inform policy actions for strategic relied on the PRSC matrix. coherence. Three major lessons can be drawn from the Support for planning reform has been a previous initiative on strengthening the M&E priority of the Bank policy dialogue, especially framework for SEDP: i) There is a need to support with the formulation and implementation statistical capacity beyond the National Statistical of the Comprehensive Poverty Reduction Indicators System (NSIS); ii) M&E strengthening and Growth Strategy (CPRGS) since 2001. It support should be selective and focused on has also been a high priority for other donors ensuring that gradual institutional capacity is over the past ten years. The Bank coordinated developed and integrated into the government donors’ support in the formulation of the SEDP operation process; and iii) It is important to ensure 2006-10 and provided direct TA, including a involvement of a wide range of stakeholders in series of trainings for MPI, line ministries, and the process. selected provinces; and participation in MPI’s drafting team for the M&E framework. ADB and On the first point, in order to strengthen the UNDP also provided resources. statistical capacity for the M&E system in VIETNAM COUNTRY PARTNERSHIP STRATEGY 166 2012 - 2016 Vietnam it is necessary to provide support As noted above, the second lesson focuses beyond just NSIS/General Statistics Office on the need for M&E strengthening to be (GSO) to also include line ministries and, selective and focused to ensure gradual when possible, provincial agencies. Three institutional capacity being developed and main sources of information have been integrated into the government operation identified for a strengthened M&E system: (i) process. The country’s planning system should information produced by GSO as part of the become more strategic, with a clearer vision of NSIS; (ii) information produced from reporting how government can achieve its objectives, as systems by line ministries and provincial well as focusing on a smaller number of high- agencies; and (iii) additional information to be level indicators. The selectiveness could be obtained by supplementary surveys. Vietnam done in several ways (at sectoral level, in a few has put considerable effort into developing a selected key programs/projects, etc.). The focus strong statistical agency for household surveys should be on improving the quality of monitoring and censuses to inform its national statistical and reporting, and to eventually incorporate a indicator system. But it has faced challenges in strengthening of evaluation capacity, when the relation to timely release of data and adequate M&E information produced would be sufficient to dissemination and transparency. Also, at times support evaluations. Good M&E work from donor- there has been a disconnect between user funded projects could also be scaled up to sectoral needs and data production. Regular nationwide projects/programs that are government funded. data for a number of important areas such as environmental management and governance The final lesson is that increased dialogue are yet to be collected. There is also significant among the stakeholders is key to converging room for quality improvement of data collected demand and supply sides. The Ministry of by line ministries and provincial agencies, given Finance is an important example of this. MOF the existence of different methodologies and currently focuses on building capacity for its definitions of various indicators. core fiscal policy management functions and is not an advocate for using strengthened results- Vietnam has recently drawn up the Vietnam based M&E in its decisions and processes. Statistical Development Strategy (VSDS). However, MOF’s utilization of M&E information While the strategy is being used to draw up would greatly strengthen M&E efforts within action plans that will hopefully serve as a guide the country. Therefore, other M&E champions to donors wishing to support the development of and key stakeholders should engage MOF and the national data system, the VSDS concentrates address the need for the agency to assess the mostly on GSO, and not on the line ministries’ performance of public spending and utilize administrative data. The future support on M&E information in allocating fiscal resources. statistical capacity should thus be directed There is also a need for improved coordination towards supporting better coordination between between GSO and MOLISA on poverty monitoring government agencies (including line ministries and targeting. Similarly, engagement by other and provinces), and especially between GSO and important key stakeholders, including overseers/ the rest of the agencies in sharing and making legislators (MOF, MPI, the National Assembly, the data available in a timely manner (including State Audit, etc), and civil society is also important budget information and survey raw data). This to the process. needs to be supported both by the government’s legal framework (on sharing information and Bank support has continued during making raw data available for analytical work to formulation of the SEDP 2011-15, albeit with support policy formulation) and by continued reduced scope compared to support provided support from donors (supporting both GSO and for the SEDP 2006-2010 M&E Framework. other government agencies). Support focused on development of results- VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 167 based M&E, assessment of the implementation serves on the Technical Advisory Board to the of the SEDP 2006-2010 using its M&E framework, VSDS. The Bank will continue to include impact and drafting of the Planning Decree. The Bank evaluation as part of project design, in order to has also supported the development of the VSDS help mainstream capacity building for M&E and via a grant from the Trust Fund on Statistical demand and meaningful applications for national Capacity Building – in addition to programmatic statistical systems, learning from the lessons support on the Vietnam Household Living drawn from previous experiences to improve Standards Survey, the Labor Force Survey, and future interventions. other data instruments. The Bank also currently VIETNAM COUNTRY PARTNERSHIP STRATEGY 168 2012 - 2016 ANNEX 21: COUNTRY FINANCING PARAMETERS Item Parameter Remarks/Explanation Cost sharing. Limit on the proportion of 100 percent In Vietnam, this policy is being applied individual project costs that the Bank may in a targeted fashion, focusing primarily finance on interventions in social sectors, poorer provinces, and decentralized projects. The Government will continue to finance its share as deemed necessary. Recurrent cost financing. Any limits that NONE In Vietnam, financing of recurrent costs would apply to the overall amount of recurrent continues to be on a highly selective basis expenditures that the Bank may finance. and within a sound and sustainable fiscal framework. Local cost financing. Are the requirements Yes for Bank financing of local expenditures met, namely that: (i) financing requirements for the country’s development program would exceed the public sector’s own resource (e.g., from taxation and other revenues) and expected domestic borrowing; and (ii) the financing of foreign expenditures alone would not enable the Bank to assist in the financing of individual projects Taxes and duties. Are there any taxes and NONE None of the taxes and duties in Vietnam is duties that the Bank would not finance? judged to be excessive. Date: August 2011 VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 169 VIETNAM COUNTRY PARTNERSHIP STRATEGY 2012 - 2016 The World The World Bank Bank in in Vietnam Vietnam 63 Ly 63 Ly Thai To Street, Thai Hanoi Hanoi To Street, Tel. (84-4) Tel. (84-4) 3934 6600, 3934 Fax 6600, (84-4) 3935 0752 Fax (84-4) 3935 0752 172 www.worldbank.org/vietnam www.worldbank.org/vietnam http://www.worldbank.org/en/country/vietnam http://www.worldbank.org/en/country/vietnam