Vietnam

Overview

Vietnam has made significant development progress over the past decade and has increasingly integrated into the world economy. The government has strong ownership of its development agenda and consistently demonstrates an effective use of development assistance. Vietnam has reduced poverty at an unprecedented rate: the number of Vietnamese living on less than US$1.25/day fell from 64 percent in 1992 to 21.5 percent in 2006. The gross domestic product grew by an estimated 6 percent in 2008 despite the global economic recession.

Vietnam's success is reflected in markedly improved social indicators. The country has already met the Millennium Development Goals to eradicate extreme poverty and hunger and to improve maternal health. Vietnam cut child mortality rates by half between 1990 and 2007 and is expected to achieve universal primary school enrolment soon.

The United Nations Development Programme ranks Vietnam 128 out of 187 countries on its 2011 human development index. The World Bank defines the country as a low income economy, with an average per capita income of US$790 (2007). This low ranking is explained in part by some sectors of the population―particularly the rural poor and ethnic minorities―not equally benefiting from economic growth. Further, both the International Monetary Fund and the World Bank have identified Vietnam as highly vulnerable to the effects of the global downturn due primarily to trade, investment, and remittance shocks.

Although Vietnam's political system is dominated by a single party, there are some signs of greater government transparency and accountability, such as more participatory approaches and better public financial management. Reforms are most evident in the workings of the National Assembly. Significant concerns remain regarding rights to freedom of expression and association.

Vietnam's anticipated transition to a lower-middle income economy is bringing about new and more complex challenges, for example, the need for deeper and broader legal and regulatory reforms for continued equitable growth. Such reforms are also necessary for Vietnam to promote well-functioning markets and a sound investment climate. Concurrently, Vietnam's ongoing decentralization of public finance accounts and service delivery is placing greater demands on provincial-level governments, as they are relatively weaker. A focus on agriculture and rural development is needed to address sustained poverty reduction.

Thematic Focus

In 2009, as part of Canada's new aid effectiveness agenda, Vietnam was selected by CIDA as a country of focus. CIDA's current program in Vietnam responds to the Government of Vietnam's poverty reduction priorities and focuses on improving the enabling environment for investment and on supporting rural enterprise development and agricultural productivity. Vietnam's development goals are set out in the Five-Year Socio-Economic Development Plan 2006-2010 (PDF, 774 KB, 147 pages), in which reforms and targets for economic growth and poverty reduction are outlined for four main areas, namely:

• Business development
• Modern governance
• Social inclusion
• Natural resources

Food security

CIDA focuses on increasing agricultural productivity, especially at the provincial level, by supporting technical assistance and other services to farmers and government agencies in order to improve production and harvesting techniques, food safety, and quality.

Economic growth

CIDA focuses on supporting legal and policy reforms, as well as institutional changes needed for market-driven growth, and on strengthening rural small- and medium-sized enterprise (SME) development. CIDA also focuses on enhancing skills for employment by improving access to and management of the technical and vocational education system.

Progress on Aid Effectiveness

Vietnam is recognized internationally as a leader in aid effectiveness through its strong local vision, ownership, and implementation of a robust made-in-Vietnam poverty reduction strategy.

Vietnam is a model for donor coordination and harmonization at the policy and operational levels. Principles of commitment and cooperation are set out in the Hanoi Core Statement on Aid Effectiveness (PDF, 38 KB, 4 pages), which adapts the Paris Declaration on Aid Effectiveness (PDF, 317 KB, 23 pages) to the Vietnamese context. CIDA, along with other donors and development partners, is actively engaged in the Government of Vietnam's donor consultative group coordination process.

Accomplishments 2009-2010

Food security

• Increased farmers' incomes by 20 percent, through the Soc Trang Herd and Crop Quality Improvement Project, which increased fragrant rice production by more than five times, from 3,600 hectares in 2005 to nearly 19,000 hectares in 2009.
• Supported the development and application of internationally accepted practices for key agri-food products to help ensure food quality and safety, through work with Vietnam's Ministry of Agriculture and Rural Development

Economic growth

• Improved the development of rural micro, small, and medium-sized enterprises (MSMEs), and increased the income and viability of more than 1,200 MSMEs (90 percent owned by women) in three targeted provinces
• Helped more than 450 enterprises directly benefit from small grants for training or new technology to improve production and access to new markets

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