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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No. 64923-VN
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROGRAM DOCUMENT
FOR A PROPOSED CREDIT
IN THE AMOUNT OF SDR 94.6 MILLION
(US$150.0 MILLION EQUIVALENT)
TO THE
SOCIALIST REPUBLIC OF VIETNAM
FOR A
TENTH POVERTY REDUCTION SUPPORT CREDIT
November 14, 2011
Poverty Reduction and Economic Management Department
Vietnam Country Management Department
East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance of their official
duties. Its contents may not otherwise be disclosed without World Bank authorization.
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VIETNAM - GOVERNMENT FISCAL YEAR
January 1 – December 31
CURRENCY EQUIVALENTS
(Exchange Rate Effective as of November 2011)
Currency Unit = Vietnamese Dong
US$1.00 = 20,890
WEIGHTS AND MEASURES Metric system
ABBREVIATIONS AND ACRONYMS
ASEAN Association of South East Asian Nations MOF Ministry of Finance
CFAA Country Financial Accountability
Assessment
MOH Ministry of Health
CIC Credit Information Center MOIT Ministry of Industry and Trade
CPAR Country Procurement Assessment Review MOJ Ministry of Justice
CPRGS Comprehensive Poverty Reduction and
Growth Strategy
MOLISA Ministry of Labor, War Invalids, and Social
Affairs
CPS Country Partnership Strategy MONRE Ministry of Natural Resources and
Environment
DA Deposit Account MPI Ministry of Planning and Investment
DP Development Partner NGO Non-Governmental Organization
DPL Development Policy Lending NTP National Target Program
FDI Foreign Direct Investment PER-IFA Public Expenditure Review-Integrated
Fiduciary Assessment
FIRST Financial Sector Reform and Strengthening
Initiative
PPP Public-Private Partnership
FY Fiscal Year PRSC Poverty Reduction Support Credit
GDP Gross Domestic Product QEA Quality at Entry Assessment
GSO General Statistic Office ROC Regional Operations Committee
HCMC Ho Chi Minh City SAV State Audit of Vietnam
IBRD International Bank for Reconstruction and
Development
SBV State Bank of Vietnam
ICR Implementation Completion Report SDR Special Drawing Rights
IDA International Development Association SEDP Socio-Economic Development Plan
IEG Independent Evaluation Group SME Small and Medium Enterprise
IFC International Finance Corporation SOCB State-Owned Commercial Bank
ILSSA Institute of Labor, Science and Social Affairs SOE State-Owned Enterprise
IMF International Monetary Fund VASS Vietnam Academy of Social Sciences
IPSAS International Public Sector Accounting
Standards
VDR Vietnam Development Report
LDP Letter of Development Policy VHLSS Vietnam Household Living Standards
Survey
M&E Monitoring and Evaluation VSS Vietnam Social Security
MDG Millennium Development Goal WTO World Trade Organization
MOET Ministry of Education and Training
Vice President:
Country Director:
Sector Director:
Task Team Leader:
James W. Adams, EAPVP
Victoria Kwakwa, EACVF
Ahmad Ahsan (Acting), EASPR
Keiko Kubota, EASPR
SOCIALIST REPUBLIC OF VIETNAM
TENTH POVERTY REDUCTION SUPPORT CREDIT (PRSC 10)
TABLE OF CONTENTS
CREDIT AND PROGRAM SUMMARY .................................................................................................. i
I. INTRODUCTION ......................................................................................................................... 1 II. COUNTRY CONTEXT ................................................................................................................ 2
RECENT ECONOMIC TRENDS .................................................................................... 2 THE GOVERNMENT‟S POLICY RESPONSE .............................................................. 4 MACROECONOMIC OUTLOOK AND DEBT SUSTAINABILITY ............................ 5 POVERTY REDUCTION ................................................................................................ 8
III. THE GOVERNMENT’S PROGRAM AND PARTICIPATORY PROCESSES .................... 9 IV. BANK SUPPORT TO THE GOVERNMENT’S PROGRAM .................................................. 11
LINK TO CPS ................................................................................................................... 11 COLLABORATION WITH THE IMF AND OTHER DONORS .................................... 12 RELATIONSHIP TO OTHER BANK OPERATIONS .................................................... 13 LESSONS LEARNED ...................................................................................................... 14 ANALYTICAL UNDERPINNINGS ................................................................................ 16
V. THE PROPOSED OPERATION ................................................................................................. 18 OPERATION DESCRIPTION ......................................................................................... 18 POLICY AREAS .............................................................................................................. 19
VI. OPERATION IMPLEMENTATION .......................................................................................... 25 POVERTY AND SOCIAL IMPACTS ............................................................................. 25 ENVIRONMENTAL ASPECTS ...................................................................................... 26 IMPLEMENTATION, MONITORING AND EVALUATION ....................................... 27 FIDUCIARY ASPECTS ................................................................................................... 28 DISBURSEMENT ............................................................................................................ 29 RISKS AND RISK MITIGATION ................................................................................... 29
ANNEXES
ANNEX 1: Letter of Development Policy ............................................................................................. 31 ANNEX 2 : PRSC 6-10 Policy Matrix ................................................................................................... 34 ANNEX 3: Monitoring Progress Towards Outcome Indicators ............................................................ 43 ANNEX 4 : Supporting Documentation for prior and policy actions under PRSC10 ............................ 48 ANNEX 5 : Public Financial Management in Vietnam .......................................................................... 52 ANNEX 6: Environmental Assessment ................................................................................................. 57 ANNEX 7 : Fund Relations Note ........................................................................................................... 60 ANNEX 8 : At –A-Glance Table ............................................................................................................ 62
MAP
LIST OF TABLES
Table 1: Key Economic Indicators .......................................................................................................................... 3 Table 2: Government Budgetary Operations ( Percent of GDP) ............................................................................. 6 Table 3: Development Partners Co-Financing PRSC Operations .......................................................................... 12 Table 4: Assessment of Prior Actions for PRSC 10 .............................................................................................. 21
LIST OF FIGURES
Figure 1: Poverty Trends in Vietnam ...................................................................................................................... 8 Figure 2: Regional Dimensions of Poverty ............................................................................................................. 9
LIST OF BOXES
Box 1: Participatory Process for the Government‟s Socio-Economic Development Plan 2006-2010 ................... 10 Box 2: Good Practice Principles for Conditionality .............................................................................................. 25
The PRSC 10 Credit was prepared by an IDA team consisting of:
Core Team: Keiko Kubota (Task Team Leader), Thang-Long Ton, Quyen Hoang Vu (Economists), Nuong
Dieu Nguyen (Consultant), Hisham Abdo Kahin (Senior Counsel), Cung Van Pham (Senior Financial
Management Specialist), Thao Le Nguyen (Senior Finance Officer), Phuong Lan Nguyen and Mildred
Gonsalvez (Program Assistants).
Contributors: Deepak Mishra, Viet Tuan Dinh, Habib Rab, Nga Nguyet Nguyen, Quang Hong Doan, James
Anderson, Huong Thi Lan Tran, Daniel Mont, Viet Quoc Trieu, Sameer Goyal, Thanh Thi Mai, Binh Thanh
Vu, Hoa Thi Mong Pham, Anh Nguyet Pham, Richard Spencer, Douglas J. Graham, Robert Gilfoyle, Huong
Lan Dao, and Toomas Palu.
Peer Reviewers: Mark Sundberg (IEGCG), Xiaofeng Hua (AFTFE), and Genevieve Boyreau (EASPR).
i
CREDIT AND PROGRAM SUMMARY
VIETNAM
TENTH POVERTY REDUCTION SUPPORT CREDIT (PRSC 10)
Borrower The Socialist Republic of Vietnam
Implementing
Agency
The State Bank of Vietnam
Financing Data SDR 94.6 million (US$150.0 million equivalent). Standard IDA terms for
blend countries: 25 year maturity and 5-year grace period.
Operation Type
A Tenth Poverty Reduction Support Credit (PRSC 10), as the fifth and last
operation in a cycle aimed at implementing Vietnam‟s Socio-Economic
Development Plan (SEDP) 2006-2010, approved in June 2006.
Main Policy Areas
The present operation provides continuing support to Vietnam‟s medium
term reform program. The current cycle of PRSCs is a vehicle for the
World Bank, and the international partner community more broadly, to
support a country that has a track record of economic growth and poverty
reduction, and is emerging from the effects of the global financial crisis. It
also recognizes the government‟s efforts to pursue and deepen reforms.
The proposed operation comprises policy actions in areas such as state
sector reforms, financial sector reform, public financial management, the
social sectors, environment, public administration and governance. This
comprehensive program, with the same broad coverage as the SEDP 2006-
2010, provides the foundation for sustained growth, social inclusion,
environmental sustainability and improved governance.
The preparation of the proposed operation, like previous operations in this
cycle, has helped improve the content of strategically important policy
actions, to ensure the timeliness of their adoption, and to monitor the
impact of the overall program on broader development outcomes.
Key Outcome
Indicators
Outcome indicators and targets for 2011 were identified at the beginning
of this PRSC cycle in the Program Document for PRSC 6 approved by the
Board in June 2007. The indicators cover the four pillars of the program
(economic, social, environmental and institutional), and include diverse
statistics such as: openness to trade; share of state economic activities in
the economy; quality of bank loan portfolio; competitive electricity
generation; poor children attending school; poor people with free health
insurance; leadership positions held by women; forest land allocated to
local communities; protection of bio-diverse wetlands; provinces using
modern budget management system; consultation in law-making process;
and enterprises reporting corruption as a binding constraint. A mid-term
evaluation of progress towards attaining the objectives was completed
during the preparation of last operation. As a result of the review, the
indicators were modified and streamlined, and are presented in the annex
of this document.
ii
Program
Development
Objectives and
Contribution to CAS
The Country Partnership Strategy (CPS) discussed by the Board in
February 2007 concluded that the SEDP of the government incorporated
the necessary poverty reduction principles, was broadly sound and was a
plan that could both deliver growth and reduce poverty. The CPS defined
the PRSC as one of the modalities to support the implementation of SEDP.
The Program Document for PRSC 6 charts the second cycle of PRSC
operations (PRSCs 6-10). The CPS Progress Report was discussed by the
Board in December 2009, and the CPS for 2012-16 is scheduled to be
discussed by the Board concurrently with its consideration of the proposed
operation. The proposed operation is consistent with the new SEDP 2011-
15, expected to be approved in November 2011, and hence with the new
CPS.
Risks and Risk
Mitigation
Vietnam‟s macroeconomic stability remains fragile and premature
loosening of policies will risk repeating the recent pattern of recurring
instability. Vigorous implementation of fiscal consolidation and structural
reforms such as reform of the state-owned enterprises (SOEs) and the
financial sectors should help Vietnam return to a more sustainable
macroeconomic environment while laying the foundations for greater
efficiency and productivity to drive medium and longer term growth. The
Bank is engaged with the government in on-going discussion on both
formal and informal basis, such as the Consultative Group meetings and ad
hoc Prime Minister‟s Roundtable, jointly with the IMF. The dialogue
carried out through the PRSC series seeks to enhance the quality and
effectiveness of financial sector regulation and supervision, and to enhance
information disclosure and effective communication of macroeconomic
policies.
There is also a risk that Vietnam will not be able to continue financing its
development needs as concessional financing begins to decline. The
authorities are acutely aware of it, and are also conscious that SOEs could
undermine government‟s finances and macroeconomic stability. Medium-
term debt sustainability is tackled through development of the capital
market to diversify sources of funds and reduce maturity mismatches, and
better monitoring and assessment of external debt flow. Reviewing of the
state sector is also underway, and steps are being taken to strengthen
monitoring and management of SOE finances.
The longer term risk is that Vietnam will fail to address governance issues
in a systematic and fundamental way. Accountability, access to
information, and fighting corruption are challenges for all countries at
varying levels, and Vietnam needs to continue the reform process on
which it has embarked. As the Vietnam Development Report 2010
Modern Institutions has shown, improving governance requires increasing
transparency at various levels. This area receives special attention in the
proposed operation, including actions to improve transparency in the
public administration, strengthen the role of oversight entities and establish
framework for monitoring the fight against corruption.
Operation ID P111183
1
IDA PROGRAM DOCUMENT FOR A
PROPOSED TENTH POVERTY REDUCTION SUPPORT CREDIT
TO THE SOCIALIST REPUBLIC OF VIETNAM
I. INTRODUCTION
1. Emerging from massive poverty at the launching of Doi Moi in 1986, Vietnam has attained
lower middle-income country status in 2009. There was acceleration, starting around 2001, in the
government‟s drive towards relying on market mechanisms, building a multi-stakeholder economy and
further integrating with the region and the world. The reforms implemented over these years have led
to rapid economic growth and remarkable progress on poverty reduction and other development goals.
The share of the population living below the poverty line fell by nearly half; from 28.9 percent in 2002
to 14.5 percent by 2008.1 Many of the remaining poor are from disadvantaged groups such as ethnic
minorities, or live in more isolated regions.
2. Attaining middle-income status is considered to be not just achieving the threshold level of
GDP per capita, but as a way of emphasizing the need for modernizing its institutions and economy. It
entails further financial deepening to support capital mobilization, the regulation on access to and
pricing of infrastructure services, the gradual development of social insurance, more effective tools for
environmental protection, legal and judiciary reforms, and effective governance, among others. This
vision was articulated in the Socio-Economic Development Plan (SEDP) 2006-20102 approved in June
2006, and continues to be embraced by the SEDP 2011-2015, expected to be approved in November
2011.
3. The proposed credit is the last in a five-year cycle aimed at supporting the implementation of
the SEDP. This series follows the first cycle of five operations (PRSCs 1-5). The cross-cutting nature
of the policy dialogue supported by PRSCs was well-suited to the circumstances when PRSC 6 was
developed. It was the only development policy operation, and it helped strengthen coordination
among line ministries and government agencies. The annual programming is demanding, but provided
the government with predictability for planning purposes, and also helps maintain the reform
momentum. The PRSC operations have also served as an effective platform for aid coordination.
Developing a single policy matrix on which all participating partners can agree was time-consuming
for the task team, but reduced the transaction costs on the government side. The process of debating
which policy reforms should be pursued also imposed a certain amount of discipline among
participants, as the reforms proposed were to be based on analytical work, government-owned,
feasible and monitorable. Most partners by and large abided by these rules, and later operations run
more smoothly as the partners became accustomed to the procedure. Earlier operations used an
opportunistic approach to making as much impact wherever possible by discussing a large number of
policy reforms. This was adapted to the circumstances where many reforms were taking place. The
engagement areas narrowed down in later operations, as reforms became more complex, parallel
sectoral development operations were introduced, and development partners became more adept at
1 The latest Vietnam Household Living Standards Survey was conducted in 2010. Preliminary results are
expected to become available soon. 2 - 5 ăm 2006-2010 (Socio-Economic Development Plan 2006-
2010), attachment to Government Resolution No. 25/2006/NQ-CP, dated October 9, 2006. The participatory
process in developing the SEDP is described in Box 1. The new SEDP covering the period 2011-2015 is
currently being finalized, to be adopted by the National Assembly in the autumn 2011 session. Current operation
was prepared under the previous SEDP 2006-2010, and the Country Partnership Strategy that supported it.
2
honing in on priority reforms to concentrate their efforts. The PRSC operations were found to have
been exemplary in their predictability, continuity, and development partner coordination (IEG3 2009).
4. With the PRSC series drawing to an end, the Bank has initiated, at the Government's request,
discussions on a follow up operation: an Economic Management and Competitiveness Credit
(EMCC). Like the PRSCs, the EMCC is expected to be a multi-year, multi-donor operation starting in
FY12 and ending in FY16. The operation proposes to focus on critical reforms to enhance
competitiveness, which is central to sustained growth and poverty reduction in Vietnam. The strategic
and analytical underpinnings for the EMCC are 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 learnt from the PRSC series is
the importance of a focused reform agenda under one budget support operation. The EMCC will
therefore concentrate its dialogue on reforms to strengthen macroeconomic stability, and institutions
for public sector governance and private sector development. It may also include cross-cutting issues
related to infrastructure and skills, which are also critical to enhancing competitiveness. It will not
address these directly, but rather complement other support provided on infrastructure and skills.
II. COUNTRY CONTEXT
RECENT ECONOMIC TRENDS
5. Since the beginning of 2011, the Government‟s priority has turned to containing inflation and
restoring macroeconomic stability. The delayed withdrawal of the 2009-10 stimulus package, which
was introduced in response to the 2008-09 global economic crisis, led to overheating in the economy.
By the end of 2010, inflation was over 10 percent, the dong had depreciated rapidly against the US
dollar, the reserves fell to below two months of imports, and the fiscal deficit was 6.4 percent of GDP.
In response, the Government introduced measures in February 2011 to tighten monetary and fiscal
policy, and implement structural reforms intended to curb inflation, stabilize the economy and ensure
social safety (Resolution 11). These efforts are starting to show results. Growth remains healthy,
monthly inflation has started to decline, and the current account deficit has also fallen. While there are
risks ahead from exogenous factors and planned increases in minimum wages and electricity tariffs,
the Government has reiterated its commitment to implementing Resolution 11 for sustained
macroeconomic stability.
6. In 2007, Vietnam experienced an unprecedented surge in external capital flow, fueling a credit
boom and an asset price bubble. Between 2006 and 2007, foreign direct investment increased three-
fold, and portfolio flows increased four-fold, with total external capital increasing from US$ 3.6
billion (or 5.9 percent of GDP) in 2006 to US$ 12.8 billion in 2007 (18 percent of GDP). Insufficient
sterilization led to rapid money supply growth, which in turn fueled a credit boom and created an asset
price bubble. Inflation accelerated and the trade deficit widened during this period.
7. The economic boom came to a halt with the global financial and economic crisis in 2008.
Portfolio flows reversed from their peak of US$ 6.2 billion in 2007, to US$ -0.5 billion in 2008, with
the stock market losing nearly 66 percent of its value. The global commodity price shocks led to
inflation reaching nearly 20 percent, and an appreciation in the real exchange rate. By 2009, there was
a significant slowdown in manufacturing growth, contraction in export demand, and the potential
closure of thousands of factories and millions of lost jobs. Many of the export-oriented firms, which
had invested heavily in the belief that the boom would continue, suddenly found their orders cancelled
and sales plunging. Some of the more leveraged firms, including the state owned enterprises, found it
difficult to keep up with their debt service payments.
3 Poverty Reduction Support Credits – an evaluation of World Bank support by the Independent
Evaluation Group.
3
Table 1: Key Economic Indicators
2008 2009/r 2010/e 2011/p 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, exc. off-budget items) 1.2 -5.1 -2.0 -1.1 -1.2 -1.2
General fiscal balance (% GDP, inc.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, ($US billion, fob) 75.5 65.4 79.3 97.6 113.3 131.0
Imports of goods (% change, previous year) 28.8 -13.3 21.2 23.1 16.1 15.6
Current account balance ($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.
* These figures differ slightly from those reported in Debt Sustainability Analysis (2011) due to corrections in the
exchange rates used.
8. A timely and large stimulus package helped to cushion the adverse impacts of the global
crisis. Real GDP growth reached 5.3 percent in 2009, and an estimated 6.8 percent in 2010. The
economy achieved higher than average growth and a more stable growth path over this period relative
to others in the region. The rapid recovery from the effects of the crisis was supported by higher
levels of investment and a strong revival in exports. Foreign direct investments continued to remain
buoyant and remittances grew at a healthy rate. Exports grew at 26.4 percent, with export of non-oil
sector doing particularly well, registering 30 percent growth in 2010. Overall, the recovery of the real
sector of the economy has been remarkable.
9. With the rapid recovery, however, the economy started overheating again in the second-half of
2010, following a delayed withdrawal of the fiscal and monetary stimulus. In December 2010,
inflation reached a two year high of 11.8 percent, the dong came under intense pressure, and the level
of foreign exchange reserves declined to $12.5 billion (1.5 months of imports). There was concern
over the health of the banking sector, in part because of the build-up of contingent liabilities of state-
owned enterprises (SOEs). As a result of these developments, and following the default of one of the
4
largest SOEs, Standard & Poor‟s and Moody‟s downgraded Vietnam‟s sovereign rating to BB- and
B1, respectively.
10. There are early signs that the Government‟s efforts to stabilize the economy are starting to pay
off, but sustained commitment to measures outlined in Resolution 11 is required to avoid recurring
bouts of instability. GDP growth in the first nine months of 2011 is estimated at 5.8 percent. Inflation
in the twelve months ending October 2011 declined to 21.6 percent from the peak of 23.0 percent,
reached in August 2011, and monthly change in the Consumer Price Index showed a slowdown in
inflation from 0.93 percent in August to 0.36 percent in October. Import growth has slowed and
exports have remained strong (35.4 percent growth in the first nine months of 2011), largely thanks to
high commodity prices. The trade deficit over this period has narrowed, and the current account
deficit remains below 4 percent of GDP. The budget deficit is expected to fall to 3.9 percent of GDP4
in 2011 compared to 6.4 percent in 2010. For the purpose of the proposed development policy
operation, it is the team‟s assessment that the current macroeconomic policy framework is adequate.
THE GOVERNMENT’S POLICY RESPONSE
11. The consensus among policymakers after the completion of the eleventh Party Congress in
January 2011 was to focus on measures to restore macroeconomic stability, even if it was at the
expense of slower growth in the short term. The Government approved Resolution 11 to pursue “tight
and prudent monetary and fiscal policy.” A summary of implementation progress is provided below.
12. Exchange Rate Policy. The dong was devalued by 9.3 percent against the US dollar and the
trading band was narrowed from +/-3% to +/-1%. This was the single largest correction to the
exchange rate following the onset of macroeconomic instability in 2007. Domestic residents started to
convert assets into gold and US dollars outside the financial system (creating a large increase in errors
and omissions in the balance of payments) to hedge against inflation and currency depreciation. In
response, a decree on management of gold trading was issued, centralizing gold exports, eliminating
trading in gold bars, and preventing cross-border trafficking of gold.
13. Monetary Policy. As of October 2011, total credit to the economy rose by 8.6 percent since
the beginning of the year (or 17.4 percent year-on-year), and total liquidity (M2) grew by 7.5 percent,
well below their 2011 annual target of 20 and 16, respectively. The State Bank of Vietnam raised its
refinancing rate by 100 basis points from 14 percent to 15 percent in October 2011. This is the fifth
time this year that SBV has raised its key rate (600 bps in total). The SBV also increased the inter-
bank over-night rate from 14 percent to 16 percent whilst cutting the rate for foreign currency deposits
and deposits of the State Treasury. The rate cut for dollar deposits should help ease some of the recent
pressures on the dong.
14. Fiscal Policy. Resolution 11 proposed to cut about 80 trillion dong (3.2 percent of GDP) in
state capital investment; off-budget investment (government‟s development bond); and investment by
SOEs and other public entities. The Ministry of Finance reported that total revenues increased nearly
23 percent in first half of 2011 compared to the same period in 2010. The budget deficit is expected to
fall to 3.9 percent of GDP in 2011 compared to 6.4 percent in 2010.
15. Banking Sector. Resolution 11 limits banks‟ exposure to non-productive activities (which
include real estate and security market) to 22 percent of total credit by June 30, 2011 and to 16 percent
by December 31, 2011. Non-compliant banks will be asked to double their required reserves ratio and
restrict their business activities. The government is revising Decision 493 to upgrade loan
classification and provisioning practice in the banking system to bring them closer to international
norms. The revision of the circular is supported by PRSC operations. It is taking longer than expected
because the SBV is cautious about tightening regulations while the banking sector is coping with the
4 IMF forecasts the deficit in 2011 will be below 3.5 percent of GDP.
5
effects of a turbulent period (more discussion in Section V). The government has also confirmed its
participation in the Financial Sector Assessment Program (FSAP), and has sought technical assistance
from the Bank and Fund.
16. State-Owned Enterprises. In 2011, the Government has started an annual exercise to publish
the annual report prepared for the National Assembly, based on the audited financial statements of
state-owned enterprises (prior action for the proposed operation). The Ministry of Planning and
Investment (MPI) has reviewed planned loans and investment projects of SOEs and recommended
those that can be dropped or scaled down. Resolution 11 also indicates that the Government will
accelerate the equitization process and strengthen the governance of SOEs. A number of state-owned
commercial banks including Vietinbank and Mekong Housing Banks have sold a part of their equity
capital to strategic investors (supported under PRSC 8).
17. Other Structural Measures. The government has issued a circular to increase disclosure of
information and policies affecting monetary management and banking (prior action for this operation).
Finally, the government is moving from an administrative mechanism for setting the prices of essential
commodities such as electricity, gas and fuel, to a more market-based mechanism. In addition,
Resolution 11 instructs Ministry of Industry and Trade to prepare a regulation for establishing a
market mechanism for pricing electricity (supported under Power Sector DPL series).
MACROECONOMIC OUTLOOK AND DEBT SUSTAINABILITY
18. Vietnam‟s macroeconomic stability remains fragile and premature loosening of policies will
risk repeating the recent pattern of recurring instability. Steadfast implementation of fiscal
consolidation and structural elements of Resolution 11, including restructuring and reform of the state-
owned enterprise and financial sectors should help Vietnam return to a more sustainable
macroeconomic environment while laying the foundations for greater efficiency and productivity to
drive medium and longer term growth. However, undertaking these deep, structural reforms will
require strong leadership, diligent implementation, support from development partners, and some
short-term pains. Vietnam must choose between a few difficult years of stabilization with better
prospects for rapid growth versus a decade of mediocre growth amidst recurring instability.
Fiscal Policy and Debt Situation
19. Vietnam experienced a sharp increase in its fiscal deficit in 2009 on account of the stimulus
measures. The Government‟s overall fiscal deficit was 9.0 percent of GDP in 2009, substantially
higher than in previous years, as the stimulus package came on top of an already expansionary budget
plan. Additionally, the fall in oil prices and the slowdown in economic activities resulted in a decline
in government revenue. The fall was partially offset in the second half of 2009, as both international
commodity prices and domestic economic activities became more buoyant.
20. With significantly higher than expected revenue outturn and expenditure in check, the
government achieved a lower fiscal deficit than planned during 2010. Total budget revenue and grants
increased from 26.7 percent of GDP in 2009 to 28.1 percent in 2010. The fiscal deficit is estimated to
have declined from to 9.0 percent of GDP in 2009 to 6.4 percent in 2010 (Table 2). As noted earlier,
the Government has committed to further fiscal consolidation in 2011.
21. Vietnam‟s public debt is likely to remain sustainable if the current economic recovery
continues and the authorities carry on the current fiscal consolidation. The results of the debt
sustainability analysis conducted in 2011 indicate that the public sector debt was 51.2 percent of GDP
at end-2009, two-thirds of which was owed to external creditors. Under the baseline scenario, this
ratio was estimated to have increased to 52.8 percent of GDP in 2010, and is projected to decline
slightly but steadily thereafter to reach 47.9 percent in 2015. The large fiscal deficits in 2009 and
2010 do not affect the overall debt sustainability significantly, as long as the government reverts to the
6
pre-crisis levels of deficit in a few years as expected. The stress tests indicate that the two main risks
to debt sustainability are a loss of access to non debt-creating capital inflows and a slowdown of
exports. The standard assumptions applied for these shocks are severe, and are unlikely to materialize.
Table 2: Government Budgetary Operations ( Percent of GDP)
2008 2009/r 2010/e 2011/p 2012/p 2013/p
Total revenue and grants 29.0 26.7 28.1 27.1 27.4 26.5
Revenue (excluding grants) 28.4 26.3 27.9 26.9 27.3 26.4
Tax revenue 24.5 22.3 23.6 23.0 23.4 22.5
Oil revenues 6.1 3.6 3.5 3.4 3.3 2.9
Non-oil tax revenues 18.4 18.7 20.1 19.6 20.1 19.6
Non-tax and capital
revenues 3.9 4.0 4.2 3.9 3.8 3.9
Grants 0.6 0.4 0.3 0.2 0.2 0.2
Official expenditures 27.7 31.8 30.1 28.3 28.7 27.8
Current 19.7 20.9 21.2 21.5 22.1 21.5
of which: interest 1.1 1.4 1.3 1.5 1.7 1.7
Capital 8.0 10.9 9.0 6.7 6.6 6.2
Official fiscal balance 1.2 -5.1 -2.0 -1.1 -1.2 -1.2
Other expenditures 2.4 3.9 4.4 2.7 2.6 2.3
Off-budget expenditure 1.8 2.8 2.8 1.8 1.8 1.7
ODA on-lending 0.6 0.5 1.6 0.9 0.9 0.6
Interest rate subsidy cost 0.0 0.6 0.0 0.0 0.0 0.0
Total expenditure 30.2 35.7 34.6 31.0 31.3 30.1
Overall fiscal balance -1.2 -9.0 -6.4 -3.9 -3.8 -3.6
Financing 2.6 8.8 6.4 3.8 3.8 3.6
Foreign (net) 1.7 3.6 3.4 2.4 2.5 2.1
Domestic (net) 0.9 5.2 3.0 1.5 1.4 1.5
Discrepancy (+ is over-financing) 1.4 -0.2 0.0 -0.1 0.0 0.0
Source: Ministry of Finance, IMF and World Bank staff estimates.
22. The largest source of uncertainty and hence, unquantifiable risk, to the debt sustainability
comes from implicit obligations which are not captured under government and government-guaranteed
debt statistics. A reliable estimate of such liabilities is not available, which limits the government‟s
ability to manage associated risks. Contingent liabilities might arise from off-budget statutory funds
such as health insurance fund, the banking sector, or large SOEs. After the turbulent few years, and
under the current tight monetary policies, some of the more leveraged SOEs, in ship-building and
cement business in particular, are reported to be experiencing problems servicing their debts. The
authorities are stepping up efforts to collect reliable and up-to-date information on contingent
liabilities (mostly in the SOE sector) and to monitor and manage potential fiscal risks associated with
borrowing by SOEs. By articulating these changes in policies taking place, and making public regular
and up-to-date information on fiscal and debt situation, the government is trying to increase
accountability of SOEs and rebuild confidence among market participants.
23. The second source of fiscal risk, albeit not of the same magnitude as contingent liabilities,
arises from the large off-budget expenditure, which has been funded by issuing off-budget bonds. The
7
off-budget spending is managed by the Ministry of Planning and Investment (MPI) to build
infrastructure such as canals, schools and housing for poor. While the off-budget spending is
approved by the National Assembly and is subject to the same level of oversight and scrutiny as on-
budget spending, it is called off-budget (misleadingly in our view) because it is largely managed by
MPI – a leftover from the planning era. The off-budget expenditure financed by MPI bonds has
increased from 1.5 percent of GDP in 2007 to 2.8 percent in 2010. However, it is scheduled to fall to
1.8 percent of GDP in 2011 (Table 2).
Changes in the Banking Sector
24. The banking sector has been adversely affected by the succession of asset price bubbles,
monetary tightening and growth slowdown. The real estate bubble of end-2007 and its subsequent
freeze in early 2008 have made it difficult for several commercial banks to recover their loans; the
rapid disinflation in late 2008, at a time when interest rates were still very high, substantially increased
the debt service burden faced by enterprises.
25. The asset quality of bank portfolios remains an ongoing concern given the unusually high
credit growth of the past years and developing, but relatively weak, risk management capacity in the
banking sector. According to the official data, the non-performing loan (NPL) ratio of the banking
system was 1.9, 2.2 and 3.0 percents in end-2009, end-2010 and July 2011, respectively. Although
rising, the SBV considers it still under control. However, if international standards are applied, the
NPL ratio of the banking sector is expected to be significantly higher. Currently, only three
commercial banks are assessed to have the adequate capacity to use international method of
calculating NPLs. The Circular revising Decision 493 is intended to tighten regulations so that this
capacity is strengthened among commercial banks.
26. The tightening of monetary policy in 2011 is putting further pressure on the banking sector.
In response to strict liquidity conditions since late 2010, smaller commercial banks have offered high
deposit rates (up to 18 percent) to gain liquidity despite SBV‟s guidance to keep deposit rate at 14
percent or below, triggering fierce competition among the banks. However, as there are no prescribed
limits on lending rates, banks have raised these to as much as 22-27 percent. The pressure on the
borrowers is therefore expected to grow, resulting in further deterioration of the quality of banking
sector assets in 2011-12. While the SBV has supported weaker banks through greater liquidity, it has
hinted that some consolidation may be needed if the weaker banks do not perform up to industry
standards. However, bank regulators are reluctant to force consolidation or allow bankruptcy to occur
in the banking sector.
27. The unresolved problems in the banking sector are likely to remain a source of concern for
Vietnam in the coming years. The SBV has upgraded its supervision efforts and raised minimum
capital requirements in response to the concerns about the health of the banking sector. By the end of
2008, all commercial banks had met the new requirements. The process of increasing the minimum
charter capital continues, in part as a gentle push towards some consolidation of smaller banks.
However, the deadline to increase the minimum charter capital further to 3 trillion dong (about $150
million) by end 2010 was extended to end-2011, when 18 of the smaller banks were unable to meet it.
The SBV opted for a more measured implementation of this policy, especially in the current fragile
macroeconomic environment.
28. In 2010, a number of other important changes in the policies and regulations governing the
banking sector were announced. These include revised laws (namely the SBV Law and the Law on
Credit Institutions), and regulation on prudential ratios (formulation of these regulations were
supported under PRSC 9). These together are expected to reshape the working environment of the
banking sector. The SBV Law should improve the accountability, mandate and autonomy of SBV in
undertaking monetary policy. The Law on Credit Institutions is seen as enhancing the autonomy,
safety and soundness of credit institutions. Credit institutions are subject to the tighter prudential
8
ratios, most notably the significantly higher capital adequacy ratio (9 percent as of October 1, 2010),
while facing stricter requirements on the amount of funds eligible for lending activities (although the
subsequent Circular 19 lightened this requirement to some extent). Much needs to be done over the
medium term, however, to address some of the structural weaknesses in the banking sector.
POVERTY REDUCTION
32. Poverty has fallen rapidly in Vietnam, from 58.1 percent of the population in 1993, to 28.9
percent in 2002, and only 14.5 percent by 2008, the last year for which comparable poverty estimates
are available5 (Figure 1). Inequality remains low, although poverty has become increasingly
concentrated in rural areas and among certain social groups (viz. ethnic minority populations). There
are growing concerns about poverty and living conditions in Vietnam‟s cities and peri-urban areas due
to high rates of urban population growth (including a heavy influx of migrant workers), excess
demand for urban services, and a continuing rise in the cost of living. Urban poverty is back on the
development agenda. Regional differentials also continue to be important. Poverty levels vary
substantially across regions. Poverty headcounts are highest in the mountainous and more isolated
Northwest region, as well as in the North East and the Central Highlands. All regions have witnessed
progress in recent years (Figure 2) although disparities remain.
Figure 1: Poverty Trends in Vietnam, 1993-2008
Source: GSO. VHLSS and World Bank.
33. Progress at reducing poverty has been more difficult in the last several years because many of
the remaining poor are from disadvantaged groups such as ethnic minorities, or live in more isolated
regions. The poor suffered particularly during the episode of inflation spike in the first half of 2008
with food prices reaching a peak by mid-year before stabilization measures were put in place. The
construction sector was hard-hit by the credit squeeze in the middle of 2008 and agriculture suffered a
series of shocks. The most recent poverty estimates for Vietnam reflect the situation in 2008 but not
more recent impacts of the global financial crisis. Although the 2008 VHLSS shows continued
progress at reducing poverty, it was at a somewhat slower rate than earlier periods: the poverty
headcount fell by around 1 percentage point each year between 2006 and 2008, compared to 2-3
percentage points a year in earlier periods (VHLSS 2002, 2004, 2006).
5 Poverty data are based on the Vietnam Living Standards Surveys (VLSS) of 1993 and 1998, and on the
Vietnam Household Living Standards Survey (VHLSS) carried out by Government Statistics Office (GSO) in
2002, 2004, 2006, and 2008.
0
10
20
30
40
50
60
70
1990 1995 2000 2005 2010
Po
vert
y R
ate
(%
po
or)
Year of Survey
Rural
Urban
National
9
Figure 2: Regional Dimensions of Poverty
Source: GSO. VHLSS and World Bank.
III. THE GOVERNMENT’S PROGRAM AND PARTICIPATORY PROCESSES
34. The Socio-Economic Development Plan (SEDP) 2006-2010 emphasized development
outcomes and the policy reforms needed to achieve them, unlike previous five-year plans, which
focused on quantitative targets. It relied more on data analysis rather than simply on administrative
reporting to substantiate its diagnostics and recommendations. It also led to the adoption of a
framework to monitor progress towards realizing development outcomes. The process through which
the SEDP was prepared was more encompassing than in the past. Extensive consultations were held,
going beyond the boundaries of government, and involving businesses, grassroots communities,
overseas Vietnamese and development partners (Box 1).
35. In the SEDP 2006-10, the government set out intended actions that fall broadly into four
main pillars: (a) the promotion of growth and transition to a market economy; (b) reducing poverty
and ensuring social inclusion; (c) managing the environment and natural resources in a sustainable
manner; and (d) building institutions that can support the strategy. The first three pillars are explicitly
listed in the SEDP, whereas the fourth one is introduced in the monitoring and evaluation framework
as the foundation to make progress on the other three.
36. Development partners chose to align their efforts behind the SEDP, a testimony to the
ownership of the reform program by the government of Vietnam. The alignment also reflects
satisfaction with the process through which the SEDP was prepared. At the same time, development
partners recognize that some of the reforms will be challenging. The SEDP represents a sustainable
development strategy only if macroeconomic management remains prudent. Moreover, the list of
policy reforms considered by the SEDP is broad, which necessitates prioritization and sequencing.
There is a consensus that supporting the reform agenda of Vietnam does not entail favoring one of the
SEDP pillars over others, but requires being selective within each of the pillars, and paying attention
to the content of the most important measures.
0.0 20.0 40.0 60.0 80.0
Poverty Trends by Region : Vietnam 2002-2008
2008 2006 2004 2002
10
Box 1: Participatory Process for the Government’s Socio-Economic Development Plan 2006-
2010
The SEDP 2006-2010, a milestone in the modernization of planning in Vietnam, presented an outline of
policy measures needed for Vietnam to advance to middle-income status by the end of the decade and
marked a clear break with past five-year plans. Previously, all national plans were prepared directly from the
top down approach and on the socialist premise that the government was in full control over the delivery of
goods and services with a long list of wishful production targets, with consultation processes which involved
only government agencies, and with self-reporting instead of any genuine assessment of results. In contrast, the
SEDP 2006-2010 set the framework for government action and resource allocation which is much more focused
on attaining development outcomes. The SEDP framework was widely consulted with stakeholders outside
government, from grassroots communities to the overseas Vietnamese. Also, for the first time, the SEDP – as
the government‟s primary planning document -- was used as a basis for guiding and allocating ODA.
The preparation SEDP 2006-2010 was built on the experience with the Comprehensive Poverty Reduction
and Growth Strategy (CPRGS). Several initiatives were undertaken since the late 1990s to support modern
planning processes. In June 2001, given the shortcomings of both traditional five-year plans and targeted
poverty reduction programs, the Minister of Planning and Investment (MPI) was given the responsibility to
produce a broader document, addressing poverty issues in a comprehensive way. The content of this document
represented an important step toward genuine analysis and assessment. Instead of relying on administrative
records, the document combined high-quality quantitative and qualitative data into the discussion. This led to a
better coverage of sensitive issues, i.e., the challenge of addressing ethnic minority poverty and the problems
faced by urban migrants in accessing basic services. The document shifted from the description of inputs and the
setting of targets towards the statement of development objectives. As part of this process, the Millennium
Development Goals (MDGs) were localized. There were also efforts to connect policy actions and resource
allocation, with a rudimentary “costing” exercise for the VDGs. CPRGS, which provided the foundation for the
first series of PRSC operations in Vietnam, was approved in May 2002, covering a three-year period.
The process leading to the preparation of the SEDP 2006-2010 had important strengths. There was a
serious effort to collect inputs from different groups of the Vietnamese society. In addition to internal
discussions within government, consultation workshops were held with local officials, groups of academics, the
domestic business sector, international and local non-governmental organizations (NGOs), people living with
disabilities (PWD), overseas Vietnamese, women and women‟s groups, and donors. A series of participatory
research exercises involving local experts and international NGOs also helped to gather feedback from poor
communities in 17 sites across the country. The draft SEDP was declassified for the first time ever. It was
discussed by the National Assembly (NA) in November 2005, a departure from previous practice of deferring its
discussion after the Party Congress. This innovation gave representatives more inputs into the content of the
document than in previous planning cycles. There was also a second round of consultations within government
and with donors and NGOs following the first discussion at the NA.
With the support of the NGO Resource Center, civil society organizations participated actively in the
organization of consultations for the preparation of SEDP. NGOs were also actively involved in the analytical
work underlying this series of credits, with their contribution focusing on infrastructure (especially in the relation
to the needs of PWD), the social sectors and legal development. Substantive inputs were provided on the
interpretation of the key development issues in each area, the identification of the main strengths and weaknesses
of the government‟s strategy to address those issues, the prioritization of policy actions within the SEDP
framework, and the selection of the most appropriate outcome indicators to measure progress in each area.
A well-functioning mechanism has also been in place in Vietnam to conduct consultations with business
associations and the private sector. Prior to both the year-end Consultative Group (CG) meeting between
government and donors and the informal mid-year CG meeting, the Vietnam Business Forum (VBF) gathers to
discuss the issues of concern to a range of chambers and associations representing the interests of enterprises.
The discussion is organized around topics such as investment promotion, transparency, tax, labor, and land. In
each of these areas, a list of main concerns is assembled, and the focus is on assessing progress towards solving
them. Many of those concerns are addressed through policy actions supported by the PRSC process.
11
37. A new Socio-economic Development Strategy 2011-20 and SEDP 2011-15 have been
prepared through a consultative process. They embrace the reform agenda adopted under the previous
SEDP, and define three major “breakthrough areas” as (i) promoting human resources/skills
development; (ii) improving market institutions; and (iii) infrastructure development. Governance is
retained as a cross cutting theme. These guiding documents are expected to be approved by the
current session of the National Assembly (October-November 2011). It is an important time for
engagement by the development partners because Vietnam‟s ability to sustain its remarkable growth
trajectory over decades to come, and eventually become an industrialized country, may be determined
during the next few years. The reforms associated with sustaining growth beyond middle-income
status are more complex than those needed to graduate from a low income country. Active
engagement should contribute to improving the content and coherence of such reforms.
38. In addition to the ten-year Socio-Economic Development Strategies and the five-year
SEDPs, other important policy developments have influenced the reform agenda. By mid-2003, the
government decided to aim for a rapid accession to the WTO. In late 2003, a new anti-corruption
strategy started to emerge, with the emphasis shifting from punitive measures to increased
transparency and the strengthening of the systems through which the government operates. The new
comprehensive anti-corruption strategy was adopted in May 2009, setting out preventive, demand-side
solutions and monitoring mechanisms. The year 2004 saw the coming into effect of the new Budget
Law, which makes the National Assembly and People‟s Councils at all levels responsible for resource
appropriations. A reform road map was adopted in 2006 to prepare the banking sector for
liberalization in compliance with Vietnam‟s WTO commitments. The roadmap included revisions of
the SBV Law and Credit Institution Law, as well as preparation of Bank Supervision Law and Deposit
Insurance Law.
IV. BANK SUPPORT TO THE GOVERNMENT’S PROGRAM
LINK TO CPS
39. The Country Partnership Strategy (CPS) submitted in January 2007 concluded that the
SEDP had incorporated the necessary poverty reduction principles, was broadly sound and was a plan
that could both deliver growth and reduce poverty. The CPS defined the PRSC as one of the
modalities to support the implementation of SEDP. The Program Document for PRSC 6, submitted to
the Board in June 2007, charted the second cycle of PRSC operations (PRSCs 6-10). The CPS
allocated US$150 million to each of the PRSCs in the second cycle. In practice, however, the amount
for PRSC 6 was increased to US$175 million, and that for PRSC 8 was increased to $350 million
using the Fast Track Facility, in order to respond to the government‟s request to help finance the
stimulus package. The amount for PRSCs 7 and 9 was US$150 million each. The amount of credit
the CPS allocated to PRSC 10 is also US$150 million.
40. A new CPS accompanying SEDP 2011-15 is under preparation, and is expected to be
discussed by the Executive Board of Directors concurrently with its consideration of the proposed
operation. The pillars of the new CPS are competitiveness, opportunities and sustainability, while
cross-cutting themes are governance, gender, and resilience. The proposed operation is consistent with
the new SEDP and hence the new CPS, supporting policy reforms to make the markets function better
while enhancing social inclusion, and strengthening environmental sustainability. The new approach
of making governance, gender and resilience as cross-cutting themes is also in line with the proposed
operation‟s holistic approach to supporting interconnected reform agenda.
12
COLLABORATION WITH THE IMF AND OTHER DONORS
41. The International Monetary Fund (IMF) has not had a program in Vietnam since the
Poverty Reduction and Growth Facility expired in April 2004. However, the IMF maintains a regular
policy dialogue through Article IV consultations, interim staff visits, and its resident representative
office in Hanoi, and seeks to build capacity through training activities for the Vietnamese officials. It
supplements this dialogue with technical assistance (TA) in areas of its expertise. A joint Financial
Sector Assessment Program is planned next calendar year. The IMF and the World Bank continue to
collaborate closely in Vietnam to ensure harmonized dialogue with the government.
Table 3: Development Partners Co-Financing PRSC Operations
Donor PRSC 12 PRSC 2 PRSC 3 PRSC 4 PRSC 5 PRSC 6 PRSC 7 PRSC 8 PRSC 9e PRSC 10p
ADB 6.4 15.0 15.0 15.0 20.0 100.0 24.84
Austraila1 7.7 14..3 11.5
Canada 5.8 7.0 3.4 9.2 4.9 4.5 3.9 2.9
Denmark 9.7 3.3 13.5 10.0 10.6 12.0 11.1 11.1 10.7 10.7
UK 1 19.7 17.3 36.0 34.9 39.3 39.6 36.4 31.8 31.5 31.5
EC 19.9 10.3 12.4 30.9 20.7 18.2 23.0
Ireland 1.7 3.9 11.0 11.9 1.4
Germany 7.8 8.8 9.6
Japan 18.6 20.8 21.5 30.0 70.0 3 41.0 TBA
Netherlands 13.4 10.0 16.0 17.6 31.0 17.6 9.6
New Zealand 2.0 1.0
Sweden 1.9
Spain 2.6 3.9 7.3 11.9 7.0 8.1 4.7
Switzerland 1 3.7 3.8 3.8
DPs subtotal 45 31 116 120 156 196 155 253 147
World Bank 250 100 100 100 100 175 150 350 150 150
Total 295 131 216 220 256 371 305 503 297 TBA
Notes: Figures are in US$ million. (e) estimate, (p) projections, subject to approval.
1 The financing for the PRSC Secretariat are provided by DFID (PRSCs 4-5), Switzerland (PRSCs 5-6), World Bank
(PRSC 6), AusAID (PRSC 7), CIDA (PRSC 8), JICA and World Bank (PRSC 10).
2 PRSC 1 operation was in two tranches: World Bank financing were $150 million and $100 million, and co-
financiers‟ contributions were $22 million and $23 million for the two tranches, respectively.
3 In addition, Japan also contributed a parallel-finance in the amount of Japanese Yen 47.9 billion to support the
government‟s stimulus efforts.
4 ADB‟s finance will support both PRSC 9 and 10 operations.
42. The PRSC operations serve as an aid harmonization platform, supported by a large number
of development partners. Over the years, many partners participated in the policy dialogue through
PRSC series, with the number of partners providing financing peaking at 11 for PRSCs 6 and 7.
PRSC 10 is expected to have seven co-financiers (Table 3). The PRSC operations are a vehicle for
development partners to follow a large number of policy areas even with a small number of staff.
They are also a common forum to raise issues or concerns with the government, allowing an easier
access to large number of ministries and agencies than would have been possible if the partner was
acting alone. The development partners typically engaged selectively in policy areas, based on their
interests and technical capacity on the ground. Many of the development partners provided TA around
the PRSC policy dialogue, which proved particularly effective in highly technical and complex areas.
The role of co-financiers evolved over time from providers of financing to partners engaged in the
13
preparation of the operations and the policy dialogue with the government. This coordination also
reduced the transaction costs for the government ministries and agencies.
43. The volume of resources mobilized so far is significant. About US$2.6 billion have been
committed in budget support over the first nine PRSC operations. The total amount could rise to close
to US$3 billion with the tenth operation. However, when compared with the national budget, the
PRSC operations amount to less than 2 percent of public expenditures, which means that Vietnam is
not aid-dependent, and chooses to engage in dialogue with the donors more for the knowledge and
expertise brought to the table. This fact raises the bar for the policy dialogue, giving prominence to its
analytical underpinnings.
RELATIONSHIP TO OTHER BANK OPERATIONS
44. The CPS 2007-11 is organized around the pillars of the SEDP, with the policy dialogue to
help implement Vietnamese reform program. The PRSCs are the apex of the policy dialogue, while
sector development policy operations (DPOs) delve deeper into sector-specific dialogue. Policies
affecting multiple sectors are typically addressed under PRSC, whereas sector-specific or more
detailed ones are treated under sectoral DPOs. A program comprising investment lending, analytical
work, and technical assistance supports implementation at the sectoral level. There is a
complementarily between the different components of the partnership program. The overall direction
of the policy dialogue is informed by the analytical work. Concrete policy measures are often made
possible by preparatory TA work. Investment credits and loans also provide an opportunity to pilot
new initiatives and approaches, which are then scaled up through the policy dialogue. The reforms
supported by the latter, in turn, enhance the effectiveness of sectoral investments.
45. Nine PRSC operations have supported the implementation of Vietnam‟s reform agenda so
far. PRSC 1, a two-tranche credit, was approved by the Board in June 2001. Its focus was mainly on
the structural reform agenda. The second tranche of PRSC 1 was released in December 2002. PRSC
2, a one-tranche operation like all its successors, was approved in June 2003. This operation was
aligned with the Comprehensive Poverty Reduction and Growth Strategy (CPRGS) of the
Government, which made it possible to broaden considerably the range of reforms supported. In
addition to the mainly structural aspects covered by PRSC 1, this second credit included various policy
actions aimed at keeping development inclusive and building modern governance. PRSCs 3 to 5 were
approved in June 2004, 2005 and 2006 respectively and had a broad sectoral coverage. The sixth
PRSC, approved in 2007, launched the second series in the program. The seventh, eighth and ninth
PRSCs were approved in June 2008, June 2009 and June 2010, respectively. The operations in the
second cycle added natural resource management and the environment to the program.
46. When there is a need for a more focused sector policy dialogue, sector DPOs complement
the PRSCs, as is the case with the series of Program 135 Phase 2 Operations (Cr 4274-VN, Cr 4580-
VN, and Cr 4918-VN), Higher Education Development Policy Programs (Cr 4604-VN, Cr 4786-VN),
Public Investment Reform DPL (Ln 7838-VN), Power Sector Development Policy Operations (Cr
4711-VN and Ln 7868-VN), and Climate Change Development Policy Operation (P122667, under
preparation). For example, Program 135 Phase 2 supports the government‟s National Targeted
Program for “Socio-economic development in communes facing extreme hardship in ethnic minority
and mountainous areas” is focused on reducing poverty at grassroots level, targeting the ethnic
minorities in particular. The program is focused on direct poverty reduction using community-based
approach, whereas PRSCs seek strategic policy reforms that would have broader but perhaps more
indirect impacts on poverty reduction. Some of the policy issues that were originally included on the
reform agenda at the beginning of this PRSC cycle are transferred to sectoral DPOs once a strategic
policy decision has been made. For example, the separation of power transmission and generation
assets and the regrouping of transmission assets under a single National Power Transmission
Corporation had been accomplished under previous PRSCs, as had been the adoption of a pricing
14
system for electricity from renewable energy. Follow-up issues are now being addressed through the
Power Sector DPOs.
47. Several of the investment projects and AAA products are particularly complementary to the
PRSCs. The Financial Sector Modernization and Information Management System Project (Cr. 4505)
is focused on SBV, Deposit Insurance and Credit Information Center (CIC) capacity building and the
Rural Finance III project supports capacity development for enhanced supervision of microfinance
institutions. A Financial Sector Reform and Strengthening (FIRST) Initiative grant is supporting CIC
in developing strategy, business plan and training programs. Ongoing AAA and related work is
supporting SBV in revising several regulations in line with new Law on Credit Institution and closer to
international standards (including regulation relating to disclosure of financial statistics) (P117058 and
P128859) as well as working with MOF in looking at options for making operations of policy banks
more effective (P118933). Bank-Fund teams are also developing a plan to support preparatory work
for the FSAP scheduled for end 2012. All these efforts work hand-in-hand with the PRSCs‟ efforts to
modernize the central bank, increase disclosures of relevant financial information, and contribute to
the development of the financial sector in general.
48. In the education sector, the Bank's lending operations and non-lending activities
complement the PRSC‟s focus on fundamental education strategy and policies in the areas of quality,
equity and accountability. Investment lending supports the development and implementation of
standards-based approaches to education delivery, especially to disadvantaged groups of children
(Primary Education for Disadvantaged Children Project (P044803) and School Education Quality
Assurance Project (P091747)) and the exercise of autonomy combined with accountability at higher
levels of the education sector (First and Second Higher Education Projects (Cr 4606-VN and Cr 4786-
VN)). The two sectoral development policy operations complement the PRSC series by delivering a
more comprehensive set of higher education reforms than can be delivered through the multi-sectoral
PRSC instrument, notably in the areas of governance, financing, quality assurance and public financial
management.
49. The World Bank‟s lending program has been complemented with IBRD resources starting
in FY2010 after the Progress Report of the Country Partnership Strategy was discussed by the Board
of Executive Directors in December 2009. The financing priorities for IDA and IBRD include energy,
transport, tertiary education, financial, water, urban, and health sectors. Three IBRD-IDA blend and
three IBRD operations have been approved so far: Power Sector Development Policy Operation (Cr
4711-VN and Ln 7868-VN), Trung Son Hydropower project (Ln 8041-VN), additional financing for
Second Transmission and Distribution project (Ln 8026-VN), Public Investment Reform DPLs (Ln
7838-VN; Cr 4944-VN and Ln 8053-VN), and Da Nang- Quang Ngai Expressway Development
Project (Ln 8049-VN and Cr 4942.VN).
LESSONS LEARNED
50. One of the lessons learned from the previous cycle of operations is the need to have a
comprehensive approach to economic reform for several reasons. First, there are linkages between
policy actions across sectors, so that a piecemeal approach would end up being less effective. For
instance, improving the delivery of social services requires an appropriate balancing of government
finances, in addition to the understanding from the demand-side. Good public financial management
is an essential ingredient to improved results in health and education sectors. Another example is the
inter-linkages between the anti-corruption dialogue and improving business environment. As different
ministries and agencies are in charge of these agenda, an overarching framework is useful in
addressing the underlying issues holistically.
51. Second, there are differences in readiness to embrace reforms in different areas. The reform
program is government-driven, with the window of opportunities difficult to predict. As a result, it is
useful to accumulate various technical building blocks necessary across the policy spectrum, so that
ambitious reforms can be supported without delay whenever the opportunity arises.
15
52. Third, the PRSCs serve as a framework for interaction between the government and the
development partner community. When coordinating the numerous partners with different interests,
excessive selectivity has proven impractical. In addition, it could also represent a lost opportunity, as
the large number of partners translates into a wider range of technical expertise than when IDA is
acting alone. Hence, the policy matrix tended to contain large number of items at the beginning of
each operation. The policy matrix narrows down somewhat over the course of preparing the
operations, as the dialogue evolves and the readiness of the government counterparts becomes clearer.
53. Drawing on these lessons, this cycle of PRSC operations was designed to be
comprehensive, covering 17 sectors. This design was well-suited to address the challenges at the time
it was conceived. However, the development needs evolve over time, especially for a rapidly
transforming country like Vietnam. After 10 years of multi-sectoral policy reforms, there are fewer
reforms that are simple technically and politically. As the remaining time in the cycle declined, the
range of reforms that could reasonably be expected to be completed within the operations‟ timeframe
decreased. The donor coordination aspect of the PRSCs has also evolved. The country‟s success has
led some of the development partners to start withdrawing or reducing their assistance to Vietnam.
Some agencies, including the World Bank, have started to give less concessional financing. Some of
the partners switched their focus on more specialized policy-based operations depending on their
interest, as the number of such operations increased. The number of co-financiers also peaked at 11
for PRSCs 6 and 7. Consequently, the later operations in the cycle have fewer benchmarks, although
the number of triggers (prior actions) stayed about the same.
54. A lesson from later operations in the cycle is that strengthening the Government‟s
ownership of the reform program is even more important when the reforms are more difficult, tend to
take longer, and often consist of making choices when all the options have pros and cons.
Interventions by development partners are effective only if the government is convinced of their
utility. While all policy reforms supported by PRSCs are Government-owned, in the sense that no
policy reform is discussed unless it is in the Government‟s work program, some areas are more
conducive to policy dialogue because the state management agency has good capacity and open to new
ideas, well–coordinated within itself, and there are less controversy in the direction of reforms.
Everything takes time in Vietnam due to the country‟s consensus-based decision making. Due to the
diffused power structure, major breakthroughs are extremely unlikely in the short term. Vietnam is
also a country of planners, and all policies must have a legal framework consisting of a law, decree(s),
circular(s) and guidelines, incorporated in a sector strategy, master plan, roadmap, action plan and
implementation schedule prepared at both central and local levels of governments. It generally takes
at least a few years from conception of an idea to implementation, and it is not always clear at which
point of time interventions are most useful and effective. For example, when a review of the past
strategy is undertaken may be the time the Government is more open to new ideas, and hence, the
most effective time to intervene, even though conducting reviews is normally not considered a policy
reform per se.
55. Furthermore, the instinct for secrecy is still pervasive among officials, and some
government officials consider a subject matter not ready for discussion until the piece of legal
document under preparation was ready for submission to the highest authority (usually the Prime
Minister) after having gone through the lengthy consultation and approval process, at which point, the
policy dialogue on the subject matter would be too late. Some were reluctant to share the legal
documents under preparation, which reduced the depth of policy dialogue. Having the right
counterpart is particularly important in this context, as departments within a ministry do not always
share information, so are not necessarily aware of what others are doing. For new policy initiatives, an
official with sufficient level of authority is needed, but for complex reforms, an official with good
command of technical details is needed. Securing the right counterpart has not always been easy, but
it is one of the most important ingredients to fruitful reform efforts.
16
56. In the future, the engagement areas for policy reforms should be chosen more selectively as
there are limited resources to tackle increasingly complex challenges. The foremost criteria for
selection need to be whether the Government‟s is motivated to undertake the reforms and wishes to
have engagement of development partners, not how desirable the reforms are. Ownership will also
help ensure that the dialogue will take place with the right counterpart. The timeframe allotted for a
policy reform should be a few years. It should also be taken into account that policy dialogue can be
useful at an early stage of reform, even if the dialogue does not culminate in adoption of a legal
document (such as decrees and circulars) within the operation‟s preparation timeframe.
ANALYTICAL UNDERPINNINGS
57. The Vietnam Development Report (VDR) 2007, titled Aiming High, provides the main
underpinnings for the current PRSC series. The preparation of this report was built on the analytical
work done over the first PRSC cycle, on structural reforms (as summarized in the VDR 2006 titled
Business), institutional modernization (VDR 2005, titled Governance) and on social inclusion (VDR
2004 titled Poverty). The process was led by the World Bank with a large number of development
partners participating, several of them contributing extensive inputs. Participants included the co-
financiers of the first PRSC series as well as other development partners, including the United Nations
agencies and international non-governmental organizations. A reviewing committee of recognized
Vietnamese experts and policy-makers advised on each of the policy areas and on the overall thrust of
the report.
58. A new series of VDRs goes more in depth into each of the four pillars of the SEDP 2006-
2010. The first volume in this series, the VDR 2008 titled Social Protection, examines the challenges
remaining in relation to poverty alleviation, with a focus on the plight of ethnic minorities. While
representing only 14 percent of the Vietnamese population, ethnic minorities account for a large share
of the poor. Even though their poverty rates have been declining steadily in recent years, the gap with
the Kinh majority has not narrowed, and some ethnic groups remain especially deprived. The VDR
2008 also analyzes the structural shifts affecting the Vietnamese society, resulting from the
demographic transition and rural-to-urban migration, and the change in the nature of the shocks
experienced by Vietnamese households, from greater exposure to international fluctuations to the
growing importance of communicable diseases. These shifts and shocks have important implications
for the design of public policies and programs, supporting the development of more institutional social
protection mechanisms and the transition to a risk-based approach and demand-side financing in the
case of the health sector.
59. The VDR 2009 titled Capital Matters focuses on constraints to the mobilization of
resources for accumulation and on the efficiency of investments by both public and private sectors.
Some of those constraints are common to many developing countries, whereas others are more
specific to the transition from planned to market economy. The report reviews the operation of the
main channels used to mobilize resources for investment in Vietnam, including tax revenues, bond
issuance, equity, and ODA. In the case of public investments, it identifies weaknesses in the selection,
appraisal and implementation of projects. Some of those weaknesses result from the different speed at
which decentralization, public financial management and environmental policies have progressed in
recent years. Special attention is devoted to state capital, and the potential risks created by weak
corporate governance in SOEs, conflicts of interest in the Government between ownership and
regulation, and the ability of large groups of SOEs to control financial institutions, thus undoing
previous efforts to harden the budget constraint.
60. The policy dialogue in governance pillar is underpinned by various analytical work
including the VDR 2010 titled Modern Institutions, which explores the devolution of power from the
central government apparatus to various institutions, including local governments, service delivery
units, legal and judiciary systems and institutions of oversight, the latter including entities as varied as
the National Assembly, mass media and official bodies investigative bodies. It analyses the
17
mechanism of accountability for these institutions. The focus of the report is the outcomes perceived
by citizens and private sector. It also profiles the governance module added to the 2008 Vietnam
Household Living Standards Survey (VHLSS). Several of the central themes of the VDR relate
directly to the current operation, especially the issue of access to information of all sorts, strengthening
the roles of oversight entities to enhance accountability, and reforming public administration.
61. The VDR 2012 will deal with the challenges of creating a market economy appropriate for
Vietnam‟s current status as a middle-income country. Some of the issues to be covered include the
role of the state-owned enterprises, effectiveness of price controls and management, the need for
greater transparency in the policy-making process and reducing institutional fragmentation in order to
effectively implement government policies. The report is under preparation, and the preliminary
findings are helping the Bank and the development partners to anchor their policy dialogue in new
evidence and analysis.
62. In addition to VDRs, sector-specific analytical work underpins policy dialogue in that
sector. For example, the policy dialogue in the energy sector is informed by extensive analytical work
over the past ten years. Recent analytical work includes support for the preparation and passing of the
Electricity Law (2004) and the Roadmap for Reform of the Electricity Sector (2006), Electricity
Licenses (2006 and 2007), Conceptual Design of Competitive Generation Market (2008), Framework
for Thermal BOT Tenders (ongoing), Development of Market Rules for the Competitive Generation
Market (ongoing), and Grid Code and Distribution Code and Metering Code (ongoing). Work on
restructuring of the electricity sector includes Restructuring the Power Transmission Business (2005),
Equitization of the Power Sector (2006), a policy note on Restructuring for the Competitive
Generation Market (2008). Pricing studies include on the Bulk Power, Distribution Margin, and Retail
Tariff Design study (2005), Retail Tariff Methodology (2008), Tariff Calculation Model (ongoing),
and Transmission Pricing Methodology (ongoing). The Bank has also reviewed energy plans and
planning processes, particularly Power Master Development Plan No.6 (2006) and the Gas Master
Plan for Southern Vietnam (2008). In addition, Vietnam Gas Sector Development Framework was
completed in 2010.
63. Gender issues have been studied from various angles. Recent analytical work
underpinning the policy dialogue include Women Retirement Age Increase Gender Equity Dimension
(2008), a study funded by the World Bank and authored by the Institute of Labor, Science and Social
Affairs (ILSSA)6, and Socio-Economic Impacts of WTO Accession on Rural Women (2009) authored
by ILSSA, UNIFEM, and AUSAID.
64. A Public Expenditure Review/ Integrated Fiduciary Assessment (PER-IFA) and a Country
Fiduciary Accountability Assessment (CFAA) were carried out in 2005 and 2007, respectively. While
noting the progress made, they pointed out areas that are in need of further improvements. These
include the process of budget development, accessibility of financial information, and accounting and
auditing framework. These recommendations form the basis for policy dialogue conducted through
the PRSC series.
6 ILSSA is a research institute associated with MOLISA.
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V. THE PROPOSED OPERATION
OPERATION DESCRIPTION
65. The proposed credit concludes the cycle of operations which supported the set of reforms
carried out under the framework of SEDP 2006-10. A new 10-year Socio-economic Development
Strategy for 2011-2020 and 5-year SEDP for 2011-2015 are expected to be adopted this year, taking
stock of the implementation during the last phase and laying out the strategies and plans to achieve the
goals in coming years. This cycle of PRSCs accompanied the last SEDP (2006-10), serving as a well-
established mechanism to provide a coordinated financial and technical assistance from development
partners in the past. It is also serving as a framework to take stock of the effectiveness of development
partner activities, and to design the new partnership modality beyond PRSCs.
66. The policy matrix for PRSCs 6-10 was developed at the beginning of this cycle, using the
SEDP 2006-2010 and other strategic documents as well as analytical work as the basis for selection.
Throughout this series of operations, some of the policy actions are adjusted as new issues arose, new
studies become available, or the original plan became no longer applicable (the summary of all policy
reforms supported under PRSCs 6-10 is in Annex 2).
67. The policy matrix for every PRSC operation contains two types of policy actions. The first
type is “triggers,” which are deemed to be more strategic, because of their potential impact on
development outcomes over time. The triggers are selected during the previous PRSC operation, and
are reported in the minutes of the negotiations (PRSC 9 in this case). The “triggers” are not rigid
conditions but represent a collective understanding of measures addressing immediate concerns (for
example, enhancing public disclosure and communication of SBV policies and banking sector
statistics), and medium-term structural reforms to be initiated now as a priority (for example,
formulating a roadmap to improve corporate and government bond markets to foster financial and
economic growth).
68. In addition to the triggers, the policy matrix also contains other reforms undertaken by the
government. This broader set of actions, or “benchmarks,” does not represent the use of
conditionality, but reflects the breadth and scope of the reforms being undertaken by the government
of Vietnam, and is a way to engage in the substances of the reforms. By providing a more
comprehensive picture of developments in each policy area, this matrix allows a better understanding
of the progress being made in the reform program. This year, the engagement areas were narrowed
down to pave the way for a smooth transition to the successor operations. Concretely, policy reforms
were included in the matrix for the proposed operation only if they are: a continuation or completion
of those which were already under discussion in previous PRSC operations, as are the case for the
gender and health triggers, or; of highly strategic importance which are deemed to influence the
medium-term economic landscape, such as the banking sector strategy, even though reforms are
unlikely to be completed within the timeframe of this operation.
69. The technical meetings are coordinated by the PRSC Coordination Unit at the SBV. The
Coordination Unit reports to the Steering Committee for the PRSC process, which is chaired by the
first Deputy Prime Minister. The Coordination Unit identifies the relevant line ministry or government
agency for each proposed policy action. The technical meetings with those ministries and agencies
provide an opportunity to go into the specifics of each action, to comment on draft policy documents,
and to agree on a time frame for their completion. As a result of these technical meetings, some
measures are deemed completed, some may be consolidated, and others may be postponed. Pending
issues regarding policy actions which are considered of strategic importance (either in terms of content
or timing) can be raised to the attention of the Steering Committee.
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POLICY AREAS
70. The PRSCs 6-10 address four pillars of the SEDP 2006-10, namely business development,
social inclusion, natural resource management, and modern governance. The eleven triggers chosen
for PRSC 10 were somewhat unevenly distributed across the four pillars, reflecting the important
reforms that are deemed feasible during the timeframe of the proposed operation. The triggers are
aimed high enough so that they are challenging, with the recognition that not all triggers will be met
fully, while others might be exceeded. It is worth noting that the PRSC series in Vietnam is the third
best performer out of 27 PRSC countries reviewed world-wide by IEG (2009) with the lowest number
and percentage of triggers relaxed.7 The achieved triggers are presented as “prior actions” whereas
those that were not met fully during the operation‟s timeframe are followed up through subsequent
operations and other channels.
71. The prior actions and benchmarks are discussed briefly below by pillars, and assessment of
achieving the prior actions is summarized in table 4 below.
Pillar I: Business development
72. The Prime Minister has issued a regulation to expedite equitization of state-owned
enterprises, and MPI has submitted to the Prime Minister a review of the state-owned Economic
Group model. Improving the corporate governance of state-owned Economic Groups has become a
topic of intense national debate recently due in part to problems of an over-leveraged shipbuilding
SOE. Academics and members of national assembly demanded increased oversight of SOEs and
greater disclosure of financial information regarding their operations. Some were concerned about the
low return on investments while others demanded more transparency in implicit and explicit benefits
that SOEs receive. The government‟s initial reaction seemed to be that of exerting more control to the
point of examining every external loan and investment decision made by SOEs, at least in the short-
run. The government has acknowledged that the strategy of pursuing economies of scale through
Economic Groups, which was adopted a few years ago, was in need of reconsideration. To this end,
the Prime Minister commissioned a review of Economic Group model (Prime Minister‟s Notice No.
25/TB-VPC dated February 25, 2011) as an important first step towards revision of the medium-term
strategy. While the study and debates are ongoing, the consensus on the new direction has not yet
emerged, partly because major policy decisions were put on hold during the prolonged political
transition period between end of 2010 and 2011Q3. Hence, the original trigger “develop a time-bound
plan to separate the exercising of the state-ownership rights from regulatory function in Economic
Groups and large General Corporations” was deemed unattainable within this operation‟s timeframe.
A draft plan is in a preliminary stage, and still requires consultation with all stakeholders. In Vietnam,
a consensus forged through a lengthy consultation process is critical for successful implementation,
and the more polemic the reform agenda, the longer the process tends to take. In the framework of the
proposed operation, policy dialogue continued at technical level, and discussions were held on merits
of different SOE models in the world, and the corresponding regulatory and governance framework
needed to make them successful. At the same time, the operation supported the more technical aspects
of reforms, such as reducing the size of state sector and introduction of foreign expertise through
expedited equitization, enhanced accountability and more informed decision-making through
increased disclosure. The operation also supported the government in reforms to manage better
potential fiscal and balance-of-payments risks emanating from SOEs through better monitoring of
external debt contracted by SOEs and strengthening the assessment of enterprises‟ ability to service
the debt. It is the team‟s assessment that the Decree 59/2011/ND-CP removing bottlenecks to
equitization, together with the review of the Economic Group model, and the government‟s new
willingness to share the review, which was considered too sensitive a year ago, constitute a solid
progress in state sector reform.
7 IEG (2009) p26. It refers to 86 PRSCs in 27 countries implemented during FY 01-08 (corresponding to
PRSCs 1-7 in Vietnam).
20
73. SBV has issued a regulation to enhance public disclosure and communication of
SBV’s policies and banking sector statistics. The SBV issued Circular 35/2011/TT-NHNN dated
November 11, 2011 stipulating disclosure of standard banking sector statistics and monetary policies.
Such information is expected to help the public understand the policy regime, check whether the
bank‟s actions match the regime, and pass judgment on its performance. With the new circular,
Vietnam comes closer to meeting the IMF data dissemination standards for presentation and release of
central bank data relating to coverage, periodicity, timeliness of data and access by the public.
Important information such as financial soundness indicators and summary banking sector statistics
will be made public on a regular basis. The Circular is explicit about the periodicity and the
departments in charge of making the information available, which are critical in smooth
implementation. Greater transparency and availability of information would allow decisions to be
better informed, while better accountability imposes firmer discipline on decision-makers. Together,
they can contribute to higher-quality decisions in central banks. In preparing the circular, the SBV
consulted widely among the stakeholders, which bodes well for successful implementation.
74. MOF has formulated a time-bound roadmap to improve corporate and government
bond markets to foster financial and economic growth. MOF is formulating a roadmap for
developing the government and corporate bond markets to help finance the country‟s development
needs. It is intended to be a living document which will be adjusted as necessary. Parts of it, for
example, the issuance of government bond decree, are already being executed. The roadmap translates
the bond market development strategy into concrete actions, with the aim of diversifying sources of
funds in the context of declining concessional funds, uncertain external financial environment, and the
need to reduce reliance on bank credits for long-term projects. In the short term, actions include
improving the debt management capacity, upgrading the existing laws and regulations to international
standards, and arranging systematic auction calendar and reducing the auction frequency. In the
medium term, it plans to centralize supervisory unit of corporate bonds, develop multi-tier trading for
the secondary market, and introduce new laws and regulations to promote bond related activities. The
formulation of the roadmap was supported by two Technical Assistance programs administered by the
World Bank (multi-donor trust fund) and Asian Development Bank.
75. The Prime Minister has adopted a Gas Master Plan to 2015 with Visions to 2025,
including a time-bound instruction to MOIT to prepare a Gas Market Reform Roadmap to 2020
for consideration by the Prime Minister. According to Vietnam Gas Sector Development
Framework (2009), Vietnam needs to increase electricity supply to meet its rapidly growing demand.
As an important step towards increasing the supply, and moving to clean sources of energy while
doing so, the Prime Minister adopted a Gas Master Plan8 in April 2011. The Plan stipulates that the
Ministry of Industry and Trade is to “conduct and coordinate with relevant ministries and agencies to
develop and promulgate a reasonable gas pricing policy to make the pricing system flexible, option for
gas price mixing to ensure financial incentives for investment in gas field development especially the
small, deep water, offshore fields and the high CO2 content fields, etc., and also to ensure the
competitiveness of gas against other alternative fuels, to develop a roadmap of gas market reform for
the prior-2020 period.” The Plan takes a highly advisable step of seeking to develop a market for gas
before the next phase of sector reform (a wholesale generation market) is due to be completed in 2014.
76. In addition to the four prior actions discussed above, the dialogue in the business
development pillar also addressed diverse issues in the areas of global integration, and state and
financial sectors. Policy reforms were introduced to facilitate trade through establishment of national
single window, strengthen risk management of contingent liabilities arising from SOEs, improve
monitoring of external private debt flows, and to enhance the banking sector health through
development of the sector strategy. The policy dialogue on the regulation pertaining to loan
classifications at commercial banks, which started during the previous operation, is still ongoing.
8 Master plans are important legal document in Vietnam, which require detailed stakeholder consultations
and ministerial as well as government-wide review process.
21
Commercial banks have suffered during the global economic crisis and recent macroeconomic
turbulence in Vietnam, and as a consequence, not all of them appear to be ready to implement the
rigorous risk assessment that will be required under the new regulation. SBV is well aware of the
importance of enhancing the soundness of its banking sector, but is trying to avoid imposing undue
stress while commercial banks cope with the difficult period.
Table 4: Prior Actions for PRSC 10
Sector Prior Action
Pillar I: Business development
State sector
reform The Prime Minister has issued a regulation to expedite equitization of state-owned enterprises, and
MPI has submitted to the Prime Minister a review of the state-owned Economic Group model
(substitutes the negotiated trigger)
Financial sector
reform SBV has issued a regulation to enhance public disclosure and communication of SBV‟s policies and
banking sector statistics
Private Sector
Development MOF has formulated a time-bound roadmap to improve corporate and government bond markets to
foster financial and economic growth
Infrastructure The Prime Minister has adopted a Gas Master Plan to 2015 with Visions to 2025, including a time-
bound instruction to MOIT to prepare a Gas Market Reform Roadmap for consideration by the Prime
Minister
Pillar II: Social inclusion
Education MOET has issued a regulation to institutionalize regular nationwide assessments of student learning
outcomes at primary and secondary levels
(modified from the original trigger)
Health MOH has issued a regulation to establish a centralized database as a step towards unifying the
national licensing system of healthcare professionals
(modified from the original trigger)
Gender The Prime Minister has adopted a set of national gender development indicators and criteria for sex-
disaggregation in the national statistics
Pillar III: Natural resources
Environment MPI has issued technical guidelines for the application of strategic environmental assessments in the
process of socio-economic development planning
Pillar IV: Modern governance
Public
Financial
Management
MOF has started an annual exercise of publishing the synthesis report based on financial statements of
state-owned Economic Groups and General Corporations
(substitutes the negotiated trigger)
Public
Administration
Reform
The Prime Minister has adopted a Public Administration Reform Master Program for 2011-2020, and
MOHA has started piloting a results-oriented monitoring and evaluation system
(modified from the original trigger)
Fighting
Corruption
GI has developed a framework for monitoring progress on the implementation and results of efforts to
prevent and combat corruption
Pillar II: Social Inclusion
77. MOET has issued a regulation to institutionalize regular nationwide assessments of
student learning outcomes at primary and secondary levels. In the light of Vietnam becoming a
middle-income country, there is increasing attention both by public and the government to students‟
22
learning, in addition to enrolment and completion, as a means to assess effectiveness and efficiency of
the education system. Improved assessment is an integral part of the Education sector strategy for
2011-20, the formulation of which was supported by PRSC 8, and which is expected to be approved
after the adoption of SEDS 2011-20 and SEDP 2011-15. This operation supported the issuance of
circular (issued on November 3, 2011), which improves testing and assessment to monitor and
evaluate curriculum reform. Better assessments of learning outcomes could be used to improve
efficiencies, and improve return on sector investments. The prior action was slightly modified from
the originally negotiated trigger, as “participation in international assessment programs” was taken
out; Ministry of Education and Training (MOET) wished to concentrate on institutionalizing regular
nationwide assessments first, and continue with ad hoc participation in international assessments for
the time being. This policy reform complements the reforms supported by the previous operation in
expanding full-day schooling for all children. The stakeholder consultations of the draft cost estimates
for full-day schooling launched are still on-going.
78. MOH has issued a regulation to establish a centralized database as a step towards
unifying the national licensing system of healthcare professionals. Ministry of Health (MOH) is in
the process of issuing a series of implementing decrees and circulars for the Law on Examination and
Treatment. Following up on PRSC 9, this operation supported MOH in preparing and issuing an
implementing decree 87/2011/ND-CP (dated September 27, 2011) and Circular 41/2011/TT-BYT
(dated November 14, 2011). The latter stipulates a centralized database, a critical ingredient for a
unified licensing system. The issuance of these decree and circular was a priority to start the licensing,
and the implementation experience is expected to feed into the drafting of other legal documents that
will complete the regulatory framework for the unified licensing system. Elements that still need to be
addressed include standardized handling of complaints of professional misconduct, inspections and
disciplinary actions thereof, centralized mechanism to enforce compliance with the law and
regulations. The issuance of the decree and circular is assessed to represent a significant progress in
the reform process.
79. The Prime Minister has adopted a set of national gender development indicators and
criteria for sex-disaggregation in the national statistics. This prior action follows up on the
dialogue carried out under PRSC 9. An inventory study of available gender-related data which also
identified gaps and areas of concern was financed by the World Bank in 2009. The study also provided
information on how these data align with current international gender indices. General Statistics
Office (GSO) has included several gender equality indicators in its new set of national indicators
under the expanded National Statistical Indicator System, which was approved in June 2010.9
National Gender Strategy was adopted in December 2010. The system of more than 100 national
gender development indicators was prepared by the GSO, in extensive consultation with ministries,
agencies and other stakeholders which would use the statistics, and was adopted by the Prime
Minister‟s Decision 56/2011/QD-TTg on October 14, 2011.
80. In addition to the three triggers discussed above, the dialogue in the social inclusion pillar
supported a reform in establishing performance indicators for the health insurance fund, one of the
largest statutory funds, and exploring the ways to publish them with accompanying analysis.
Pillar III: Natural Resources
81. MPI has issued technical guidelines for the application of strategic environmental
assessments in the process of socio-economic development planning. The Law on Environmental
Protection (2005) stipulates the requirement for conducting Strategic Environmental Assessment
(SEA) for strategic policies, programs and plans. One of the guiding regulations issued to implement
the Law, Decree 04/2008/ND-CP, contains provision for obligatory application of SEA in the
development of socio-economic Master Plans. Although the SEA concept and requirement have been
9 Decision 43/2010/QD-TTg dated 2/6/2010.
23
introduced in the government legislation for some time, systematic application to the planning
processes remains a challenge. The major constraint for the application of SEA at present is the lack of
technical guidelines and regulation on financing mechanism. Despite the regulation to allocate 3
percent of the total budget for developing or revising socio-economic Master Plan, it remains unclear
how to use these funds. As the new cycle for socio-economic Master Plans began in 2011, the
adoption of specific SEA technical guidelines for this process would help ensure environmental
sustainability in Vietnam‟s economic development planning. To this effect, MPI will issue the
guidelines by end October 2011, prepared in collaboration with Ministry of Natural Resources and
Environment after extensive consultations with the potential users to make the guidelines user-
friendly. Decree 29/2011/ND-CP issued April 18, 2011 stipulates the use of these guidelines.
Pillar IV: Modern Governance
82. MOF has started an annual exercise of publishing the synthesis report based on
financial statements of state-owned Economic Groups and General Corporations. This prior
action replaces the originally negotiated trigger for public financial management discussed in the next
paragraph. A default by a large SOE served as an acute reminder to the government that poor
performance of SOEs has fiscal implications. It could take a form of recapitalization of an enterprise
or bailing out enterprises that are unable to meet their debt service obligations, or less dramatically, of
lower (or negative) profit than if the enterprises were performing well. In response, Ministry of
Finance (MOF) is revising Decision 224/2006/QD-TTg (dated October 6, 2006), which regulates the
responsibilities of the regulator, owner, and managers of the state-owned enterprises, with the aim of
strengthening monitoring, reporting and assessment of SOE performance. In addition, as a mechanism
to enhance accountability of SOEs as well as in the spirit of better access to information, MOF will
publish the annual report on SOE performance prepared for the National Assembly; the first report
will be posted on its website before November 10, 2011 and subsequent reports will be published in 4th
quarter every year. This report is based on the audited financial statement filed each year by the
SOEs.
83. “Enhance the management of transport infrastructure assets through decentralization and
adoption of financial mechanisms for investment, operation and maintenance” was the original
negotiated trigger in the public financial management area. Regulations on management of transport
infrastructure assets are of strategic importance, as transport infrastructure is a critical input to socio-
economic development of Vietnam. The regulation is expected to cover a wide range of policies
related to infrastructure, from budget allocation, investment, management, to maintenance. Main
objectives include further decentralization of management responsibilities from central to local levels,
improved fund mobilization for investment in infrastructure, and improved financial mechanisms
guiding rational utilization, fee collection and maintenance of transport infrastructure assets, which
allows recovery of both capital and maintenance costs in transport projects. MOF started to review the
current practice and existing regulations, and found that due to complexities of the task, drafting the
decree would take longer than expected. MOF now expects to complete the draft in 2012. The
authorities and the task team have therefore agreed to allow necessary time to complete the decree.
84. The Prime Minister has adopted a Public Administration Reform Master Program
for 2011-2020, and MOHA has started piloting a results-oriented monitoring and evaluation
system. This prior action follows up on the dialogue conducted under the previous operation on the
comprehensive and analytical review of the Public Administration Reform Master Program 2001-
2010. The review served as the basis for developing the Public Administration Reform (PAR) Master
Program 2011-2020, which focuses on six areas: (i) institutional reform covering the legal and policy
framework, clarification of land and property ownership rights, state enterprise reform, etc.; (ii) reform
of administrative procedures focusing on improving the business environment, streamlining
administrative procedures, and strengthening the process of feedback and dialogue with the business
community and the population; (iii) organizational reform of the state administrative apparatus calling
for functional reviews, appropriate decentralization, and improvement of the operation of one-stop
24
shops; (iv) civil service reform aiming at improving the professionalism of civil servants, and
strengthening accountability and meritocracy within the civil service, and reforming the salary system;
(v) reform of public finances covering mechanisms for using state funds and budget allocations; and
(vi) administrative modernization covers the expansion of information technology in state agencies,
expand on-line services, etc. As a ten year program, the PAR Master Program 2011-2020 focuses on
the priority goals and objectives of public administration reform, rather than the details of
implementation. While it covers much of the same ground as the previous PAR Master Plan, it is
more specific in its objectives, suggests clearer deliverables, and also contains responsibilities for
implementation at central and local levels. The PAR Master Program, prepared by the Ministry of
Home Affairs, has been submitted for the Prime Minister‟s approval in October 2011. An
accompanying results-based M&E system has been developed with TA from UNDP, and is now in the
final stages of preparations to start piloting. The lessons learned from the pilot exercise will be
incorporated into the design, and the roll out to the whole country is expected in 2012. The original
trigger expected adoption of the results-oriented M&E system, and the prior action will need to be
modified to reflect the current status.
34. GI has developed a framework for monitoring progress on the implementation and
results of efforts to prevent and combat corruption. The government‟s anti-corruption strategy
tasks the Government Inspectorate (GI) with developing a system of indicators to track corruption and
anti-corruption. It represents the first time that the government has set out a formal framework to
assess progress regularly on reducing corruption based on a set of indicators. The monitoring
framework attempts to measure both the scale and the nature of corruption. In the framework, the
scale of corruption refers to both the frequency of corrupt acts in various areas of state management,
and the extent of damages caused to the state, to enterprises, and to citizens. The nature of corruption
refers to the severity of corruption (i.e., the frequency of the most serious corruption offenses), the
structure and organization of corruption, links with other crimes, etc. The monitoring framework calls
for the regular (annual) collecting of more than three dozen different indicators through sociological
surveys and administrative data collection. The circular on corruption reporting sets out the details of
the administrative reporting at regular intervals from ministries, ministerial-level agencies, provinces
and cities and state economic corporations. Reporting covers the activities to train and raise
awareness, efforts to implement codes of conduct, results of inspections, complaints and
denunciations, and so forth. The circular on the M&E framework also calls for evaluation of
anticorruption efforts, based on the criteria such as the proportion of corruption cases detected and
resolved. The framework that has been developed is complex and full implementation will be
challenging. Nevertheless, it represents an important milestone in the government‟s efforts to track
progress on anticorruption and to generate accountability for those results. It is expected that this prior
action will exceed the originally negotiated trigger, as the monitoring mechanism is expected to be
formalized by a circular by November 2011.
35. In addition to the prior actions discussed above, the current operation continued to follow
up on introducing internal audit to the country, a policy reform supported under the previous
operation. During the period covered under this operation, the State Audit of Vietnam (SAV), the
entity assigned the responsibility for internal audit by the existing Law on State Audit, finalized the
draft decree on internal audit. Not all of the best practice recommendations were incorporated in the
draft decree, partly reflecting the constraints imposed by the current legal framework, which assigns
the SAV, an independent entity reporting to the National Assembly, the task of internal audit, which
should belong to the government. For example, rather than putting Inspectorates of the ministries and
agencies in charge of internal audit, the decree assigns some responsibilities for internal audit to SAV.
The issuance of the decree is expected by end 2011.
25
Box 2: Good Practice Principles for Conditionality
Stakeholder consultations were held in February 2009 in Hanoi in the context of world-wide review of DPL
evaluations, conducted by OPCS.
Ownership. There is general agreement across the stakeholder groups that the PRSC series have been firmly
rooted in the government‟s own reform agenda, as expressed first through the CPRGS and then the SEDP. In
both the donor and NGO consultations, participants mentioned that this was “best practice.”
Harmonization. Alignment to the CPRGS and the SEDP helped development partners work more coherently
in support of government outcomes. There was general acknowledgement that the PRSC operation was a
complex one, bringing together multiple ministries and donors. Government participants were particularly
appreciative of donor efforts to coordinate assistance around the SEDP and PRSC. There was still concern
over the current framework for accountability, i.e., the PRSC framework being similar, but not identical, to the
SEDP monitoring framework. There were views that donors should resist the temptation to use independent
monitoring mechanisms. Inputs from NGOs emphasized how accountability works in practice, outlining the
need to engage alternative and independent viewpoints. Donors also emphasized how harmonization could be
improved, suggesting a more structured approach to engagement in the PRSC process. This would enable
“newcomers” to the process (which grows annually in terms of number of participants) to understand better
their roles and obligations.
Customization. The general sense was of that the process had become increasingly tailored to the country
priorities. The need to balance the wish to promote desirable reforms and the respect for the country‟s
priorities, perhaps described as “the art of the possible,” was recognized. A repetitive theme refers to building
the analytical capacity within the Government, so that the Government, rather than development partners, can
lead the process of determining which actions should be prioritized in the agreements. Currently the
prioritization and sequencing of actions and triggers was undertaken more by donors than by the Government,
although the Government owns the broad agenda from which the PRSC operations are derived.
Criticality. The size of the policy matrices is relatively large, but is being reduced, balancing criticality with
an active policy dialogue across the reform agenda. A multi-sector, multi-agency, multi-donor operation is
likely to need a spread of “benchmarks” in order to keep the operation inclusive and motivating for all
participants. While this number of benchmarks is higher than in other countries, it is justifiable in Vietnam, as
the Bank and all co-financiers use the same policy matrix to decide on their level of support, thereby providing
a single harmonized platform for the policy dialogue and disbursements.
Transparency and predictability. Both predictability and transparency had increased over recent years. The
PRSC process has led to disbursements to the budget on an annual basis, thus meeting the objective of aligning
aid to domestic budget cycles. Since PRSC 2, commitments were made in June of each year, which is the time
when the preparation of the budget starts. The budget is approved by the National Assembly towards November,
for the following calendar year. The submission to the National Assembly already factors in the amount of
resources expected from PRSCs. Although the World Bank inputs were predictable, there was less predictability
over the timing and level of co-financier resources that would be available. Not all donors were able to commit
to financing beyond the current years and as levels of co-financing increase, this adds an element of uncertainty
into the operation.
VI. OPERATION IMPLEMENTATION
POVERTY AND SOCIAL IMPACTS
36. The reforms supported by the PRSC series have led to a transformation of the Vietnamese
economy, including an increased reliance on market mechanisms and growing integration into the
world economy. Vietnam‟s rapid economic growth and resilience during the recent crises are a
testimony to the soundness of the program. This rapid transformation, however, has had large social
impacts: greater economic fluctuations from increased integration with world markets, potential
financial instability due to exposure to capital flows, growing inequality as agglomeration effects play
out and the economic hubs of the country sail ahead, and possible vulnerabilities as market
mechanisms develop throughout the social sectors. The poor are also disproportionately affected by
26
internal shocks, such as natural disasters and communicable diseases. The PRSC operations address
these concerns through various policy-level measures such as strengthening and extending the
coverage of the pension programs and health insurance, improving the quality of health service by
reforming the way health care providers are licensed, ensuring environmental assessments are
undertaken during the planning processes, introducing reforms to strengthen the stability of the
banking sector, and improving the monitoring of capital flows, and developing policies to mitigate
potential adverse effects of integration.
37. There are winners and losers in any reform process, and the reforms supported by this
series of PRSCs seek to create an institutional and regulatory framework that is conducive to
economic growth with enhanced social protection, while leaving grassroots efforts to reduce poverty
to other complementary operations such as Program 135 operations (Cr 4274-VN, Cr 4580-VN, and
Cr 4918-VN) and Northern Mountain Poverty Reduction Projects I and II (Cr 3572-VN and Cr 4698-
VN), which deal more specifically with reducing poverty among ethnic minorities. The country‟s
rapid rate of overall poverty reduction bears witness to their success. The reforms supported by each
PRSC are assessed to ensure that they do not adversely affect poor and vulnerable groups. The
proposed operation supports strengthening protection of the population at large through policy actions
such as monitoring implementation of the gender equality law, analyzing and disclosing health
insurance operations, and measures designed to improve education service delivery. Development of
bond market and SOE reforms are examples of actions aimed at improving economic efficiency and
stability. The agenda to improve governance would also benefit the poor, as they suffer
disproportionately from corruption and inadequate public services.
38. Assessing the wider social impacts of a transformation of this magnitude is challenging.
Good tools exist to assess the consequences of trade liberalization, an important component in earlier
phases of the PRSC cycle. However, a retrospective assessment of the studies conducted at the time
concludes that they were not able to foresee the actual consequences. In a similar vein, more recent
attempts to identify ex ante winners and losers from the WTO accession have proven inconclusive.
The WTO accession matters because it brings competition in services, raises standards or increases
financial openness, and none of this can be easily captured with the tools at disposal. A review of a
dozen studies based on computable general equilibrium models and almost as many sectoral studies
(reported in VDR 2006 Doing Business) shows that few results are robust across the studies,
suggesting a high sensitivity to the methodology and assumptions used. To fill this gap, increasing
emphasis has been put on monitoring and evaluation in all areas of the program (linked to the M&E
framework in the SEDP). A broad review of social protection issues was conducted under VDR 2007
Social Protection and the Vietnam Academy of Social Sciences (VASS) completed a comprehensive
poverty report in 2010.
39. The Social Protection VDR and more recent VASS Poverty Assessment updated Vietnam‟s
poverty assessment. The reports identify the main shifts and shocks being faced by the Vietnamese
economy through a period of fundamental transformation, rather than dealing with potentially adverse
impacts on a policy-by-policy basis. Identifying the right set of policy responses is challenging.
Historically the Government has deployed mechanisms to ensure the participation of the poor and
near-poor in universal programs, such as exemption of school fees and waiver of health insurance
premium (under the National Targeted Program for Poverty Reduction), and increasing spending on
local infrastructure and services in poorer regions of the country, such as the Program 135 and the 61
Poor Districts Program. More recently, the Government has been experimenting with cash transfer
programs.
ENVIRONMENTAL ASPECTS
40. As required under Operations Policy 8.60, the task team determined if there are significant
effects on the country‟s environment, forests, and other natural resources. “Significant effects” are
27
defined as “environmental changes of sufficient magnitude, duration, and intensity as to have non-
negligible effects on the natural resource base and on human welfare.10
”
41. Each policy trigger and benchmark was reviewed to determine if there were negative,
positive environmental consequences of if they were neutral in terms of its expected impacts. The
results of the analysis are included in Annex 6. Of the 14 prior actions and benchmarks reviewed,
none were found to have a potential negative impact, three an environmental positive benefit, and the
rest had no environmental implications. The most important of the positive benefits identified, are
those associated with the promotion of strategic environmental assessment (SEA) in development
planning. It is important to also note that under the World Bank‟s parallel DPO on Public Investment
Reform-2 (Cr 4944-VN and Ln 8053-VN), the Government has engaged to carry out a number of
regulatory reforms and capacity building initiatives in the areas of environmental impact assessment
(EIA) and SEA.
IMPLEMENTATION, MONITORING AND EVALUATION
42. The PRSC operations have been included in a number of evaluations of budget support
operations, policy lending, and application of good principles in conditionality. A Quality at Entry
Assessment (QEA) for the first PRSC cycle was conducted shortly after the approval of PRSC 2. The
QEA rated the proposed series as highly satisfactory in terms of its strategic relevance and approach
and to its poverty reduction and social inclusion aspects. All other dimensions were considered
satisfactory. A review of Implementation Completion Reports (ICRs) by the Independent Evaluation
Group (IEG) reached similar conclusions. Based on the relevance and achievements under most
objectives, the overall outcome of the first PRSC cycle was rated satisfactory. Another assessment
was conducted after PRSC 4, as a part of a broader evaluation of general budget support,
commissioned by 24 donors and conducted by the University of Birmingham in seven countries. This
assessment showcased Vietnam as a successful example of government-donor collaboration, with
strong impact on policies. The assessment for Vietnam was updated after PRSC 5 by the same
research team, by then working in a consulting firm (Mokoro). This update was financed by the
World Bank as an input for the preparation of the current PRSC cycle. The updated assessment
concluded that PRSCs were effective at supporting policy reforms, at linking policy and budgets, at
strengthening financial management, and at helping harmonization. The inclusiveness of process was
highly valued. At the same time, PRSC operations were judged less effective at supporting policy
breakthroughs and at helping policy implementation. Poverty Reduction Support Credits – an
evaluation of World Bank support by the Independent Evaluation Group (2009) found Vietnam‟s
PRSC series were well-aligned with country‟s development strategy, contributed to a dialogue around
the budget and other mechanisms as tools to promote pro-poor policy objectives, and served
exceptionally well as a focal point for donor coordination.
43. Another independent evaluation, similar to the Mokoro report and covering all ten PRSC
operations, was conducted in 2011 jointly by the government and interested development partners led
by the European Union. It found PRSCs effective in coordinating ministries and participating
development partners, but they were more effective in some areas, such as financial sector, than
others, such as public administration reform. The evaluation reported that the participants from both
the authorities and partners found the series improved in later operations, as both sides gained
experience, and the program design and implementation, such as the size of the policy action matrix
and timely sharing of relevant documents, were modified to adapt to the changing circumstances.
44. To monitor progress in the implementation of the reform agenda in the PRSCs 6-10, a set
of development indicators was selected when PRSC 6 (2007) was prepared. The indicators were
chosen based on the monitoring framework for the Socio-Economic Development Plan (SEDP), but
10
World Bank Toolkit “Assessing the Environmental, Forest, and other Natural Resource Aspects of
Development Policy Lending” (World Bank, 2008).
28
are fewer in number. In the case of governance, the set of indicators goes beyond the SEDP
monitoring framework. This was an area where the experience in monitoring was limited, and the use
of enterprise and household surveys, as opposed to administrative self-reporting, was not yet common.
The set of indicators was modified to reflect the changes made to the policy matrix (which was also
established during the preparation of PRSC 6) as the reforms supported under PRSCs 6-10 evolved
due to opportunities and changes in priorities (Annex 3).
45. At the beginning of this PRSC cycle, it was deemed impractical to monitor the progress
towards development outcomes on an annual basis because collecting and processing survey data take
time, and policy reforms are unlikely to yield outcomes immediately. The Board of Executive
Directors approved that the assessments be done twice during this PRSC cycle, towards the middle of
the cycle and at the end of it. A midterm review of the progress towards development outcomes was
conducted during the preparation of PRSC 9.
46. Mid-term review found that overall progress had been made towards achieving the
development outcomes. Poverty Reduction Support Credits are designed to be holistic with a caveat
that causal relationship between policy actions and improved indicators cannot be established.
Evaluating the impact of socio-economic policies is always difficult, because policies are not
implemented in a vacuum, and there are many other factors at play. It is not easy to assess which part
of the change in a broad development indicator is due to a specific policy as the channels through
which outcomes can be produced are diverse, and causes and effects do not always have a linear one-
to-one relationship. Any convincing analysis requires a credible counterfactual to appraise what
would have happened in the absence of the policy being evaluated, but such a study was considered
outside the scope of the PRSC operations in Vietnam.
47. End of program review is planned at the time of Implementation Completion Report
(planned for FY13). The latest available information is reported in the Annex 3.
FIDUCIARY ASPECTS
48. Public Financial Management. Vietnam‟s public financial management (PFM)
environment is considered adequate to support this operation. The most recent Country Financial
Accountability Assessment conducted in 2007 concluded that „the financial management risk to proper
use, control and reporting of funds that are managed through the Vietnam public financial
management systems is assessed as moderate.‟ The approved State Budget is published on the
Ministry of Finance (MOF) website just before the start of the Fiscal Year. It includes information on:
aggregate revenue and spending; budget financing; planned spending by government function; and
domestic revenue sources. MOF publishes quarterly budget execution reports, which include
information on spending at central, provincial, and district level, and estimated revenue collection.
Audited financial statements are published eighteen months after the end of the FY. The Government
has maintained strong ownership of the PFM reform agenda and continues to lead a coordinated
reform program in consultation with the development partners. While the financial management and
accountability systems of the government have improved, the risks arising from weak implementation
and compliance remain. The quality and extent of independent audit oversight can be further
strengthened by updating the audit strategies and methodologies of the State Audit of Vietnam to align
with international practices, and through the development of an effective internal audit function, which
currently is only at an embryonic stage in Vietnam. A detailed discussion on the state of PFM in
Vietnam is in Annex 5.
49. Foreign Exchange Environment. An IMF safeguards assessment has not been conducted in
Vietnam. This assessment would provide information about the foreign exchange control environment
of the SBV and integrity of financial information. The SBV is subject to auditing by SAV on an
annual basis, however under the current laws the audited financial statements and audit reports of SBV
are not made public. Notwithstanding these factors, IDA understands, following recent discussions
29
with the IMF, that there are no serious concerns with the SBV‟s foreign exchange control
environment.
50. Deposit account (DA). To address the potential residual fiduciary risks related to the
foreign exchange control environment, the Borrower will open and maintain a dedicated DA at SBV in
US dollars for the Borrower‟s use once the Credit is approved by the Board. The DA will form part of
the country's official foreign reserves. An equivalent amount in Vietnamese Dong will be credited to
an account of the government available to finance budgeted expenditures. If after deposit in the DA,
the proceeds of the Credit or any part thereof are used for ineligible purposes, as defined in the
Financing Agreement, IDA will request the Borrower to refund the amount directly to IDA. Amounts
refunded to IDA shall be cancelled.
51. Reporting & Auditing. Through SBV, the Borrower will report the exact sum received into
the DA, ensure that all withdrawals are for “eligible” expenditures, indicate to IDA details of the
Treasury account to which the Vietnamese dong equivalent of the Credit proceeds will be credited,
and submit a report on receipts and disbursements for the DA. The Government will, if considered
necessary by IDA, allow an independent external audit of the dedicated foreign currency DA.
DISBURSEMENT
52. The Credit will follow IDA disbursement procedures for development policy lending
operations, and the Credit proceeds will be disbursed in compliance with the stipulated release
conditions. Various measures have been taken to ensure that the overall fiduciary policies and
institutions are adequate to proceed with support from IDA and other development partners.
Analytical underpinnings for the operation include the 2002 Country Procurement Assessment Review
(CPAR), the 2005 PER-IFA and the CFAA (2007). Disbursement will not be linked to any specific
purchases and no procurement requirements will have to be satisfied.
RISKS AND RISK MITIGATION
53. The short term risk is premature loosening of monetary and fiscal policies will risk
repeating the recent pattern of recurring instability. Vigorous implementation of fiscal consolidation
and structural reforms such as reform of the state-owned enterprises and the financial sectors should
help Vietnam return to a more sustainable macroeconomic environment while laying the foundations
for greater efficiency and productivity to drive medium and longer term growth. The Bank is engaged
with the government in on-going discussion on both informal and formal basis, such as its engagement
in the consultative group meetings and ad hoc Prime Minister‟s Roundtables, jointly with the IMF. An
ongoing technical assistance project helps strengthen capacity for managing public finance. The
dialogue carried out through PRSC series seeks to enhance the quality and effectiveness of financial
sector regulation and supervision, and to enhance information disclosure and effective communication
of macroeconomic policies.
54. There is also a risk of that Vietnam will not be able to continue financing its development
needs as concessional financing begins to decline. The authorities are acutely aware of it, and are also
newly conscious that SOEs could undermine government‟s finances and macroeconomic stability.
Medium-term debt sustainability is tackled through development of capital markets to diversify the
sources of funds and to reduce maturity mismatches, and better monitoring and assessment of external
debt flow. The authorities have invited the World Bank team to conduct a Debt Management
Performance Assessment (DeMPA) in preparation for stepping up its capacity. Reviewing of the state
sector is also underway, and steps are being taken to strengthen monitoring and management of SOE
finances.
55. The longer term risk is that Vietnam will fail to address governance issues in a systematic
and fundamental way. Accountability, especially downwards, access to information, fighting
corruption are challenges for all countries at varying levels, and Vietnam needs to continue decisively
30
the reform process on which it has embarked. As the Vietnam Development Report 2010 Modern
Institutions has shown, improving governance requires increasing transparency at various levels. This
area receives special attention in the proposed operation, including actions to improve transparency in
public administration, strengthen the role of oversight entities and establish framework for monitoring
the fight against corruption.
56. Vietnam is at a crossroads. The authorities have managed to weather the external shocks
with increasing skillfulness, and have delivered impressive poverty reduction results. Although the
country has attained the lower middle-income status, there are still difficult challenges ahead, and
there will be less external support in the form of concessional financing. It is time for the authorities
and the development partners to prepare the medium-term engagement plan which is most suited for
the country at this crossroads. The World Bank is prepared to accompany the authorities in this
transition through an array of complementary programs and projects, while ensuring that its overall
partnership strategy remains well coordinated within the Bank and with other development partners.
The proposed operation is important for the country in completing the ongoing agenda, and in entering
the new phase with a strong momentum for reform.
31
ANNEX 1: Letter of Development Policy
32
33
34
ANNEX 2 : PRSC 6-10 Policy Matrix
Area PRSCs 6-9 PRSC 10
Pillar I: Business Environment
Global
integration
Grant trading and distribution rights to all foreign firms in line with
international commitments
Issue regulations to guide the intellectual property law with adequate
enforcement mechanisms
Establish consultation and information gathering mechanisms to
identify the social and environmental impacts of WTO accession
Harmonize agricultural health and food safety regulatory tools with
international standards in line with the SPS agreement
Tackle the infringement of copyrights and trademarks on a commercial
scale in line with TRIP Agreement
Set up M&E framework for the implementation of government policies
post-WTO accession
Make commercial scale infringements of patent, trademark rights and
rights of design a crime
Improve competition and efficiency of the pharmaceutical sector through
prevention of unfair commercial use of trial data
Adopt a plan for industrial and trade Adopt
Master Plan for national single window to
facilitate trade by simplifying transit-related
regulatory requirements
State sector
reform Further restrict list of sectors where 100-percent state ownership is
to be retained
Use share auctions as the main mechanism for equitization, and allow
foreign strategic investors
Classify all SOEs according to performance and publish the results
The State Capital Investment Corporation (SCIC) to begin receiving state
ownership rights in equitized SOEs from ministries and provinces.
Assess scope and nature of lending and other transactions among
affiliated parties in Economic Groups and General Corporations
Strengthen financial management of SOEs and their investments in
other entities, defining the level of such investments
Transfer state ownership rights in equitized SOCBs and selected General
Corporations to SCIC
The Recipient has issued regulations on state-owned economic
groups for better corporate governance and setting limits for cross
share holding
Separate the exercise of ownership rights from the regulatory function in
The Prime Minister has issued a
regulation to expedite equitization of
state-owned enterprises, and MPI has
submitted to the Prime Minister a review
of the state-owned Economic Group
model
35
Area PRSCs 6-9 PRSC 10
unequitized SOEs
Ensure competition and transparency in the sale of state capital in
equitization process
Financial
sector reform Require public disclosure of financial statements of SOCBs in line
with internationally accepted standards
Increase equity stake allowed to foreign strategic investors in commercial
banks
Approve equitization plans allowing participation of strategic
investors for two SOCBs and complete the equitization of one of
them Issue a road map to enhance bank supervision, including off-site
supervision and risk-management tools
Enhance the role of the banks‟ boards of directors and introduce fit-and-
proper tests in line with international best practices
Prepare revised law on State Bank of Vietnam focusing its mandate
on and enhancing its autonomy in regard to monetary policy and
financial sector stability Improve monitoring of foreign indirect investment by strengthening
prudential rules and supervision for custodians and brokers
Adopt a contingency plan to address potential adverse effects stemming
from the global financial crisis on banking sector
Complete equitization of one SOCB, and make progress in soliciting
participation of strategic investors
The Recipient has finalized regulations to better assess commercial
banks’ portfolio risks, enhance public disclosure, and strengthen
supervision
Develop a medium-term strategy for Vietnam Development Bank
Revise regulation to facilitate bank resolution and restructuring
Improve regulations on securities to foster development of domestic
capital market
SBV has issued a regulation to enhance
public disclosure and communication of
SBV’s policies and banking sector
statistics Formulate a Banking Sector Strategy 2011-
2020 with the aim of enhancing the
soundenss and stability of the financial
sector and to promote comeptition
Private sector
development
Introduce investment climate monitoring tool as part of annual enterprise
survey
Reduce processing times and rationalize fee structure for business
registration
Clarify authority on investment certificates and conditional sectors, and
standardize related documentation
Issue guidelines to foreign investors transitioning to new Investment and
Enterprise laws
MOF has formulated a time-bound
roadmap to improve corporate and
government bond markets to foster
financial and economic growth
36
Area PRSCs 6-9 PRSC 10
Establish consultative mechanism to streamline licenses and oversee
implementation of new investment-enterprise regime
Establish single-window mechanism for businesses to cover registration,
tax, and seal formalities in selected provinces
Simplify enterprise registration including by unifying tax and business
identification numbers and streamlining seal carving procedures
Rationalize incentives related to Enterprise Income Tax and simplify tax
procedures for household businesses
Raise the cap on shareholdings by single foreign investors in unlisted
companies
Issue regulation on agricultural extension in disadvantaged areas to
promote poverty reduction
Promote SME development through revising regulations, formulating an
action plan for supporting industries, and improving coordination among
responsible ministries
Establish national business registry with unique number for business,
tax, statistics, and seal agencies
Improve disclosure requirements of audited financial information of
public companies
Adopt regulation on disclosure of financial risks in the financial
statements of enterprises and banks
Infrastructure Decentralize investment ownership to better integrate capital and
recurrent budgets in the road transport sector
Clarify contract specifications, investor qualifications and treatment
of unsolicited proposals for BOT projects
Adopt wastewater charges based on cost recovery, with provisions to
protect the poor
Adopt market-based pricing systems to estimate the costs of state-
funded civil engineering investments
Separate power transmission and generation assets and regroup
transmission assets under a single National Power Transmission
Corporation
Introduce modern principles of transparency and corporate governance in
provincial infrastructure funds
Reduce traffic fatalities through strengthened enforcement and improved
education programs
Facilitate access to driver training and testing and provide financial
support to purchase special vehicles for people living with disabilities
Prime Minister has adopted a Gas Master
Plan to 2015 with Visions to 2025,
including a time-bound instruction to
MOIT to prepare a Gas Market Reform
Roadmap to 2020 for consideration by
the Prime Minister
37
Area PRSCs 6-9 PRSC 10
Adopt a pricing system for electricity from renewable energy and
provide incentives for government procurement of energy-efficient
equipment
Revise the road law to improve traffic safety through inter alia better
standards and strengthened supervision of commercial vehicle operators
Strengthen legal framework and institutional capacity of the National
Transport Safety Committee (NTSC)
Pillar II: Social inclusion
Education Extend performance standards for primary teachers nationwide,
including evidence-based assessments
Adopt transparent criteria to decide on university admission quotas on a
pilot basis
Revise tuition fees at secondary and tertiary levels, better reflecting
market conditions, and enhance policies to protect the poor
Issue roadmap for education information system to strengthen education
management
Formulate education development strategy to 2020 focusing on
equity of learning outcomes and relevance of contents
The Recipient has produced cost estimates and initiated public
consultation on full-day schooling for primary education
Issue an action plan for conducting assessment for primary and secondary
education for 2010
MOET has issued a regulation to
institutionalize regular nationwide
assessments of student learning outcomes
at primary and secondary levels
Health Adopt HIV/AIDS law and prepare action plans to scale up harm
reduction, fight stigma and discrimination
Improve budgetary balance between health infrastructure, human
resources, subsidies and preventive care
Submit health insurance law which better pools risks and allows
improved incentives in payment to service providers
Increase the health insurance premium paid on behalf of the poor and
partially subsidize the near-poor
Regulate safe treatment of solid waste discharge by hospitals in line with
international practices
Enhance treatment of medical waste discharged by hospitals at both
central and local levels
The Recipient has adopted a law establishing a framework for
national standards and a unified licensing system for all health care
practitioners
MOH has issued a regulation to establish
a centralized database as a step towards
unifying the national licensing system of
healthcare professionals
Prepare a summary report of health
insurance revenues and expenditures, and
key coverage and utilization performance
indicators for publication
38
Area PRSCs 6-9 PRSC 10
Develop action plan and guidelines for treatment on waste and water
discharged by health care facilities, revising healthcare cost standard to
secure appropriate budget for the treatment
Social
protection
Adopt Social Insurance Law making the system financially viable and
extending its coverage
Introduce voluntary pension program for farmers and informal
sector, allowing for support for the poor to participate in the
program
Adjust safety net for redundant SOE workers to cover state-owned
plantations and farms
Prepare a strategic plan to ensure prudential and effective
investment of social security funds
Update official poverty line(s) to reflect current conditions, agree on a
methodology to update lines on a regular basis to reflect changes in the
cost of living
Gender Unify legal framework to address gender disparities and increase
women’s participation in decision making
Determine institutional responsibilities for the implementation of the
Gender Equality Law and monitoring gender equality
Create legal framework for domestic violence prevention and control
Operationalize the Anti-Domestic Violence Law by adopting action plan
and issuing guiding regulation
Issue regulation to assign institutional responsibilities and allocate budget
for implementing measures in ensuring gender equality
Inter-ministerial circulars to be issued for implementing domestic
violence law by key responsible agencies, including establishment of
reporting system, supporting services to victims and clear measures for
behavior change in place
The Prime Minister has adopted a set of
national gender development indicators
and criteria for sex-disaggregation in the
national statistics
Pillar III: Natural Resources Land and
forests Issue strategy to strengthen linkages between protective and
economic functions of forests, and promote local ownership
Clarify resettlement and compensation process in cases without land-use
certificates, and mechanisms for handling complaints
Issue guidelines for forest development based on participatory land-
use planning and independent monitoring Transfer SFE land to local authorities for reallocation to households,
ethnic minority groups and private enterprises with focus on poor areas
39
Area PRSCs 6-9 PRSC 10
Water and
sanitation Allocate institutional responsibilities for integrated river basin
management Adopt natural disaster mitigation strategy with attention to non-structural
measures and guidelines for provincial and ministerial action plans
Issue regulations to ensure financial sustainability of irrigation services
and provide financial relief for poor farmers
Allocate institutional responsibilities to develop a unified national
sanitation strategy
Adopt a national action plan for information, education and
communication for personal hygiene, safe water and environment
sanitation
The Recipient has developed a proposal to continue the current NTP
for rural water supply and sanitation, which focuses on promotion of
rural sanitation and addresses personal hygiene
Introduce a regular and transparent nation-wide monitoring system for
urban sanitation to deliver information on state and development of the
sector
Environment Mandate public consultation on environmental impact assessments
commune level with public feedback incorporated in report to relevant
authorities
Strengthen incentives for solid waste management using economic
instruments
Approve national target program on adaptation to climate change
and allocate institutional responsibilities for its implementation Adopt regulations for performance contracts for sewerage and drainage at
local levels
Adopt legal framework for biodiversity protection to clearly delineate
and better administer protected areas, and to improve community
consultation process
The Recipient has issued technical guidelines for efficient use of
water resources to complement the irrigation services fee waiver
policy
Issue regulations on national environmental data collection, and collect
the data
MPI has issued technical guidelines for
the application of strategic environmental
assessments in the process of socio-
economic development planning
Pillar IV: Modern governance
Planning
processes Allocate state capital expenditure transparently, using criteria like
population, poverty and ethnicity
Adopt regulations for master and regional plans specifying issues,
process, agency responsibility, and require disclosure
40
Area PRSCs 6-9 PRSC 10
Establish criteria for selecting public investment projects and
mechanisms to monitor their financing and implementation
Establish list of indicators, data sources and reporting mechanism for
monitoring of SEDP
Establish a legal framework for strengthening urban planning and urban
infrastructure management
Public
financial
management
Disclose results of audits conducted by the SAV and its annual audit
plan
Publish report on budget execution for current year and budget plan for
forthcoming year, on an annual basis
Issue regulations for periodic disclosure of external public debt and its
composition
Implement regulation to guide the establishment and issuance of
benchmark government bonds
Consolidate administration procedures for all taxes into a single law,
modernizing assessment and enforcement methods
Issue regulations on content and timing of disclosure of SAV reports,
including audit reports of individual entities
Revise the investment laws to improve efficiency in state capital
expenditures and strengthen the management of public investment
projects
Conduct mid-term review of the SEDP and strengthen result-based
approach in M&E framework for planning
Formulate public debt management law consolidating the
management of domestic and external debt
Conduct public financial management reforms including commitment
accounting, vendor management and new chart of accounts
Adopt procedures for annual audit plan ensuring sufficient frequency and
adequate provincial coverage
The Recipient has formulated a regulation for internal audit
development and implementation and defining organizational
responsibilities
Strengthen the legal framework for taxing the use of non-agricultural land
and the capital gains to increase efficiency and equity, and dissuade
speculation
MOF has started the annual exercise of
publishing the synthesis report based on
financial statements of State-owned
Economic Groups and General
Corporations
41
Area PRSCs 6-9 PRSC 10
Legal
development Establish separate legal, judicial, economic, and budget committees
to strengthen the National Assembly’s supervisory role Simplify and broaden access to legal aid for marginalized and vulnerable
groups
Adopt policies to encourage the participation of non-state establishments
in the delivery of public services
Create a facilitating legal framework for the establishment and operation
of economic collaborative groups and social and charity funds
Enhance the responsibility of enterprises vis-à-vis consumers and
strengthen the handling of consumer complaints
Establish the National Bar Association, with governing documents
and structures approved by the community of lawyers
Simplify the procedures, strengthen the management, and improve the
monitoring and complaints system of civil judgments execution
Increase the systematic and widely accessible publication of court
judgments, beginning with Supreme People‟s Court cassation
Develop effective legal framework on consumer protection
Public
administration
reform
Extend One-Stop-Shop (OSS) to all ministries and agencies and
introduce inter-linked OSS to further simplify administrative procedures
Adopt principles of competition, merit-orientation and transparency in
the recruitment, appointment, promotion and dismissal of civil servants
Dissociate civil service pay structure from minimum wage setting
widening the range of minimum wages
Formulate common standards for IT applications and e-government
interfaces at central and provincial levels
Develop indicators for monitoring and evaluating the implementation of
PAR and provision of public administrative services
The Recipient has issued regulation and developed pilot schemes to
strengthen competition, merit orientation, and transparency in the
recruitment, appointment, and promotion of civil servants
The Prime Minister has adopted a Public
Administration Reform Master Program
for 2011-2020, and MOHA has started
piloting a results-oriented monitoring and
evaluation system
Fighting
corruption Operationalize Steering Committee against corruption with power to
suspend high level officials if suspected
Disclose results of investigations against corruption for cases overseen by
the Government Inspectorate
Establish legal framework to protect and reward whistle blowing on
corrupt activities
Implement asset declaration requirement in regard to senior officials
and their immediate families, with penalties for non-compliance
Introduce mandatory rotation for sensitive government positions and
GI has developed a framework for
monitoring progress on the
implementation and results of efforts to
prevent and combat corruption
42
Area PRSCs 6-9 PRSC 10
payment of government salaries through bank accounts
Issue a comprehensive anti-corruption strategy, setting out preventive,
demand-side, and sector-specific solutions, and monitoring mechanisms
The Recipient has (a) carried out annual procurement compliance
and performance audits of projects funded by state budget; (b) made
public the findings of selected audits; (c) adopted a pilot procurement
code of ethics for participants; and (d) launched an open access
electronic bidding system
Develop an enabling legal framework to protect and reward witnesses
and whistle-blowers
Improve reporting system to strengthen implementation of asset
declaration
* Boldface indicates prior actions.
43
ANNEX 3: Monitoring Progress Towards Outcome Indicators
Area Indicator Definition Source Baseline
(year)
Update
(year)
Most recent
(year) Target*
Pillar I: Business development
Global
integration 1. Openness to trade
Merchandise exports as a proportion
of GDP and merchandise imports as
a proportion of GDP
GSO
61%
69%
(2005)
61.3%
71.5%
(2009)
69.7%
81.9%
(2010)
Above
70%
for both
2. FDI Inflows Inflows of FDI (as recorded in BoP) BOP (SBV)
$2,315
million
(2006)
$6,550
million
(2007)
$6,900
million
(2009)
Three times
the baseline
State sector
reform
3. State Economic
activities in National
accounts
Share of state sector in Gross
Domestic Product
Statistical
yearbook (GSO)
38.4 %
(2005)
35.9%
(2007)
35.1%
(2008)
Below
33.3%
4. State investments
in SOEs as share of
total investment
Share of state investments in total
investments, where total is defined
as state, non-state and FDI
Statistical
yearbook (GSO)
47.1%
(2005)
37.2%
(2007)
33.9%
(2008)
Below
33.3%
Financial sector
reform
5. Quality of loan
portfolio
Required provisioning for possible
non performance in all outstanding
credit
SBV 6-9%
2.8%
(Sept
2008)
2.22%
(Feb 2011)
Less than
5%
6. Number of banks
using qualitative
criteria for borrowers
Banks following the qualitative
criteria (international standards) for
loan classification
SBV 0 3
(July 2011) 5
Private sector
development
7. Employment in
private enterprises
Number of paid employees in non-
state enterprises, excluding
collective enterprises
GSO (Annual
Enterprise Survey)
4.04
million
(2005)
4.8 million
(2006)
5.0
million
(2009)
More than
5 million
8. Private domestic
investment As a proportion of total investment GSO
30%
(2001-
2005)
33.9%
(2009)
36.1%
(2010) 35.3%
44
Infrastructure
9. Competitive
electricity generation
Electricity generated by non-EVN
entities excluding diesel and small
hydropower stations
MOIT 14.5%
(2004)
26.0%
(2008)
35.7%
(2010)
Twice the
baseline
10. Traffic accidents
Number of fatalities reduced with
better traffic management and better
road development
National Traffic
Safety Committee
27,933 (2002)
14,643
(2005)
12,800
(2008)
11,500
(2010)
Half the
baseline
Pillar II: Social inclusion
Education 11. Poor children
attending school
Net enrollment rate of poor children
in primary, lower- and upper-
secondary schools
GSO (VHLSS)
88.7%
43.1%
9.3%
(1998)
91.9%
78.0%
27.7%
(2006)
90.7%
77.8%
31.2%
(2008)
Above
90%
75%
33%
(2010)
12. Learning
outcomes in primary
school
Proportion of Grade 5 students
below functional reading level
Learning outcome
surveys done in
2001, 2007, and
2010
11%
(2001)
9.7%
(2007)
Below 10%
by 2020
Health
13. Poor people with
free health insurance
Proportion of people below the new
national poverty line who have been
provided with free health insurance
GSO (VHLSS) 42%
(2004)
49%
(Kinh/
Chinese)
78%
(ethnic
minorities)
(2006)
37.7%
(Kinh/
Chinese)
63.6%
(ethnic
minorities)
(2008)
100%
(2020)
14. Use of modern
health care facilities
by the poor
Average annualized contacts with
hospitals for the poorest quintiles GSO (VHLSS)
0.15
(2004)
0.18
(2006)
0.23
(2008)
Above
0.3
Social protection 15. Poverty among
ethnic minorities
Proportion of ethnic minorities
below the new Vietnam poverty line GSO (VHLSS)
61%
(2004)
52%
(2006)
50.3%
(2008) 50%
45
16. Contributors
towards old-age
pensions
Includes both the compulsory and
the voluntary schemes. In percent of
the labor force
VSS, GSO, Social
Insurance
Department
(MOLISA)
16%
(2006)
19%
(2008)
20%
(Mar 2011)
Above
22%
Gender
17. Leadership
positions held by
women
Proportion of female delegates at
the National Assembly. As a share
of total
MOHA 27%
(2006)
24.4%
(2011)
Above 30%
(1)
18. Asset ownership
among women
Proportion of land use certificates
held in the name of both spouses or a
female person
GSO (VHLSS) 30%
(2004)
35%
(2008) Above 40%
Pillar III: Natural resources
Land and forests
19. Forest land
allocated to local
communities
Proportion of forest land allocated to
local people and communities, for (i)
all of Vietnam and the (ii) Central
Highlands
MONRE
(i) 25%
(ii) 2%
(2005)
(i) 21% (2)
(ii) 3%
(2008)
Above
(i) 30%
(ii) 5%
20. Issuance of Land-
Use Certificate
Share of land Land Use Right and
House and Land-Attached Assets
Ownership Certificate (LURHOC)
was issued; area of land with
LURHOC;
MONRE
(i) 79.9%
(ii) 413,060
ha
(2008)
Above
(i) 85%
(ii) 450,000
ha
Water
21. Population with
access to improved or
clean water
Includes urban and rural population.
Includes all improved water sources
excluding all hand dug wells
GSO (VHLSS)
Urban: 82%
Rural: 48%
(2004)
Urban:
83%
Rural:
52%
(2006)
Urban: 89%
Rural: 60%
(2008)
Above
Urban: 90%
Rural: 60%
22. River basins with
inter-provincial
management
Number of river basins with inter-
provincial water allocation
procedures established and
operational
MONRE 3
(2006)
4
(2008)
Above
4
Environment 23. Quality of surface
water
Biological Oxygen Demand (BOD 5)
in major river basins (i.Nhue-Day, ii.
Cau, and iii. Dong Nai)(3)
CEM
i. 35
ii. 11
iii. 14
(2005)
i. 8
ii. 3
iii. 9
(2008)
i. 9
ii. 5
iii. 12
(2009)
average
reduction of
50% from
the base year
46
24. Protection of bio-
diverse wetlands
Number of wetlands of international
importance (26 by Ramsar criteria)
included in the protected area system
MARD 2
(2006)
2
(2008) 4 or more
Pillar IV: Modern governance
Planning
processes
25. Provincial
screening of public
investment
Number of provinces that have
issued guidelines for screening
public investment projects at the pre-
appraisal stage, including sound cost
benefit analysis
MPI None
(2006)
None
(2008)
None
(2010) 2 or more
26. Provinces
adopting modern
planning principles
Proportion of provinces using a
participatory approach to planning in
the preparation of their annual plans
and adopt a results-based monitoring
approach
MPI 3
(2006)
10
(2007)
18
(2010) 20 or more
Public financial
management
27. Use of modern
budget management
system
Provinces using the integrated
Treasury and Budget Management
Information System live
PFM 0
(2006)
35
(2010)
Above 45
(2011)
28. Public debt and
public guarantees
Ratio of public debt to GDP,
inclusive of publicly guaranteed debt
at all levels of government
MOF 43.5%
(2006)
44%
(2008)
below the
threshold of
55%
Legal
development
29. Consultation in
the law-making
process
Percentage of draft laws and
ordinances posted in the National
Assembly website for comments.
Office of
National
Assembly
0
(2006)
100% of
laws;
87.5%
ordinances
(2008)
100% of
laws; 90%
of
ordinances
30. Fraction of civil
judgments enforced
Number of civil judgments enforced
in percentage of all those subject to
enforcement
MOJ
(Department of
Civil Judgment
enforcement)
45%
(2006)
51%
(2008) Above 50%
47
Public
administration
reform
31. Provinces with e-
government
interfaces
Percentage of provinces with an
online guidance and services for
businesses
OCG
State
Administrative
management
computerization
72 and 2%
(2006)
80 and 13%
(2008)
Above 90
and 10%
32. Provincial
departments with one
stop shop model
Proportion of provincial
departments that have adopted the
one stop shop model
MOHA 67%
(2006)
73%
(2007)
82% (4)
(March
2009)
Above 80%
Fighting
corruption
33. Proportion of
entrepreneurs that see
corruption as a
binding constraint to
business
Fraction of enterprises who say
corruption is a major or very severe
obstacle; Fraction of enterprises who
say corruption is no obstacle.
World Bank
Enterprise
Surveys 2005
and 2009, panel
firms (5)
Major or very
severe
obstacle=16
% (2005); No
obstacle=
40% (2005)
Major or
very severe
obstacle=5%
(2009); No
obstacle=
74% (2009)
Below 5%;
Above 75%
34. Asset declaration
by civil servants
Number of (i) provinces and (ii)
central level ministries in full
compliance with asset declaration
regulations and (iii) number of
declarations verified(6)
GI
Annual Anti-
corruption
reports
None
(2007)
(i) 17/43
(ii) 7/63
(iii) 0
(2008)
(i) 24/43
(ii) 32/63
(iii) 788
(2009)
(i) 27/43
(ii) 42/63
(iii) 1000
(2010)
Notes: * Target values are for 2011 unless otherwise noted.
1. Elections are held every 5 years. In 2006 elections, 33 percent of candidates were women (currently checking the share of female candidates in the
2011 elections). The target is from the 5 year National Plan.
2. Forest area is expanding, so the lower share does not necessarily represent a regression. The share should be calculated using 2005 forestry area as the
denominator for all years (if no new forests are under SFE or allocated to communes). The share of land transferred to economic entities and local
communities is 39 percent.
3. Source: CEM report 2010.
4. This figure is from March 2009 (993 out of 1213, the newest information dated 11/9/2009), while the previous years are from January 2007 and January
2008, respectively. There was a difficulty arising from Hanoi and Ha Tay merging in early 2009. The MOHA official said he thought this figure was
too high -- his guess was around 80 percent.
5. Response categories were identical. Questions were very similar. 2005: "Please tell us if any of the following issues are a problem for the operation
and growth of your business. If an issue poses a problem, please judge its severity as an obstacle on a four-point scale where: 0 = No obstacle 1 =
Minor obstacle 2 = Moderate obstacle 3 = Major obstacle 4 = Very Severe Obstacle." 2009: "As I list some factors that can affect the current
operations of a business, please look at this card and tell me if you think that each factor is No Obstacle, a Minor Obstacle, a Moderate Obstacle, a
Major Obstacle, or a Very Severe Obstacle to the current operations of this establishment." Samples are identical since the responses of panel firms are
reported. N=239.
6. Reported as of August annually. Source: Anticorruption report No. 135/BC-CP dated September 19, 2008, report No. 103/BC-CP dated September 1,
2010.
48
ANNEX 4 : Supporting Documentation for Prior and Policy Actions under PRSC 10
Pillar I: Business development
Area Benchmark / Prior Action Supporting Documentation
Global
integration
Adopt Master Plan for national
single window to facilitate
trade by simplifying transit-
related regulatory requirements
Decision 2599/QĐ-BCĐASW dated October 21, 2009
to introduce the Master Plan and the Road Map 2008-
2012 – concept and guidance to the ministries and
agencies
Decision 1263/QĐ-TTg dated September 16, 2008 to
set up NSW Steering Committee chaired by MOF to
coordinate all activities
Decision 1616/QĐ-BCT dated March 31, 2010
approving the plan for simplifying administrative
procedures under MOIT
National Single Window (NSW) Master Plan (MOIT)
State sector
reform The Prime Minister has
issued a regulation to
expedite equitization of state-
owned enterprises, and MPI
has submitted to the Prime
Minister a review of the
State-owned Economic
Group model
Draft of time-bound plan to separate state ownership
exercising authority from regulatory functions signed
off by Minister of MPI and submitted to the
Government through MPI Official Document No.
7732/BC-BKHĐT dated November 09, 2011 to the
Prime Minister
Resolution 10/NQ-CP dated February 23, 2010
promulgating the Government‟s program of action for
realization of the National Assembly‟s Resolution No.
42/2009/QH12 on enhancement of the effect and
effectiveness of implementation of policies and laws
on management and use of state capital and assets at
state run groups or corporations
MPI's Official Letter No. 61/BKHĐT-VP dated 11
February 2011 asking CIEM to delay work on draft
Plan to the last quarter of 2011
Decree 59/2011/NĐ-CP was issued on July 18, 2011
replacing Decree 109/2007/ND-CP on SOE
equitization
Comprehensive report on Evaluating corporate
governance of SOEs and supervision of state economic
groups and policy recommendations under BWTO
Prime Minister‟s Notice No. 25/TB-VPC dated
February 25, 2011 assigns NSCERD to conduct a
preliminary review of the state economic groups
Research on SOE ownership policies by EDA
49
Pillar I: Business development
Area Benchmark / Prior Action Supporting Documentation
Financial
sector reform SBV has issued a regulation
to enhance public disclosure
and communication of SBV’s
policies and banking sector
statistics
Circular 21/2010/TT-NHNN dated October 08, 2010
on the Statistic reporting applicable to units of the
State Bank and credit institutions, foreign bank‟s
branches
SBV Circular 35/2011/TT-NHNN dated November 11,
2011 on information disclosure of SBV
Formulate a Banking Sector
Strategy 2011-2020 with the
aim of enhancing the
soundness and stability of the
financial sector and to promote
competition
Draft Banking Sector Strategy 2011-2020 dated Sept
11 2011
Private sector
development
MOF has formulated a time-
bound roadmap to improve
corporate and government
bond markets to foster
financial and economic
growth
Draft Roadmap to improve corporate and government
bond market version on November 2011 was officially
transmitted to SBV through MOF Official Letter No.
29707/BTC-QLN dated November 01, 2011
Infrastructure The Prime Minister has
adopted a Gas Master Plan to
2015 with Visions to 2025,
including a time-bound
instruction to MOIT to
prepare a Gas Market
Reform Roadmap to 2020 for
consideration by the Prime
Minister
Gas Master Plan to 2015 with visions to 2025
approved via PM Decision No. 459/QĐ-TTg dated
March 30, 2011
Pillar II: Social Inclusion
Area Benchmark / Prior Action Supporting Documentation
Education MOET has issued a
regulation to institutionalize
regular nationwide
assessments of student
learning outcomes at primary
and secondary levels
Circular 51/2011/TT-BGD ĐT dated November 03
2011 on regular nationwide assessments of student
learning outcomes at primary and secondary levels
50
Health MOH has issued a regulation
to establish a centralized
database as a step towards
unifying the national
licensing system of healthcare
professionals
MOH Decree 87/2011/ND-CP detailing and guiding
the implementation of some Articles in the Law on
Examination and Treatment
MOH Circular 41/2011/TT-BYT implementing the
Decree and stipulating the establishment of centralized
database
Prepare a summary report of
health insurance revenues and
expenditures, and key coverage
and utilization performance
indicators for publication
The summary report of statistics and accompanying
analysis of health insurance revenues and expenditures
Gender The Prime Minister has
adopted a set of national
gender development
indicators and criteria for
sex-disaggregation in the
national statistics
Decision 43/2010/QD-TTg dated June 02 2010 of the
Prime Minister on the issuance of national statistic
indicators
PM's decision No. 56/2011/QD-TTg dated 14 Oct
2011 on the issuance of the National Gender
Development Indicators
Pillar III: Natural Resources
Environment MPI has issued technical
guidelines for the application
of strategic environmental
assessments in the process of
socio-economic development
planning
MONRE Decree 29/2011/NĐ-CP dated April 18, 2011
on SEA, environment impact assessment, environment
protection commitment
MONRE Circular 26/2011/TT-BTNMT dated July 18,
2011 guiding the implementation of Decree 29
Technical guidelines for the application of strategic
environmental assessments in the process of socio-
economic development planning issued by MPI and
officially transmitted through MPI Official Letter
No.7726/BKHĐT-KHGDTNMT dated November 08,
2011
51
Pillar IV: Modern governance
Area Benchmark / Prior Action Supporting Documentation
Public
financial
management
MOF has started an annual
exercise of publishing the
synthesis report based on
financial statements of state-
owned Economic Groups and
General Corporations
Report to the NA No. 163/BC-CP about improving
the efficiency of policy implementation, capital and
state assets utilization at state EGs posted at MOF
website:
http://mof.gov.vn/portal/page/portal/mof_vn/ttsk/137
0574?p_page_id=2202234&pers_id=2177083&item_
id=48120773&p_details=1
Confirmation in writing that the posting will be done
annually
Public
administration
reform
The Prime Minister has
adopted a Public
Administration Reform
Master Program for 2011-
2020, and MOHA has started
piloting a results-oriented
monitoring and evaluation
system
Resolution No.30c/NQ-CP dated November 08 2011
on Public Administration Reform Master Program for
2011-2020
Confirmation that MOHA has started piloting a
results-oriented monitoring and evaluation system
Draft results-based M&E system for the State PAR
Master Plan
Fighting
corruption GI has developed a framework
for monitoring progress on the
implementation and results of
efforts to prevent and combat
corruption
GI's document No. 2176/TTCP-C.IV dated August
15, 2011 regulating reporting mechanism and
indicators on anti-corruption activities (with 03
Annexes)
GI Circular No. 11/2011/TT-TTCP dated November
9, 2011 on criteria of assessing the corruption
situation and evaluating anti-corruption activities
Joint Circular No. 12/2011/TTLT dated November 9,
2011 on sharing, managing and using the information
and data on anti-corruption activities
Note: Boldface indicates Prior Action included in the Financing Agreement for the operation.
52
ANNEX 5 : Public Financial Management in Vietnam
Overview
1. Over the past decade, Vietnam has made strides in establishing a sound public financial
management system. With the adoption of the first organic budget law in 1996 and its revision in
2002, a legal framework for public resource management has been put in place. A centralized treasury
system is being set up with branches extending from the center to all provinces and districts to provide
basic essential financial services to all government agencies. Steady progress has been achieved in
making the budget more predictable and pro-poor, and the budgeting process more transparent and
participatory. Substantial efforts have also been made in recent years to improve transparency in the
use of public resources through disclosure of information on detailed government spending as well as
expenditure policies, regulations and procedures.
2. There is strong ownership in the Vietnamese Government of the PFM reform agenda.
MOF is currently engaged, as are other Ministries, in developing a reform strategy for 2011-2020. The
strategy aims at (i) maintenance of stability of public finances within the broader economy; (ii)
improved effectiveness of public sector expenditure in achieving policy and service delivery; (iii)
development of effective influence by government over key finance markets; (iv) effective and
efficient resource mobilization to finance public expenditures. Support to the implementation of
reforms is coordinated through the PFM partnership group which overarches the activities of
government, donors, and working groups, meeting half yearly to discuss progress. There is ongoing
effort among donors to directly align their support with the mainstreaming government‟s strategies
and plans.
3. PFM remains in the center of Public Sector reforms. Other focus areas are organizational
restructuring, pay and employment reform, and institutional development. The PFM reforms hinge on
seven priorities: budget management, revenue management, debt management, SOE fiscal risk
management, financial market supervision and government bond market development, public asset
management, and price management.
4. The overall conclusion of the latest Country Financial Accountability Assessment (CFAA 2007)
stated that PFM arrangements and their implementation and performance pose a moderate risk
that funds will not be properly controlled or used for intended purposes. The CFAA proposed a set of
recommendations to help the government design and continue implementing reforms and capacity
building programs to modernize and strengthen PFM and enhance transparency and accountability
arrangements in support of sound economic management and improved governance.
5. Even though a series of analytical work, such as Public Expenditure Review (PER) or CFAA,
have been undertaken every three to four years, progress and impact of the PFM reforms and
development initiatives can only be measured by establishing an official monitoring framework, and
baseline performance measures. The Public Expenditure and Financial Accountability (PEFA)
measurement framework provides a recognized measurement of the performance of the public
financial management of government. Similarly, the Debt Management Performance Assessment
(DeMPA), adapted from the PEFA framework, but is focused on debt management issues, would
provide a baseline assessment of debt management capacity. Although the Government has agreed in
principle to introducing these measurement frameworks through pilot self-assessment process in 2011
(PEFA) and 2012 (DeMPA), no firm decision on detailed timeframe and commitment of resources
have been made.
53
6. Within the MOF, the number of technically-qualified and experienced managerial staff needs to
be increased to meet the reform challenges of the Ministry. Support is needed for Capacity building
across sectors and sub-national government to implement decentralized PFM reforms.
Recent Developments and the Way Ahead
7. PFM Legal and Institutional Framework. The CFAA reported that since 2004,
implementation of the 2002 State Budget Law and the 2005 Accounting Law has progressed and a
State Audit Law has been enacted. However, it also noted that some confusion and overlap in budget
responsibilities remain in the budgeting system which is limiting the participation of sectors in
resource planning, budgeting and budget management and confuses accountabilities between the
national and sub-national levels. Furthermore with the redevelopment of the government accounting
systems and regimes, the Accounting Law is no longer adequate and needs revision, and the basis for
accounting needs to be better defined, however there is no clear plan at that this time to revise the
Accounting Law. The State Budget Law will be revised and re-submitted to the National Assembly in
2012, expectedly including a number of critical changes to state administration in Vietnam such as
enhanced decentralization to sub national government and adjusted fiscal authority of central vis-a-vis
sub national tiers of government in budget approval.
8. PFM information systems. The Treasury and Budgetary Management Information System
(TABMIS) will progressively address difficulties in monitoring a fully-consolidated budget as well
as the fiscal position. TABMIS has been developed since 2007, piloted in 2009, and recently rolled-
out to MOF and treasuries and financial agencies in 35 out of 63 provinces. Fifteen largest spending
line-ministries are getting ready to use TABMIS to conduct budget allocations for 2011. It is expected
that the system will become fully operational in 2012 upon its nationwide roll-out. TABMIS will
provide the capability to record and control commitments, improve cash management and arrears
management, and strengthen expenditure management and controls. There are initial staged plans for
TABMIS consolidation and expansion, in both terms of both functionality and coverage, towards the
Integrated/Government Financial Management Information System (IFMIS).
9. Public accounting regulations. In parallel with TABMIS project, a unified Treasury and
Budgetary Chart of Accounts has been developed to provide consistency of classification of revenues
and expenditures in budgeting, accounting and reporting with expenditures classified on an
administrative, economic and functional basis. This will facilitate accurate and timely financial
reporting, and the flow of budgetary information between government ministries provinces and the
public. For future TABMIS expansion, development of a unified and uniform chart of accounts for the
public sector (including the Spending Units) is now envisaged. A staged roadmap for adoption of the
International Public Sector Accounting Standards (IPSAS) is also being developed to align
government accounting regimes and practices with international standards.
10. Budget Development & Execution. Vietnam‟s budget coverage is reasonably comprehensive
but still incomplete compared to international practices. Budget gaps arise from the lack of clarity in
the state budget coverage of user fees and charges of many service delivery units, lack of integration
or disclosure of the financial positions of public financial funds, untimely and sometimes inadequate
incorporation of donor financing, and off-budget government bonds. Budget execution variations arise
from such practices as revenue underestimation particularly for crude oil revenues, keeping the state
accounts open after year end with post year expenditures recorded against previous year unused
budgets, and over implementing construction and development plans. Separate preparation of the
recurrent and capital investment budgets hampers effective management of resources and the
composition of public expenditure remains unbalanced.
11. Public expenditure is planned annually and also for medium-term over five year periods but the
linkage between the two remains weak. The ongoing revision of the State Budget Law introduces
54
Medium-Term Fiscal and Expenditure Framework, to be mainstreamed in the annual budget cycle.
There are also initial discussions on reforming budget planning toward output- and program-based
budget elaboration.
12. Off-budget-balance expenditures, i.e., expenditures not counted in the calculation of the
budget deficit, include government bonds issued to finance infrastructure projects and education
facilities, recapitalization of entities such as the Vietnam Development Bank or the Vietnam Social
Policy Bank, and borrowings by sub-national governments and their affiliated entities such as local
development funds. However, these so-called off-budget expenditures in Vietnam can be considered
on-budget in several respects. They are included in the budget that is reviewed and approved by the
National Assembly, and their execution was done through the Treasury and subject to the same
disclosures and scrutiny as standard budget expenditures. There are attempts under the ongoing
revision of the State Budget Law to adjust budget structure and coverage to be more in line with the
international norms.
13. Contingent liabilities might be arising from these “off-budget-balance expenditures” and other
implicit sources. A systemic definition and a reliable estimate of such contingent liabilities are not
available, which limits the government‟s ability to manage such risks properly. More broadly, as
Vietnam is reaching middle-income status, it will need to engage more long-term finance from both
domestic and external sources. Under the recently improved debt management, initial attention from
the government on risk management and monitoring of contingent liabilities has been observed. Given
the recent default of one of the largest state owned Economic Groups (Vinashin), MOF is planning to
strengthen monitoring of fiscal risks from the SOEs. However, although considered as the country‟s
lead agency for national and public debt management, MOF has not yet prepared an inventory of
government contingent liabilities from various sources, due to lack of necessary legal framework, poor
data availability and limited assessment capacity.
14. Revenue administration. Customs controls are still considered low in productivity,
inconsistent and vulnerable to corruption. The Customs administration will need to change
significantly, shifting its mindset from a culture of domestic protection and control of all transactions
to one that facilitates foreign trade and promotes private sector development. The tax administration is
also characterized by low compliance and vulnerability towards corruption. Five areas of tax
administration have been identified as in need of special attention: (1) the fragmentation of the legal
framework related to tax administration; (2) the absence of effective coordination and information-
sharing between the tax administration and other government agencies; (3) taxpayers‟ lack of
knowledge about the tax laws and compliance procedures; (4) inadequate professional skills and
training of tax administration; and (5) information technology system which is lagging behind the
requirements of a modern tax administration. In addition, tax laws and policies will need further
reforms to broaden the tax base, and to reduce the number of rates and exemptions. Reforms in the
management of revenue are progressing with clearer allocation rules and decentralized responsibilities;
however classification of revenue in line with international standards needs to be introduced, and
enhanced consultation on revenue targets is needed to improve the quality of revenue budgets.
15. Public debt management has improved both in terms of legal framework and institutional
arrangements. The Debt Management Department was established in May 2009 with the role of a
modern debt management office under the MOF. Although not all of the tasks relating to public debt
management have been consolidated to this Department, the organizational structure of the department
is similar to the debt management office according to international practices, with 6 divisions
functioning as front office, one division performing the middle office functions, and one division
performing the back office functions. Meanwhile, the first-ever Law on public debt management was
approved by the National Assembly in June 2009 and came into effect in 2010. The Law introduced
substantial reforms in managing and monitoring comprehensively public debt and government
commitments (including domestic sub-national debts and on-lending), and addressing many
55
weaknesses in the public debt management in Vietnam. A series of guiding decrees were adopted in
2010 to facilitate the implementation of the law. Special attention is now paid to strengthening risk
management and developing forward-looking debt management strategy and program.
16. Financial market supervision and the government bond market. At present, many agencies
participate in financial market supervision, leading to overlapping responsibilities and ineffective
management and supervision. There is a need to consolidate market supervision functions into a
single agency and to separate state management and supervision functions. Vietnam‟s government
bond market is still small scale, low liquidity, and the maturity structure is skewed toward short-term.
The number of market participants is relatively small and supporting infrastructure, such as
depository, clearing and information systems, is yet to be developed. Therefore, considerable efforts
are required to develop a full-fledged government bond market and coordinate it with development of
related markets such as capital, security and real estate. A bond market development roadmap is being
prepared towards these visions.
17. The Government‟s PFM reform program highlights that state assets budget resources and human
resources need to be managed in an integrated way for efficient and effective service delivery, and
reforms are being gradually introduced. The legal framework and market principles in asset
management were recently adopted under the Law on State Asset Management. The requirements for
management reporting systems are being defined, but reform in this area has been slow. Initially,
attention is needed for developing consistent and comprehensive asset accounting and asset
management policies in line with international standards and practices. Further study will be carried
out in 2011 to determine the most appropriate solutions to address the government‟s accounting and
asset management requirements.
18. Independent scrutiny of PFM has significantly increased, with external oversight of budgetary
affairs by the National Assembly and the recently independent State Audit of Vietnam (SAV). The
functional committees and deputies of the National Assembly, and the local People‟s Committees have
been given greater prominence in examining, decision-making and oversight of the state budget. There
is steady expansion of external audit coverage and quality, and legislative oversight. Encouragingly,
the SAV audit report was made public for the first time in 2006, and regularly since, triggering serious
debates where are broadcasted live on the usage of state budgets. However, the capacity of these
institutions, especially the SAV, is limiting the coverage and scope of audits. It is difficult for the
SAV to manage the increasing workload including compulsory audit for 100 percent of SOEs, and to
consider the move towards performance audit. Significantly, the SAV has recently approved an
ambitious and comprehensive strategy to 2020 (with accompanying implementation plan to 2015)
aimed at upgrading its capacity across the key areas of organizational and legal framework, human
resources, audit planning and methodologies (including performance audit), information technology,
and external relations.
19. The country‟s public financial management system has a range of internal oversight
mechanisms. In the past, the focus was on inspection rather than systematic review to provide regular
and timely feedback to the management on the use of public resources. Internal auditing is an
important element of a sound public financial management system, which helps increase effectiveness,
efficiency and financial control. This issue becomes even more important if the government intends to
decentralize further to the local levels. The legal and institutional frameworks for the organization and
operation of internal audit are being developed. Although implementation will be challenging, this has
been a very encouraging step towards establishing a sound internal audit system in Vietnam in the
coming years.
20. Vietnam has increased its level of fiscal transparency. Budget plans and budget execution
accounts are being made available publicly, and there is increasing compliance with reporting
regulations. However there is still room for improvement, particularly in relation to consistency in
56
quality of reports and their timeliness. The draft budget plan should be disclosed before National
Assembly‟s approval. To enhance the quality of financial reporting, consistency between budget and
accounting classifications needs to be maintained. The number of budget execution reports needs to be
rationalized. Content and presentation of financial information needs to be improved in line with
existing government regulations in the publicly available budget execution reports to make them more
informative. Enabled by TABMIS, MOF has committed to, by 2013, publish monthly and more
disaggregated budget execution reports on MOF website 15 days after month end, as opposed to the
current practice of publicize quarterly and aggregated report 45 days after quarter end. In addition, the
Government is establishing a State Accounting General function, and working toward producing and
issuing annual financial statements, including cash and asset information, in line with international
practices. The annual final accounts need to be issued faster than the current 18 months, e.g. 9
months, after year end to enhance their relevance to the discussions on the budget of the subsequent
year.
21. Good progress has been made in establishing legislation and the environment for greater
financial accountability and transparency of financial information. Regulations on financial
disclosures of the State Budget Law, Accounting Law and State Audit Law have been issued
increasing the scope and range of required disclosures by entities at all levels of government.
Information is being made available on public accessible websites. However, implementation remains
the challenge. To further increase transparency, the content of budget documentation and the final
accounts could be enhanced by including analysis, explanations and information in line with
international practices. Disclosure of financial information, particularly spending at unit level should
be actively monitored to ensure compliance with the enhanced disclosure requirements. Published
financial reports should be timely, and a calendar for disclosures issued publicly.
57
ANNEX 6: Environmental Assessment
Environmental Assessment Review (OP 8.60 Likelihood of significant effects on environment, forests, and natural resources)
Area and
Number Medium Term Objectives Impact
11 Potential negative effects and
borrower’s ability to manage
them
Potential positive effects
Pillar 1 - Business Development Global
integration
Adopt Master Plan for national single
window to facilitate trade by simplifying
transit-related regulatory requirements
Blue No likelihood of significant
negative effects.
No specific environmental
consequences are likely.
State sector
reform The Prime Minister has issued a regulation
to expedite equitization of state-owned
enterprises, and MPI has submitted to the
Prime Minister a review of the Economic
Group model
Blue No likelihood of significant
negative effects.
No specific environmental
consequences are likely.
Financial sector
reform SBV has issued a regulation to enhance
public disclosure and communication of
SBV’s policies and banking sector statistics
Blue No likelihood of significant
negative effects.
No specific environmental
consequences are likely.
Formulate a Banking Sector Strategy 2011-
2020 with the aim of enhancing the soundenss
and stability of the financial sector and to
promote comeptition
Blue No likelihood of significant
negative effects.
No specific environmental
consequences are likely.
Private sector
development MOF has formulated a time-bound
roadmap to improve corporate and
government bond markets to foster
financial and economic growth
Blue No likelihood of significant
negative effects.
No specific environmental
consequences are likely.
11
Grading adapted from Assessing the Environmental, Forest, and Other Natural Resource Aspects of Development Policy Lending – A World Bank Toolkit
(2008): Red– Very Likely Negative Impact; Yellow- Potential for Negative Impact; Blue – No Impact; Green – Positive Impact.
58
Infrastructure: Prime Minister has adopted a Gas Master
Plan to 2015 with Visions to 2025,
including a time-bound instruction to
MOIT to prepare a Gas Market Reform
Roadmap to 2020 for consideration by the
Prime Minister
Green No likelihood of significant
negative effects.
The master plan is expected to have
positive environmental impacts in the
long run once it enters the
implementation phase. In particular,
facilitating access to gas and reducing
coal use is one of the single greatest
actions that can be taken to reduce
carbon emissions in Vietnam.
Pillar 2 - Social Inclusion
Education MOET has issued a regulation to
institutionalize regular nationwide
assessments of student learning outcomes
at primary and secondary levels
Blue No likelihood of significant negative
effects.
No specific environmental
consequences are likely.
Health MOH has issued a regulation to establish a
centralized database as a step towards
unifying the national licensing system of
healthcare professionals
Blue No likelihood of significant negative
effects.
No specific environmental
consequences are likely.
Prepare a summary report of health insurance
revenues and expenditures, and key coverage
and utilization performance indicators for
publication
Blue No likelihood of significant negative
effects.
No specific environmental
consequences are likely.
Gender The Prime Minister has adopted a set of
national gender development indicators
and criteria for sex-disaggregation in the
national statistics
Blue No likelihood of significant negative
effects.
No specific environmental
consequences are likely.
Pillar 3 - Natural Resources Management
Environment MPI has issued technical guidelines for the
application of strategic environmental
assessments in the process of socio-
economic development planning
Green No likelihood of significant
negative effects.
Expected to have significant positive
impact when strategic environment
assessments (SEAs) are carried out more
systematically during the planning
process and taken into account.
Pillar 4 - Modern Governance
Public financial MOF has started the annual exercise of Green No likelihood of significant No specific environmental
59
management: publishing the synthesis report based on
financial statements of State-owned
Economic Groups and General
Corporations
negative effects.
consequences are likely.
Public
administration
reform
The Prime Minister has adopted a Public
Administration Reform Master Program
for 2011-2020, and MOHA has started
piloting a results-oriented monitoring and
evaluation system
Blue No likelihood of significant
negative effects.
No specific environmental consequences
are likely.
Fighting
corruption
GI has developed a framework for
monitoring progress on the
implementation and results of efforts to
prevent and combat corruption
Blue No likelihood of significant
negative effects.
No specific environmental
consequences are likely.
60
ANNEX 7 : Fund Relations Note
Vietnam—Assessment Letter for the World Bank1
December 2, 2011
1. Significant progress has been made in implementing tight macroeconomic policy
measures stipulated in the adjustment package (Resolution 11) adopted in February.
However, confidence remains fragile.
GDP growth is projected to slow to 53/4
percent in 2011, recovering somewhat to 61/4
percent
in 2012. Inflation peaked at 23 percent in August and is estimated to decelerate to 19 percent
y/y by end-2011, and further decline to around 8 percent y/y at end-2012 (12 percent on
average). Credit growth is projected to fall sharply to around 12 percent y/y at end-2011.
The current account deficit is forecast to narrow significantly in 2011, thanks partly to a rise
in the value of oil exports, and remains at low levels in 2012. However, significant downside
risks arise from weaknesses in the U.S. economy and uncertainties surrounding the Euro
Area, which could adversely affect exports, remittances, foreign direct and portfolio
investment, and possibly aid.
Soon after an 8.5 percent devaluation of the official dong/U.S. dollar exchange rate in
February, the market exchange rates converged with the official rate and were stable over the
summer. However, confidence in the dong has eroded again in recent months. Interventions
by the State Bank of Vietnam (SBV) have kept the gap between the official and market
exchange rate relatively small, but have resulted in a decline in international reserves.
The overall fiscal deficit in 2011 is estimated at 31/2
percent of GDP, owing to higher-than-
projected revenues and cuts in public investment. While the government intends to keep the
tight stance on public investment in 2012, the fiscal deficit may not decline much unless
additional consolidation efforts are made.
2. Concerns over the soundness of the banking sector are rising. Nonperforming loans
are increasing, due partly to difficulties faced by industry and party due to a decline in the value
of some real estate projects, and would likely be significantly higher under international
reporting standards. State-owned commercial banks have extended liquidity support to some
small banks under stress, a move that can at best be a temporary solution.
3. While we commend the government’s efforts to date, and its intention to keep the
tight policy stance into 2012, premature policy loosening would unravel the gains made so
far. We believe that continuing, and strengthening where appropriate, the tight policy stance,
remains critical. In particular, fiscal consolidation should be further accelerated to support
monetary policy. At the same time, a transparent framework for financial sector consolidation
and re-capitalization (both quantitatively and qualitatively) with a view to raising the capital
adequacy ratio is needed, and action to implement it would need to start without delay. These
measures should serve to rebuild external, fiscal, and financial buffers, which are needed in an
uncertain and volatile global economic environment.
1 The 2011 Article IV consultation was concluded on April 28, 2011. Staff has monitored the situation in Vietnam
closely since then, including by the staff visit during November 4-10, 2011. The next Article IV consultation
mission is planned for March 2012.
61
Est.
2007 2008 2009 2010 2011 2012
Output
Real GDP (percent change) 8.5 6.3 5.3 6.8 5.8 6.3
Saving and Investment (in percent of GDP)
Gross national saving 33.3 27.8 31.6 33.9 34.0 33.1
Private 27.0 20.2 24.8 28.4 29.1 28.7
Public 6.3 7.6 6.8 5.6 4.9 4.4
Gross Investment 43.1 39.7 38.1 38.1 34.5 34.2
Private 32.6 29.9 23.2 26.5 25.8 26.2
Public 10.6 9.9 14.9 11.6 8.8 8.0
Prices (percent change)
CPI (period average) 8.3 23.1 6.7 9.2 18.8 12.1
CPI (end of period) 12.6 19.9 6.5 11.7 19.0 8.1
Core inflation (end of period) 8.0 16.3 6.1 8.8 … …
GDP Deflator 8.2 22.1 6.0 11.9 21.0 11.0
General government finances (in percent of GDP)
Revenue and grants 28.7 29.0 28.1 27.6 26.6 27.0
Expenditure 31.2 30.2 35.1 33.9 30.1 30.5
Current 20.3 19.7 19.7 20.9 20.9 21.9
Capital 10.9 10.5 15.4 13.2 9.3 8.7
Overall balance 1/ -2.5 -1.2 -7.0 -6.3 -3.6 -3.5
Public and publicly guaranteed debt (end of period) 44.6 42.9 51.2 52.8 48.8 47.0
Money and credit (percent change, end of period)
Broad money (M2) 46.1 20.3 29.0 33.3 11.8 12.4
Credit to the economy 53.9 25.4 39.6 32.4 12.1 14.7
Interest rates (in percent of GDP, unless otherwise indicated)
Nominal three-month deposit rate (households) 7.8 8.1 10.7 11.6 … …
Nominal three-month lending rate (households) 11.8 11.5 12.7 14.0 … …
Balance of payments (in percent of GDP, unless otherwise indicated)
Current account balance (including official transfers) -9.8 -11.9 -6.6 -4.1 -0.6 -1.1
Exports f.o.b. 68.3 69.4 61.3 69.7 79.2 80.2
Imports f.o.b. 82.9 83.6 70.2 74.7 80.5 32.1
Capital and financial account 15.4 14.0 12.2 2.8 2.5 2.0
Gross international reserves (in billions of U.S. dollars, end of period) 2/ 21.0 23.0 14.1 12.4 13.0 16.6
In months of prospective GNFS imports 3.0 3.8 1.9 1.3 1.2 1.4
Total external debt (end of period) 3/ 32.4 33.4 41.6 42.3 39.6 37.8
Nominal exchange rate (dong/U.S. dollar, end of period) 16,017 17,483 18,479 19,498 … …
Nominal effective exchange rate (end of period) 4/ 91.1 92.0 80.8 81.1 … …
Real effective exchange rate (end of period) 4/ 106.0 125.7 115.7 116.9 … …
Memorandum items:
GDP (in trillions of dong at current market prices) 1,144 1,485 1,658 1,981 2,534 2,989
GDP (in billions of U.S. dollars) 71.1 90.3 93.2 103.6 124.8 139.5
Per capita GDP (in U.S. dollars) 835 1,048 1,068 1,174 1,397 1,543
Sources: Vietnamese authorities; and IMF staff estimates and projections.
1/ Excludes net lending of the Vietnam Development Bank.
2/ Excludes government deposits.
3/ Uses interbank exchange rate.
4/ 2000 annual average=100.
Projections
Table 1. Vietnam: Selected Economic Indicators, 2007-12
62
ANNEX 8 : At –A-Glance Table
Vietnam at a glance 8/31/11
East Lower
Key D evelo pment Indicato rs Asia & middle
Vietnam Pacific income
(2010)
Population, mid-year (millions) 88.4 1,944 3,811
Surface area (thousand sq. km) 331 16,302 31,898
Population growth (%) 1.2 0.7 1.2
Urban population (% of to tal population) 28 45 41
GNI (Atlas method, US$ billions) 99.9 6,149 8,846
GNI per capita (Atlas method, US$) 1,130 3,163 2,321
GNI per capita (PPP, international $) 2,910 6,026 4,784
GDP growth (%) 6.8 7.4 7.1
GDP per capita growth (%) 5.5 6.6 5.9
(mo st recent est imate, 2004–2010)
Poverty headcount ratio at $1.25 a day (PPP, %) 13 17 ..
Poverty headcount ratio at $2.00 a day (PPP, %) 38 39 ..
Life expectancy at birth (years) 75 72 68
Infant mortality (per 1,000 live births) 20 21 43
Child malnutrition (% of children under 5) 20 9 24
Adult literacy, male (% of ages 15 and o lder) 95 96 87
Adult literacy, female (% of ages 15 and o lder) 91 91 74
Gross primary enro llment, male (% of age group) 102 111 109
Gross primary enro llment, female (% of age group) 100 112 105
Access to an improved water source (% of population) 94 88 86
Access to improved sanitation facilities (% of population) 75 59 50
N et A id F lo ws 1980 1990 2000 2010 a
(US$ millions)
Net ODA and official aid 228 181 1,681 3,744
Top 3 donors (in 2008):
Japan 4 1 924 1,191
France 15 12 53 143
Germany 0 16 33 112
Aid (% of GNI) .. 3.0 5.5 4.0
Aid per capita (US$) 4 3 22 43
Lo ng-T erm Eco no mic T rends
Consumer prices (annual % change) .. 36.4 -1.6 9.2
GDP implicit deflator (annual % change) .. 42.1 3.4 11.9
Exchange rate (annual average, local per US$) 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
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
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
M anufacturing .. 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 o f 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. A id data are for 2009.
Development Economics, Development Data Group (DECDG).
(average annual growth %)
(% of GDP)
10 5 0 5 10
0-4
15-19
30-34
45-49
60-64
75-79
percent of total population
Age distribution, 2009
Male Female
0
10
20
30
40
50
60
1990 1995 2000 2009
Vietnam East Asia & Pacific
Under-5 mortality rate (per 1,000)
0
2
4
6
8
10
12
95 05
GDP GDP per capita
Growth of GDP and GDP per capita (%)
63
Vietnam
B alance o f P ayments and T rade 2000 2010
(US$ millions)
Total merchandise exports (fob) 14,483 72,191
Total merchandise imports (cif) 15,637 84,801
Net trade in goods and services -173 -7,948
Current account balance 1,108 -3,999
as a % of GDP 3.6 -3.9
Workers' remittances and
compensation of employees (receipts) 2,000 6,626
Reserves, including gold 3,030 12,400
C entral Go vernment F inance
(% of GDP)
Current revenue (including grants) 20.4 26.2
Tax revenue .. ..
Current expenditure 15.9 21.2
T echno lo gy and Infrastructure 2000 2009
Overall surplus/deficit -2.0 -6.5
Paved roads (% of to tal) 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 D ebt and R eso urce F lo ws
Enviro nment
(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, M DRI) – – 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
Portfo lio equity (net inflows) .. 128
GDP per unit o f energy use
(2005 PPP $ per kg of o il equivalent) 3.3 3.7
Energy use per capita (kg of o il equivalent) 477 689
Wo rld B ank Gro up po rtfo lio 2000 2009
(US$ millions)
IBRD
Total debt outstanding and disbursed – –
Disbursements – –
Principal repayments – –
Interest payments – –
IDA
Total debt outstanding and disbursed 1,113 6,270
Disbursements 174 1,206
P rivate Secto r D evelo pment 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 portfo lio 223 156
Time required to register property (days) – 57 o f which IFC own account 107 153
Disbursements for IFC own account 25 24
Ranked as a major constraint to business 2000 2010 Portfo lio sales, prepayments and
(% of managers surveyed who agreed) repayments for IFC own account 18 40
Access to /cost o f financing .. 40.5
Access to land .. 25.9 M IGA
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).
0 25 50 75 100
Control of corruption
Rule of law
Regulatory quality
Political stability
Voice and accountability
Country's percentile rank (0-100)higher values imply better ratings
2009
2000
Governance indicators, 2000 and 2009
Source: Kaufmann-Kraay-Mastruzzi, World Bank
IBRD, 0IDA, 6,270
IMF, 83
Other multi-lateral, 10,010
Bilateral, 11,566
Private, 4,172
Short-term, 6,645
Composition of total external debt, 2009
US$ millions
64
Millennium Development Goals Vietnam
With selected targets to achieve between 1990 and 2015(estimate closest to date shown, +/- 2 years)
Go al 1: halve the rates fo r extreme po verty and malnutrit io n 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
Go al 2: ensure that children are able to co mplete primary scho o ling
Primary school enro llment (net, %) .. .. 95 88
Primary completion rate (% of relevant age group) .. .. 96 ..
Secondary school enro llment (gross, %) 35 .. 65 ..
Youth literacy rate (% of people ages 15-24) 94 .. 95 97
Go al 3: e liminate gender disparity in educat io n and empo wer wo men
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
Go al 4: reduce under-5 mo rtality 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
M easles immunization (proportion of one-year o lds immunized, %) 88 95 97 97
Go al 5: reduce maternal mo rtality by three-fo urths
M aternal mortality ratio (modeled estimate, per 100,000 live births) 170 120 91 56
B irths attended by skilled health staff (% of to tal) .. 77 68 88
Contraceptive prevalence (% of women ages 15-49) 53 65 74 80
Go al 6: halt and begin to reverse the spread o f H IV/ A ID S and o ther majo r 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
Go al 7: halve the pro po rt io n o f peo ple witho ut 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 o f energy use (constant 2005 PPP $ per kg of o il equivalent) 2.5 2.9 3.3 3.7
Go al 8: develo p a glo bal partnership fo r develo pment
Telephone mainlines (per 100 people) 0.1 1.1 3.3 35.2
M obile 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 computers (per 100 people) 0.0 0.1 0.8 9.6
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
0
25
50
75
100
2000 2005 2009
Primary net enrollment ratio
Ratio of girls to boys in primary & secondary education
Education indicators (%)
0
50
100
150
2000 2005 2009
Fixed + mobile subscribers
Internet users
ICT indicators (per 100 people)
0
25
50
75
100
1990 1995 2000 2009
Vietnam East Asia & Pacific
Measles immunization (% of 1-year olds)
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