Vietnam provides a good example of a mature development partnership. There has been strong national ownership of the development agenda, going back to the 1980s when Vietnam first introduced market-oriented reforms. This has enabled Vietnam to average 6-7% growth ever since, and Government predicts that Middle Income Country status (GDP of US$1,000 per capita) will be reached by 2010. This has been combined with a commitment to social inclusion and poverty reduction. Various budgetary mechanisms are used to channel additional budgetary resources to the poorest areas. Vietnam’s record on poverty reduction is among the most successful in the developing world. The number of people living in extreme poverty fell from 58.1% in 1993 to 24.1% in 2004, for an average decline of over 3% per year. Vietnam has already achieved its first Millennium Development Goals – to halve poverty by 2015. Vietnam’s social indicators are superior to those of most countries at a similar income level.
Vietnam’s successes at growth and poverty reduction have made it one of the top ten recipients of ODA in the world, with 28 bilateral and 23 multilateral development partners. There were pledges of US$5.4 billion in ODA in 2008, of which three quarters emerged as firm commitments. The top three donors (Japan, the World Bank and the Asian Development Bank) together account for 80% of ODA, while the EU and its member states are the largest providers of grant assistance.
However, Vietnam is by no means aid dependent, with ODA representing 4.5% of GDP and less than 12% of the budget. The volume of ODA is less than FDI, tourism revenues or remittances. However, it funds 33% of all public sector investments, and is regarded by Government as an important catalyst for other investment flows and a key source of finance for the development of social and economic infrastructure.
Vietnam has gone as far as any country in articulating principles, commitments and targets for aid effectiveness. The Hanoi Core Statement of September 2005 localises the Paris Declaration commitments and sets out ambitious national aid targets for 2010. National leadership of the aid effectiveness by the Ministry of Planning and Investment has been very strong. There are a number of aid-effectiveness challenges still to be addressed. First, a significant share of ODA is still fragmented into too many individual donor projects delivered through parallel management arrangements, taxing and distorting national capacity. The development of effective Programme-Based Approaches is a key challenge. Second, disbursement rates remain low, reflecting cumbersome donor and government procedures. Government has invested in developing a new legal framework for public investment management, but inconsistencies between Vietnamese and donor rules still need to be ironed out.
This is the first annual report provided by Vietnam’s reformed high level aid policy dialogue mechanism – the Aid Effectiveness Forum – and submitted to the Vietnam Annual Consultative Group Meeting in December 2010.
Vietnam’s SEDP 2006-2010 is a comprehensive national strategy for growth and poverty reduction, prepared through an extensive consultation process. It is structured around the four pillars of business development, social inclusion, natural resource management and modern governance. Individual sectors and provinces in Vietnam also prepare their own SEDPs. A results framework for the SEDP has been adopted, and work is underway to develop a Medium-Term Expenditure Framework to support implementation.
The CCBP is co-funded by the World Bank and the Like-Minded Donor Group, and develops capacity on ODA management and implementation across the Vietnamese administration. A major strand of its work is reviewing and reforming Vietnam’s legal framework for ODA management. Another is training government officials at multiple levels in project management and aid effectiveness.
Vietnam has developed a standardised monitoring and reporting tool for all investment projects, which is now used by most of Vietnam’s major donors. The tool, which is a simple excel sheet with standard reporting fields, simplifies the monitoring processes, while capturing the data needed for monitoring progress towards Vietnam’s national development goals. The Tool is a step towards the development of a standardised M&E system for ODA activities, with unified principles, methodologies and institutional arrangements.
Each year, in time for the annual Consultative Group meeting, Vietnam’s development partners produce a report outlining their views on the country’s most pressing development challenges. Each report contains a general assessment of development trends, with a focus on a particular theme. Coordinated and authored by the World Bank, the VDR provides a platform for joint policy dialogue, feeding into the discussions of the policy matrix for general budget support.
The Partnership Group for Aid Effectiveness is the main forum for coordinating, discussing and monitoring aid effectiveness in Vietnam. Co-chaired by the Director of the Foreign Economic Relations Department of the Ministry of Planning and Investment and a donor representative (rotating), the PGAE includes representatives of various GoV agencies, donors and civil society. The PGAE agrees an annual Action Plan setting out the most pressing implementation challenges on aid effectiveness.
The 2008 Paris Declaration monitoring survey concluded that Vietnam had already achieved seven of its Paris Declaration targets, and was on track for at least two more. While ownership and mutual accountability were found to be robust, there needed to be more effort on alignment and results based management. Accuracy of aid reporting and increased capacity for strategic planning at the local level are key aid effectiveness challenges.
This independent monitoring report notes that policy making in Vietnam at the sectoral level tends to be highly fragmented, with policy decisions emerging from multiple institutional sites and processes. The opaque nature of the policy process limits opportunities for participation by civil society actors, although Vietnam has made significant progress in promoting grass-roots participation at the community level. However, country ownership of sectoral and thematic strategies tends to be fairly low.
Vietnam was one of the first countries to produce a national strategy, the Hanoi Core Statement (HCS), for implementing the Paris Declaration. The HCS localises the Paris Declaration into 28 Partnership Commitments and 14 targets, in some cases more ambitious than those in the Paris Declaration. Supported by a dedicated structure for GoV-development partner dialogue on aid policy, the HCS has been a key instrument for focusing the implementation effort. Vietnam is currently preparation a localised version of the Accra Action Agenda.
Author(s): Bartholome, Leurs McCarty, OECD Year: 2007
Vietnam’s Poverty Reduction Support Credit, managed by the World Bank on behalf of 12 participating donors, is frequently cited as an example of best practice on policy dialogue in a mature development partnership. Each year, GoV and donors negotiate around a set of policy actions for achieving Vietnam’s development goals. The dialogue is also open to non-funding partners and CSOs, and makes use of existing sectoral dialogue processes. There is no conditionality in the PRSC, but donors link their annual funding decisions to progress against the previous year’s benchmarks. The instrument is well aligned with Vietnam’s budget calendar.
: 
