Strategy

Vietnam

Strategy

Vietnam: a new economic tiger

Vietnam is undergoing rapid changes. Its growth rate has stood at around 7% for the past 20 years and the country has experienced numerous social, economic and institutional changes. Between 2000 and 2010 its GDP tripled and its exports quadrupled in dollars. The country is one of the world’s major rice, coffee and rubber exporters and is also a top exporter of certain manufactured products such as clothing. A number of reforms are underway in the financial and public sectors. Vietnam is pursuing its economic modernization and aims to become a major regional player.

This ambition goes hand in hand with an ever greater presence in international decision-making bodies such as the UN, ASEAN and APEC. Vietnam joined the World Trade Organization (WTO) in January 2007. In addition to political stability and social cohesion, the country enjoys a whole host of factors which make it attractive to foreign investors.

Such progress has already considerably reduced poverty, yet the country still has to face new changes. A quarter of the population lives below the poverty line. Three out of four Vietnamese live in the countryside. Around a million young people arrive on the job market every year. By 2025 the country’s population will have reached 125 million which will put it in 4th place in Asia. Vietnam must consequently come up with solutions to major challenges including job creation and qualification for young people, absorbing the urban demographic tide, raising low-carbon energy capacity and, finally, a more sustainable management of natural resources (water, soil, renewable energies).

An urgent issue must be added to the list: preparation for climate change. Vietnam, with its 3,444 km of coasts and two deltas - Mekong and Red River - with fragile balances, is among the most vulnerable countries to global warming. If it is not well armed against climate change, all of its poverty reduction and development efforts will be called into question.

In view of these major challenges, AFD has based its strategy in Vietnam on four areas

Small and Medium Enterprises, financial sector and vocational training

AFD financing in this sector is provided either to banks and financial institutions or in the form of sectoral budget support (financial sector reform, SME development).

The aim is to increase financing for small and medium-sized enterprises and also help banks and financial institutions – including microfinance institutions and local investment funds – modernize their management and adapt to international standards (compliance with prudential rules, social and environmental protection, anti-money laundering and combating the financing of terrorism).

The AFD has also developed financing for the vocational training sector. This funding helps countries successfully compete in the international market by developing a competent and qualified labor force, creating partnerships with companies and assisting workers in making the transition from specializing in heavy industry (mines, etc.) to getting skills for more high-tech industries (telecommunications, electronics, nuclear, etc.).
Infrastructure
We finance basic infrastructure in:
- the environment sector (drinking water and sanitation, urban waste),
- the energy sector
- the transport sector.
The aim is to provide the poorest with access to basic services (rural electrification and drinking water) and heavy structuring infrastructure (energy transportation, Hanoi’s first metro line, railway rehabilitation). Our financing is also allocated to municipal investment funds for the construction of small-scale public equipment.
Agriculture, rural development and food security

Several financings aim to improve the quality and competitiveness of agricultural industries (particularly coffee, tea, sugar, cotton and rubber). AFD consequently supports the implementation of new public policies made necessary by the liberalization of production and commercialization.

Programs also support infrastructure for poor rural communities by financing rural roads and markets, access to drinking water, flood protection, water retention and irrigation networks.
Studies and partnerships
The principal missions of the "Studies and Partnerships" division of the Vietnam agency are:

instruction and management of the agency's projects for intellectual production (theme or sector studies, organization of seminars and conferences)

active participation in the donor coordination groups that have a strategic or operational interest for the agencies, such as the 6 development banks group (AFD, ADB, World Bank, JICA, KfW, Korea Eximbank)

oversight of NGO projects financed by the AFD as well as decentralized cooperation projects

translation of AFD documents into Vietnamese

The division is also in charge of the instruction and implementation of transverse projects or programs, especially the ones cofinanced by other donor organizations (budget aids, support programs for the development of public/private partnerships).