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Viet Nam and UNDP

UNDP has been in Viet Nam since 1977, when there was a very limited donor presence in the country. Only Sweden, Finland and several sister UN Agencies were present during that period, while most of Viet Nam's other major donors started or resumed their assistance programmes beginning in 1993. UNDP's role in Viet Nam has evolved with and helped to facilitate Viet Nam's many stages of transition since the end of the war in 1975.

 

Past, Present and Future

2001 - 2010:  Emerging Opportunities and Challenges
1999 - early 2002:  Viet Nam's Economy Picks Up
1997 - 1999:  Regional Crisis Increases Focus on Maintaining "Stability"
1994 - 1997:  Increasing Focus on Institutional, Legal and Regulatory Reforms
1989 - 1993: Acceleration of Doi Moi Reforms
1986 - 1989: Early Doi Moi Reform Period
1975 - 1986: Post-war Reconstruction and Rehabilitation

2001 - 2010:  Emerging Opportunities and Challenges

  • Looking ahead, Viet Nam is facing an array of opportunities and challenges including: further poverty reduction, the rapid globalization of trade, finance, information and knowledge; the need to develop more effective, flexible and responsive state institutions; job creation for a rapidly growing young labour force with rising expectations; better quality health and education services; competition with China; the US bilateral trade agreement; and increasing domestic incomes and savings needed to sustainably finance higher levels of development and human well-being, while avoiding dependence on foreign finance.
  • In line with Viet Nam's needs and priorities, as well as UNDP's reform process, UNDP Viet Nam is moving even further into upstream advisory and capacity building assistance for pro-poor policy and institutional development.
  • UNDP's future programme will focus on the following key areas: 1) Equitable Management of Globalization; 2) Promoting an Enabling Business Environment; 3) Partnerships to Fight Poverty; 4) Sustainable Financing for Development; 5) Public Administration Reform; 6) Rule of Law and Justice for All; 7) Disaster Mitigation and 8) Environmental Management.
  • Moreover, in the particular cases of Public Administration Reform, Legal Sector Reform and support to the National Assembly, the Government and a growing number of donors are looking towards UNDP to play an increased role in assisting Government-led ODA coordination.
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1999 - early 2002:  Viet Nam's Economy Picks Up

  • In this period, Viet Nam's economy began to pick up again, initially in-line with an improved regional economy during 2000. Then, slowing export demand from a weakening global and regional economy was offset by robust domestic demand fuelled largely by easy credit growth and relaxed fiscal policy; as well as improved investor confidence thanks to the approval of the new Enterprise Law and the ratification of the bilateral Trade Agreement with the United States.
  • UNDP continued to provide key assistance to the Ministry of Planning and Investment through its Central Institute for Economic Management in the drafting and ongoing implementation of the new Enterprise Law which was passed by the National Assembly in May 1999 and became effective in January 2000. Since early 2000, the Enterprise Law is credited with the creation of nearly 40,000 new non-State businesses and close to a million new jobs. UNDP assisted in the effective implementation of this very important new law.
  • UNDP also provided technical assistance for capacity building in legal reform and public administration reform, with project interventions at the Office of the National Assembly, the Ministry of Justice, and the Government Committee for Organization and Personnel. Most notable outcomes of such interventions are the Legal Needs Assessment Report and the Public Administration Reform Strategy. UNDP played a key role in facilitating and coordinating donor assistance and participation in these activities. UNDP also assisted in the production and dissemination of a new CD ROM called "Your Lawyer" which brought practical information on legal rights to people across the country.
  • Throughout 2000 and early 2001, UNDP provided neutral research-based policy advice to the Development Strategy Institute (DSI) and the drafting committee for the formulation of Viet Nam's new Ten-Year Socio-economic Development Strategy 2001-2010. Thanks to UNDP's neutrality, for the first time the Government allowed a remarkably open consultation process with the international donor community during the drafting phase of the new development strategy. During an 18-month period, a series of High Level Round Table Consultations and Technical Workshops were held, involving senior officials in the Government, including the First Deputy Prime Minister Nguyen Tan Dung as well as a variety of Ministers, Vice-Ministers and senior officials from the international ODA community and NGOs.
  • The Socio-Economic Development Strategy was endorsed by the 9th National Party Congress in April 2001 and approved by the National Assembly in October of the same year. Notably, the research and consultation process succeeded in shifting the focus of the strategy more on the well-being of people and human development, and less on the Government's long-standing objective of "Industrialization and Modernization." For the first time ever, the Government's strategy included “a substantial increase of the national Human Development Index” as a major national development target over the next decade.
  • UNDP was also providing neutral policy advice for the development of a Comprehensive Poverty Reduction and Growth Strategy (CPRGS) for Viet Nam and the Interim Poverty Reduction Strategy Paper (PRSP) to eliminate chronic hunger by 2005, to again halve the poverty rate by 2010 and to reach the Millennium Development Goals. UNDP worked with the UN Country Team to localize the MDGs and to jointly comment on the first draft of the CPRGS.
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1997 - 1999:  Regional Crisis Increases Focus on Maintaining "Stability"

  • In mid-1997, an economic and financial crisis broke out in Southeast Asia and spread throughout East Asia. Fortunately, Viet Nam was not as negatively impacted by the crisis as many of its neighbouring countries, thanks largely to its very low reliance on liquid foreign finance.
  • Nevertheless, Viet Nam's annual GDP growth did slow to the 4-6% range in line with declining export demand and a sharp decline in FDI.
  • The regional crisis did however highlight the importance of effective governance and institutions in dealing with such crises, and Viet Nam moved ahead, albeit more cautiously during this period, with devising and drafting a range of further policy and institutional reforms.
  • UNDP's assistance to upstream policy and institutional development continued; notably, in 1997 UNDP signed and began implementing a project aimed at improving the regulatory environment for business, and which ultimately resulted in the now widely-acclaimed and successful Enterprise Law.
  • UNDP also provided timely policy advice to the Government during the regional economic and financial crisis, in particular with the publication of UNDP's staff paper “East Asia: From Miracle to Crisis, Key Lessons for Viet Nam” in June 1998. This research-based policy booklet outlined many of the most important positive as well as negative lessons learned from other countries in the region over the past 40 years. It was received with considerable enthusiasm by many circles in the Party and Government, and it led to a senior-level international round-table conference later in August 1998 involving top-level policy advisors and researchers from many countries in and outside the region.
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1994 - 1997:  Increasing Focus on Institutional, Legal and Regulatory Reforms

  • This period was characterized by high economic growth rates and further improvements in human well-being as the supply-side of the economy responded further to the dramatic reforms of earlier years, as well as the financial stimulus from rapidly increasing FDI and ODA inflows. With the macro-economy in better shape, the Government began to focus more on institutional, legal and regulatory reforms.
  • UNDP responded by providing increased capacity building assistance in a number of strategic areas including: public administration reform, legal reform, public expenditure reform, and improving the regulatory environment for non-State businesses needed to generate the jobs, incomes, poverty reduction, domestic savings, and taxes needed to finance and sustain increasingly higher levels of development and human well-being.
  • Following the arrival of many new donor organizations, from 1994 UNDP began to focus more directly on sustainable poverty reduction and human development, particularly through policy-driven capacity building assistance for effective governance, pro-poor policies and pro-poor institutional development.
  • UNDP has also been instrumental in facilitating Government-led ODA coordination, brokering common understanding and promoting a spirit of partnership.
  • In March 1995, UNDP launched the Monthly Donor Group Forum which brings together senior representatives of the ODA community in Viet Nam and senior Government officials, frequently at the Ministerial level, to meet once a month to discuss priority development issues and challenges, in order to share information, develop common understanding and determine how the ODA community might best assist the country.
  • Past sessions of the Monthly Donor Group Forum have included the Minister of Planning and Investment, the Minister of Finance, the Minister of Justice, the Minister of Trade, the Governor of the State Bank, and many other senior officials. More recently, the Monthly Forum has also held sessions with such internationally-renowned policy advisors as Nobel Laureate, Professor Joseph Stiglitz; and Professor Janos Kornai, the “grandfather of transitional economics.”
  • The Monthly Forum has helped develop a spirit of regular dialogue, better understanding and shared initiatives between Government and donors;
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1989 - 1993: Acceleration of Doi Moi Reforms

  • This period was characterized by dramatic macro-economic reforms including: the liberalization of most prices; a sharp reduction in monetary and credit growth; a major devaluation and unification of exchange rates; the elimination of direct budget subsidies to state owned enterprises (SOEs); the reduction of the number of SOEs from around 12,000 to around 6,000 through both mergers as well as liquidations; the creation of a two-tier banking system; the increase and maintenance of positive real interest rates; and a widening of the "open door" policy.
  • The initial results were remarkable including: emergence from the socio-economic crisis of the 1980s; a sharp increase in GDP growth (averaging close to 9% per annum during 1994-97); a major reduction in the inflation rate from triple digits to single digits; and a dramatic stabilization of the economy.
  • During this period, UNDP began moving further upstream into capacity building activities to assist effective policy and institutional reforms.
  • In terms of supporting Viet Nam's opening up to the rest of the world and its integration into the international community, UNDP assisted in the drafting of the first Foreign Investment Law in 1989 and the organization of the first Investors' forum in 1992. Moreover, UNDP helped the Government in successfully organizing the first International Donor Conference in 1993 which mobilized US$1.8 billion in 1993 dollars of ODA pledges (equivalent to US$2.4 billion today).  At this Conference, the Government officially requested that UNDP take the lead role in technical assistance for capacity building and aid coordination in-country. Since then UNDP has played a key role in the annual and mid-term donor Consultative Group Meetings chaired by the World Bank.
  • UNDP also facilitated Viet Nam's participation in the negotiations with Mekong riparian countries, which led to the signing of the Mekong Agreement and the establishment of the Mekong River Commission in 1995, which has contributed to regional stability. UNDP also assisted the country to prepare for its entry into ASEAN in mid-1997 and AFTA thereafter. UNDP has also provided some early preparatory assistance for Viet Nam's eventual accession to WTO.
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1986 - 1989: Early Doi Moi Reform Period

  • The Government's reform programme, known as Doi Moi, was officially launched in 1986 in order to revitalize the national economy. This reform process was characterized by two major aspects, namely (i) macro-economic stabilization, market reforms, and a gradual move away from central planning; and (ii) a gradual opening up to the rest of the world via a more “open door policy.”
  • UNDP strongly encouraged, facilitated and directly assisted both of these aspects of the Doi Moi reform process; (e.g. through training of senior officials in market principles and policies; bringing in international expertise and advisors to facilitate and advise on the transition; providing technical assistance to conduct sector reviews and develop master plans for key economic sectors).
  • The Doi Moi reform process, especially land policy reform and the considerable liberalization of agricultural prices in the latter part of the 1980s had a major impact on poverty reduction; land policy reform essentially transferred the management of agricultural land from large State cooperatives to farm families via the transfer of "land user rights." As a result, Viet Nam was transformed from a food deficit country and a rice importer in the mid-1980s, to a food surplus country and the world's second largest rice exporter today. It is also one of the world's largest exporters of Robusta coffee and a number of other cash crops.
  • Poverty declined from well over 70% of the population in the mid-1980s to about 37% in 1998 and an estimated 32% today (based on an internationally comparable measure of poverty).
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1975 - 1986: Post-war Reconstruction and Rehabilitation

  • This period was characterized by continued hardship and suffering resulting from the war, which was also exacerbated by the Soviet-promoted central planning model, which in turn, resulted in serious shortages of food and other basic goods as well as a dismally backward technical infrastructure.
  • With Viet Nam largely focused on post-war reconstruction and rehabilitation during this period, UNDP provided assistance to Viet Nam's rehabilitation efforts, primarily in agriculture and industry, through the transfer of technology and technical know-how.
  • UNDP thus constituted one of the few windows to the outside world for Viet Nam during the country's post-war isolation, which lasted until around 1993.
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