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VietnamCountry program estimate 2010-11: $96 million Total ODA: $119.8 million Australia’s aid to Vietnam will:Support inclusive growth, through activities that assist Vietnam address the challenges of economic integration and transition to a market economy. Improve access to markets for the rural poor by supporting the construction of around 60km of feeder roads and canals in the Mekong Delta that will connect through to major transport corridors that are also being built with Australian support. Stimulate regional trade by supporting major infrastructure projects like the Cao Lanh Bridge in the Central Mekong Delta. Strengthen access to water and sanitation services by supporting the Government of Vietnam's own program to improve access to basic water and sanitation services. Help mitigate climate change challenges by improving the Government of Vietnam's capacity to manage the impacts of natural disasters, understand future impacts and possible solutions in the Mekong Delta and rehabilitate mangrove forests to protect coastlines. Strengthen Vietnam's human resource foundation by further increasing the number of development awards for study in Australia in 2010‑11 to 225 per year. Join Vietnam's effort in strengthening the health system to combat HIV, emerging infectious diseases and ensure sustainable health service delivery. Provide rural development assistance by enhancing the quality and effectiveness of Program 135 Phase II (P135-II) implementation and support competitive funding mechanisms for grants for agricultural research and development. Place volunteers to work in priority areas agreed by Vietnam and Australia. Support a range of community level activities, including through major partnership programs between Australian NGOs and local communities. Support regional programs that address high priority economic and trans-boundary development challenges, such as trans-national crime, trade liberalisation and reducing the spread of communicable diseases. A new program strategy (2010-2015) is currently under development. See also Greater Mekong Subregion. Country overviewVietnam lies on the eastern edge of mainland South-East Asia, bounded by the South China Sea to the east, China to the north, and Laos and Cambodia to the west. Vietnam has 63 provinces and cities, with a central government located in Hanoi. The largest city is Ho Chi Minh City, formerly known as Saigon. The most commonly spoken language is Vietnamese (86 percent). The Kinh group comprise about 86 per cent of Vietnam's population of approximately 85 million people; the remaining 14 per cent of the population belong to 53 different ethnic groups. The mainstay of Vietnam's economy is rice production; Vietnam is the second largest exporter of rice worldwide. Other agricultural products such as coffee and rubber are important exports. Vietnam's coastline and inland waterways allow significant fishing and, more recently, aquaculture industries for both subsistence and export. Forest covers about 35 per cent of the land, though much of this is no longer pristine. Vietnam is one of the most disaster-prone countries in the world; about 70 per cent of its population is at risk of typhoons and torrential storms followed by flooding. Despite plenty of water in some areas, there is a lack of clean drinking water in general, and droughts also occur in upland areas. Development contextPolitical and economicVietnam has achieved remarkable economic success since the Doi Moi (renovation) process which began in 1986. Since 1993, growth in real gross domestic product has averaged around 7.5 per cent a year and the poverty rate has been reduced from 58 per cent in 1993 to 13 per cent in 2008. Increasingly the key drivers of growth have been accelerated international integration, market liberalisation and job creation in the private sector. It appears, however, that returns from the first round of economic policy reforms in Vietnam are dropping off as international competition picks up. Vietnam faces new challenges in strengthening its resilience to global fluctuations and maintaining high growth to support continued poverty reduction. No significant change to Vietnam's political system is foreseen, with the Communist Party maintaining a single party state. This does not mean, however, that Vietnam's governance is unchanging. Governance reforms in Vietnam are clearly underway, driven by economic reform and a desire to maintain social stability. Achievements against the MDGsVietnam's economic growth and reductions in poverty are impressive by any measure. Since 1993, annual real GDP growth averaged around 8.5 per cent and the rate of poverty fell from 58 per cent of the population to 14.7 per cent in 2007. Growth has resulted from accelerated international integration, market liberalisation and private sector job creation. The Socio-Economic Development Plan (SEDP) 2006-10 is the Government of Vietnam's strategy to achieve middle income country status by 2010, that is average per capita annual income of US$ 1,050-1,100 per annum. The SEDP has four pillars: accelerating growth, promoting modern governance, strengthening the social sector and social inclusion, and better managing natural resources. It emphasises development results and the policy reforms needed to attain them. The SEDP has 12 goals that reflect the Millennium Development Goals (MDGs) and take into account development features specific to Vietnam. Vietnam has made good gains against most MDGs. However, meeting targets in areas such as combating HIV/AIDS and providing access to adequate sanitation will require intensified effort.
Development challengesVietnam needs to protect its gains as well as make further inroads into entrenched poverty. Fifty per cent of the population still live on less than US$2 a day and many remain vulnerable to sliding back into poverty as a result of either economic shocks or natural disasters. Poverty in Vietnam is concentrated among ethnic minorities who live in remote mountainous areas. However, there are also significant pockets of poverty among the rural majority Kinh people. Even with increased rates of urbanisation, the majority of people live in rural areas (80 per cent of the population) and remain engaged in agriculture (60 per cent of the workforce). Gender also remains a significant determinant of poverty in Vietnam. For example, ethnic minority girls continue to lag behind both Kinh girls (10 per cent gap) and ethnic minority boys (13 per cent gap) in terms of school enrolment. While Vietnam is on track to achieve middle-income country status in the coming years, it will need to make some hard decisions in order to achieve its more ambitious goal of becoming an industrialised country by 2020. The experiences of Japan, Singapore, Taiwan and South Korea show that it is possible to move to higher income levels through pursuing ambitious policy and institutional changes. Aid environmentAlthough Vietnam is one of the world's largest recipients of Official Development Assistance (ODA), mostly as concessional loans, this assistance represents only about 4 per cent of Vietnam's gross domestic income. Vietnam's main donor partners include the World Bank, the Asian Development Bank, Japan and South Korea. The Government of Vietnam localized the Paris Declaration on Aid Effectiveness as the Hanoi Core Statement on Aid Effectiveness in 2005. The Statement includes some indicative targets for 2010 that are even more ambitious than those in the Paris Declaration. Vietnam has made significant progress towards achieving these targets. Further progress in implementing the Hanoi Core Statement will depend on improvements in Vietnam's systems for procurement, public financial management and social and environmental impact assessments. Aid stories and peopleExamples of Australia's aid program in action:
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Last reviewed: 3 June, 2010
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