In affirmation of Vietnam’s remarkable progress towards Middle Income Country status, the World Bank Board of Directors today approved a second loan for Vietnam from the International Bank of Reconstruction and Development (IBRD).

In affirmation of Vietnam’s remarkable progress towards Middle Income Country status, the World Bank Board of Directors today approved a second loan for Vietnam from the International Bank of Reconstruction and Development (IBRD). The loan for Vietnam’s power sector reforms received the green light together with four other operations to support poverty alleviation, health care and critical infrastructure development in traditionally vulnerable areas of Northern Vietnam, the Red River Delta and rapidly urbanizing Ho Chi Minh City.

Concrete results underpin the approval of these projects. The first Northern Mountains Poverty Reduction Project, for example, helped double incomes for participating households from VND 4,300,000 (about US$ 226) before the Project was implemented, to VND10,600,000  (about US$ 557) at completion in 2007. Under the first phase of this project, more than 350,000 households benefitted from improved health care, and over 118,000 households received access to clean water, significantly improving the health of local people.

“Vietnam’s development story is an inspiration for countries beyond East Asia,” said Jim Adams, World Bank Vice President for the East Asia Pacific region. “The challenge now is to ensure quality growth and stabilize the macro-economy. The Bank’s programs in infrastructure and human development will support important reforms in improving efficiency, sustainability and cleaner growth in the short term, while creating necessary conditions for longer term growth.”

The approvals by the Board today include:

US$ 150 million Second Northern Mountains Poverty Reduction Project: Targeted at some of Vietnam’s poorest ethnic minority areas, this project builds on the success of its predecessor to enhance the living standards of the local people. This is done through improving and diversifying their livelihoods opportunities through better access to productive infrastructure, innovative businesses, improved agricultural productivity and local employment. It also helps to build capacity of local governments and communities to plan, manage and implement livelihood improvement programs in their localities.

US$ 65 million Central North Region Health Support Project: In 2008 the Government of Vietnam passed a Health Insurance Law aimed at universal coverage within the decade. The project will increase coverage for the near poor - currently at only 10% - while upgrading capacities of district hospitals and preventive health centers. It will also provide further training to medical practitioners and upgrade medical colleges.

“Both these programs are filling important gaps in poverty reduction,” said Victoria Kwakwa, Country Director for Vietnam. “Rapid growth needs to be complemented by such targeted programs to ensure that remote and disadvantaged segments of the populations catch up with the majority of Vietnamese in their opportunities for increased incomes and in their access to basic services. The community-driven approach is continuing to facilitate the harnessing of all members of society for realizing their individual and collective development aspirations”.   

US$ 90 million Ho Chi Minh City Environmental Sanitation Project Additional Financing: The project will build a 335 km drainage system from the city’s business center to control annual  flooding and increase the collection of wastewater in an environmentally and financially sustainable manner. Together with dredging of canals and embankments, it will provide flood relief to 240,000 households, prevent infrastructure damage – currently estimated at US$ 78 million annually- while reducing public health risks. Over a million people will benefit.

US$ 65 million Red River Delta Rural Water Supply and Sanitation Project Additional Financing: The program builds infrastructure for sanitation and water supply that will benefit 800,000 people. It will also support hygiene behavior change in the 120 targeted communities while helping the government build capacity for sustainable rural water supply schemes, with tariffs set at a level sufficient to cover operations, maintenance and debt service.

US$ 312 million First Power Sector Reform Development Policy Loan: The program is organized around four main policy areas essential to the reform of Vietnam’s power sector: development of a competitive power market by reducing the existing monopoly, power sector restructuring to offer customers more choice in services, electricity tariff reform to attract new investors and  improving energy efficiency.