Vietnam is making good progress in strengthening private sector development and is ranked 68 out of 190 countries in the World Bank's Ease of Doing Business Index. However, variable infrastructure quality, low productivity, and a business environment that is at times complex and opaque are still major constraints to growth. There is an infrastructure backlog and investment needs are beyond current government resources. Many Vietnamese still live in remote and rural areas with limited access to services and markets. Better infrastructure and ongoing economic reform is needed for Vietnam to reduce poverty and reach its ambition of becoming an industrialised country by 2020.
Australia is working with Vietnam to build new and better infrastructure with a focus on the Mekong Delta, the fastest growing region in Vietnam. Our infrastructure investments are opening up opportunities for trade within the Mekong region and helping connect people to essential services such as hospitals and schools.
We continue to provide advice to the Government of Vietnam on ways to encourage new sources of funding for building infrastructure, including from the private sector. For example, we are helping to improve the quality of project preparation to reduce risk and make transport projects more attractive to new investors. In the rural water sector, we are looking at innovative ways to address the financial viability gap for services to make the sector more commercially sustainable for private sector providers.
On economic reform, we are helping Vietnam to identify good practice examples, appropriate for the Vietnam context, to build an evidence base and public support for reform. We are working closely with Australian economic institutions to share Australia's experience of increasing competition in the economy and long-term reforms that will improve productivity.
Enabling and engaging the private sector for development fact sheet
$9.4 million, 2017-2021
Aus4Reform is helping to relieve key constraints to growth of the private sector (domestic and international), increase Vietnam's competitiveness, and promote regional and global trade. It will help strengthen the evidence-base to support economic reform in line with Vietnam's emerging commitments under regional and international economic cooperation agreements. The program engages international and domestic experts on key policy issues and works with a range of stakeholders to build support for reform. The program also draws on contemporary Australian reform experience and supports institutional links with Australian economic agencies including the Productivity Commission and the Australian Competition and Consumer Commission.
Aus4Reform works with four key agencies in Vietnam: the Central Institute for Economic Management, the Vietnam Competition and Consumer Authority, the Institute for Policy and Strategy in Agriculture and Rural Development, and the Vietnam Chamber of Commerce and Industry. Emerging priorities can be addressed through a flexible funding mechanism, which can be accessed by a range of additional organisations including the Communist Party Economic Reform Commission and the Economic Committee of the National Assembly.
The Vietnam Provincial Governance and Public Administration Performance Index
- From 2017 to 2021, Australia will be the main sponsor of the Vietnam Provincial Governance and Public Administration Performance Index (PAPI), with $2.9 million over three years representing approximately 70 per cent of overall PAPI funding.
- PAPI is the largest time-series national governance and public administration performance monitoring tool in Vietnam exclusively based on citizens’ experiences. Since 2009, PAPI has captured and reflected the experiences of nearly 89,000 citizens with diversified demographic features.
- PAPI is a policy monitoring tool that measure provinces’ performance of governance and public administration (i.e. outputs of local governance, public administration and public services that are experienced by citizens at the provincial level) based on experiences and feedback of citizens (men and women) randomly selected from all 63 provinces in Vietnam.
- PAPI mirrors six dimensions of government performance: (i) participation in elections and policy making at the local level, (ii) transparency in decision-making, (iii) vertical accountability, (iv) control of corruption in the public sector, (v) public administrative procedures, and (vi) public service delivery. PAPI has helped different national stakeholders to understand how governance and public administration in Vietnam has changed over time and suggested ways to address governance bottlenecks. As such, PAPI provides a ‘gold mine’ of data for policymakers and researchers to triangulate government-business-citizen assessments of policy implementation so as to inform subsequent policy reforms and government performance improvement.
Australia-World Bank Strategic Partnership in Vietnam Phase 2
$25 million, 2017-2021
The Australia-World Bank Strategic Partnership Phase 2 builds on a successful first phase partnership with the World Bank to further progress Vietnam’s priority economic reforms. The partnership targets five key areas: trade and competitiveness, transport, Mekong Delta climate resilience, gender and ethnic minorities. Our support is helping strengthen institutions, fostering inter-ministerial coordination and cooperation, and building the capacity of the private sector.
$30 million, 2018-2022
Through the Aus4Transport program, Australia is supporting Vietnam to develop the transport sector by providing early stage project preparation. Australia is prioritising multilateral development bank-financed projects to demonstrate the value of high quality project preparation in accelerating approval process and reducing long-term maintenance costs. This project will develop up to five national priority highway projects to the point where they are ready to begin construction. Lessons from the preparation of these projects will inform policy reforms for the Ministry of Transport that will improve project preparation and help deliver value for money.
Cao Lanh Bridge
$160 million, 2011-2018
Australia co-financed the design, supervision and construction of the Cao Lanh Bridge across the Mekong River to facilitate trade and economic growth in the region. This bridge is a vital part of a major transport initiative called the Central Mekong Delta Connectivity Project that helps link people and markets in the Mekong Delta to the rest of Southeast Asia and beyond. The bridge is two kilometres long, six lanes wide and sits 37.5 metres above the Mekong River. The bridge will directly benefit five million people, including an estimated 170,000 road users per day. It is the largest single Australian aid activity in mainland Southeast Asia.
Australia provided funding for the design and construction supervision for the Cao Lanh Bridge. A strong technical design that mitigates risks has been a focus of Australian support, including ensuring the bridge can withstand the impacts of climate change. Social challenges related to increased trade and regional connectivity, such as the risks of human trafficking, have also been considered.
Vietnam Climate Innovation Center
$7.35 million, 2013-2020
Australia has supported the establishment of the Vietnam Climate Innovation Centre through the World Bank and with co-funding from the United Kingdom. The Centre, which was launched on 7 December 2015, provides small and medium enterprises – including those led by women – with the seed capital, skills and networks they need to develop and bring to the market innovative yet commercially viable climate-smart technologies. This in turn promotes private sector engagement in green growth and supports Vietnam's aims as a middle-income country to reshape the economy and increase competitiveness.