AFD in Vietnam - English version

Aerial view of the city of Hanoi © Kamel Bouhmad, AFD

Vietnam Vietnam is engaged in a process of rapid social, economic and institutional transformations. The Vietnamese Government has been conducting substantial reforms for 20 years now, thereby stimulating its growth, which stands at an average rate of nearly 7% a year. This development has significantly reduced poverty and Vietnam became a middle-income country in 2010. However, it still needs to address major challenges, including job creation and the qualification of young people, the absorption of the urban demographic wave, the increase in electricity demand, the alarming development of the energy mix, which uses the most polluting primary sources, and, finally, a more sustainable management of its natural resources.

Family-run business benefiting from the Local People’s Credit Funds Program supported by AFD Š Binh Dang

One in three Vietnamese is concerned by AFD-funded projects.

In order to maintain dynamic growth, Vietnam needs to continue to modernize its productive sector, while improving its environmental and social performance. The reform of the banking sector, the privatization of the capital of State-owned companies, and the rationalization of public investments need to be continued. Finally, Vietnam needs to take steps to face the consequences of climate change: its two main deltas, the Red River and the Mekong are indeed particularly vulnerable to rising water levels.

Long-term partnership Since 1994, AFD has financed over 80 projects in Vietnam and is today targeting an annual amount of sovereign commitments of some EUR 100m. AFD has set out to develop its non-sovereign commitments for State-owned companies. It is currently the only donor to offer this range of financing in Vietnam, for which the authorities appreciate the intrinsic virtues in terms of public debt.

Support for the country’s agriculture

million family EUR 415 m farms of commitments supported projects

Support for the transition towards sustainable development

million tons of CO EUR 830 m emissions avoided of commitments every year projects

Support for infrastructure

projects

EUR 550 m of commitments km of land routes built or improved million people with sustainable access to the drinking water service

Double power generation

capacity between the center and south of the country

Three priority areas for operations AFD’s actions aim to assist the country in the implementation of a new green growth model, in the context of the Economic and Social Development Plan (2016-2020) and green growth strategy defined by Vietnam. It is for this reason that AFD’s strategy is based on three areas: helping Vietnam to address the challenges of climate change. AFD intends to maintain the dialogue with the authorities on climate policies and green growth, by continuing its financing of the Support Program to Respond to Climate Change (SP-RCC). This program aims to assist the country in implementing a strategy to combat climate change and in improving its public policies to mainstream «climate» issues into all the economic sectors; helping the productive sector to improve its performance, with a focus on the environmental and social aspects. In order to maintain dynamic growth, AFD assists this modernization by supporting vocational training that meets the needs of the economy, as well as Vietnam’s ecological transition. It also achieves this by supporting the productive sector and assisting companies in relation to the environment and the climate; promoting environmentally friendly urban development. Vietnam is experiencing rapid urbanization and its urban centers and secondary cities have considerable infrastructure and planning needs. AFD will focus its operations on the sector of the sustainable equipment of cities, with the aim of adapting them to the impacts of climate change, promoting more environmentally friendly development, and helping them to meet the challenge of population and geographical growth.

AFD provides its knowledge and mobilizes French expertise in order to come up with solutions to combine sustained growth, a maximized social impact and an optimal management of natural resources.

Construction of the Hanoi metro © Alain Béchereau, Systra

Construction of the « Nhon-Hanoi Station » metro line The first line of the Hanoi metro is currently under construction and will carry 100,000 passengers a day. This means of transport will avoid the emission of 10,000 teq CO2 during twenty years of operation.

AFD has allocated some EUR 180m of credit in cofinancing with the Asian Development Bank, European Investment Bank and French Ministry of Finance. This project has also benefited from a EUR 1.27m grant from the French Facility for Global Environment (FFEM).

Future development of the Nhon Station line, Hanoi © Systra

Assisting public policies in the fight against climate change Between 2010 and 2015, AFD disbursed five annual tranches of credit, each for EUR 20m, under the Support Program to Respond to Climate Change (SP-RCC). This program was jointly launched by AFD and Japanese cooperation, JICA, in 2009 and has supported the Vietnamese Government’s climate roadmap by creating a reference platform for dialogue between ministries and donors. All the technical ministries participate in this dialogue on public policies, which covers a wide range of fields for mitigation (energy efficiency, renewable energies, transport, construction, waste...) and adaptation (water resources management, agriculture, forestry). The SP-RCC program has been extended to 2017, with a total of EUR 100m of disbursements scheduled.

Supporting regions threatened by rising water levels With over 3,000 km of coastlines, Vietnam is particularly exposed to rising sea levels. In this respect, in 2015, AFD allocated a EUR 53m loan to the Ninh Binh, Ha Tinh and Can Tho provinces to finance the adaptation of these rural provinces to changes in rainfall patterns, the increase in the frequency and violence of extreme climate events, and the rise in sea levels.

This project, by constructing engineering structures (locks, dams, banks and irrigation systems), aims to secure the economy of these provinces, particularly their agricultural economy, ensure the safety of persons and goods, and improve sanitary conditions for populations in the target area.

In addition, AFD is working on a project with the Tien Giang, Ca Mau and Quang Nam provinces for integrated coastal area management. It aims to assist them in the fight against the adverse consequences of rising sea levels, prevent coastal erosion, and preserve or rehabilitate the coastal mangrove.

Water management project in the Red River region © François Carlet-Soulages, NOI Pictures

Improving water resources management in Phuoc Hoa Several irrigation projects are being conducted with the aim of improving water resources management in the Dong Nai basin. They include the construction of a dam in Phuoc Hoa, a channel to transfer water from the Bé River to the Dau Tieng reservoir, and new irrigation areas in two provinces: Long An and Tay Ninh (20,546 ha). AFD is allocating EUR 50m for the implementation of these projects, in cofinancing with the Asian Development Bank.

Supporting the productive sector Assisting vocational training Supporting vocational training is an important issue in Vietnam. It is indeed necessary to provide the country with a skilled and qualified workforce which meets the needs of the country’s new and future industries. The unemployment rate for young Vietnamese between 15 and 24 is three times higher than for the higher age groups, and population growth suggests that demand for employment will be even greater.

Since 1999, AFD has allocated EUR 40m of financing for nine training centers, some of which are to become schools of excellence that meet the highest international standards, and in sectors as diverse as automotive technology, industrial electricity, metal cutting and welding, and telecommunications. They will qualify over 7,000 people a year.

Students in training at the Industrial University of Ho Chi Minh City © Laurent Weyl, Collectif Argos

AFD’s action for vocational training helps the country to build a skilled and qualified workforce.

Supporting urban funds Over the past thirty years, Vietnam has had the fastest urbanization rate in Southeast Asia. Urban development was initially concentrated in Hanoi and Ho Chi Minh City and rapidly spread to the other large cities, such as Da Nang and Can Tho, making these municipalities the new national urban centers.

In this respect, AFD supports local investment funds for development, which are public entities, in Ho Chi Minh City, as well as in the Can Tho, Da Nang, Khanh Hoa and Lao Cai provinces.

This financing, for a total of EUR 140m, aims to participate in funding social and environmental projects via urban funds

Aerial view of the city of Hanoi © Laurent Weyl, Collectif Argos

(social housing, educational centers, hospitals, transport infrastructure, sustainable energies).

These projects make a significant improvement to living conditions for residents by: Increasing health service provision and access; Increasing water supply; Improving hygiene through more effective waste treatment; Clearing slums; Creating local employment.

Supporting private sector development Since 2001, AFD, via its subsidiary PROPARCO, has been supporting the private sector in Vietnam, where it has a broad mandate for operations. This mandate allows it to finance projects which support sustainable growth and fight against poverty.

In this capacity, PROPARCO has invested in the infrastructure sector (combined cycle gas-fired power plant, ports), in the financial intermediation sector (via two of the country’s largest commercial banks), in investment funds, and in the textile industry and maritime transport. With a total commitment of some EUR 160m, Vietnam is one of the most important countries for PROPARCO’s operations in Asia.

Promoting public-private partnerships

Project to rehabilitate railway lines between Yen Vien and Lao Cai © Binh Dang

A project to assist the Ministry of Planning and Investment in coordinating the pilot PPP mechanism aims to finance several feasibility studies and promote the launch of model investment projects based on public-private partnerships. AFD is supporting this program by allocating EUR 8.6m in cofinancing with the Asian Development Bank.

AFD: transferring know-how In order to provide a response to the main public policy issues, AFD organizes workshops, with the Vietnamese authorities, for officials from ministries and public bodies (energy efficiency, transport, PPPs, vocational training, provision of non-sovereign financing), which allow French expertise in development to be shared.

AFD Vietnam is also active in the field of ideas, by providing its financial support to French actors established in Vietnam for the conducting of sectoral studies and analyses (EFEO, IRD, PADDI, IMV, CIRAD) in the fields of development. It also takes part in the organization of the Tam Dao Days

which, every year, offer training in social science analysis methodologies – geography, economics, statistics, social anthropology and history, by involving leading figures from the world of research.

The Center for Financial, Economic and Banking Studies (CEFEB), AFD’s corporate university, also offers partner countries a wide range of training courses through its Master 2 Program on project financing, or through tailor-made training.

Tam Dao Days Every year, AFD participates in the Tam Dao Days, which are a major event in the training agenda for future scientific experts in the Southeast Asian subregion.

It brings together over a hundred participants, experts and development practitioners on the topic of sustainable development. These Tam Dao Days provide an analytical framework, as well as intellectual and methodological tools to gain an understanding of this broad thematic area.

AFD at the 2014 Tam Dao Days © Stéphane Lagrée

Coordinated partnership-based action AFD’s action in Vietnam is coordinated with the action of French development cooperation actors. Several projects benefit from actions undertaken by decentralized cooperation (Aquitaine Region with Lao Cai Province, Île-de-France Region with Hanoi, Rhône-Alpes Region with Ho Chi Minh City Region, Brest Métropole with Hai Phong).

AFD promotes aid harmonization in its policy for commitments, as two-thirds of its financing in Vietnam are provided in cofinancing programs. Since 2003, it has been a member of the group of six banks, which includes the Asian Development Bank (AsDB), World Bank, Japan’s JICA, Korea Eximbank and Germany’s KfW. This group, in consultation with the Vietnamese Government, has made a package of proposals to harmonize and enhance management procedures for Official Development Assistance. It has also strengthened its links with the European Union by contributing to the joint programming exercises, and by mobilizing the Asian Infrastructure Facility in projects that allow «loan-grant blending».

AFD promotes aid harmonization in its policy for commitments, as two-thirds of its financing in Vietnam are provided in cofinancing programs.

AFD also manages the actions of the French Facility for Global Environment (FFEM) and provides grant financing for the initiatives of French NGOs operating in Vietnam (over 25 NGOs supported since 2009).

Collectively modernizing the electricity sector Improving the power grid is a major issue in Vietnam. Rural electrification, power transmission and hydropower generation are among the actions supported by AFD in the field.

This support has led to the construction of a high-voltage line which is over 430 km-long (cofinanced with the Asian Development Bank). It has doubled the power generation capacity between the north and south.

Since 2000, AFD has committed EUR 210m to support the national operator VietNam Electricity (EVN), which in 2015 signed a partnership agreement with EDF in order to benefit from French expertise in distribution to the end user.

Construction of the power grid in Hai Phong © Laurent Weyl, Collectif Argos

Water management in the Red River region © François Carlet-Soulages, NOI Pictures

Proparco - a subsidiary of the Agence Française de Développement (AFD) devoted to private sector funding - has been supporting sustainable development for almost 40 years. It operates in 80 countries in Africa, Asia, Latin America and the Middle East and helps finance and support financial institutions and corporate private-sector projects.

The French Facility for Global Environment (FFEM) is a financial instrument of French cooperation and development policy, dedicated to the protection of the global environment in developing countries and emerging markets. With funds of €90 million for 2015-2018, the FFEM supports innovative work in developing countries in the following areas: climate, biodiversity, international waters, soil degradation including deforestation, persistent organic pollutants and the ozone layer. At the end of 2015, the FFEM had received financial pledges of €331 million, with 285 projects in their portfolio, 67% of which are in Africa and the Mediterranean.

Execution : Planet 7 – August 2016 - Brochure printed in Vietnam

Agence Française de Développement (AFD), a public financial institution that implements the policy defined by the French Government, works to combat poverty and promote sustainable development. AFD operates on four continents via a network of 75 offices and finances and supports projects that improve living conditions for populations, boost economic growth and protect the planet. In 2015, AFD earmarked EUR 8.3bn to finance projects in developing countries and for overseas France.