ISG Plenary MeetingISG Plenary Meeting

Investment Orientation for Investment Orientation for the Development of the New the Development of the New Rural Areas in Vietnam Rural Areas in Vietnam AsianAsian

Ayumi KonishiAyumi Konishi

Country Director for Viet Nam Country Director for Viet Nam

Asian Development BankAsian Development Bank

10 November, 2010, Ha Noi10 November, 2010, Ha Noi

Congratulations!Congratulations!

• For Viet Nam to have become a Middle For Viet Nam to have become a Middle Income CountryIncome Country

• For Thang Long Ha Noi 1000For Thang Long Ha Noi 1000

• For being a successful ASEAN Chair in 2010For being a successful ASEAN Chair in 2010

• For hosting the International Rice CongressFor hosting the International Rice Congress

• For convening this ISG meetingFor convening this ISG meeting

• …………and a lot moreand a lot more

New SEDS/SEDPNew SEDS/SEDP

• Focus on “Inclusiveness” of the Focus on “Inclusiveness” of the socioeconomic development of socioeconomic development of Viet Nam Viet Nam –– i.e., not to let the rural i.e., not to let the rural areas to be left behindareas to be left behind

• Focus on “environmental Focus on “environmental sustainability” through improved sustainability” through improved natural resources management, natural resources management, environmental protection environmental protection measures, and measures to measures, and measures to address climate changeaddress climate change

Planning on the Planning on the Development of New Development of New

Rural Areas Rural Areas

The first program under the Prime The first program under the Prime Minister’s Decision approving the Minister’s Decision approving the National Target Program on Building National Target Program on Building New Rural Areas is entitled, “Planning New Rural Areas is entitled, “Planning on the Development of New Rural on the Development of New Rural Areas”. Planning is the first step and Areas”. Planning is the first step and this is the subject for my presentation. this is the subject for my presentation.

Major Agriculture Sector IssuesMajor Agriculture Sector Issues

• Agriculture growth, productivity improvement Agriculture growth, productivity improvement and diversification have been impressive and diversification have been impressive

• ANRE activities remain critically important for ANRE activities remain critically important for the majority of Viet Nam’s households and for the majority of Viet Nam’s households and for future efforts at poverty reductionfuture efforts at poverty reduction

• However, crop production remains dominated by However, crop production remains dominated by paddy commoditypaddy commodity

• output quality is typically poor by regional output quality is typically poor by regional standardsstandards

• little value addition, and need to improve the little value addition, and need to improve the sector’s technological base sector’s technological base

• Food safety and environmental concernsFood safety and environmental concerns

Major Natural Resources Sector Major Natural Resources Sector IssuesIssues

• Natural resources are under ever-Natural resources are under ever-increasing pressureincreasing pressure

• Anticipated effects of climate change are Anticipated effects of climate change are likely to be particularly severelikely to be particularly severe

• Sector factor market conditions are Sector factor market conditions are deficient in several major respectsdeficient in several major respects

• Overall enterprise structure is dominated Overall enterprise structure is dominated by (inefficient) SOEs and by (inefficient) SOEs and (undercapitalized) agriculture and micro-(undercapitalized) agriculture and micro-business unitsbusiness units

However……..However……..• Sector planning is technically weak in some areasSector planning is technically weak in some areas

• Staff capacity is limited and performance Staff capacity is limited and performance management issues affect MARD, MONRE, etc. management issues affect MARD, MONRE, etc.

• Total amount of public expenditure devoted to Total amount of public expenditure devoted to the sector is still lowthe sector is still low

• There are problems in the distribution between There are problems in the distribution between capital and recurrent spendingcapital and recurrent spending

• Decentralization is changing responsibilities for Decentralization is changing responsibilities for public expenditure managementpublic expenditure management

• Sector management is becoming more complex, Sector management is becoming more complex, and there is a need to modernize the role of and there is a need to modernize the role of state institutions in service deliverystate institutions in service delivery

Breakdown of ongoing ADB loansBreakdown of ongoing ADB loans(as of 31 July 2010)(as of 31 July 2010)

Finance0.64%

Transport and ICT34.65%

Water and Other Municipal Infrastructure

& Services5.42%

Multisector1.14%

Education6.26%

Agriculture and Natural Resources

14.03%

Health and Social Protection

2.28%

Public Sector Management

2.41%

Industry and Trade0.37%

Energy32.79%

Breakdown of ongoing ADB TAsBreakdown of ongoing ADB TAs( as of 31 July 2010)( as of 31 July 2010)

Finance4.59%

Transportation and ICT18.14%

Water and Other Municipal Infrastructure and Services

10.12%

Multisector1.90%

Education2.63%

Agriculture & Natural Resources

21.97%

Health, Nutrition and Social Protection

2.58%

Public Sector Management3.28%

Industry and Trade14.55%

Energy20.23%

Lessons from ADB Lessons from ADB ExperienceExperience

• Projects’ efficiency has been compromised by Projects’ efficiency has been compromised by implementation delaysimplementation delays

• Sustainability of investments (e.g., in rural infrastructure) Sustainability of investments (e.g., in rural infrastructure) is threatened by O&M financing/cost recovery concernsis threatened by O&M financing/cost recovery concerns

• There is a need to get the strategic setting of investments There is a need to get the strategic setting of investments rightright

• Ensure high levels of Government ownershipEnsure high levels of Government ownership

• Support day-to-day implementation with sufficient levels Support day-to-day implementation with sufficient levels of in-country resourcesof in-country resources

• Ensure sufficient project financingEnsure sufficient project financing

• Avoid overlaps in geographical coverage and investment Avoid overlaps in geographical coverage and investment scale and scopescale and scope

Then, what can we do Then, what can we do together?together?

• Capacity building at different levels/areasCapacity building at different levels/areas

• Crop diversificationCrop diversification

• Introduction of technology to move to Introduction of technology to move to higher value addedhigher value added

• Sector reformsSector reforms

• Development of rural infrastructure and Development of rural infrastructure and their appropriate maintenancetheir appropriate maintenance

• ……and moreand more

Thank you for your Thank you for your attention!attention!

For information on ADB activities in Viet For information on ADB activities in Viet Nam:Nam:

• Please Visit Viet Nam Resident Mission web Please Visit Viet Nam Resident Mission web site at site at http://www.adb.org/vietnamhttp://www.adb.org/vietnam or or

• Email to Email to adbvrm@adb.orgadbvrm@adb.org