USAID-Vietnam Partnership

Following rapid economic growth that resulted from reforms implemented in the 1980s, Vietnam was able to significantly reduce poverty levels from 58 percent in 1993 to just 14.5 percent in 2008. By 2010, the Southeast Asian country moved up to lower-middle-income status and seemed well on its way to meeting most of its Millennium Development Goals. But Vietnam continues to struggle with development challenges such as inequality and poor social services. The government also has problems with corruption and weak public institutions. And while it has reached out to the private sector to help address these challenges, the current public-private relationship leaves much to be desired. In addition, the move to middle-income status meant Vietnam became less of a priority for bilateral and multilateral donors, many of which have chosen to focus support on fragile and least-developed countries. The United States, however, remains a committed development partner to Vietnam. Last year, both governments forged a comprehensive partnership to bolster not only U.S.-Vietnam relations but also the United States’ rebalancing in Asia. Funding levels In its 2014-2018 country development cooperation strategy with Vietnam, the United States pledged to support Vietnam in: 1. Enhancing governance to facilitate broad-based, sustainable growth. 2. Strengthening its capacity to protect and improve the health and well-being of its citizens. 3. Addressing legacy issues to further advance the bilateral relationship. But despite promises of continued increased in aid spending in Vietnam, the United States slashed its requested allocation for the Southeast Asian country by 15 percent in FY 2014. The requested aid budget for FY 2015, however, increased to $107.9 million. The United States has been providing an average $100 million in foreign aid to Vietnam annually. Below is a breakdown of actual and requested funding since 2009: The bulk of U.S. aid is coursed through the U.S. Agency for International Development and the Department of State. Additional support is channeled through the Millennium Challenge Corp., U.S. Trade and Development Agency and Department of Defense. Funding priorities For FY 2014, the health sector has received the largest allocation, with 55 percent — or $53.2 million — of the aid budget. The bulk of the health envelope has been earmarked for the national HIV and AIDS response, including activities implemented by the U.S. President’s Emergency Plan for AIDS Relief. In addition, USAID will provide integrated prevention, care and treatment programs for vulnerable groups in Vietnam. The environment is a priority sector as well. For FY 2014, the United States has provided $13.1 million to promote environmental sustainability in Vietnam and to transform the Southeast Asian country into a green economy. The environment envelope will also fund efforts to address Vietnam’s vulnerability to climate change and to decontaminate former U.S. air bases exposed to Agent Orange dioxins. Below is a sectoral breakdown of U.S. aid for FY 2014: On top of sectoral assistance, the United States supports multicountry initiatives, including the U.S.-led Lower Mekong Initiative. The initiative, which has received $15 million for FY 2014, will fund education, environment, health, regional infrastructure and women’s programs in Myanmar, Cambodia, Laos, Thailand and Vietnam. Devex analysis The United States and Vietnam seem to have gone past their violent history and are steadily developing an improved and more strategic relationship. The Western nation, for one, sees the Southeast Asian country as a vital partner in its efforts to deepen relations with new and traditional allies in the region. In terms of trade, Vietnam benefits significantly from the United States — its single-largest export market. With the Trans-Pacific Partnership under negotiation, Vietnam hopes to expand and increase sustainable and inclusive market access. During the visit of President Truong Tan Sang to the United States, President Barack Obama said the Western nation is, “committed to the ambitious goal of completing this agreement before the end of the year because we know that this can create jobs and increase investment across the region and in both our countries.” Vietnam remains a priority country in several U.S. initiatives such as PEPFAR, Enhancing Capacity for Low Emission Development Strategies, and the International Military Education and Training Program in East Asia and the Pacific. While other bilateral and multilateral donors have begun phasing out support from Vietnam, the United States continues to provide considerable assistance to the country, and will do so until Hanoi achieves its goal of becoming an industrialized nation by 2020. Contact: Joakim Parker, Mission Director USAID Vietnam Tel. : (84-4) 3935-1260 Fax : (84-4) 3935-1265 Email: UsaidVietnam@usaid.gov Join the Devex community and gain access to more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.