Vietnam

Over the last 30 years, Vietnam has seen remarkable economic growth, which has led to new challenges: growth in demand for energy, rapid urban development, and the arrival of a million young workers on the labour market every year, among others. In addition to these challenges, the country is faced with an urgent situation: its exposure to natural disasters and the effects of climate change. AFD is providing the country with support to implement the Paris Agreement. Its actions are focused on the energy transition, making cities and territories resilient and young people.

Context

Over the last 30 years, Vietnam has known remarkable economic growth, transforming what was one of the world’s poorest nations into a lower middle-income country. Between 2002 and 2018, GDP per capita increased by almost three times and reached $2700 in 2019 allowing more than 45 million people to escape poverty. The country experienced rapid demographic and social changes. Its population reached 96.5 million in 2019 (multiplied by 1.6 in 33 years) and is expected to expand to 120 million by 2050. Vietnam also experience the emergence of a middle class, counting for 13% of the population nowadays, 26% by 2026.

These changes pose new challenges to the country, such as rapid urban development, increasing energy demand and the arrival of a million young workers on the labour market every year. In addition, Vietnam’s population and economy is highly vulnerable to natural disasters and the effects of climate change.

Present since 1994, AFD works in close collaboration with the Vietnamese authorities to assist the implementation of the Paris Agreement especially through the areas of energy transition, resilience of cities and territories and youth. It offers an extensive range of financial instruments: sovereign and non-sovereign loans and grants to the State and public sector.

AFD's Vietnam office is directly attached to the Southeast Asia regional office in Bangkok.

Our approach

"AFD and Vietnam: Supporting the implementation of the Paris Agreement"

The AFD's strategy is to support Vietnam in moving towards a low carbon, resilient development path. AFD is deploying a wide range of "climate" activities in the country, one of the most extensive in any of the countries where it operates. In total, over the 2006-2020 period, €1130 million was devoted to tackling climate change and adapting to its effects, through 26 projects and development programmes. The urban and territorial development, energy and water management sectors are the subject of particular attention.

AFD is also active in public policy dialogue with Vietnamese authorities to help raise ambitions towards a low-carbon and resilient development path. As a historical partner of the Climate Budget Support Program (SPRCC), AFD is positioning itself to support the program that will succeed the SPRCC in supporting the implementation of the Nationally Determined Contributions (NDCs). It is also mobilizing the 2050 Facility, in particular through the Vietnam GEMMES Program to feed the new national climate change strategy. Finally, it supports the integration of climate change issues into all economic sectors and into the country's strategic documents.

Vietnam has seen very rapid urbanisation over the last 30 years. By 2050, the cities are expected to be home to 60% of the Vietnamese population. The challenges are many: high urban density, increase in air, water and soil pollution, road congestion and inadequate public transport.

For many years AFD's interventions have been aimed at strengthening the resilience of cities and territories in the face of the impacts of climate change, natural hazards and disasters. In particular it supports the promotion of good-quality urban development that is respectful of the environment in order to reduce cities' vulnerability and mitigate greenhouse gas emissions. Our actions cover:

creation of sustainable facilities in urban spaces,
development of public transport (line 3 of the Hanoi Metro, the Hanoi-Lao Cai railway), public water and sanitation services, waste collection and treatment networks.
and integration of environmental issues in urban planning.

We are also investing, alongside the provincial authorities, in the area of integrated water resource management, in both urban and rural areas, with water infrastructure projects aimed at anticipating the risks of flooding (e.g. in the provinces of Ninh Binh, Ha Tinh and Can Tho and in Nghe An and Thanh Hoa provinces), drought, river and coastal erosion, the salinisation of arable land and rising sea levels.

Vietnam's high growth rate is inducing a very fast increase in electricity production, which will be multiplied by four by 2030 compared to 2014. The development of renewable energies is occupying a growing place in the master plans (in particular the PDP8 project which sees the share of coal decreasing compared to previous plans).

In order to contribute to the mitigation of greenhouse gas emissions, AFD is striving to support the development of renewable energies in Vietnam, the modernization of the network to absorb new renewable energy capacity, and energy efficiency efforts. In particular we are financing, through support for Vietnam Electricity (EVN) or green credit lines, the development or extension of hydro-electric power plants, such as the Huoi Quang plant, Ialy plant and soon Hoa Binh, the construction of solar farms and an increase in wind power capacity. We are also supporting the reinforcement of the electricity grid to allow the use of clean energy sources as a priority.

AFD pays very particular attention to the social integration and employability of young people and vulnerable populations, in particular in promising industrial sectors. It is supporting the modernisation of the vocational training offer (including higher education) by adapting courses to businesses' needs, training teachers and taking account of issues like safety and the environment. For example, we support five technical training centres that guarantee decent work to the future skilled workforce.

We also provide backing for social integration and support programmes initiated by civil society that help to consolidate social ties.

AFD is a partnership-oriented agency and it works alongside local authorities and voluntary bodies, but also with international partners. For example, it is funding sociological studies on the consequences of climate change in the Red River Delta. It is also coordinating research programmes on coastal erosion or the Vietnam GEMMES model on the impact of climate damage. In addition, it supports different technical cooperation programmes, for example on the methodology of planning electricity distribution grids or resilient urban development.

We also contribute to raising the awareness of the population, especially young people, of key development issues. This led us to organise several competitions to raise awareness among Vietnamese youth about the challenges of climate change and the actions they can take at their own level.