Evaluation of Sector Approaches in Environment
Vietnam Case Study Report
Policy Operations Evaluation Department
Directorate-General for International Cooperation (DGIS)
September 2007
MetaMeta Management
Wageningen International
Viet Insight
1
Table of Contents
1.
Introduction ........................................................................................................ 5
2.
2.1
2.2
2.3
2.4
Country context................................................................................................... 6
Development ..............................................................................................................6
State of the environment .............................................................................................7
Environmental governance and policy ...........................................................................9
Forestry governance and policy ..................................................................................10
3.
3.1.1
3.1.2
3.2
3.3
Case studies....................................................................................................... 12
Forestry sector support..............................................................................................13
Trust Fund for Forests ...............................................................................................18
Environmental Sector Support ....................................................................................20
Poverty Reduction Support Credits .............................................................................23
4
4.1
4.1.1
4.1.2
4.1.3
4.1.4
4.2
4.2.1
4.2.3
4.2.4
4.2.5
4.3
4.3.1
4.3.3
4.3.4
4.4
4.4.1
4.4.2
4.4.3
Analysis ............................................................................................................. 26
Country conditions ....................................................................................................27
Sector policy context .................................................................................................28
Sector investment plan ..............................................................................................28
Institutional framework..............................................................................................29
Engagement of civil society and private sector ............................................................29
Donor inputs.............................................................................................................31
Overall contribution ...................................................................................................31
Harmonisation ..........................................................................................................33
Alignment .................................................................................................................34
Mutual accountability.................................................................................................35
Outputs ....................................................................................................................35
Ownership ................................................................................................................36
Effect on non-state actors..........................................................................................36
Transaction costs ......................................................................................................37
Outcomes .................................................................................................................38
Improved service delivery ..........................................................................................38
Poverty focus............................................................................................................39
Project or Sector Support...........................................................................................41
5
Generic lessons.................................................................................................. 42
References .......................................................................................................................... 46
Annex 1
Environmental Sector Acitivities DGIS Vietnam 1998-2006 ........................... 510
Annex 2
List of Persons Interviewed .............................................................................. 51
Annex 3
Overview of Triggers for PRSC 1 - 5 .................................................................. 54
Annex 4
TFF Portfolio Status - 30 June 2007 .................................................................. 56
Annex 5
Comparing National Forest Development Strategies ........................................ 58
Annex 6
Correlating forestry and poverty targeting ....................................................... 59
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Glossary
5MHRP
ADB
CFAA
CIDA
CPRGS
CG
DAC OECD
DANIDA
DGIS
DFID
Doi Moi
DONRE
DOP
EC
EIA
FD
FDI
FDS
FLITCH
FPD
FSDP
FSSP
FSSP&P
GBS
GDP
GoV
GTZ
HCS
HRD
ICD
IMF
IOB
ISG
ISGE
ISGES
IUCN
JBIC
JICA
KfW
LMDG
M&E
MARD
MDG
MDTF
MSCP
MTEF
MOET
MOF
MONRE
MOSTE
MOT
MOU
MPI
NRE
ODA
PMU
5 Million Hectares Reforestation Project
Asian Development Bank
Country Financial Accountability Assessment
Canadian International Development Agency
Comprehensive Poverty Reduction and Growth Strategy
Consultative Group
Development Assistance Committee
Danish International Development Agency
Directorate-General for International Cooperation (Netherlands)
Department for International Development (UK)
Economic liberalization policy
Province-level Department of Natural Resources and Environment
Department of Organisation and Personnel in MONRE
European Commission
Environmental Impact Assessment
Forest Department (within MARD)
Foreign Direct Investment
Forest Development Strategy
Forestry for Livelihood Improvement in the Central Highlands Project (ADB)
Forest Protection Department (within MARD)
Forest Sector Development Project (WB)
Forestry Sector Support Partnership
Forestry Sector Support Program and Partnership
General Budget Support
Gross Domestic Product
Government of Vietnam
German Agency for Technical Cooperation
Hanoi Core Statement
Human Resource Development
International Cooperation Department (MONRE)
International Monetary Fund
Policy Operations Evaluation Department (DGIS)
International Support Group (MARD)
International Support Group on Natural Resources and Environment
Secretariat of ISGE
The World Conservation Union
Japan Bank for International Cooperation
Japan International Cooperation Agency
Kreditanstalt fur Wiederaufbau (German Bank for Reconstruction)
Like Minded Donor Group
Monitoring and Evaluation
Ministry of Agriculture and Rural Development
Millennium Development Goal
Multi Donor Trust Fund
MARD-Sida Cooperation Programme
Medium Term Expenditure Framework
Ministry of Education and Training
Ministry of Finance
Ministry of Natural Resources and Environment
Ministry of Science Technology and Environment (former GOV Ministry)
Ministry f Transport
Memorandum of Understanding
Ministry of Planning and Investment
Natural Resources and Environment
Official development Assistance
Project Management Unit
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PRSC
RNE
SDC
SEDP
SFE
SIDA
SNV
SWAP
TA
TAG
TFAP
TFF
ToR
UNDP
UNEP
USD
VEPA
WB
WWF
LFA
SBS
SEDP
SEMLA
Poverty Reduction Support Credit
Royal Netherlands Embassy
Swiss Agency for Development and Cooperation
Social Economic Development Plan
State Forest Enterprise
Swedish International Development Agency
Stichting Nederlands Vrijwilligers (Netherlands Development Organization)
Sector Wide Approach
Technical Assistance
Thematic Ad-hoc Working Group
Tropical Forestry Action Plan
Trust Fund for Forests
Terms of Reference
United Nation Development Program
United Nations Environment Program
United Stated Dollar
Vietnam Environment Protection Agency
World Bank
World Wildlife Fund for Nature
Logical Framework Approach
Sector Budget Support
Socio-economic development plan
Strengthening Environmental Management and Land Administration (SIDA)
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1.
Introduction
This report brings together the results of the Vietnam country case study undertaken as part of the
Evaluation of Sector Approaches in Environment, commissioned by the Policy Operations Evaluation
Department (IOB) of the Directorate-General for International Cooperation, the Netherlands (DGIS).
The objective of the policy evaluation are to obtain insights into the results of Dutch support to the
environment and to contribute to policy development intended to promote the application of the
sector-wide approach in environment. Other country case studies are undertaken in Colombia, Ghana,
Pakistan and Senegal.
In Vietnam the Royal Netherlands Embassy (RNE) has supported and funded the development of a
sector-wide approach in the Forestry Sector since 1999 – soon after the announcement of the policy
on sector-wide approaches in 1998. From 2001 the RNE has been closely involved in the Poverty
Reduction Support Credits (PRSC), a general budget support mechanism administered by the World
Bank which includes policy conditionalities on environment and forestry among others. In addition the
RNE has supported activities under the (now) Ministry of Natural Resources and Environment and
taken part in the International Support Group on Environment (ISGE). All these three components are
discussed in this report with special emphasis on the activities in the Forestry Sector, where
engagement was most intense.
Total expenditures in 1998-2004 for activities in the environmental sector, including forestry and
general environment (including biodiversity) per se amounted to Euro 43,259,000. With the exception
of a peak in 2002, annual expenditures gradually increased from Euro 3.7 Million in 1998 to Euro 7.1
Million in 2006. Amounts spent on forestry (Euro 21,746,000) and on other environmental activities including biodiversity programmes - (Euro 21,513,000) were almost equal in this period .
In the period 2004-2006 for which aid is classied per modality, Euro 3,000,000 was categorized as
sector budget support out of a total expenditure on environment and forestry of Euro 15,019,982 in
this three year period. In addition in the same period Euro 42,000,000 was made available as general
budget support – including a reallocation of the budget assigned to the forestry sector. Itemized
details of budget expenditures on environment and forestry are in annex 1.
5
This report is based on a visit to Vietnam from 6-17 May 2007, including the attendance at the
Forestry Partnership Forum on 8 May and Forestry Investment Forum on 9 May, a field visit,
supplementary interviews, review of documentation and study of data from the various management
information systems within DGIS1. A list of persons consulted is attached as annex 2. The report first
describes the country context (section 2) before discussing the three components in the
environmental program (section 3). It finally analyzes the outputs and outcomes of the program in the
light of the different pre-conditions underneath the sector-wide approach, as described by OECD-DAC,
on country conditions and donor roles (section 4). It ends with a number of lessons on the
implementation of the sector approach in environment (section 5).
2.
Country context
2.1
Development
Among the eleven partner countries in the bilateral environmental program of DGIS, Vietnam occupies
a special position. It has witnessed sustained economic growth of 7.5-8% for the last ten years and is
on the threshold of becoming a Lower Middle Income Country. Vietnam has experienced double-digit
poverty reduction with the number of poor going down from 58% in 1993 to 37% by 1998, to 29% in
2002 and 24% in 2004 (MPI 2006). In the course of time Vietnam in fact replaced its own less
stringent standard with a revised standard, closer to the international accepted poverty level
definition.
Gross National Income per capita increased steadily – from USD 380 in 2000 to USD 620 in 2005 –
and the GDP in 2005 stood at USD 52 Billion (Word Bank 2007). Over time Foreign Direct Investment
has caught up with ODA. In 2005 FDI in Vietnam in 2005 was USD 2.0 Billion (World Bank 2007),
equivalent to 4% of GDP2, whereas ODA stood at 1.9 Billion USD. ODA per capita is USD 22. The
vision in the Socio-economic Development Plan 2006-2010 (SEDP) is for ODA to remain important, but
for FDI to take an increasingly important role. The SEDP forecasts a continued strong and investmentled growth in the coming period. Investments are anticipated to rise to 40% of GDP (up from 37%). A
number of economic measures are foreseen to enhance efficiency of resources – in particular a further
orientation to private sector development (among other by pricing of infrastructure services and
setting regulatory regimes for public private partnerships), further reform of state-owned enterprises
and increased mobilization of domestic fiscal resources through tax reform. Many of these reforms are
triggered by the accession to the World Trade Organization. The SEDP foresees a growth path that is
driven by business development and reduces poverty through job creation. While government wants
to retain a direct role in the productive sectors, it sets out reforms that are levelling the playing field
for all types of enterprises.
An intangible that has come with the steady development in Vietnam– mentioned by several persons
interviewed in this case study – is a great receptiveness for new ideas and a drive to do better, and
lead and operate on its own terms. ODA is seen in Vietnam not just as aid, but also a tool for getting
international credibility. This is worded in among others in the SEDP, where the ODA commitment to
Vietnam is seen as an ‘approval ... of the international donor community of the socio-economic
development policies of the State and the Party” (pg 27). There has also been a U-turn in the
transparency of decision making. Whereas in 1999-2000 the Public Budget was considered a state
secret (with members of Parliament not allowed to carry the document outside the Parliament
building), the process of preparing the recent SEDP was modelled on the broad-based consultative
activities of the Comprehensive Poverty Reduction and Growth Strategy (CPRGS).
Vietnam is a one-party democracy. It has drawn criticism for the absence of open elections and multiparty democracy. For instance, in a reassessment of the lists of partner countries for Swedish and
Canadian bilateral aid, this argument may reportedly go against a continuation of these bilateral
1
2
The report was prepared by Frank van Steenbergen (MetaMeta), Wouter Leen Hijweege (Wageningen International) and
Bach Tan Sinh (Viet Insight). The support by Liesbeth Kuyate and Jaap van der Kloet in preparing background information is
gratefully acknowledged as well as the comments of Paula Williams and Tim Dawson on the first draft of this report.
The SEDP refers to a higher figure for FDI, i.e. 15.5% of GDP (MPI 2006), which would be equivalent to USD 8 Billion.
6
programs in the country, despite of other achievements in poverty alleviation or increased
transparency.
Decentralization has progressed considerably and the role of the central ministries is now shifting to
policy making and guidance. In the Provinces the budget is issued by the Provincial People’s
Committee and then endorsed by the Provincial People’s Council. The bottom-line is that in the
current set-up central ministries have no budgetary control over expenditures ‘in their sector’. As such,
the definition of a sector as ‘a financial and institutional unit’ - as was applied in early documents on
the sector-wide approach, does not adequately describe the current governance arrangement.
Further, decentralisation below the Province level is uneven across the country. This is related to the
absence of a lack of single framework that would rule the division of tasks between central and local
government units as well as interdepartmental coordination at provincial and district level (Crown
Agents 2005, Adams 2003). At the lowest level of government, assigned tasks outstrip fiscal
capabilities. The Decree on Grassroots Democracy (1998) as well as policies and legislation such as
the Law on Complaints and Petitions of Citizen, the Public Administration Reform Master Plan and new
anti-corruption measures in principle have opened opportunities for more deliberative citizen
engagement. Difficulties remain, however, in particular with the overlapping roles of government and
the so-called mass organizations, the inadequate funding at local level, the limited understanding of
the opportunities under the Grassroots Democracy Decree among the main local players (UNDP/ VASS
2006). In absolute numbers there is broad engagement in civil society organizations (74% of all
citizens), but this is mainly due to membership in mass organizations. NGOs are mainly active in cities
and provide services to disadvantaged groups, such as ethnic minorities, HIV/AIDS patients, invalids
or Agent Orange victims. By and large the civil society is not politically active or engaged in advocacy
(Norlund and Dang 2007).
According to several sources, corruption in Vietnam is common and systemic. In the corruption
perception index of Transparency International, Vietnam ranks 111 out of 160 in 2006, a position
more or less unchanged for the last five years. Anti-corruption measures (such as a the establishment
of a State Inspectorate and State Audit) are, however, being introduced – among others triggered by
a gambling scandal, that involved the Project Management Unit (PMU 18) under the Ministry of
Transport. This scandal was widely publicized and used to put corruption and anti-corruption on the
agenda and to raise questions about the functioning of the public, political and judiciary system as
well as the low salary levels. A donor assessment of the PRSC summarises the common thinking on
corruption (Ministry for Foreign Affairs, Finland 2005):
“While it is not entirely evident that corruption is as widespread and destructive as sometimes
depicted, it is clear that corruption remains an issue in Vietnam and that attention needs to be paid to
pursuing concrete steps towards curtailing it as much as possible. Some of the recent steps in
enacting punitive measures are to be noted but the systemic aspects can only be addressed through
greater transparency and popular control.”
Among others as part of the PRSC process measures have been taken improve public finance
management, by changing the national procurement system, modernizing the budget system and
improving financial management information. This change has led the main development banks
operating in Vietnam (JBIC, KfW, ADB, World Bank) to commit themselves to use Government of
Vietnam standard bidding documents (Duong 2005). Otherwise, there is relatively little alignment
with country financial systems in ODA. The constraints are not so much perceptions of financial abuse
as procedures being sometimes unwieldy or not in line with donor requirements.
2.2
State of the environment
The impressive economic growth in Vietnam has had an inevitable effect on environment. The
Vietnamese economy is still to an important extent dependent on natural resource exploitation.
Fishery, forestry, and agriculture are all identified as economic growth sectors. This makes the
degradation of the resource base becoming of particular concern, not only because it undermines
livelihoods in rural areas, where 74% of people still resides, but also as it may impede economic
growth. In 2004 agriculture contributed 24% to GDP and 30% to total export value. Fisheries are
7
providing employment to 4 million people, but over fishing has reduced annual landings to less than
40% of pre-1990 figures. Coastal shrimp farming has, in particular, had adverse effects on the
mangrove population and coastal groundwater resources. Mangrove areas declined by 60% since
1990, when it stood at 155,000 ha.
Forestry likewise is seen as an important economic sector, expected to generate USD 3.9 billion
annually by 2010 (according to Vietnam Forestry Development Strategy)3 in export earnings for timber
and non-timber products. Degradation of forest resources is not new but pre-dated the period of rapid
economic growth. The decline in forest cover since 1943, has been associated with growing
populations, expanding agriculture, conversion of forests to alternate land uses, and the defoliation
campaigns in the American-Vietnam war. In some places, the practice of shifting cultivation in forests
led to shortened recovery times and loss of soil cover. It has been estimated that in 1943, forests
covered 43% of the national land area. By the early 1950s, forest cover had declined to 27% of the
land area4. After this large scale reforestation activities were initiated in the 1990s and the trend
reversed. The Government has supported reforestation through a series of programmes, known as
327, 556, and 661 (the latter is also known as the 5 Million Hectare Reforestation Programme, which
runs from 1998 to 2010).5
Vietnam: Trends in forest cover (net change in 1000 ha/year)
1943 - 1976
-85
1976 - 1980
-82
1980 – 1985
-203
1985 - 1990
-143
1990 - 1995
+25
1995 - 1999
+403
Source: Warfvinge and Vu (2002)
As a result, by the end of 2005, forest cover in Vietnam, including both natural forest and plantations,
has increased to 12 million ha or 37% of total land area against a government target of 43% by 2010.
Of this amount 15% is special-use forest and 49% is protection forest. Production forest amounts to
36%. The average standing volume of forests is between 62 and 76 m3/ha6, but of plantation only
20.8m3/ha (Profor, 19997).
Vietnam is also in the top ten biodiversity countries globally. This was underlined spectacularly with
discoveries of new mammal species in the last decade. Vietnam has 289 species which are threatened
with global extinction according to the IUCN Red Book. (1056 fauna and flora species are in danger of
national extinction – an increase from 721 from 1998. There is also erosion of genetic stock in
traditional animal breeds.
Apart from these green environmental concerns, brown environmental challenges related to urban
and industrial growth are important and becoming increasingly prominent. Although the degree of
urbanization in Vietnam compared to other Asian Pacific Rim countries is still relatively low (26%),
3
Current export of 1.6 billion US $ in 2006
From 14.3 million ha in 1943 to 9.3 million ha in 1993 ( REFER TO DATA IN STRATEGY)
The Vietnam Forestry Development Strategy (Feb. 2007) provides the following overview: "Due to unsustainable management
and a very high need for conversion of forest land and for forest products for socio–economic development, the forest area and
forest quality have been continuously decreased over the years. Based on available documents, in 1943 Vietnam had 14.3
million ha of forests, with 43% forest cover; by the year 1990 only 9.18 million ha remained, with a forest cover of 27.2%.
During the period 1980 – 1990, the average forest lost was more than 100,000 ha each year. But from 1990 to the present, the
forest area has been increased gradually, due to afforestation and rehabilitation of natural forest (exception for the case of
some areas, like the Central Highlands and the South-East region, where the forest area still has the tendency to be reduced).
Based on the official statement in Decision No. 1970/Q /BNN-KL-LN, dated 6 July 2006, as of 31 December 2005, the total
national forest area was 12.61 million ha (forest cover of 37%), including 10.28 million ha of natural forest and 2.33 million ha
of plantation forest, which can be classified into the 3 forest types as follows:
•
Special-use forest: 1.93 million ha, comprising 15.2%;
•
Protection forest: 6.20 million ha, comprising 49.0%; and
• Production forest: 4.48 million ha, comprising 35.8%.
6
Forest inventory has been carried recently, but the data are not yet available. Consequently, information in the public domain
on the stocking and yield of the Vietnamese forests is not accurate or consistent. The growing stock in the forests is
estimated at 560-590 mill. m3, the average stocking thus being 62 m3/ha (forested lands) or 30 m3/ha (all forest land). The
figure includes stem volume only and the estimate was done in late 1980s. (PROFOR 1999)
7
Study on Financing Strategy for Sustainable Forest Management in Vietnam, Draft version, Jyrki Salmi; Nguyen Xuan
Nguyen ; Le Quang Trung PROFOR/UNDP 1999.
4
5
8
several problems associated with urban and industrial growth are making their mark. Examples are
the eutrophication of urban water bodies, depletion of groundwater near cities or pollution by
leachates from waste disposal sites. Urban sewage and waste collection fall behind increased
requirements. Between 2002 and 2004 solid waste per capita rose by 35% in urban areas. Collection
rates range between 60-80% for large cities (MONRE 2006). In many urban and industrial areas
hazardous waste is not yet separated and safe dumping facilities are exceptional. Industrial growth
rate is around 16%, but only 4% of industrial waste water is treated. Air pollution is a major hazard,
mainly from dust, caused by traffic and older industry. Lead pollution on the other hand has been
controlled since the use of lead petrol was regulated. Fertilizer issue is increasing but still low (less
than 25% of China levels).
2.3
Environmental governance and policy
Since 2002 the environment gained higher profile in Vietnam. This change is manifest from new
institutions and the mainstreaming of environment in national policy and budgets.
On 2 August 2002, the National Assembly ratified the establishment of the Ministry of Natural
Resources and Environment (MONRE) by separating it from the Ministry of Science Technology and
Environment (MoSTE) in order to strengthen the state management of the environment and natural
resources. According to the Decree 11/ND-CP dated 5 November 2002, MONRE is responsible for the
state management in the area of environmental protection nation-wide.
MoNRE has clout, because it is also responsible for of land administration and land allocation. In the
Provinces Departments of Natural Resources and Environment (DoNRE) operate under the jurisdiction
of the provincial government.
Further, the National Environmental Agency (old NEA), previously a department under Ministry of
Science, Technology and Environment (MOSTE, now MOST), has been also reformed into the
Vietnam Environment Protection Agency (VEPA) of the present MONRE. VEPA assists the Minister of
Natural Resources and Environment in execution of State management tasks regarding environmental
protection, including such areas as: examination, supervision, prevention, mitigation and remediation
of environmental pollution, degradation and incidents; improvement of environmental quality;
conservation of bio-diversity; environmental monitoring; application of technologies; developing
databases, statistics, information and reports on environment; implementing integrated coastal zone
management; and education to enhance the awareness of the community on environment. The
organization is staffed with relatively young people and is coming to terms with its ambitious agenda.
VEPA also operates the so-called Environmental Protection Fund. The Environmental Protection Fund
(with a capital amount of approximately USD 20 Million) provides short and medium term loans for
investments in environmental management, such as sanitary landfills or solid waste recycling. The
Fund has been oversubscribed and in VEPA’s assessment it fulfils a substantial need among
Vietnamese enterprises. The intention is to replenish the fund in the future from polluter fees or from
grant contributions.
Compared to other countries, the environmental institutions in Vietnam, as they evolved in recent
years, have more importance. First at cabinet level the National Council on Sustainable Development
was established in September 2005. The Council has 45 members representing line ministries, sectors,
local governments and public associations and is chaired by the Deputy Prime Minister.
Environmental issues are further mainstreamed in national policies and budget. “Managing
environment and natural resources in a sustainable manner”’ is one of the four pillars of the SEDP
2006-2010, next to the promotion of growth and transition to market economy, reduced poverty and
insuring social inclusion and building institutions. Acknowledging the potentially unsustainable pattern
of economic and industrial growth, the SEDP has several objectives on environment. In addition to the
above-mentioned targets of forest cover increase, other targets by 2010 are:
- 100% of the larger cities and 50% of the smaller cities will apply clean technology, pollution
abatement and waste treatment
9
-
-
50% of businesses will comply to environmental standards
100% of industrial zones and export processing zones are equipped with centralized waste
water treatment facilities; 90% of solid waste is collected and treated; 80% of hazardous
waste is treated and 100% of medical waste
90% of the urban population and 75% of the rural population will have access to clean water.
The SEDP also envisages continued forestry sector reform – striking a better balance between forest
protection and production, restructuring state forestry enterprises and allocating forest land to ethnic
minority households, thus supporting economic development and job creation.
Environment is mainstreamed into national budget processes as well. The Vietnam Agenda 21 also
called “the Strategic Orientation for Sustainable Development in Vietnam” was announced in 2004 by
the Prime Minister. It commits one percent of public expenditure is to be spent on environmental
protection activities. By decision of the Ministry of Finance environmental protection activities are
defined as solid waste treatment, waste water treatment, air pollution mitigation, reduction of noise
pollution, nature and biodiversity conservation (including national parks), clean water supply and rural
sanitation, survey and management activities in support of these. Within the Ministry of Planning and
Investment, a Sustainable Development Unit is active. This unit mainly supports the different
Provinces in developing environmental programs against this one percent target. The budget process
itself is the behold of the Provinces and in this case MoNRE has no direct linkage.
2.4
Forestry governance and policy
Over the years forestry has been handled by the Forestry Department and the Forestry Protection
Department within the ‘super’ Ministry of Agriculture and Rural Development. A previous Ministry of
Forestry was merged into MARD in 1995. The Forestry Department, previously known as the Forestry
Development Department, has responsibility for forest production, management, and utilisation
issues. It also has the mandate for leading on forest sector planning, strategy, and monitoring. The
Forest Protection Department has lead responsibility for forest conservation and forest protection
efforts, such as protection against illegal activities, forest fires and others.
Forestry sector policies since 1995 have spanned a mix of economic and environmental concerns, but
managed to, contribute to an increasing forest cover (Mather, 2007)8. Concern over the alarming rate
of deforestation in the 1980’s was first reflected in the Tropical Forestry Action Plan (TFAP), the main
sector policy document of its time. The TFAP exercise identified seven still familiar main issues:
deterioration of living conditions for the rural population; declining forest cover; lack of operational
efficiency; decline in biodiversity; watershed degradation; wood imbalances; and lack of skilled man
power. It led to a logging ban in some forests in 1992, which was extended to most natural forests
five years later. The 1991 Law on Forest Protection and Development categorized three forest land
classes with different management regimes.
8
When the forest cover decreased, the sector’s economic role in the formal economy was declining. Between 1990 and 1995,
forestry’s contribution to gross domestic product (GDP) declined from 3.0 to 1.4 percent and forest products exports as a
share of total exports from about 5 to less than 3 percent (in USD terms, from 127 M to 101 M)(General Statistical Office in
ADB TA). (MARD/ICD/FSSP Synthesis Report, 2001). Other sources point out that if environmental services from forestry are
added forestry’s contribution to GDP may be close to 7% though.
10
Special use forests:
Protection forests:
Production forests:
mainly national parks, protected landscapes and other protected areas
watersheds, mangroves, etc. forests with special protective functions
forests where logging is allowed, includes industrial plantations
The partial logging ban was accompanied by a package of socio-economic and technical measures
towards the protection of natural forests, while reforestation was accelerated. This National
Programme for Upland Development or ‘Programme 327’, often referred to as the “regreening of
barren hills", was conceived as an integrated rural development activity. However, as a large part of
the funding activities was channeled through the State Forest Enterprises9, the direction changed to
subsidized tree planting, forest protection and protection of natural forests in watershed areas.
According to MARD estimates, the programme resulted in 638,500 ha of tree plantations.
The programme was revised in 1995, and then became known as Programme 556. In 1997, the
National Assembly approved a new programme, known as the Five Million Hectare Reforestation
Project (5MHRP). The Prime Minister issued Decision 661 on the implementation of the 5MHRP early
in 1998, so it became known as ‘Programme 661.’ (In July 2007, Decision 100 updated Decision 661.)
The programme became one of the 13 national target programmes and contributed to bring forestry
in the centre of development policy in Vietnam. The programme aims to reforest 2 M ha in protection
forest and 3 M ha in commercial production forest. These targets, however, were revised in late
2006. Contrary to what its name suggest, the programme’s approach goes beyond reforestation and
plantation establishment, but is also concerned with the management of natural forests, the
promotion of local timber markets and development of forest industry thus serving environmental as
well as production purposes. In contrast with the top-down style of its predecessor Programme 327,
the 661 programme was meant to operate in a more participatory way. The government established a
fund (known as Fund 661) to finance projects under the programme. The expectation was that this
fund would also attract ODA funding.
A Forest Sector Development Strategy (2001 – 2010) was approved at Minister’s level. It put forest
development in the context of Vietnam’s overall sustainable development, relating it to national
priority goals such as poverty reduction, job creation and economic development. Five years later this
strategy was replaced with the revised Viet Nam Forestry Development Strategy (VFDS, 2006-2020).
This revised strategy also has higher status, because it was officially endorsed by the Prime Minister in
February 2007. This revision was deemed necessary to be consistent with the 2004 revision of the
Law on Forest Protection and Development and to align with the socio-economic development
programmes, as well as to mobilize additional support for the forest sector. Whereas the first strategy
was developed very much in-house, the preparation of the new strategy was done in a more
transparent process reflecting the change in decision-making culture in Vietnam over the last ten
years. Among others a thirty-person interministerial team was engaged with further representation
from universities, the Committee on Ethnic Minorities and other civil society representation. The Forest
Sector Support Programme and Partnership (now renamed the Forest Sector Support Partnership) was
intimately involved in his process (see section 3.1.1). A comparison of the two national forest
development strategies is provided in annex 4.
Governance in the forestry sector has changed over time. Over time the land allocated to different
forest categories changed – with the proportion under production forest declining and protection and
special use forests increasing. To reverse this trend, however, the Prime Minister issued instructions in
late 2005 for all provinces to reclassify the forests in accordance with revised criteria, aiming to shift 3
million ha of less critical protection forest to production forests. With the progressive decentralization,
9
FAO referred to an even much larger number of projects. “During 1995, the Government allocated about US $60 million for
the Programme implementation, which was carried out through 1200 projects Source: FAO website:
http://www.fao.org/docrep/003/x6900e/x6900e0z.htm accessed 2/6/07 . For comparison, the synthesis report (ICD/MARD
2001) estimated that in 2000, central level agencies and 40 provinces implemented around 400 projects under the 5MHRP.
The large majority of these are watershed afforestation and forest protection carry-overs from Programme 327, with state
forest enterprises being the key project owners.
11
the direct role of the Forestry Development and Forestry Protection Departments of central MARD has
reduced and the role of the Provinces increased. The actual management of the national forest estate
is delegated to state organisations (state forest enterprises (SFE) and management boards),
households and village communities. The new Viet Nam Forestry Development Strategy gives
increased priority to the involvement of private enterprises in leased production forests while village
communities and individuals, especially from poor ethnic minorities are prioritised for forest areas
historically attached to the communities (VFDS 2007). In this decentralized implementation structure,
linkages between MARD and the district and provincial level forestry units are often closer with the
same level treasury units than with MARD. The decentralisation of forest management to the
provincial and levels of local government also presents a number of opportunities for better
management, for example in targeting ethnic minorities. On the other hand it also is a serious
challenge to coherent sector management and policy innovation (Profor, 1999, Synthesis Report,
2001). Moreover consistency in central and provincial administrative structures is not systematically
maintained. Within Programme 661 initially planning and decision-making character was more
centralized, but in 2001 a number of national steering committees, including the National 5MHRP
Steering Committee, were abolished. At provincial level, the sub-Forest Protection Departments are
now being brought under the provincial Departments of Agriculture and Rural Development (DARD),
which already contain the sub-Forest Department (sub-FD).
3.
Case studies
In this section, three cases of sector support to environment are discussed, in which the RNE was
engaged, i.e. the forestry sector program, the environmental program and the Poverty Reduction
Support Credits.
The forestry sector program has been a front runner in sector-wide approaches in Vietnam – with the
beginning going back to 199810. The experiences in the forest sector have often been used as a
reference case for other sector approaches in the country (see for instance www.sbsvietnam.org). The
two tangible outputs of the process of alignment and harmonization have been the Forestry Sector
Support Partnership (FSSP) and the Trust Fund for Forests (TFF). Sector support in other
environmental sub-sectors has not progressed significantly, though an International Support Group for
Environment has been in place since 2001. Finally, the Poverty Reduction Support Credit (PRSC) is a
General Budget Support mechanism, administered by the World Bank. The Netherlands have
contributed significantly to the grant component of the PRSC. The PRSC is of particular interest
because the associated MTEF includes a set of policy actions and ‘triggers’ on environment and
forestry – included at the suggestion of the RNE and the FSSP.
In Vietnam the Netherlands is on the list of important donors – behind World Bank, France, ADB, JBIC
that are in a supercategory of their own and trailing JICA, DFID, DANIDA and Ausaid11. In 2005 and
2006 respectively Euro 21.8 M and Euro 15.3 M was spent through the delegated bilateral channel12.
To this Euro 11 M and Euro 24 M under GBS should be added for these two years, administered from
the Evaluation and Quality Control Department (DEK) in The Hague. In addition there is support
through the central bilateral channel, under the responsibility of the thematic directories in The
Hague. For environment in Vietnam for instance central bilateral support this amounted to Euro 0.9 M
in 2005 – i.e. for a biogas project, implemented by SNV.
The table below (based on annex 1) is a snapshot of Dutch aid channelled through the different
modalities in environment and forestry in Vietnam in 2002-2004.
10
The idea of a Coordination Group for Forestry Development in Vietnam (CGFV) was proposed as early as 1995 by the Ministry
of Forestry, but the first partnership was created in 1998.
11
In forestry, at least, other important donors include Germany and Korea.
12
This has the RNE as budget holder.
12
Dutch Aid to environment in Vietnam 2002-2004 (in Euro M)
Delegated bilateral
Macro support
Central bilateral
2004
Project
3,350
0,495
SBS
GBS
2,000
8,000
2005
Project SBS
2,552 3,000
GBS
8,000
2006
Project
6,117
SBS
GBS
24,000
0,898
Source: DGIS (Piramide)
Some of the classification is open to debate, however. The amount of USD 3 M in 2005 that was
contributed to the PRSC from the allocation of the Forestry sector in 2005 is classified as Sector
Budget Support, whereas in 2004 it is appears as General Budget Support. In 2006 USD 3.5 M was
first proposed to be under the SBS, but this was later requisitioned as General Budget Support (see
section 3.3). Co-financing of World Bank and ADB forestry sector programs and contribution to the
multi-donor trust fund are classified as project support.
What is apparent that there are a large number of aid modalities – more than the three categories
used: Projects without component, Projects with Financial Assistance, Pooled funds, Trust fund, Cofinancing, Direct Sector Budget Support and GBS, with various degrees of earmarking. Grouping this
range of modalities in three categories is likely to create interpretation issues.
3.1.1
Forestry sector support
The sector support programme in forestry in Vietnam was one of the first engagements with sectorwide approaches in Vietnam and with sector-wide approaches in environment within DGIS, initiated
soon after the new policy was announced in 1998. The Dutch bilateral aid program in Vietnam was
relatively new, as the Embassy reopened only in 1994. A project portfolio in the forestry sector was
being developed up at the time, consisting among others of co-financing of World Bank and Asian
Development Bank projects, support to the Forest Research Institute, support to Cat Tien National
Park Conservation Project, the latter routed through WWF, and a small grants program, administered
directly by the RNE.
Initially approximately ten donors came together, with the RNE – on request of the others - playing a
leading role. The RNE was well-placed to do so, being a neutral minor player and also because it had
access to a large network in the sector, as a result of developing its project portfolio. The RNE
moreover had the staff in country to dedicate time to the development of a SWAP, in the shape of
sector specialists in Hanoi, in particular the specialist in forestry and biodiversity. In his own estimate
the forestry sector specialist at the time spent an estimated 50% of his time in 1998-2002 on the
development of the SWAP13, making using of informal contacts with the Vice Minister as well as with
other donors. Support from DGIS headquarters was mainly in terms of creating the space to pioneer
the new approach, emphasizing broad principles of coherence (policy framework), ownership (follow
GoV ideas) and coordination (harmonization), but not in tangible assistance in terms of training,
specific advice or models.
The emphasis in the period 1998-2001 was on donor harmonization. During the 1998 Meeting of the
Consultative Group for Vietnam in Paris the Programme 661 and the attached fund were presented as
a priority of the Vietnamese Government and as the appropriate framework for forestry development
in Vietnam, including donor inputs to the forestry sector.
Part of the drive to donor coordination in the forestry sector came from a fear that in spite of its
broader intentions the 5MHRP would be biased toward tree planting with little attention for the
environmental agenda or poverty alleviation. Donors were reluctant to contribute to the 661 Fund and
initiated informal discussion on a coordinated response. The Government of Vietnam at that time was
13
The contribution of the national sector specialist to the development of the SWAP was far less, as most of his time was
consumed in the administration of a small grants program.
13
strongly target driven, with targets published in newspapers and there generally being not much
discussion on approaches. Within MARD the Forestry (Development) Department was very production
driven and less accessible to donors. There were more links with the Forest Protection Department –
where there was a larger convergence with donor priorities such as biodiversity conservation and
community forestry, and a number of joint projects were being implemented (although budget wise
they were modest).
The following months a dialogue between Government of Vietnam and the donor group, resulted in
December 1999, in a Memorandum of Agreement on the Preparation of a 5MHRP Partnership, signed
by fifteen international partners. A Partnership Steering Committee14 was established and a
partnership secretariat functioned under the International Co-operation Department of MARD. Three
joint Government-Donor Task Forces were established to review and analyze different aspects
relevant to the development of a Sector Support Program., i.e.
•
•
•
Task Force I: Clarification of the 5MHRP
Task Force II: Forest Policy, Strategy and Institutions
Task Force III: Forest Sector Investment and Assistance Needs and Partnership Support
Structure
Two years of 5MHRP partnership activities (2000-2001), resulted in agreement on a more
encompassing Forest Sector Support Program and Partnership (FSSP&P), based on the task force
reports, including a joint sector review15 and a number of consultative forum meetings. The FSSP&P
Memorandum of Agreement (MOA) signed in November 2001 between the Vietnam Government and
initially 19 [now 26] international partners – donors as well as international NGOs - represents the
result of a donor harmonisation effort. The MOA included a Forest Sector Support Program with nine
result areas. The thirty-page logical framework, organized around these result areas with performance
indicators, differs noticeably from the Forest Development Strategy 2001-2010, which MARD published
at approximately the same time. In the assessment of several donor representatives at that time
general ownership of the FSSP Program framework was limited within the GoV /MARD. Neither were
the Ministry of Planning and Investment and the Ministry of Finance initially involved (though once
created they became members of the TEC and the Steering Committee). This start needs to be put in
perspective, as at this time in none of the sector partnerships were in place or open dialogues had
advanced to any extent, though there was a willingness on all sides. A quote from the then First
Secretary at the Swedish Embassy in Hanoi, described SIDA's attitude to the Forest Sector Support
Partnership: "We think it's perhaps a rather squarishly top-down plan type of programme, political
agenda and so forth. But as Sweden is very much encouraging partnerships and sector-wide
programme approaches we think this programme, for all its constraints, is a good starting point for a
dialogue with the government on forestry issues" (Samuelsson 2001 in Lang).
There were many international players active in forestry sub-sector in Vietnam – not less than in
sectors such as education and health. This situation continues today. The FSSP&P was set up to be
the framework for working towards a collaborative, sector-wide support for the forestry sector,
between the Government of Vietnam and a growing number of international development partners.
The governance of the FSSP&P was originally through a Partnership Steering Committee (PSC), a
Technical/Executive Committee (TEC), a Coordination Office (FSSP CO) staffed by seconded MARD
staff, contracted staff, and advisors, and a process of annual reviews of the forest sector and of
partnership activities. To make a link with the Provinces, originally a 8-person committee, the
Provincial Reference Group (PRG), was set up. In 2005, it was replaced by six Regional Forestry
Networks, serving 42 forestry provinces. The institutional structure of the Forestry Partnership was
revised in 2006, such that the Partnership is now open to a wider range of stakeholders and
Partnership Forum events organized for these stakeholders. The TEC has now become the standing
14
15
Decision 855 QD/BNN-TCCB of 14 March 2000
Especially the synthesis report, which was the culmination of efforts by a large group of national and international experts
who have taken part in the 5MHRP Partnership Process. It attempted to incorporate the collective knowledge of the three
5MHRP Partnership Task Forces, as well as the outcome of the Asian Development Bank Technical Assistance ‘Study on the
Policy and Institutional Framework for Forest Resources Management (TA No. 3255 - VIE)’. Additional sources of information
were consulted and information incorporated to the extent possible.(Synthesis report 2001)
14
committee of the Partnership, responsible for most decision-making. In 2006, the name of the
Partnership was also changed to the Forest Sector Support Partnership (FSSP, also known as the
Forestry Partnership), as the partnership no longer has a separate Program, with nine result areas,
but rather is supporting the new Vietnam Forestry Development Strategy (VFDS).
The FSSP&P was envisaged to operate for 10 years, through 2010. Four core donors, including the
RNE, agreed to financially support the operations of the Partnership and the FSSP Coordination
Office16 originally until 2006, then later until the end of 2007. This support (a total of 1.3 m USD for 5
years) has been channelled through a pooled FSSP Coordination Office Trust Fund (CO TF), which in
itself offered some new management challenges as terms and conditions for the fund disbursements
vary considerably among the donors. The Government of Finland provided in-kind technical assistance
to the FSSP Coordination Office. Discussions are now ongoing about a renewal of support, through
2010.
The FSSP&P Memorandum of Agreement contains 15 agreed basic “principles for forest sector
cooperation.” These principles – adopted well in advance of the Paris Declaration and Hanoi Core
Statement – pledged partners to work together towards harmonization, joint working mechanisms,
use of Government procedures, joint review, reporting, auditing, monitorin, and evaluation.
To date, the main results of Partnership activities have been the following:
Promotion of Policy Dialogue
• Support to the preparation of the Vietnam Forestry Development Strategy (VFDS 20062020), by supporting international and national consultants, and facilitating the consultative
process, through numerous workshops and provincial field visits. Though the Strategy took longer
to complete than envisaged, it was well received by the Government and national partners and on
top of it endorsed at Cabinet level, unlike the earlier strategy that it replaced. The Strategy stands
out as a well coordinated and collaborative Partnership intervention. It also replaced the FSSP
Program Framework, thus taking a final step towards policy alignment;
• Support to the 2004 revision of the Law on Forest Protection and Development, and
subsequent supporting legal documents.
• Meetings, workshops, and Forum events. Organization of Partnership Steering Committee
meetings and other fora for policy dialogue, review comments on strategy and legal documents,
etc.. In 2007, the Partnership organized its first Forestry Partnership Forum on the topic of
Socialisation, i.e. Broadening Stakeholder Engagement in Forestry. It also collaborated with
MARD’s Planning Department to organize the Forestry Investment Forum, to promote the
engagement of both domestic private sector investors and Foreign Direct Investment in the
sector.
Development of Information Systems
• The Partnership has established a bilingual website, www.vietnamforestry.org.vn, which serves
as an important portal for information on the sector, and links to other key sites.
• Other Partnership information systems, especially the FSSP Newsletters, recent issues of
which have focused on specific themes – such as partnership, forestry and poverty, and the role
of the private sector in forestry.
• The Forest Sector Manual. This manual has been prepared with 36 chapters in Vietnamese – of
which 9 are published bilingually (i.e., also available in English). It has been made available on the
website.
• The Matrix of Affiliation, providing an overview of the activities of the different players in
forestry. The matrix was first prepared in 2002 and updated in 2003. In 2005 it was replaced with
a Forestry ODA database, which comprises a module within the Forest Sector Information and
Monitoring Systems (FOMIS).
• A Common Work Program. The original intention was for all FSSP partners to prepare a joint
work program for implementing the nine result areas of the Forest Sector Support Program.
Computer software was designed in 2003, to allow partners to post their ongoing activities. It
16
While the initial partnership functioned within MARD, the FSSP Coordination Office, although officially linked to MARD was
physically outside the ministry. The proximity to several donor offices was mentioned by several respondents as a
contributing factor for close involvement from donor representatives.
15
•
proved unsuitable, however, so a FSSP&P Annual Work Plan was prepared in 2004, 2005, and
2006, including the FSSP CO annual work plan and some key collaborative Partnership activities.
This approach was difficult to manage, so for 2007, the FSSP CO reverted to preparation of just a
work plan for the Coordination Office. The intention to develop joint activities among FSSP
partners has been achieved to a certain extent under the TFF (see 3.1.2)
Monitoring and Evaluation System. The original idea of a Partnership Monitoring and
Evaluation System was replaced by the idea of the Partnership supported development of a a
forest sector indicator set and data base, as part of the larger Forest Sector Monitoring and
Information System (FOMIS). In 2004, an initial set of indicators was defined, and data
collected for 2002 and 2003, and the information provided on the Partnership’s website. In 2006,
the indicator set was revised, to more closely monitor the key impacts and outcomes for the
Forestry Development Strategy. Baseline data for 2005 has been collected, and an analytical
report is under preparation. In the meantime several organizations (including partners in FSSP)
are developing other data systems outside FOMIS. In November 2006, the Minister instructed the
Forestry Department to take the lead in developing a comprehensive forest sector information
system.
Key Studies: four key studies identified in the original FSSP MOA and Program have been
undertaken:
• Harmonization of Implementation Frameworks. In 2003-04, the Partnership sponsored a
study of Harmonization of Implementation Frameworks (HIF), which compared procedures for
5MHRP activities with those of several major donors.
• Forestry, Poverty Reduction, and Rural Livelihoods. In 2005-06, the Vietnam Forestry
University undertook a study on forestry, poverty reduction, and rural livelihoods for the
Partnership. This study was funded by RNE, Sida, and SDC.
• Gender Issues in the Forestry Sector in Vietnam. In 2005-06, MARD’s Committee for the
Advancement of Women undertook a study for the Partnership on gender issues. This study was
funded through a small grant from the Trust Fund for Forests.
• Forest Research, Education, Training, and Extension. In 2005, a situation analysis and
needs assessment was prepared. This activity was supported by a FSSP partner, Helvetas.
Piloting of a Joint Funding Mechanism:
• Support to the establishment of Trust Fund for Forests (TFF) in 2004, and initial preparation of
screening and financial management procedures. The TFF is supported by four bilateral donors,
including RNE. In addition, GTZ provides technical assistance for the TFF. The FSSP Coordination
Office has served as the day-to-day Management Unit for the TFF during the initial phase (20042007). Initially the decision-making for the TFF was the responsibility of the Partnership
committees, i.e., the PSC and the TEC. In 2007, however, this responsibility was transferred to a
newly-established TFF Board of Directors.
Although the FSSP did not achieve all its intended outputs, it has established itself a main point of
convergence in the forestry sector and has – it was observed – contributed to making coordination the
norm rather than the exception. The Annual Review 2003 (FSSP&P 2004) described this as: the FSSP
has succeeded becoming a key reference point for most international actors in forestry development
in Vietnam. 2003 witnessed an increased level of collaboration and coordination among international
and national partners in the context of the FSSP Program Framework.” From the country visit it
appears that this still holds, with the FSSP having set itself up as respected coordinating mechanism,
with the Matrix of Affiliation and the Vietnam Forestry Development Strategy being highly valued by
respondents.
Senior MARD staff appreciates the flexibility and the synchronized policy discussion (and hence
reduced transaction costs) that came with the FSSP. Though the FSSP is not the only policy and
implementation coordination show in town, it functions as an effective self-regulating coordinating
mechanism – supported by a strong urge of many players – including MARD - to make use of the
partnership. The partnership formula of voluntary association, however, has its drawbacks (as other
partnerships have). It is relatively difficult to come to joint action programs; there is the tendency of
some themes and topics being left unaddressed; and partners roles are being left undefined. Some
16
partners are very active and others are in observer mode. Some partners also developing competing
initiatives outside the FSSP program. In the past, the Coordination Office was criticized for being too
involved in implementation – as opposed to coordination – of activities, but the CO has taken steps to
clarify this situation. On the other hand a lesson learnt, formulated in an Annual Report of the RNE
makes the point that this loose association allowing for incremental progress is also a major strength:
“Creating a partnership that is broadly supported by government, bilateral donors and international
financing agencies requires considerable effort. The success ultimately depends on the degree of
liberty for the different participants to initially hold on to their own procedures. This makes it possible
to direct energy to policy development, strategy and implementation, institutional analyses and
poverty studies. A functioning partnership increases the willingness of participant for more elaborate
cooperation (pooling, trust funds, harmonization).” (RNE 2003). The same point was made by the
consultant involved in reviewing the partnership (Rydder in Anon (2007): “The partnerships are an
institutional mechanism for having collective conversations about the sector. If you’re moving towards
a sector approach you need to have a starting point as a way for everyone to get out of the habit of
bilateral thinking.”
A main bottleneck has been the engagement of local players. The Annual Review of 2005 mentions:
‘Many partners have expressed concern that too much attention has focused on central strategic
planning issues, to the neglect of activities happening in the forest, i.e., decentralized activities in the
provinces.’ Along the same lines it has been difficult to get other government organizations others
than MARD to play a strong role, as in the assessment of one informant ‘it is not their show’.
Changes were made based on the 2006 external evaluation, the governance structure of the
partnership was revised, separating the partnership and TFF governance structures, broadening the
Government of Vietnam representation, and reorienting its institutions to more effectively supporting
the, by then nearly completed Vietnam Forestry Development Strategy 2006-2020 and leaving behind
a time-consuming period of settling financial procedures.
It is envisaged that the partnership coordination and support functions of the FSSP coordination office
will be merged into the operations of the Forestry Development by 2009. Although a number of MARD
staff17 have been seconded to the FSSP Coordination Office, a clear roadmap for such a transfer is still
under discussion and has yet to be agreed upon.
17
Seconded MARD staff include a full-time deputy director, a part-time forestry officer, a part-time accountant, and a part-time
financial officer.
17
3.1.2
Trust Fund for Forests
An important step in coordinated sector support in forestry is the Trust Fund for Forests. The Trust
Fund for Forests (TFF) was established in June 2004 under the aegis of the Forest Sector Support
Program and Partnership (FSSP) and is implemented under a MoU signed between the Government of
Vietnam (GoV/MARD) and four contributing donors (Finland, the Netherlands, Sweden and
Switzerland). The ambition of the TFF was to serve as a main financial vehicle for moving towards the
sector-wide approach. This fund was originally intended to provide funding for small grants, cofinancing as well as sector budget support (see box).
An initial transition phase (2004-2007) provided for the TFF to be managed within the FSSP. Beyond
this date, in 2008 it was anticipated that the TFF would be managed directly by MARD. During the
transition phase the donors agreed to provide approximately € 9.6 million in un-earmarked
contribution. In addition two of the donors provide earmarked contributions totaling € 9.2 million, for
the Forest Sector Development Project (FSDP), which is also financed by a World Bank (IDA) loan, a
grant from the Global Environment Facility (GEF), and the Government of Vietnam. This earmarked
funding included the RNE grant that routed support to the Forest Sector Development Project
(FSDP)18 through the TFF.
Contrary to what the name suggests, the fund is not a trust fund in the true sense, but is based on
(earmarked and un-earmarked) commitments related to anticipated levels of expenditure. Donor
contributions are released on the basis of consolidated liquidity plans. Administration of the fund is
done by the FSSP Coordination Office. Additionally the European Union provides € 3 M ‘parallel
support’ administered separately by the World Bank to activities identified within the FSSP Programme
Framework. This separate arrangement was necessary as under EU regulations it is cumbersome to
pool funds, and in the case of the TFF prevented them from becoming a donor. In-kind technical
assistance is provided by GTZ.
Financial support mechanisms originally foreseen under TFF:
• Direct grant and co-financing support – Available to support priorities of the TFF and
for co-financing support of loans and Global Environment Facility (GEF) initiatives where
these are consistent with overall objectives of the TFF. Grants are available on a
competitive basis following a call for applications. No upper limit was set for individual
grants grants.
• Small grants - Available for project preparation activities, community-based forest
management initiatives, research, workshops, conferences, and awareness and extension
activities on key themes relevant to promoting progress on FSSP result areas. Grants are
available on a competitive basis following a call for applications. Individual small grants will
not exceed € 50,000 and the total annual allocation for all small grants will be € 200,000.
• Sector support - Contributions from the TFF for sector support will be considered on an
annual basis and will be assessed against strategic sector benchmarks, to be developed,
negotiated and agreed by all TFF partners. Contribution levels will be set according to
progress made against the benchmarks.
For those bilateral partners, where responsibilities were not delegated the finalization of the MoU took
considerable time and effort. Also the position of the World Bank vis-a-vis the TFF was not clear. The
Annual Report of the RNE for instance remarks: ‘The World Bank has difficulty to make use of the
opportunities it has to participate in basket or pool funding’ (RNE 2004).To begin the actual operation
of the TFF, guidelines had to be prepared on financial contributions and application and disbursement
of funds. This was time-consuming. Although the four donors signed one joint MoU with MARD for the
establishment of the fund, each donor signed one (or more) separate financing agreement(s) with
18
FSDP is financed by World Bank, GEF and Government of Vietnam with co-financing of Finland and RNE (through the TFF)
and parallel funding by the European Commission.
18
MARD covering its contributions to the TFF. The TFF rules had to be matched with procedural
requirements of the different donors as well as certain GTZ and Government of Vietnam procedures,
laid down in the MoU.
For TFF fund management, initially GTZ procedures on project cycle management, procurement and
contracting were incorporated. Furthermore there was a requirement for appraisal to take place
through the FSSP institutions. Whereas this prevented a reinvention of the wheel, the procedures
turned out to be cumbersome among others because of the different layers of screening and decision
making, in the Coordination Office, the Partnership Steering Committee, the Technical/Executive
Committee and MARD. Two years into operation, they were replaced by a new set of rules, closer to
internal MARD rules. The type of support under TFF was also simplified19. This episode however
resulted in considerable transaction costs and opportunity costs. The time and effort of the FSSP
Coordination Office and the Partnership spent on TFF procedures and governance arrangements
affected the appreciation and commitment of partners20. In the PSC and TEC meetings, partnership
related issues and policy dialogue received less attention.
The first two of three financial support types under the TFF concern relatively conventional grant
making mechanisms. The first was a small grants program, providing grants of 50,000 Euros or less.
In principle this can be very helpful in innovating forestry policy and implementation modalities. The
drawback however was that the TFF call for small grant proposals – issued after the preparation of
the Operational Manual and Guidelines for grant applications - yielded over 50 applications and
created a considerable administrative burden on the TFF management unit, i.e., the FSSP CO. The call
for proposals also generated disappointment, because a vast majority of applications were rejected
because they did not fit TFF criteria or because they overlapped with the larger ‘Community Forest
Management Pilot Programme’. By June 2007, however, 14 small grants were issued. A “sector
support package” of 500,000 Euros was approved, to support the development of legal documents
and the preparation of the Vietnam Forestry Development Strategy: this package was implemented
through grants to the Forestry Department, Forest Protection Department, and Legal Department of
MARD. In addition six larger grants (between Euro 377,000 and Euro 12,340,000) were approved,
several of them two years of project preparation and appraisal. Most of these larger grants concerned
pilot programs, partnership development or capacity building to be implemented at province level.
The majority of the applications were from within central MARD or from national institutes, with only
two successful applications coming from the Provinces. For several of the larger grants, international
non-governmental organizations, such as TBI, SNV and IUCN, worked with Vietnamese partners to
prepare the grant applications. Thus, the TFF procedures in fact resulted in a more competitive
funding environment while familiar direct access channels to (bi-lateral) donors has been closed off.
Among some of these organizations, this situation has caused reservation in the preparation of
proposals, because once the proposal is approved third party services above a certain amount may be
tendered, making it uncertain whether investments in project preparation will lead to follow up.
The Trust Fund for Forests was not intended to provide funding for private sector organizations. For
the Vietnam Forestry Development Strategy envisages a major increase in private sector financing for
the forest sector, such as in improved wood processing or plantation management. The strategy
clearly anticipates the need for private sector investment in productive activities, whereas the public
budget (government and ODA) is to focus more on public goods and services, such as forest
19
The TFF support programmes were simplified as follows:
Grant support for projects/programs – Available for direct support to projects and for co-financing of loan projects and GEF
initiatives, where these are consistent with the priorities agreed by BoD and identified within the VFDS. Individual grants were
to be approved by the BoD and no limit was set on their value.
Grant support for non-project activities - Available for project preparation; preparation of policy and legal documents; local
conferences, workshops, meetings and training courses; participation in important international conferences; and capacity
building of government agencies and institutions related to implementation of sectoral plans. Individual grants, approved by the
BoD, were not to exceed € 25,000 (grants below € 10,000 could be approved by the TFF Director) with a total annual allocation
of € 100,000.
20
A complaint in the 2004 Annual Review of the FSSP is that ‘Many partners have expressed concern that too much attention
has focused on central strategic planning issues, to the neglect of activities happening in the forest, i.e., decentralized
activities in the provinces.’ (FSSP 2005)
19
protection, and also providing an enabling environment for the private sector, such as through support
to forestry research, education, training, and extension, infrastructure, an improved policy and legal
framework, etc.
Under the co-financing window, the TFF is supporting the Forest Sector Development Project (FSDP),
with earmarked funding (Euro 9.2 Million), and is co-financing the Forestry for Livelihood
Improvement in the Central Highlands (FLITCH) Project implemented by ADB (with Euro 12.3 Million).
These two co-financing arrangement boosts the funds volume of TFF, as they account for Euro 21.5 M
out of Euro 29.4 M expected disbursement. Their contribution to sector coordination is limited with the
main actors (ADB and WB) having alternative fora for policy dialogue with Government. The TFF is
also co-financing with the Global Environment Facility (GEF) a smaller project, Preparation of a
Sustainable Land Management Program and Partnership.
The third TFF window provided for the establishment of a mechanism for sector budget support.
Activities on development of TFF sector support delivery mechanisms did not progress very far, due to
delays in finalisation of the Vietnam Forestry Development Strategy and delays in the undertaking of a
sector financing study (FSSP, 2006). The Major Joint Review of 2006, moreover, questioned the
wisdom of putting in place a sector budget support mechanism through the TFF, for several reasons:
- The fact that significant levels of ODA, in particular through large external funding agencies
such as World Bank, ADB, KFW and JBIC had already been committed;
- The expected tapering off of ODA from 2010 onwards, as Vietnam would reach MIC status;
- The relatively small level of funding of ODA to the forest sector (approximately 20%).
In summary, the TFF is not a trust fund in the conventional sense since funds are not held by
trustees, rather the funds remain owned by the donors, but are managed and used by MARD to
address specific objectives. Hence the TFF is in effect a mechanism for pooling donor contributions
and applying these to support priority actions agreed by the TFF Board of Directors based upon the
VFDS. Considerable time was spent in putting the TFF in place and come to workable procedures. The
delegation of administrative tasks reduces donor overhead costs through an outsourcing of project
management tasks. While 2004-06 overhead costs for the TFF amounted to 115.000 €, or only 3% of
disbursed funds. It should be noted that with the start of three larger-scale projects funded directly
from TFF, the monitoring role, and thus overhead costs, are bound to increase considerably over the
coming period21. On the side of the Government of Vietnam some of the transaction costs may have
reduced in application and financial management, but a large part of the transaction costs are the
same as the larger TFF-funded projects have their own separate steering committees. For a number
of reasons, the TFF is not functioning as a mechanism for sector budget support, yet it is appreciated
as it is more flexible than the conventional Government budget system in terms of directing resources
and achieving multiple-year financing (once funding is secured)22. The niche of the TFF is hence not
so much to prepare for sector budget support as it is to strategically support forestry sector
management and provide a point of convergence of otherwise disjointed activities. In the words of the
2006 Major Joint Review Mission of the TFF: “TFF should be directed towards providing larger-scale
technical assistance for implementation of the National Forestry Strategy and to support a sector-wide
planning approach. Such activities would be directed to both national and provincial levels. TA
activities should also be strategically pursued to leverage significant larger funds external to the TFF.”
3.2
Environmental Sector Support
Environmental management in Vietnam has moved centre-stage in the last 5-8 years, more so than in
other countries. The CG meeting of 2000 put environment prominently on the agenda and the Prime
Minister approved an action plan in June 2001. More recently, environment figures as one of the
21
22
It is worth noting that the 2006 review raised the issue of overhead costs to manage the mainly small grants proposals and,
quite surprisingly suggested the outsourcing to the UNDP small grants facility “thereby relieving the TFF/FSSP from
administering this time consuming and strategically secondary leg of the TFF” (Joint review team, 2006).
This is also the reason for the National Assembly, in approving the 2004 revision of the Law on Forest Protection and
Development, to declare that a Forest Protection and Development Fund would be established, to provide another, alternate
source of funding for the forest sector. MARD has been working on the design of this proposed new fund sine 2005, but
agreement has not yet been reached on the source of financing for this fund, nor its intended use.
20
pillars in the ongoing Socio—Economic Development Plan. Another highlight is the commitment to
spend at least 1% of public budget on environment and the decision to set up the high level Council
for Sustainable Development at cabinet level.
Until 2002 environment was handled by the Ministry of Science, Technology and Environment
(MoSTE)- with a ‘rattlebag’ portfolio of left-over topics. In 2002 the Ministry of Natural Resources and
Environment (MONRE) was established, which is also tasked with land allocation, topographical
surveys and groundwater management. This gives the Ministry considerable clout – environment is
linked with spatial planning and land allocation. Within environment there is increased attention for
‘brown environment’, i.e. waste disposal, sewerage treatments, safe handling of chemicals, associated
with Vietnam’s rapid industrialization and urbanization.
Both in ODA and in number of donors, however, there is less external support to environment than to
for instance, the forestry, health or education sector. The Nordic Plus group (SIDA, DFID, Danida,
CIDA, Norway, Netherlands) are the main cluster of donors, active within the realm of MONRE The
combined ODA commitment by 2007 under ongoing programs with MONRE was USD 58.2 Million
(USD 24.8 Million of which had been disbursed), according to the ODA data base.
Of these the largest bilateral donor is SIDA (current commitment USD 26.2 Million). SIDA funds the
Programme on Strengthening Environment Management and Land Administration (SEMLA). This
SEMLA was formulated in a project mode, yet after it was launched an explicit effort was made to
align SEMLA with the different elements in the MONRE Five Year Plan – by explicitly relating project
activities to policy actions of the Ministry. At national level SEMLA strengthens land use planning and
the use of strategic environmental assessments and environmental impact assessment. It develops
legal codes, guidelines and strategies and undertakes capacity building and the development of
implementation models. The activities are routed through Thematic Advisory Groups, whose terms-ofreference includes the integration with the provincial activities under SEMLA. These provincial
activities focus on six Provinces. They include pilot activities in pollution prevention, clean production,
chemical safety, implementation of EIAs and SEAs, environmental land information, land use planning
and land registration. These activities are complemented by support to human resource development
and the development of administrative systems. A special component is the cooperation between the
Swedish Chemical Inspectorate and MONRE on the implementation of the Chemical Safety Law.
Other major bilateral donors are DANIDA and CIDA. DANIDA (current commitment USD 13.3 Million)
supports investments in urban and industrial pollution control and the development of an
environmental information system. CIDA is concluding its current environmental support program
(commitment and disbursement USD 9.4 Million), but intends to fund a new Environmental
Governance Programme, which will consist at national level of support to the development of policies,
regulatory frameworks and their implementation in hazardous waste, air emissions and wastewater
as well strengthening MONRE capacity to coordinate with other Ministries. In addition the program will
support environmental expenditure planning in selected Provinces, enforcement of regulations for
managing industrial pollution an support the use of EIAs and other tools as well as the use of planning
and multistakeholder processes in pollution management measures, such as industrial parks, industrial
clusters, craft villages and transborder issues.
Large MFIs are not working with MONRE (yet). The World Bank funded the Mekong Delta Water
Resources Project (1999-2005) and the Coastal Wetlands Protection and Development Project (20002007) with a total commitment of respectively of USD 147 million and USD 65 million. Both these
projects, however, were implemented by the Ministry of Agriculture and Rural Development as well as
the Provincial Peoples Committees.
By comparison Dutch bilateral support has been very modest. Besides their importance for biodiversity
conservation, flood protection and groundwater recharge (VEPA et al, 2005), wetlands are important
in both rice production and fishery. Both economic sectors have boomed – with Vietnam changing
from rice importing country to the World’s second largest rice exporter and production from fishing
and aquaculture increasing to 991,000 tons in 1990 to 2,250,000 tons in 2000. The Appraisal
Memorandum for the pre-implementation support to the National Wetlands Support Programme
estimates that the livelihoods of 20% of the population of Vietnam are related to the management of
21
wetlands. There is not a direct link between wetland areas and poverty pockets as there is in case of
forestry, but a study in a number of wetland dependent communities commissioned by the World
Bank-funded Coastal Wetlands Protection and Development Project found poverty levels to be high
(23-61%) and persistent (Vietnam Institute of Economics 2006). Aquaculture is a major source of
income, but livelihoods are beset by economic constraints – market fluctuations and lack of capital -,
lack of access to improved production techniques and environmental problems (flooding, pollution by
pesticides and saline ingression of groundwater
In the past years all types of wetlands in the country. i.e. coastal lagoons, melalueca swamp forests
(that harbour the largest number of threatened species), mangroves and inland lakes and wetlands
have come under pressure from overuse for timber or charcoal production and from encroachment for
farming or conversion to fish ponds. The main institutional problems are at the heart of this is the
absence of a unified policy and approach:
- scattered and partly conflicting responsibilities for wetland management between three
ministries: MARD, MoF and MONRE with legal provisions under the different ministries
conflicting, such as the regulations for Special Use Forests (MARD) and the Law on
Environmental Protection (MONRE). Responsibilities are further fragmented due to
decentralization;
- relative weakness of MONRE and VEPA, both in general and in wetland management, being
established in 2002.
The currently main support to wetland management from the RNE is a pre-implementation program
lasting one year – from 2006 to 2007 – with a budgetary commitment of Euro 325,600. Earlier
support to wetland management was through a range of programs outside the RNE - a regional
program through the RNE Thailand (the Mekong Wetland Biodiversity Project - MWBP), a MILIEV
supported program for the management of coastal wetlands and a series of projects through UNDP.
The pre-implementation programme aims to strengthen wetland management and clear part of the
confusion on institutional responsibilities. The pre-implementation program contains four components:
(i) completion of document for the National Wetland Support Programme; (ii) further elaboration on
design of a special Wetland Support Fund; (iii) capacity building for MONRE and VEPA in project
management and reporting and finally, (iv) a series of learning projects. These ‘learning projects’ aim
at fostering working relations between the different central and provincial organizations. Among
others they consist of the development a ‘joint implementation circular’ between MONRE, MARD and
MOF; the preparation of interprovincial management plans for the coastal wetlands of Red River and
the development of wetland conservation plans in selected areas. The orientation is towards
strengthening the MONRE sector rather than wetland management per se, as in the earlier programs.
The program is administered as a project within VEPA – among others by operating a special account
and having an accountant, seconded to the program. For the learning projects VEPA will prepare
MoU’s with the different Provincial Committees. The design of the program has resemblance to the
program in the forestry sector, i.e. the combination of policy and capacity development and pilot
implementation. Donor harmonization is not an issue, as the donor density within MONRE is relatively
low. Even in spite of the modest financial involvement within MONRE the RNE is now the main
external party in wetland management. Other donors active in wetland management, World Bank,
GEF and SIDA – are attached to different ministries, i.e. MARD and Ministry of Fisheries, under
program that predate MONRE’s establishment.
Donor coordination within MONRE has taken shape through the International Support Group for the
Environment. The ISGE has been around for a considerable period. The decision to form the ISGE,
along the lines of the other ODA partnership groups, dates from June 2001. Its establishment –
following a decision of the Ministry of Science, Technology and Environment (Mo-STE) and a
Memorandum of Understanding – between members of the Steering Committee - materialized a year
later (May 2002). The ISGE was then inactive for over two years, because the Ministry of Natural
Resources and Environment was being established out of Mo-STE. In this period the new Minister of
MONRE gave the go-ahead for a new ISGE Steering Committee (with similar functions and mandates
as the first attempt). The mandate of the ISGE was formulated as ‘to assist MoNRE, other Ministries
and international donors towards mobilisation and better coordination of ODA resources to attain
Government and MoNRE plans, priorities, policies and strategies geared towards enhanced sustainable
22
management of the environment and natural resources through facilitating functions and activities.’
At the same time an ISGE Secretariat was established. In February 2005, five core donors (CIDA,
DANIDA, RNE, SDC, SIDA) signed a MoU that regulated the funding of this secretariat and
retroactively approved a general work plan for a period of 2 years. Total ISGE funding is modest.
MONRE contributions are in kind (office space, staff time) and the five core donors allocated USD
321,000 in operation funds for the two year period. It has also been estimated that all core Donors
together spent at least 470 person days for ISGE.
There is disappointment over the functioning of the ISGE. In the words of all donor representatives
interviewed for this study the ISGE has so far functioned primarily as a forum for information sharing.
It has not been effective as a mechanism for priority setting, coordination or intense dialogue with all
players in the environmental field. Its main modus operandi has been that of open plenary meetings
and meetings of the different Thematic Ad Hoc Groups. These meetings were attended on average by
30-55 participants. Attendance by representatives from other Ministries than MONRE was minimal, so
ISGE’s role in promoting crosscutting issues has been small. From MONREs side there is
disappointment that so far the ISGE has not levered more ODA funding to the sector. Among some of
the persons interviewed there is a feeling that the presence of the workplan and the existence of the
Environmental Protection Fund should have attracted more external support than what has happened
so far. A review of ISGE was undertaken in 2007 and suggested strengthening of coordination
functions within ISGE secretariat and movement of establishing a NRE sector fund.
Obviously it is too early to make any judgement about impact of RNE involvement in the
environmental sector, leave alone on poverty alleviation. The current modest program aims to
strengthen MoNRE’s role and capacity in wetland management with attention for the cross-sectoral
nature of wetland management. It includes a provision for establishing a subsectoral discretionary
fund and explore the link with the Environmental Protection Fund. As in the forestry sector, direct
sector budget support is not on the agenda. At present MoNRE does not have a target program,
where budget support might if at all be an option.
Within MoNRE sector support has made little headway, and the limited progress of the ISGE is sign of
this. There are a number of reasons why the implementation of a SWAP in environment is less
straightforward:
- the changing institutional set up of the environmental sector (new Ministry and
decentralization) resulting a movement of goalposts, as could be seen from the evolvement of
the ISGE
- the crosscutting nature of the environmental agenda – meaning that different players operate
in different arenas with different playes, wetland management being an example
- the more diffuse environmental agenda – as can be seen from the main activities of MONRE –
with a coherent program at a single Ministry, such as MoNRE, having less added value
On the supply side moreover the number of external parties in environment is small, making
harmonization and coordinated alignment less necessary. As the example of ongoing programs show
policy alignment can also take place on a project basis and coordination can be addressed bilaterally.
3.3
Poverty Reduction Support Credits
Since 2001 the Poverty Reduction Support Credit (PRSC) has been in place as a prime mechanism for
general budget support in Vietnam. On the basis of the interim Poverty Reduction Strategy Plan,23
known in Vietnam as the Comprehensive Poverty Reduction and Growth Strategy (CPRGS), the first
PRSC that was accepted by the Board of the World Bank in June of 2001. In May 2002 the
23
In retrospect the World Bank (2007) observes that: “The CPRGS was neither the five-year plan nor a recognized sectoral
strategy. This unclear status subsequently generated some confusion among officials, who found it difficult to judge what
their obligations were in relation to the document. Conveying the CPRGS approach and messages to authorities at local levels
was most difficult.”
23
Government of Vietnam presented a full PRSP to boards of IMF and the World Bank, making Vietnam
the first country in Asia to do so.
The PRSC mechanism is based upon a series of agreed policy actions and triggers. The list of triggers
and policy actions is the outcome of working group discussions, convened by the World Bank Office.
Sector ministries, donor representatives, civil society organizations and private sector are invited to
these meetings, but reportedly for environment and forestry issues, attendance by other than donor
and government representatives is limited. The triggers are the policy actions to determine the award
of the World Bank credit. Usually 10-15 policy actions are singled out. There are three levels, i.e. low
case, base case and high case, with the annual PRSC loan amount related to the level reached.
The PRSC loan is complemented by an additional grant amount, which is funded by contributions of
several bilateral donors. Over time the number of donors contributing to the grant component has
increased, reaching 15 in PRSC 4. The grant has become more important in monetary terms than the
credit component. Overall the PRSC represents a substantial amount of the total ODA – between 7.5
to 10%. The RNE has been an important contributor to grant component – with financial contributions
over the years amounting to Euro 68.2 Million.
PRSC
1 (2001, 2002)
2 (2003)
3 (2004)
4 (2005)
5 (2006)
World Bank Loan
USD 250 M
USD 100 M
USD 100 M
USD 100 M
USD 100 M
Grant Component
USD 49 M
USD 31 M
USD 116 M
USD 118 M
USD 154 M
RNE Contribution
Euro 15.2 M
Euro 8 M
Euro 10 M
Euro 11 M
Euro 24 M
Source: World Bank (2007)
Policy actions and triggers on forestry, water and environment were included respectively from PRSC
2 and PRSC 3 onwards and the RNE was instrumental in promoting this inclusion. Performance review
of the triggers is undertaken by the World Bank as is fiduciary risk assessment. The World Bank has
initiated a number of assessments - namely a Country Financial Accountability Assessment (CFAA,
2001, updated in 2004), Comprehensive Procurement Assessment Review (CPAR, 2002) and a Public
Expenditure Review (PER, 2004). The CFAA is currently being updated. For all these services the
World Bank charges 2% as administrative charge on the amounts it administers24.
The PRSC is considered as a ‘general policy platform where overall policy is reviewed’ (…). This is a
major development from the time when the PRSC was initiated, when public budget was still classified
state secret. Being a general policy platform also has a risk. In the words of a study commissioned by
the Ministry of Development Cooperation of Finland (2005): “…consultation is focused on individual
prior actions and triggers instead of the overall goals of budget support. This, coupled with some
individual donors insisting on the adoption of their proposals for prior actions and triggers, has led to
a proliferation of sector working group meetings and the adoption of relatively complex prior
actions...”
In spite of the triggers and policy actions, the link between PRSC and sector policy, however, is
remote. Forestry officials interviewed as part of the study described the forestry triggers and actions
as: ‘reading about it in the newspaper’. In the educational sector a case was made to adopt policy
actions agreed within the concerned partnership of the sector and include these in the MTEF, but
suggestion has not been adopted the WB. Achieving or not achieving the sectoral conditionalities has
no bearing on sector budgets, as the PRSC is transferred to the State Bank of Vietnam without any
earmarking. According to one informant, the policy impact of the triggers and policy actions is also
limited, because there is a tendency to select conditionalities in such a way that there is very large
likelihood of them being achieved. On the other hand, last year Vietnam did not classify as a high
case, because the triggers in environment were not achieved.
24
If the amount exceeds USD 30 M this transaction charge is negotiable
24
The triggers and policy action on environment and forestry, as they developed since PRSC 3, are listed
in annex 4. The conditionalities are now largely at the level of outputs, in particular changes in
legislation and regulation and new policy initiatives (as the name policy action suggests in fact).
Examples are: decentralized responsibility for EIA of investments; issuing of the National Forest
Strategy for 2006-2020 (subsequently issued with the name, Vietnam Forestry Development
Strategy); directive to strengthen the management of solid waste in urban and industrial zones or
establishment of provincial land registration offices. It has been proposed that from PRSC-6 onwards
outcome criteria should be included too. Candidate criteria in forest and environment are: client
satisfaction with land administration offices; forest land allocated to local communities; forest quality,
air quality and wetland status. All criteria concern the state of environment in 2011 – yet this poses a
practical problem because however desirable it may be to connect GBS with actual performance it is
difficult to do this on a year to year basis, because of the inertia in data collection and attribution
effects (unusual weather or other events).
Contributions by the RNE to the PRSC have come from general means as well as from unspent
budgets from the Environment and Water programs (Euro 5 M). The contribution in 2005 was
relatively high, because during the end of the budget year an extra allocation could be made of Euro
10 Million from unspent central funds. The contribution from the Environment and Water programs
resulted in a minor controversy, as the Internal Auditors Office of DGIS argued against attributing this
contribution to the overall spending on environment and water programmes, reasoning that there was
no causal link with environmental programmes – apart from the policy triggers and action plans on
environment, water and forestry. The DEK on the other hand supported this attribution. There is a
certainly an element of ‘trading places’ in this discussion. More intriguing is that in the official financial
figures of FEZ state an expenditure on environment equivalent of Euro 24 M, which differs from the
figure used by the RNE, but is equivalent to the PRSC contribution. The viewpoint of the Internal
Accountancy Department that GBS cannot be ascribed to the spending on a specific sector is also at
odds with the practice of FEZ of allocating a percentage of GBS to a country to different sectors and
themes, including environment.
In summary the PRSC has developed into a high disbursing aid modality, which feeds into an
increasingly transparent policy dialogue. It creates a slot for donor organizations in continuous general
policy discussion rather than as earlier in special PRSP type of events. The PRSC has also prevented
some of the harmonization challenges by providing several new small donors an easy entry point for
disbursement. On the other hand, in spite of the presence of sectoral triggers and policy actions, the
PRSC has limited impact on sector management – its engagement is of a stock-taking rather than a
leading nature. The PRSC has also been criticized for not taking into account capacity building and
implementation constraints at decentralized level. The gradual evolution that was presented with the
introduction of the SWAP – evolving from project aid to sector budget support to general budget
support – is not supported by this case, as there is a disconnect between sector support and general
budget support.
25
4
Analysis
This section reviews the experience to come to sector-wide approaches in environment in Vietnam,
using the general framework of analysis for the policy evaluation. This section, looks respectively at
partner country conditions (section 4.1), donor inputs – in particular the role of the Dutch aid –
(section 4.2) and results both at the level of outputs (section 4.3) and outcomes (section 4.4). A
summary of main points is in the table below.
GENERAL CONTEXT
Environmental issues
Environmental sector
profile
Environmental history
SBS history
Environmental
governance
Sector policy (and
conditional to SBS?)
Decentralisation
Role of civil society
Role of private sector
Donor harmonisation
RNE history
Main SBS/ SWAP focus
Sectors involved and
income generation?
Institutional focus of
SWAP
PAF/ MTEF structure
Accompanying programs
Industrial and urban pollution; biodiversity; sustainable resource use (fisheries,
forestry) as basis for these economic sectors
High – one of four pillars in 5 year plan; minimum budget threshold (1%)
Donors not much into environmental sector; many activities in forestry however
H&A very much endorsed in recent years, GBS – but almost no example of SBS
SECTOR SPECIFIC CONTEXT
National target program for forestry – drive to increase forest cover
Ministry of Natural Resources and Environment recently upgraded.
Earlier Forestry Strategy replaced by VFDS 2006-2020, endorsed by PM.
Sustainable Development Strategy. No investment plan.
GBS has indicators on forestry and environment
Provinces autonomous – central ministries have policy role in all sectors.
Mass organizations but not involved in SWAPs. INGOs move from implementer
to advisor. NGO in environment relatively weak.
Role is increasing (waste processing). Important commercial partner in forestry
– FDI expected to equal ODA soon.
CHARACTERISTICS OF SWAP
Forestry Sector Support Partnership. RNE has leading and initiating role.
Harmonisation in MONRE did not make much progress.
Long history in forestry and wetlands. No role in ‘brown environment’, even
though its importance increases fast.
Harmonized and strengthened policy process and sector management. No
budgetary alignment.
Forestry (biodiversity and income generation), wetlands. Note: RNE emphasizes
biodiversity aspect of NRM sectors
Forestry Department and Forest Protection Department in super-ministry MARD.
No SWAP in Environment.
There are environmental/ forestry triggers in GBS (set at safe levels).
In TFF and Forestry Sector Partnership all brought under one heading
26
INPUTS
Earmarked or not
Financial inputs
Preparation
RNE resources inputs
Capacity building
Donor harmonisation
Financial resources
Institutional changes
Ownership
Policy operationalisation
Constraints
Support to discretionaryTrust Fund for Forest – partly earmarked.
In 1998-2006 expenditures on environment Euro 43 Million. Of this Euro 3
Million is nominal SBS. Financial contribution to Forestry SWAP modest.
Intensive donor coordination. Expert inputs from other donors
50% of fte for 4 years, after that 20% fte. Also financial support to Partnership
Office (Euro 350,000)
No special arrangement – but related projects in capacity buiilding program from
‘central bilateral’
Very active Forestry Sector Support Partnership – initially chaired by RNE.
In environment donor Harmonization is rather passive but also less overlap
OUTPUTS
ODA to Forestry Sector is 20% - mainly from loans from multilateral companies.
SWAP was oriented to joint and common policy process.
No institutional changes as result from Forestry SWAP.
High. Also ‘recognition factor’
TFF is mechanism to operationalize VFDS – only now becoming operational
Decentralization makes it difficult to move beyond sector policy and pilot based
support to new approaches.
GoV financial procedures make financial alignment unattractive for both parties.
OUTCOMES
Service delivery
Poverty reduction
Sustainability
4.1
Long lead time and hence not possible to assess yet, as first activities under TFF
become operational now.
No explicit poverty focus, though forest areas coincide with poverty pockets.
Several activities have plausible poverty effect – but devil is in the detail of
implementation
Not an area of concern. Vietnam is not aid or policy dependent.
Country conditions
Interest in aid management in general and in the sector-wide approach in particular in Vietnam is very
high. There are a number of initiatives in the field of aid management and harmonization. The main
forum is the annual Consultative Group Meeting but in addition to this there are thematic working
groups and sectoral partnership groups – in 2004 already respectively 19 and 24, five of which are in
MARD. Most ministries, including MARD and MONRE, have an International Coordination Department.
A web-based data ODA base is operated by the Ministry of Planning and Investment with regular
updates of the main donors and larger NGO’s. A Hanoi Declaration has been formulated, being a
localized version of the Paris Declaration. A guideline on ODA management (Decree 131) is issued and
a Master Plan on Official Development Assistance Mobilization and Utilization is under preparation. On
the donor side, there are several harmonization initiatives, such as the Five Bank Harmonisation
Initiative, the Like Minded Donor Group and the EU Coordination Initiative. In addition, there are
special support programs in aid management and the sector-wide approach in particular, such as the
Capacity Building Initiative and the Poverty Environment Partnership Vietnam. Within MARD there is
even a Swedish support project, the MARD-Sida Cooperation Programme (MSCP), the objective of
which is to introduce sector approaches.
Literature sources mention a number of country conditions that are supportive of the development of
a SWAP, in particular the existence of a sector policy and sector investment plan, supportive
27
institutional arrangements, including in public finance management and the engagement of non-state
actors. These aspects are briefly reviewed below.
4.1.1
Sector policy context
Brown et al. (2001) describes the importance of sector policies as ‘broad and high level government
commitment to a strategy to which donors can broadly agree, preferably linked to a credible medium
term budget process and civil service reform process’. The important caveat in this statement is: to
which donors can broadly agree. The cases from Vietnam show that the existence of a sector policy
and high level commitment is not necessarily enough.
In the forestry sector there was in 1998 a national investment vision in forestry, i.e., the 5 Million
Hectare Reforestation Project (also known as Programme 661) and later the Forestry Development
Strategy 2001-2010. There was, however, a separate and parallel policy discussion with the donor
community, leading to the MoU on the priority program of the FSSP with different emphases (e.g.,
biodiversity, community forestry, non-timber forest products). Later the two tracks were merged and
updated in the Vietnam Forestry Development Strategy 2006-2020. The phenomena is probably not
unusual for sector support in environment: whereas at least for the RNE the main interest in forestry
was primarily environmental and social, in Vietnam forestry development was to an important degree
an economic activity as well. This creates a dilemma in applying sector-wide approaches in sectors
with both productive and environmental protection functions.
A second observation from the case studies is that policy dialogue between partner country and donor
group is an essential ingredient in sector support and GBS, more so probably than the existence as
such of a sector policy. This is illustrated by the annual discussion on policy actions in the GBS
(whereas the SEDP could have been sufficient) and the reformulation of the Vietnam Forestry
Development Strategy. The donor-partner country dialogues, however, differ from the national policy
making and budgeting in that they are largely non-political and - in the Vietnamese context in
particular – do not necessarily have the involvement of the Party. The draft Vietnam Forestry
Development Strategy did go to the Party for review. After some months, however, the Party stated
that its review was not required.
4.1.2
Sector investment plan
Neither in environment nor in forestry has a sector investment plan been developed. Both the Vietnam
Forestry Development Strategy 2006-2010 and the Five-Year Plan for the Natural Resources and
Environment Sector 2006-2010 identified a list of priorities challenges and objectives, but both
stopped short of being translated into a sector investment plan.
The Five-Year Plan for the Natural Resources and Environment Sector (MONRE 2005) has an overview
of main objectives and the supporting actions and organizational responsibilities (within MONRE) in
log-frame format. It does however not provide operational details at program or investment plan
level, however, and includes a generalized estimate of income and expenditures. The Five-Year Plan
only describes responsibilities at central level, not at the DONRE level.
Similarly, the Vietnam Forest Development Strategy 2006-2020 describes five programs for the next
fifteen years and provides a ball-park estimate of the costs involved in implementation. For the short
term (2007-2010), a list of twenty-one priorities is formulated, including assigning the executing
agency (MARD in all cases – sometimes shared with the Peoples’ Committees of the Provinces (PPC)
and collaborating agencies (other ministries and PPCs). For the Forestry Partnership, it is difficult to
plan on the basis of this long list. More work is ongoing now to further refine the priorities and
identify needs for overall support – from Government, as well as ODA support, including TFF support,
and private sector, including FDI, support. This situation is a major challenge, as normally the forest
sector only knows the Government budget on an annual, not multi-year, basis – except for the
Government investments in Programme 661. (Although MARD is developing a Medium-Term
Expenditure Framework, or three-year budget, this exercise is so far just a training and piloting
exercise, and the MTEF is considered to be just a “shadow budget.”)
28
MARD is working to develop consensus on the priorities for TFF support to implementation of the
strategy. In the past, the nature of the TFF was that proposals were requested and should fall within
the TFF funding priorities list but not the other way around with proposals being developed on the
basis of the priorities. The challenge now is to make a change in this approach.
The strategies in other words provide an overall framework, but are not a public investment plan per
se. The consequence of this situation is that different players (organizations) can select to support the
elements that they prefer, but that a sector-wide policy or strategy is not necessarily supported. Some
of this can be seen in Vietnam – with some of the 21 Vietnam Forestry Development Strategy
priorities attracting much more ODA interest in the shape of special projects than others.
4.1.3
Institutional framework
Three main elements in the institutional framework of relevance for the sector approach are mandate
and implementation capacity, decentralization and PFM. In case of the environmental programs
implementation capacity is very relevant, because in many cases environmental agencies have only a
limited (regulatory) remit and often no link to implementation at local level. In this respect MONRE is
far better placed than environmental organizations in other countries, because its institutional
mandate includes land use management and waste water treatment. As MONRE and VEPA were
relatively new organizations (established/reformed in 2002 only), the RNE was cautious to work with
VEPA, because of their limited experience. Also because of the restructuring of environmental sector –
in particular the change from MoSTE to MoNRE – sector coordination was stalled from 2002 to 2005.
Because the environmental portfolio is more fluid than that of other sectors (Education, Health,
Forestry), institutional instability may be expected to be more of a factor in the environmental sector
than elsewhere.
In contrast the forestry sector has been more stable. There are some capacity constraints in relatively
new lines of activities - such as community forestry – but by and large the forestry cadre is wellestablished. The main challenge comes from decentralization. With the delegation of implementation
responsibility to Provinces and Districts, the role of the central Departments reduced to policy making
and regulation, whereas budget allocation and implementation are done at local levels.
There has been considerable attention to public finance management (PFM) in Vietnam, triggered
from outside the forestry and environment sector. Public finance management has been a central
theme in the PRSC discussions and economic reform is one of the pillars of the SEDP. Transparency
has vastly improved. The state budget law has been updated and the full state budget is published in
detail, although there are still issues on the provincial level in publicizing budget information in a
transparent format. While there is much attention to accountability in PFM, there has been less
attention to budget efficiency. Yet this is an important issue in the relation between the MoF and the
sector ministries. Because budget allocations are released late in the budget year and are usually for a
single year and because adjustments are hard to make, sector ministries have a strong preference for
special discretionary funds over which they have direct control, such as the Forest Protection and
Development Fund (FPDF, under preparation by MARD) and the Environmental Protection Fund
(administered by VEPA). The Environmental Protection Fund is supplied by an internal revenue
stream of MONRE. The possible sources of funding for the FPDF have not yet been agreed.
4.1.4
Engagement of civil society and private sector
In Vietnam the state is the dominant player in environment – although the space for community
organizations and private sector has increased over the last decade. The most important civil society
organisations in Vietnam in terms of membership and implementation programs are the mass
organizations. These mass organizations work under the instruction of the Communist Party of
Vietnam. Key officials are political committee members. All party members have to join a relevant
mass organization. In the green environmental sector the Vietnam Farmers Association is the most
important mass organization. It has been involved in large scale farmer training and extension
29
programmes and rural credit programs. In the recent Forestry Partnership Forum a representative of
this Association suggested that the VFA could also play a role in organizing forest communities and in
local training. So far the mass organizations have not figured in any of the dialogues or externally
supported programmes in the forestry or wetland sector nor has any other politically affiliated
organization.
National NGO’s in Vietnam are still limited in number and are mainly active in urban welfare (see
section 2) not in forestry or environment. International civil society on the other hand has been active
in these sectors in Vietnam – such as IUCN, WWF, SNV, Tropenbos International (TBI Vietnam). They
have been engaged in advocacy and implementating special projects. All these organizations are
members of the FSSP, as are international welfare-oriented NGO’s such as CARE and OXFAM, and
international research organizations, such as the Center for International Forestry Research (CIFOR).
These green NGOs appreciate the FSSP, but see it as only one channel for influencing policies. The
policy engagement of these NGOs is almost entirely on the subject matter – none of these
organizations is involved in budget scrutiny or impact tracking. The engagement in advocacy is issuebased, as the international NGOs obviously do not represent a specific constituency. Their
engagement in the PRSC discussion has been small.
Private sector investors are important players in the environment – particularly in brown environment
and in forestry. Forest-related enterprises form only a small proportion of Vietnam’s economy. In 2005
the forestry sector generated 1.6% of GDP and 3.4% of GDP in export value. Its value is much higher
in terms of employment creation, especially in often remote rural areas. Most enterprises are relatively
small, an exception being export-oriented furniture factories, which have taken an enormous flight in
recent years with exports reaching 1.6 billion USD in 2006. The export-oriented wood processing and
furniture industry relies on imported raw materials among others to ensure FSC certified products. It
should be noted that the market is progressing much faster than the institutional development as
there is only one certified plantation forest in Vietnam while the development of a national standard
and a certification s body for FSC standards has been dragging for many years.
Since Decree 65/CP in 1998 government policy towards private sector has become more constructive
and consistent, providing a basis for its current rapid, but unstable development. More recently a
noticeable change in policy is the active pursuit of (foreign) direct investment in production forests
and plantations. Despite the government recognized need for a strategic approach and the issuing of
investment promotion acts, no financing strategy (or investment plan) has been developed, since the
1999 Profor document. With the clear distinction of roles between state protection and conservation
and private sector for production functions, such a strategy will be urgently required in order to raise
the projected 1.4 billion US $ investments required for achieving the VFDS 2006-2010 targets. (Dr.
Trang Hi u D ng, MARD, pers. comm.)
Country conditions
Broad and high level government
commitment to a strategy to which
donors can broadly agree, which
often requires hard choices and
linkage to a credible medium-term
budget process and civil service
reform process in order to be
meaningful
Action plans that recognize
capacity limitations by prioritizing
action lists especially where much
needs to be done by an overloaded
government
A better organized review process
and rigorous, verifiable information
and analysis that is independent of
influence/editorial control by
Achievements and comments
• The 5MHRP had high level commitment. The review of
5MHRP resulted in a forestry partnership with a program
framework containing 9 agreed result areas, the commitment
to prepare a long-term strategy for the sector, and
agreement for collaboration on a number of activities and
operational tools.
• A medium-term budget reform process was not part of the
FSSP although a less far reaching public administration
reform project (the GTZ Reform of the Forestry
Administration System, REFAS project) was.
• The synthesis report (MARD, 2001) and other studies
(Helvetas et all, 2005) indicate structural weaknesses and
capacity building requirements. The FSSP action plans
remained rather abstract on the issue of capacity building
support. TFF project include capacity building elements on
certain topics.
• The 5MHRP partnership task forces, and synthesis report
30
prepared a thorough analysis of strengths and weaknesses of
the 5MHRP. The FSSP TEC and PSC meetings offered
transparency and opportunity for dialogue, especially for a
4.2
Donor inputs
This section focuses on the inputs of donors, in particular DGIS and RNE Hanoi, in the three sector
support case studies. It discusses overall contribution and resources used, the choice for the
(sub)sector, the contribution to harmonization and donor coordination and to alignment as well as
mutual accountability.
4.2.1
Overall contribution
The RNE made a major contribution to getting the Forestry Sector Support Program and Partnership
going. The sector specialist in forestry and biodiversity devoted, in his own estimate, 50% of his time
in 1998-2002 to coordinate the development of the FSSP&P, and served as the first International CoChair of the partnership. . Because of the earlier personal contacts in building up a project portfolio
(including co-financing), the RNE was well-positioned and in fact requested by others to provide this
service. Similarly representatives of other donor organizations were ‘freed’ to help get the process of
coordination on its way. This initial process of partnership establishment, in the period 1998 to 2001
took careful negotiation, personal commitment and confidence building in informal networks, but
relatively little financial support. This start up phase was consolidated in the FSSP&P MOA. After this
MOA, the partnership was formalized and a Programme Framework and FSSP Coordination Office
came in place. The role of the core group of donors changed and became more formalized in the
Partnership Steering Committee membership as well as main sponsor and supporter – lending the
necessary authority and status to the partnership secretariat as well. The time input of the
representatives of the main donors to FSSP is still there, but is now an estimated 10-15% of their
time.
Intriguingly, against the large personal contribution to the forestry sector approach process, the ‘net’
financial contribution to the Forestry Sector Support Program and Partnership by the RNE is not so big
in the period 2004-2006, for which data are available. Most of the expenditures in this period were still
outside the sector support programme, as earlier projects were phasing out and because some of the
larger financial outlays under the TFF were delayed and approved in 2007 only. In addition, a new
regional project was started in 2006 that was not part of the sector support.
Below is a characterization of the main bilateral expenditures in environment in 2002-2004. The main
expenditure are contributions to the PRSC, which is a general budget support mechanism. The
allocations could be defended as the PRSC includes triggers on forest and environment. Actual
expenditures through the TFF are less than that of ADB-cofinancing, the regional Biodiversity Corridor
Project and two large NGO projects. This may change from 2007 onwards, as among others the follow
up of these projects as well as co-financing is routed through the TFF.
Name Project
Contribution to PRSC
Expenditure 20042006 (in Euro)
5,000,000
Biodiversity Corridor Initiative
2,988,000
Non Timber Forestry Product
Phase II
ADB Forestry Sector Project
SNV Biogas Project
2,897,577
Multi-donor Trust Fund for
Forests (TFF)
WB Forest Protection and
Rural Development Project
1,347,000
1,353,068
1,393,502
1,000,000
Short description
Allocation to general budget support
mechanism
Adding environmental component to
regional, transboundary program
Project implemented by IUCN. Follow up
proposal being prepared for TFF
Co-financing
Project implemented by SNV, fund
received directly from DGIS
Funds contributed to support sector
development activities
Co-financing
31
Contributions to the small multi-donor trust funds that supported coordination of sector support, i.e.
the FSSP CO Trust Fund and the ISGE are modest. The RNE provided US$350,000 to FSSP CO Trust
Fund for the period between November 2002 and 2005. The bulk of this contribution, US$ 250,000,
was provided in November 2002 as start-up contribution for the forestry partnership and CO
operations. In general once there is basis of harmonization and alignment, sector support can be
relatively inexpensive.
The partnership costs, since 2002 funded through the shared donor fund for the core Partnership
activities and for the running of the FSSP coordination office amounted to about 1million Euro.
Compared to the current commitment of the TFF of 29 m € these costs are relatively low. Although
hard to estimate, the real staff time investment from the embassies could well add up to an average
of 1.5 FTE per year for the four core donors only. Together with these hidden costs, the Partnership
and TFF establishment process could probably amount to about 3.5 m € or 10% of the current TFF
commitments.
FSSP CO Trust Fund - Expenses from 2002 to 2006 in USD
Year 2002
Year 2003
Year 2004
Year 2005
Year 2006
TOTAL
%
Partnership Institutions
Communication and
Information
Other Partnership
Activities
4,660
22,470
83,930
42,810
39,950
193,820
19
1,040
11,690
108,170
17,320
27,624
165,844
17
0
5,220
17,430
0
0
22,650
2
FSSP CO Expenses
8,880
69,390
147,540
177,420
199,210
602,440
61
3,500
2,490
4,940
10,930
1
357,070
237,550
266,784
984,754
100
5000
50000
60000
115000
Core Partnership
Activities
Audit
Total
TFF share of CO expenses
(rough estimates)
14,580
108,770
12%
Within DGIS most of the work in developing and sustaining the sector program was done by the RNE
in Hanoi. The support provided from the main directorates in DGIS consisted of ‘creating the policy
space’ and encouraging the development of sector coordination. Beyond this encouragement there
has been little direct support to the development of sector approaches. A number of training inputs
were sourced from DGIS PFM Support Program, but these basically familiarized RNE staff with the key
elements of PFM and were not directly addressed to the environmental programmes. No special
training (as from the Joint Learning Events program that DGIS supports) or special support missions
were undertaken.
4.2.2
Sectoral or subsectoral approach
The approach followed in Vietnam was based on sub-sectors rather than sectors. The choice for the
sub-sectors (forestry, wetlands) followed from earlier engagements and fell within the general
tendency for support to green environment rather than brown environmental programs within DGIS.
The immense size of MARD and the diverse portfolio of MONRE also would have made a full sector
support programme based on the entire range of activities difficult to implement practically.
The major challenge to the sector approach or subsector approach in Vietnam is the decentralization.
50% of government budget is disbursed through Provincial Governments and allocations are
principally decided at Provincial level. Implementation moreover is the behold of the Province, District
and Communes.
Involving local players is cumbersome as is clear from the Five-Year Plan of MoNRE, TFF package, the
experience in PRSC policy dialogue and the regional networks under FSSP for instance, if only because
32
of the sheer number of Provinces (42 provinces in the forestry networks) in the country and the
differences between them. One key respondent stated that it was difficult to ‘deal with
decentralization’ and that the escape was to focus on policy mainly and engage with national players
only.
There is a clearly logistic side too, particularly where staff of donor agency are important interlocutors
and partners in policy dialogue. In case of budget support to Provinces not only the sector Ministry
but also MPI would need to be involved, making the challenge much larger.
In Vietnam the public sector structure in the country differs from the organizing principle implicit in
the sector approach (i.e. the sector as a financial and institutional unit). There is probably no easy
answer in matching a sector approach with a system of decentralized governance and safeguarding
macro-meso-micro linkages. In Vietnam a number of efforts were made, however:
- A special support unit in MPI, i.e. the Sustainable Development Unit (supported by UNDP),
helping Provinces to develop programs in waste water treatment.
- Special activities in selected Provinces, as in projects such as SEMLA and the project to be
funded from the TFF;
- Alignment with a National Target Program, but this has only happened with Programme 135.
4.2.3
Harmonisation
The Forest Sector Support Program and Partnership started on an agenda of harmonization rather
than alignment. The incentive in the assessment of some of the informants was to define a joint
position vis-à-vis the Programme 661, which so it was feared would be ‘dominated by tree planting’.
In addition also ‘the time was right’ – there were many factors within the donor community and
outside of it – supporting a transition from bilateral activities towards sector coordination (see below).
The issues in the table have arisen while the partnership has been ongoing. But they have not
necessarily affected the development of the partnership. The ideas of a sector-wide approach,
improving harmonisation and alignment, etc. were in the very design of the partnership, in 2001, i.e.,
in the basic principles for cooperation.
Driving factors for FSSP&P development
Donor Community
•
•
•
•
•
25
New SWAP oriented policy25
(RNE, WB, ADB, SDC, EU)
Sufficient staff capacity
(RNE) and close personal &
work relation among core
group of embassy staff of
4-5 donors.
Efficiency drive, i.e., urge to
reduce overhead costs of
small environmental
projects
On the ground knowledge
of sector through existing
project portfolio
Paris declaration on
harmonisation among
donors create common
GoV Ministries (MPI & MoF)
•
•
•
•
Hanoi Core Statement is
localised commitment to aid
efficiency. Ambitions might
be over optimistic and aims
are not always realistic, yet
it provides a (shared) sense
of direction.
Concerns of GoV relating to
the slow disbursement of
ODA. (REFAS,2005)
Recognition of mixed
character of forest sector
(productive vs protection/
conservation functions )
Sense of urgency to reform
SFE into market-oriented
production functions for
MARD
•
•
Relatively low donor
dependency for the sector
and ample experience and
capacity of MARD in project
management
recognition that significant
improvements in
effectiveness and efficiency
can be achieved,
particularly in the areas of
capacity building, planning
and monitoring.
This does not mean a full consensus on the concept and application of SWAP, among the various agencies. For example the
Finnish embassy advised against a pure SWAP concept application as it sees the forestry sector as a mix of commercial
production activities requiring DFI and private sector involvement and on the other hand services of a more public nature in
which the government is playing a major role. (Marko Katilo, pers. comm.)
33
Donor Community
framework for action. Like
minded donor group
consensus goes beyond
Paris Declaration in terms
of
• Need for capacity
building approach
• Use of country systems
• Avoiding PMU and
reducing uncoordinated
missions
GoV Ministries (MPI & MoF)
P661 to succeed
MARD
An early and main achievement of the harmonization effort in the perception of several donor
representatives was a better understanding of what was at hand and who does what. This was
consolidated with the preparation of a matrix of affiliation, a “who is who” in forestry, that made it
easier to locate everybody’s contribution as compared with the nine result areas in the FSSP Program.
In the initial harmonization process large multi-lateral agencies like WB and ADB were strongly
present, eager at the time to move towards sector budget support under a SWAP. Delays in
developing a sector budget support mechanism (around program 661) and the implementation of
major projects by themselves, as well as personnel changes reduced their direct involvement. The
mutli-lateral donors remain however postive towards supporting a program approaches in forestry.
Harmonization in the forestry sector managed to create a common framework and common policy
forum and joint financial support mechanism, i.e. the FSSP and TFF under pooled funding of a core of
relatively like-minded donors. Both arrangements were custom-made to accommodate the different
procedures and earlier commitments of the contributing parties. For the EU, its commitment was more
restrained by its internal procedures and a parallel funding arrangement, linked to the FSSP priorities,
was created. Hence a pragmatic route to pooled funding was chosen. The TFF for many reasons,
however, never achieved the earlier ambition of providing the route to sector budget support.
In contrast to the forestry subsector, harmonisation in the environmental sector has been minimal.
This is explained by the lack of effort but also by the lack of need – the number of donors is limited
particularly if compared with the number of subsectors. Much of the coordination can be arranged
bilaterally and informally.
4.2.4
Alignment
As mentioned the forestry sector support started on a harmonization agenda partly out of concern for
the direction that Programme 661 would take. Only after 2002 there was a convergence between
donor policies and MARD policies, culminating in the newly formulated FDS 2006-2020. The issue is
therefore ‘alignment with what’. Both in the VFDS and in the SEDP policies development process,
documents have been formulated that were supported by government and donor community. This can
be contrasted with the period 1998-2002, when documents were prepared parallel to existing
documents, i.e. the Forest Sector Support Program with its nine result areas against the Forestry
Development Strategy 2001-2010 and the CPRGS against the 2001-2005 Socio-Economic
Development Plan.
The issues introduced under this alignment process concern some of the earlier agenda items in the
forestry programmes of the RNE – such as community forestry and biodiversity conservation. The
more conventional social issues prevail, based on a poverty reduction focus. Broader linkages with
economic development, private sector involvement (in TFF through PPP for example) and market
chain issues remain underdeveloped, and are only gradually developing through the German bilateral
programmes.
34
4.2.5
Mutual accountability
One of the five principles in the Paris Declaration is mutual accountability. In case of donor roles this
is usually understood as long-term financial commitment to a sector and a country. The financial
allocations of the RNE to the environment and forestry in Vietnam have been fairly consistent since
1998: in 2004, a shift occurred in the forestry sector to the TFF as the funding mechanism. From the
ODA data base of the Ministry of Planning and Investmentit appears that most other donors have had
fairly consistent spending levels. The imminent MIC status of Vietnam may cause a reduction in ODA,
even though one can argue that with economic development environmental issues become more
rather than less prominent.
At present several donors are reviewing their list of partner countries, so as to come to a smaller
number of countries with which to have a bilateral relationship. In case of Sweden and Canada (two
donors active in environment), there is the serious possibility that aid relations may be phased out, as
Vietnam does not fulfil the criteria on governance. An advantage, however, of multi-donor funding
arrangements, such as the TFF or FSSP, is that the exposure to such changes is less, though this
comes at the price of larger administrative complexity. Another factor that affects long-term financial
commitment is the practice of one-off allocations, made at the end of the year so as to avoid
underspending of aid budgets. The extra allocation by DGIS of Euro 10 million to the PRSC 5 was
sourced from this. GBS mechanisms such as the PRSC – because of the limited preparation time - are
suitable destinations for such budget windfalls. The reverse side of this is that allocations to GBS are
more foot-loose too, unlike that of project commitments. The table in section 3 underlines this –
whereas in 2005 there is still considerable disbursement on projects implemented by NGO, even
though the sector approach came in place in 1998, the spending on GBS is far more peaked.
Decree 131 on the Regulation of Management and Utilization of ODA describes that ODA should be
regulated by international treaty – yet this has had no response, as from donor rules and regulation
do not allow this – indicating the practical limitations to ‘mutual accountability’.
4.3
Outputs
The most common definition of a sector programme, and the one adopted in this study, is “all
significant funding for the sector supports a single sector policy and expenditure programme, under
government leadership, adopting common approaches across a sector, and progressing towards
relying on government procedures to disburse and account for all funds.” 26 The rationale is to avoid
the development of fragmented systems and instead systematically involve non-state actors and as
well as in general reduce transaction costs and focus efforts on sector strengthening instead.
Against the definition above there is no full-fledged sector approach in the environmental sector, even
if one would define the sector as the mandate of MoNRE: there is no single sector policy and
expenditure programme supported by donor funding. In environment the main achievement is the
existence of an International Support Group on Environment, which had little output otherwise.
Similarly, in case of the forestry sector, there also is not a single expenditure programme. The TFF at
one stage was supposed to be a transition towards sector budget support, but is now better
considered as a strategic fund for sector strengthening. The TFF has taken a systematic move towards
using government procedures. In forestry, however, there is a single sector policy and a strong
convergence in approaches.
On the basis of this definition, the forest and environmental sector programs are reviewed in terms of
ownership, policy operationalization, use of government financial procedures. In addition the impact in
terms of transaction costs, effect on non-state actors and sustainability is discussed.
26
Foster.M. 2000, New approaches to development cooperation: What can we learn from experience with implementing sectorwide approaches? Centre for Aid and Public Expenditure, ODI, see also IOB evaluation report No. 301)
35
4.3.1
Ownership
Ownership is a term that, though important, is hard to quantify. There are however a number of
pointers as to the leadership role of the Government of Vietnam. First is that sector approaches and
consultative processes are now very much embraced in the national policy documents. In the forestry
sector, the Vietnam Forestry Development Strategy 2006-2020 was modified and finalized within
MARD and that in the last stage there was no involvement of the donor partners. Similarly the policy
documents in the environmental sector were prepared in-house and there is also strong government
leadership, though this probably also has to do with the limited donor interest in the sector.
Anecdotally some respondents mentioned that the reason to prepare the policy documents was to
attract donor attention.
At a different level the entire philosophy of the sector-wide approach, i.e. that of using country
systems and putting national policy processes centre-stage, has now become very much the norm in
Vietnam, putting government ownership at the centre and having disconnected projects losing appeal.
4.3.2
Improved policy operationalization
The TFF was set up to provide support for priorities agreed within the partnership, i.e., to support
implementation of the 2001-2010 strategy and national target programme for forests (5MHRP, or
661). More specifically, the TFF had four specific objectives: (1) aligning ODA support more closely
with the agreed priorities identified in the FSSP framework; (2) improving the poverty targeting of
ODA support to the forest sector, consistent with the CPRGS; (3) harmonising aid delivery from ODA
to the forest sector through reducing transaction costs on GoV; and (4) supporting a transition
towards a sector wide approach to ODA support in the forest sector.” Furthermore, it aimed “to
support activities that address pro-poor and sustainable approaches to forest management at policy
level and piloting at implementation level.”
It has subsequently been discussed that with the Prime Minister’s approval of the new Vietnam
Forestry Development Strategy (2006-2020), the TFF will support strategic priorities under this
strategy. Thus, the TFF has evolved in a funding mechanism for strategic sector support rather than
sector funding. The TFF has funded the development of legislative documents. Recently a number of
implementation project are improved, that will put the policy in practice and serve as models.
The FSSP has had also a large number of activities that help to operationalize the policy, such as
various partnership meetings, including the recent Forestry Partnership Forum. Although the
Partnership itself has not directly supported capacity building, many of the individual FSSP partners
have done so through a variety of different ODA projects and programmes. One partner, Helvetas,
undertook a situation analysis and needs assessment looking at the linkages among forestry research,
education, training, and extension, which provided important input into the Vietnam Forestry
Development Strategy and the design of the support programme dealing with those issues.
In contrast, the in environment sector, policy operationalization is done on a project basis with project
having important institutional and legislative component. The experience of the SEMLA project is of
interest. Only after the project was approved and initiated, an effort was made to see how.
4.3.3
Effect on non-state actors
The definition of the sector-wide approach makes the point of government leadership but not
monopoly. In the forestry and environmental sector in Vietnam it was mainly the green international
NGOs that were active (IUCN, WWF, Tropenbos, SNV) – in policy advocacy and the implementation of
special projects, for instance on non timber forest products or community forestry. A considerable part
of Dutch bilateral aid went directly to these organizations.
With the development of the forestry program, all these organizations joined the Forestry Sector
Support Program and Partnership. With the development of the TFF new more competitive rules of
36
engagement were introduced for these international NGOs. All organizations are working on direct
grant proposals under the TFF, but submission is through national organizations and ultimately direct
engagement is dependent upon successful tendering of TA services to national implementing
agencies. In the assessment of several of the NGOs they continue to operate on a variety of funding
streams, TFF being one of them though it now entails an element of uncertainty related to approval
and tendering result. The NGOs also take part in the partnership, the consultative meetings and the
forum.
In their own assessment the FSSP provides one important additional opportunity for policy discussion,
but there are also alternative effective routes for advocacy. One organization that became gradually
less visible in the sector is the FAO. Whereas before 1998 it still had an orchestrating role in some of
the policy debate (for instance in the Tropical Forestry Action Plan), its role has changed to providing
ad hoc support from special programs. It is neither involved in monitoring in the forestry or
environmental sector, in spite of its facilities in this regard.
In the PRSC discussion the international NGOs have not been active. In the environmental sector
sector coordination is still weak and there is no policy forum comparable to the FSSP. The
international NGO provide support for instance in the formulation of wetland legislation.
The role of the private sector in forestry and environment has increased. This is largely an
autonomous process, driven by the larger importance of brown environmental issues (and need to
invest in waste disposal and processing) and the increased export orientation of the timber processing
sector. The larger attention for the private sector is within the remit of the overall policy change in
this direction in Vietnam, encouraged among others in the PRSC process. The FSSP within its
capacities has supported these developments – by providing a clear policy environment and by
encouraging dialogue with the private sector. In contrast in the TFF there is no slot for financing the
private sector, even though in principle the private sector could be an important service provider too.
4.3.4
Transaction costs
The sector-wide approach is meant to reduce transaction costs, primarily for the institutions in the
partner country that may otherwise be overwhelmed by a multitude of projects, which would divert
attention from routine priority activities. As mentioned in section 2, this is not such an issue as such as
in the Government of Vietnam there is a proliferation of projects as well. The sector-wide approach is
also meant to reduce transaction costs for donor organizations and come to more efficient aid
management – with higher spending per capita.
Although once up and running a shared facility such as the TFF and FSSP may make work easy and
reduction transaction costs, the experience with the TFF and FSSP shows that the transaction costs of
setting up new multi-donor coordination mechanisms (especially in terms of time requirements) can
be considerable and that particular the efforts of harmonizing and aligning procedures can be
substantial. It is important to realize where the high transaction costs came from. The case studies
give several examples:
- Overcrowding of donors in some sectors (forestry in case of Vietnam);
- Rules of engagement not being entirely clear, as in partnership arrangements, such as the
FSSP and ISGE
- Internal procedures in donor side – particular the insistence on auditing procedures or the
lack of delegation from headquarters;
- Prevalence of relatively short-term and/or small financial commitment, including small grants,
that have a proportionally high management burden.
The ‘lesson learned’ quoted in an annual report of the RNE (see section 3.1.2) makes the point of
avoiding too much effort in procedural alignment between donors but instead create flexible
structures, where it is easy for several players to come ‘on board’ on their own terms. In this regard
the FSSP and TFF may be compared with the annual PRSC discussions on policy actions and triggers.
In the FSSP and TFF the core donors are full partners with financial commitments linked to policy
priorities linked to SC discussion, whereas for the other partners there is no single policy dialogue. In
37
the PRSC discussion donors ‘buy’ an entry ticket to the policy dialogue, but pledges are independent
of the policy actions and triggers selected in the end. If aid effectiveness is only measured in
disbursement per staff time than the PRSC arrangement is more effective.
4.3.5
Sustainability
A concern with the sector approach, particular where there is a large element of sector budget
support, is sustainability, both of keeping up public spending levels and of maintaining newly created
facilities. In case of the sector support to the environment in Vietnam these concerns are not relevant,
as there is no direct sector budget support. Moreover the issue of maintaining facilities in environment
is different from health, education or water supply.
ODA in forestry is important but not overwhelming. According to ISG-MARD it is around 25% (see
table below). Vietnam has a relatively solid financial basis and aid dependency overall is low.
Government revenue comprises 22–23 percent of GDP (World Bank 2007).
Annual Forest Sector investments 2001-2005 (Million US $
FUNDING SOURCES
State budget for 661
Infrastructure investment
Credit
Capital of enterprises and SFEs
FDI
Household investments
ODA
Other
Total
Source: ISG-MARD
2001
22.0
26.1
45.9
0.8
7.5
5.1
67.7
0.9
176
2002
23.1
37.5
52.7
1.1
19.3
5.1
49.9
1.9
191
1 US $ = 16000 VD)
2003
26.1
48.6
45.1
4.7
37.3
5.6
51.6
0.6
220
2004
33.3
37.1
45.3
4.6
42.5
5.8
50.2
2.6
221
2005
43.2
45.3
41.7
4.7
42.9
6.3
41.1
2.8
228
Total
148
195
231
16
149
28
260
9
1,035
For the current 5-year period (2006-2010), the Vietnam Forestry Development Strategy assumes that
sector financing will experience a major increase in foreign direct investment. If this projection is
realised, then the contribution of ODA to the sector financing – although remaining relatively constant
in absolute terms – would decline to only 13 percent of overall financing.
The sector and project support that is now given to both forestry and environment sector moreover
can in theory work to provide openings for direct investment, including FDI. This is done in FSSP
among other by developing a clear strategy and institutional structure for FDI, as for instance through
the Forest Investment Forum, organized by MARD’s Planning Department, with support from the
FSSP, in May 2007.
4.4
Outcomes
Ultimately the sector approach has to be measured against its outcomes, in particular improved
service delivery and poverty alleviation.
4.4.1
Improved service delivery
It is not possible to correlate the various efforts in environmental or forestry sector support with
changes in service delivery either by public or private players in environment in Vietnam. There are a
number of reasons why this is not possible and these reasons go to the core of the sector-wide
approach as it is implemented in the environment in Vietnam. First is that though the process of
harmonization started in 1998 and in 2007 there is more policy alignment and donor coordination, this
38
does not mean that significant changes in terms of different programs or funding levels are now
noticeable. There has moreover been no consolidated monitoring27 or impact tracking related to the
forestry programs or the PRSC, but given the above this would not have given results. As one of the
interviewees remarked that ‘not much happened during the development of the SWAP’. The process
of harmonization and alignment – especially when there are a large number of donors – is time
consuming and it is common for the initial period of SWAP development that impacts are in new
coordination mechanism, improved administrative systems and new policies, but not in service
delivery on the ground.
A second reason why it is difficult to measure improved service delivery from a SWAP development,
even beyond the initial stage is that in natural resource management issues of attribution and
retribution make it difficult to correlate changes in environmental services to the implementation of
policies – the effect of a prolonged drought might overshadow all human effort. This also bedevils the
use of outcome indicators in the MTEF of the PRSC, as many changes at outcome level can only be
established if at all on a medium-term basis.
This impossibility to measure changes in service delivery is significant. One of the five tenants in the
Paris Declaration is ‘managing for results’. In reality this is not so straightforward at outcome level
because changes in forestry or wetland status take effect over a longer period and are the sum-total
of many factors – government policy being only one of them. This makes it pointless to correlate
annual change (if they can be meaningfully measured at all) to environmental governance
4.4.2
Poverty focus
Attention for environment is systematically justified in the main policy documentation of DGIS as
sustainable poverty alleviation and by reference to the higher vulnerability of the poor to resource
degradation. This explains why in Vietnam engagement has been exclusively with green environment
issues (i.e. forestry, water management and wetlands) and has ignored emerging brown
environmental issues.
As with service delivery it is not possible to assess poverty impacts of the three programs, but it is
possible to look at the poverty focus. In case of the forestry sector in Vietnam as elsewhere the main
forest areas are coinciding with areas of deep and persistent poverty. There is a strong match
between forestry areas and areas, populated by ethnic minorities (see maps in annex 5). The ethnic
minorities make up 11 percent of the population of Vietnam, yet 39% of the poor (UNDP 2006).
This overall recognition does not necessarily lead to operationalized forest-poverty linkages but does
result in standardised policy statements to justify forestry investments with a.o. social arguments of
job creation for, and encouraging non-timber forest product use by ethnic minority communities in
upland areas.
Yet the proof of the macro-policy is in the micro-linkage. There are several opportunities within the
environmental sector for direct poverty alleviation. With the enactment of a new Land Law in 1993
and its subsequent updates, forest management was devolved from the central state to households,
villages and communes. This provides direct income to the poor sections of society in the form of
timber and non timber forest produce. (Sikor 2001 in Mather, 2007). Another major income source
and direct link with livelihood improvement is established through the outsourcing to households of
management services for natural forests and forests in some critical watersheds, which were not to be
allocated to households, but to communes, districts or other entities. Dinh Duc Thuan (2005) states
that this has been the dominant method of forest land allocation. On the other hand there are also
reports from different parts of the country that strong implementation of forest protection policies
have undermined the possibilities of local people to survive and prosper. There are instances where
even the basic needs of local populations have been placed out of bounds: wood for construction of
houses and coffins, developed agricultural lands, has been classified to be inside protection areas that
27
There are many kinds of monitoring, including traditional forms of “reporting” – that monitor performance and progress.
Some individual projects have done impact studies.
39
cannot be used. Current forestry policies intend to conserve and develop forests, especially natural
forests. The areas where there are many ethnic minority people are often the same areas that should
be strictly protected. The result has been that local people, mainly ethnic minorities, do not have
opportunities to access forest resources, even in areas where there are few other options for
economic development.
In a study of forestry, poverty reduction and rural livelihoods issues conducted by a team from the
Vietnam Forestry University, more than seventy focal group discussions were held in 4 provinces.
These groups ranked the priority key issues of forest-dependent people in highland areas as: (1)
forestry policy is not clear to local people; (2) the poor receive little benefit from forestry extension
and research, and income from NTFP is decreasing; (3) forest land allocation by itself does not help
the poor overcome their poverty, and the administrative system is too complicated for providing
transparent access to relevant legal products; (4) there are unmitigated
conflicts among the objectives of forest protection, conservation and poverty reduction, and wood
processing has little impact on poverty reduction; and (5) people have limited legal rights to use forest
resources. (Thuan et al, 2005).
Below a number of case studies on micro linkages are summarized, including observations during the
field visits. They illustrate that actual effects on poverty alleviation are often very different from what
is anticipated. This is not to say that forestry programs or environmental programs have no impact on
poverty alleviation, but to make the point that for poverty alleviation the local mechanisms and microlinkages have to be understood and monitored through poverty tracking.
Forest and poverty linkages and their limitations
Expected poverty impact
Forestry protection and
management contracts
Provide local income
opportunities
Land use planning
Long term poverty alleviation
through sustainable land
management
Forest land allocation (LUPLA)
Providing tenure security and
access to credit facilities
Community forestry
Regulating sustainable access to
forest for large number of
people
Examples of Differing
Impacts
Richer sections of the community
may capture these opportunities.
The weak social cohesion in the
often re-located communities
under the programme 135,
increases this risk even
further(Vickers and Mackenzie,
2007; Xuan Phuc and Thomas
Sikor, undated28)
Households have chosen not to
follow the plans,
but instead have used the land
for food production. This is
reflected on a large scale:
one source states that only 2030% of the allocated land have
been used as projected by
the Government land-use plan
(Eleine and Dubois 1998).
Poor community members were
less well-informed and so did not
apply for the land titles in time
Genuinely poor do not have the
resources to timber from the
community forest, even if
allowed.
In other cases very poor were
28 Illegal timber logging in Vietnam (undated): Who profits from forest privatization connected with a logging ban? To Xuan
Phuc and Thomas Sikor Junior Research Group on Postsocialist Land Relations Humboldt University, Berlin
40
Expected poverty impact
Promotion of non timber forest
products
Biogas
4.4.3
Examples of Differing
Impacts
not informed and were excluded
from the land allocation process
Introduction of new models for
Improved knowledge and skills
NTF production and processing
about managing NTFP products,
in general and more productive
especially bamboo, rattan, thanh
ways of using household labour mai fruit and huong bai creating
long term income opportunities
Some households because of
lesser access share less in
project.
Reduced time for fuel wood
collection (Raintree et al, 2007)
Reduced time for fuel wood
Private contribution to
collection and with it pressure on investments is still considerable
forests
(eq Euro 250) and limits uptake
in poorer highland areas
Project or Sector Support
Finally the overall transition to the sector support needs to be placed in perspective. There is still a
proliferation of projects in Vietnam. The regional overview of forestry-related donor-funded projects
(see figure below) illustrates this. The overview was shown29 during the Forestry Investment Forum
meeting, held at Hanoi on May 9th 2007. The project mode of operation is well-entrenched with an
estimated 160 PMUs in existence within MARD only. Even some (not all) of the projects supported
from the TFF will continue to have separate PMUs, in line with Government of Vietnam procedure. In
addition most of the donors that are core members in the FSSP continue to operate project operations
outside the TFF. The four TFF donors, however, are the exceptions, as they agreed to provide all
sector support through the TFF only.
29
Source: Powerpoint presentation OVERVIEW ON THE FOREST SECTOR by Dr. Trang Hi
Department Ministry of Agriculture and Rural Development
uD
ng Director, Planning
41
There is in fact a logic to the continued importance of projects as well as the continued prevalence of
national target programmes. These arrangements make it possible to overcome some of the
constraints in administrative and budgetary procedures, such as management and staff incentives,
more flexible multi-year funding and opportunities for intersectoral coordination as well as
coordination between centre and province. This explains the limited interest in ‘on-budget’ ODA within
MARD and MONRE. A comparison of project and sector approaches then is difficult to make and in the
context of Vietnam not entirely useful, as the two approaches are not mutually exclusive.
Forestry sector support in Vietnam is hence not to be interpreted in narrow terms of aid effectiveness
and budget increases. In this respect the FSSP and TFF, and a larger scale the CPRGS and PRSC,
have made drastic changes by redefining aid relations and putting country systems at the centre. The
joint coordination has not only simplified policy dialogue but also added value and appeal to the policy
coordination, which goes beyond issues of reduced transaction costs and streamlined procedures.
In the environment sector the picture is different but a useful contrast. Here the lack of coordination
also means the lack of status for policy dialogue.
5
Generic lessons
The objective of this case study was to take stock of the status and results of the Dutch support to
environment and to contribute suggestions on the promotion of the sector approach in environment.
This section distils generic lessons from the Dutch-supported program to environment in Vietnam.
This is done against the background of the different tenets of the Sector Approach, as formulated in
the Paris Declaration and monitored by among others OECD DAC: ownership, harmonization,
alignment, mutual accountability, results monitoring and public finance management. The context of
Vietnam is that of low aid dependency and steady economic growth, moving towards Middle Income
Status in the foreseeable future.
There is large convergence among the Government of Vietnam and the donor community on the need
to promote the sector-wide approach. This was underlined by the Hanoi Core Statement, Decree 131
on Aid Management, the functioning of the Consultative Group as well as twenty-four partnerships in
different sectors, subsectors and national target programs and numerous donor-government
committees on improving aid effectiveness and promoting harmonization and alignment.
Set against this background it is intriguing that within the different sectors very little aid is ‘on budget’.
What is more common is the establishment of discretionary funds. The Trust Fund for Forests is a
prime example of this – and it is special in its overall size and co-management arrangements. The
degree of alignment of such discretionary funds with Government of Vietnam procedures varies, but
this financial modality is often preferred by sector ministries as it provides the flexibility and timeliness
of budget releases and possibilities for multiyear spending that is lacking in the financial allocations of
the Ministry of Finance. This makes such discretionary funds particularly suitable for non-standard
expenditures on capacity building, program innovation, policy studies as well as contribution to private
sector and civil society activities. The existence of such funds is a reflection on public finance
management that is often strongly focused on administrative accountability but overlooks budget
efficiency. The context of low aid dependency is also important in this respect – channelling relatively
small amounts through the national budget system can be cumbersome and may not have high added
value.
The case study documented the establishment of one such discretionary fund – the Trust Fund for
Forests, closely linked to the Forestry Sector Support Partnership. What stands from this experience
are the considerable initial transaction costs involved in donor harmonization at this level, even when
42
total expenditures for the Trust Fund are modest30 compared with the total ODA in the sector. These
start-up transaction costs were related to the development of several bilateral financing agreements
for the facility as well as the effort to come to acceptable fund management procedures. There was
an opportunity cost to this process. The time involved in coming to an operational mechanism meant
that in the end the TFF became a facility for policy change rather than a major funding mechanism for
the forestry sector, as the larger donors in the meantime developed programs of their own, although
they are closely linked to the TFF. However once the FSSP and TFF were in place and operational,
they presented relatively inexpensive mechanisms for coordination and policy operationalization.
The Forestry Sector Support Partnership managed to become the main policy arena in the forest
sector, but this was also achieved at relatively high transaction costs. In this case this was much
related to vagueness that is implicit in the concept of ‘partnership’. A large number of organizations
joined the low threshold opportunity. However, beyond having probably matching interests, roles and
responsibilities of partners typically are undefined, making it difficult to formulate program and come
to agreement.
Donor harmonization was meant to reduce transaction costs, but the experience above seems suggest
that for this to happen a considerable time investment is required to set up a joint financing
arrangement. In the forestry sector in Vietnam the reduced transaction cost argument moreover loses
some of its value when the different donors (with the exception to an extent of the TFF core donors)
continue to operate a range of activities in the sector, outside the TFF and FSSP. Many of these
activities have separate management structures (if not PMUs then at least steering committees and
task forces). Besides, project proliferation is not unique to bilateral aid, because the Ministry of
Agriculture and Rural Development itself operates more than 160 projects from its own budget. The
reduction of transaction costs is hence not achieved by the TFF or FSSP only. What the TFF and
FSSP instead seem to have done is to create critical mass for the Like Minded Donor Group and
establish a single policy and program innovation forum for the Forestry Sector in MARD, which is very
much appreciated. In case of donor harmonization the 20-80 rule seemed to have been in place,
where 80% of the benefits were achieved at 20% of the effort. This was the early stage when in the
forest sector a matrix of alignment was formulated, which made it possible to see ‘where everybody
was’ in this donor-crowded sector, as well as to formulate a shared position. The hard 80-20 part is in
developing joint financing arrangements as well as dovetailing bilateral programs.
The larger question here is whether donor harmonization is the way forward or donor
complementarity is. Donor presence is high in certain sectors, such as forestry, but low in others – in
this case environment. There is a case to make the choice of sectors to be supported contingent on
donor density rather than solely on internal thematic priorities31. In this case the environmental
sector in Vietnam – as probably in other countries – is of interest, as it is less crowded. The variety of
topics moreover under the MoNRE means that there is less chance of overlap and less need and effort
to harmonize conceptual agendas. Donor complementarity in other words would be a strong argument
for a larger engagement in environment.
The other side of harmonization is alignment, both policy alignment and alignment with country
administrative systems. The administrative alignment was discussed above. Policy alignment in the
forestry sector was a two-step process. Through the 5 Million Hectare Reforestation Project, the
Government’s forestry policy as it existed in the late 1990s and early 2000s, had a perceived large
emphasis on single-species commercial tree plantation. It differed from donor priorities, such as
community forestry, biodiversity and poverty alleviation through trade in non-timber forest products.
From 2005-2006 the Vietnam Forestry Development Strategy (2006-2020) was developed with the
technical assistance of the FSSP – giving larger emphasis to these items and gaining endorsement by
the Prime Minister, which the earlier strategy lacked. Ownership of the strategy is high now, both by
Government of Vietnam and by the external agencies working in the sector. The point to make
however is that alignment is not just a given thing and that the sheer existence of a country policy is
not sufficient. The policy dialogue is important not to come to a better policy as such, but to create
30
31
Especially if one takes out the co-financing for the World Bank, ADB and GEF forestry projects.
Such thematic priorities are embedded imbedded in input targets, as in the case of financial commitments of 12.5% to water
and environment and 15% to education in DGIS.
43
better appreciation between the different development partners. This was particularly true in a sector
such as forestry in Vietnam, which serves an economic development agenda as well as environmental
agenda, with the two not neatly matching. In Vietnam alignment took place after the strategy was
jointly formulated, following an intermediate stage where the principles for FSSP defined the area of
cooperation. The intriguing issue is what the operationalization of an environmental SWAP means in
practice – should one work with the entire sector or only with that section that matches the
environmental agenda? This is not only an issue of donor priorities, but also capacity. It is fair to say
that the engagement in forestry development cooperation by the Netherlands is oriented towards
biodiversity conservation and poverty alleviation and not to commercial forestry. Should a sector
program in forestry pay less attention to this aspect of a national strategy?
The other question is also what to align with. Ideally a sector strategy would be matched with a sector
investment plan, which would make it easier to see where all activities – funded from national and
international budgets would fit in. In the forestry sector and environmental sector in Vietnam such
sector investment plans have not yet been formulated, and support to different activities inside and
outside the FSSP has an element of moving targets. In other sector support programmes, annual
performance indicators are formulated, that serve as the basis for dialogue for sector budget support.
Though a medium-term expenditure framework is being formulated for MARD, this is only in pilot
stage and thus is not yet prominently used32.
For the General Budget Support to Vietnam such a mechanism is in place. Annually policy actions and
triggers are agreed as part of the Poverty Reduction Strategy Credits, following a process of
consultation in multi-stakeholder working groups. Performance is measured against these triggers and
the loan amount under the PRSC is contingent to this. The process has been described as a broad
systematic policy dialogue and the transparency of it is a dramatic change from the highly classified
discussion on national development budgets as recent as 2000-2001. The policy dialogue is best
characterized as stock taking with the triggers selected on the basis of already planned policy
initiatives rather than the other way round.
Sector ministries are at present only marginally involved in the process. By their own account they
‘read about it in the newspaper’. There is for this matter in the current set up no gradual transition
from Project Support to Sector Support to General Budget Support, unlike current thinking. The
triggers, that are now chosen concern safe ‘easily-measurables’, in particular policy and legislative
initiatives. There is a discussion to incorporate outcome indicators in the near future. A tentative list
on such outcome indicators for forestry and environment is in existence. The constraints, however,
include problems of how to measure, for instance forest cover and quality, on a year-to-year basis and
use possible changes (that may have many reasons) to decide on General Budget Support.
Another question is whether the activities in the environment and forestry sector, as supported by
Dutch bilateral aid, had impact on the ground, in particular in term of poverty reduction. As there has
not been any explicit monitoring of forestry or environmental impacts on poverty reduction, however,
not data is available to assess this possible impact, i.e., the answer to this question is that this issue
cannot be established. Most efforts between 1999 and 2006 were undertaken to come to a shared
approach. This is common in other SWAps too. Usually the initial emphasis is on new management
systems rather than service delivery.
Even then in a fast developing economy as Vietnam, with poverty levels halved within a decade, one
can question whether for arguments of attribution it is possible or even meaningful to detect a
systematic link between poverty alleviation and bilateral environmental support activities. If at all, this
can probably only be done on a case by case base through impact tracking. The forest areas largely
coincide with ethnic minority population in Vietnam. Ethnic minorities account for 11% of the
population, but represent 35% of the poor. There is a strong spatial correlation between forestry and
the incidence of poverty of poverty. A number of programs could in theory have a positive impact on
direct poverty reduction, but there has been no explicit pro-poor focus in the programmes or related
32
MARD is one of the pilots for training in development of the Medium-Term Expenditure Framework. As a pilot training
exercise, the MTEF is considered to be a “shadow budget,” and not yet the real budget, which is still an annual one. The
development of the MTEF is meant as a tool for improved management of the public or state budget.
44
monitoring. Moreover, in terms of poverty impact the devil is in the detail of the macro-micro linkages
and in implementation the very poor may still miss out.
The final issue is the larger discussion on a differentiation between countries. As fast developing
countries as Vietnam reach MIC status, they become less eligible for ODA. At the same time
environmental challenges – in urban and industrial development and in intensified natural resource
use – increase. The question is whether a differentiated approach with partner countries would not
be preferable, both with respect to the nature of a SWAP and in the emphasis on environmental
management.
Sector budget support is often seen as the high point in sector-wide approaches. In Vietnam there are
a number of reasons why ‘on budget’ SWAPs are not practical and in fact also uncommon. First is the
distinction between line ministries and the Ministry of Finance, where the actual budget allocation
from the Ministry of Finance often come late, leaving limited time for spending and implementation,
because the closure of the financial year and the surrendering of unspent budget is already
imminent. Linked to this is the limited flexibility, embedded in Ministry of Finance rules. These two
factors have a large bearing on value for money – yet are usually not addressed in PFM. In Vietnam
there was hence a strong preference within line ministries to create special funds – with larger
discretionary control by the line ministries and the possibility of multi-year spending. The second
reason why in Vietnam sector budget support was relatively impractical is the decentralized nature of
the public sector. Because there are no budgetary relation between central line ministries and
Provinces, sector support would involve relations with a large number of Provinces arand central
orchestration by the Ministry of Planning and Investment. The main on budget ODA in Vietnam (GBS
aside) is the contribution of DFID to Target Program 135 on Poverty Alleviation, which is better
described as program support, as well as budget support selected sub-components of the Educational
National Target Programme. In the environmental sector however there is no Target Program,
whereas ‘Forestry’ Target Program 661 is funded through a government created programme fund.
Although ODA support has not been directly channelled through Programme 661, many ODA projects
and programmes provide support aiming to reach some of the same objectives as 661, such as
increasing forest cover, creating rural employment and reducing poverty. This suggests that
particularly in the context of a country that is not aid-dependent, a Sector-Wide Approach with Sector
Budget Support is very much possible and meaningful.
45
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RNE (2002), Vietnam Jaarverslag 2002, Jaarplan 2003. Hanoi: Royal Netherlands Embassy.
RNE (2004), Vietnam Jaarverslag 2004, Jaarplan 2005. Hanoi: Royal Netherlands Embassy.
RNE (2005), Vietnam Jaarverslag 2005, Jaarplan 2006. Hanoi: Royal Netherlands Embassy.
Sager, Hugo and Le Duc Chung (2007). External Review ISGE International Support Group
on Natural Resources and Environment.
SEMLA (no date). Vietnam-Sweden Cooperation Programme on Strengthening Environmental
Management and Land Administration.
47
Socialist Republic of Vietnam (2004). The Strategic Orientation for Sustainable Development in
Vietnam (Vietnam Agenda 21).
Socialist Republic of Vietnam (2006). Decree on Issuance of Regulation on Management and
Utilization of Official Development Assistance No. 131/2006/ND-CP
Sunderlin, William and Huynh Thu Ba (2003) Poverty Alleviation and Forests in Vietnam. Jakarta:
CIFOR.
UNDP (2005). Vietnam Development Cooperation Report. Hanoi: UNDP.
UNDP/ Vietnam Academy for Social Sciences (2006). Deepening Democracy and Increasing Popular
Participation in Viet Nam. Policy Dialogue Paper No 1. Hanoi: UNDP.
Vietnam Environment Monitor 2005, Biodiversity.The Worldbank, SIDA and MONRE.
Viet Nam Environment Protection Agency/ IUCN (2005). Overview of Wetlands Status in Viet Nam
Following 15 Years of Ramsar Convention Implementation. Hanoi: VEPA.
van Ginneken, Pieter(2004). Mid Term Review Tropenbos International Programme 2001-2005
Vickers, Ben and Catherine Mackenzie (2007). Sharing the Wealth?: A case study of a pioneering
community-based timber harvesting operation in Central Vietnam. SNV Vietnam.
WorldBank (2005), State Forest Enterprise Reform in Vietnam Review of Policy and Implementation
Framework for Decree 200, Technical Note, November 2005
World Bank (2007), Upstream Review Document for a Proposed Credit in The Amount Of Sdr 114.8
Million (Us$175.0 Million Equivalent) to The Socialist Republic Of Vietnam for a Sixth Poverty
Reduction Support Operation. Final Version. Hanoi: World Bank.
48
Annex 1 Environmental Sector Acitivities DGIS Vietnam 1998-2006
49
Source: MIDAS, Piramide, FEZ
50
Annex 2
List of Persons Interviewed
Name
Position
Name of Agency or Company
Armand Evers
First Secretary Water Management
Royal Netherlands Embassy Hanoi
Ben Vickers
Advisor Collaborative Forest
Management
SNV Netherlands Development
Organisation
Bengt van Loosdrecht
Deputy Head of Mission/ Head
development cooperation
Royal Netherlands Embassy Hanoi
Benjamin Zech
First Secretary
Royal Netherlands Embassy Hanoi
Bernard O’Callaghan
Program Coordinator
IUCN
Bui Hoa Binh
Officer International Division on
Development
VEPA
Bui Phuoc Chuong
Provincial Coordinator Extension
and Training Support Project
Helvetas
Cao Thang Binh
Senior operations officer rural
development and natural
resources
World Bank Vietnam Country
Office
Claudia Doets
Advisor
SNV Netherlands Development
Organisation
Dang Mai Dung
Senior Program Officer
Swiss Agency for Development
and Cooperation
Dao Xuan Lai
Programme Officer Sustainable
Development Cluster
UNDP
Director
Forest Protection Department,
MARD
Hoang Thanh
Programme Officer Rural
Development and Environment
Cooperation Section
Delegation of the european
Commission to Vietnam
Holger Neuweger
Development Cooperation
Consultant
H
Vice Minister
Ministry of Agriculture and Rural
Development (MARD)
Jan Rudengren
Chief Technical Advisor
MARD-SIDA Cooperation Program
Jan van Raamsdonk
Inspector
Policy and operations evaluation
department, Min. of Foreign
Affairs the Hague
Kari Mukala
Councellor
Embassy of Finland Hanoi
Laslo Pancel
CTA
Embassy of Germany
GTZ/ Project
Le Cong Uan
Forestry Coordinator
IKEA
Hà Công Tu
a
n
c Nh
51
Name
Position
Name of Agency or Company
Marko Katila
Advisor
Ministry for Foreign Affairs,
Finland
Matthew Greenwood
Economist
Mekong Economics Ltd.
Michael Evequoz
Assistant Country Director
Swiss Agency for Development
and Cooperation
Tuyen Nguyen
Investment Officer
IFC International Finance
Corporation
Le Van Son
Senior Development Officer
Embassy of Canada
Marjol van der Linden
Researcher
Policy and operations evaluation
department, Min. of Foreign
Affairs the Hague
Pamela White
Project Director
Helsinki Consulting Group
Pham Minh Thoa
Deputy Director
Department of Forestry MARD
Senior officer
Forest Protection Department,
MARD
Nguy
nH
uD
ng
Nguy
n Ng
c Bình
Director
Forestry Department, MARD
Nguy
n Ng
c Ly
Head Sustainable Development
Cluster
UNDP
Nguyen the Dzung
Operations Officer rural
development
World Bank Vietnam Country
Office
Nguyen Thi Hong
Xiem
Communication Officer
Forest Sector Support Programme
Nguy
Y n
n Th
H
ng
Vice Director
Agriculture and Rural
Development, Ministry of Planning
and Investment (MPI)
Nguy
n Th
Y
n
Program Officer
IUCN
Senior Consultant
Poyry Forest Industry
Paul Speed
Paula J. Williams
Chief Technical Advisor
FSSP CO
Peter Dart
Principal Research Fellow
University of Queensland Australia
Pham Minh Thoa
Deputy Director
Department of Forestry (MARD)
Pham Minh Uyen
Program Officer
Royal Netherlands Embassy
Pieter de Baan
Country Director Vietnam
SNV Netherlands Development
Organisation
Tran Huu Vien
Rector
Vietnam Forestry University
Tran Hong Ha
Director General
VEPA
Tran Thi Le Anh
Officer
VEPA
Per Bertilsson
CTA
SEMLA
52
Name
Position
Name of Agency or Company
Rolf Samuelsson
First Secretary
Embassy of Sweden
Sander van den Ende
Chief Technical Advisor project for
sustainable forest management
WWF Greater Mekong Vietnam
Programme
Severin Kodderizsch
Rural Sector Coordinator
World Bank Vietnam Country
Office
Tim Dawson
TFF Advisor
FSSP CO
Trân Kim Long
Vice Director
International Cooperation
Department, MARD
Vu Van Trieu
Country Representative
IUCN
Wijnand van de IJssel
Policy Advisor. Knowledge
Management
DGIS
(Former Sector Specialist Forestry
and Biodiversity)
53
Annex 3
Sector
Overview of Triggers for PRSC 1 - 5
PRSC 1
Triggers
PRSC 2
Status
Triggers
PRSC 3
Status
Triggers
PRSC 4
Status
Triggers
PRSC 5
Status
Triggers
Status
Land and
forests
Submission of a bill
for the revision of the
Land Law, supporting
land-tenure security,
community land-use
practices and access
to land for all sectors.
S33
Issue a decree on
the restructuring of
SFEs, including
transfer of underused land to
households,
communities and the
private sector
S
Set up provincial land
registration offices (LROs)
in compliance with the
2003 Land Law
S34
Environment
Conduct a broad
consultation to
support the drafting
of regulations to
implement the
environmental impact
assessment (EIA).
S
Submit for approval
by the National
Assembly the
Amendment to the
Law on
Environmental
Protection
S
Develop economic,
administrative and
information tools for
environmental protection
S35
33
HS: stands for highly satisfactory, S: for satisfactory, PS: for partially satisfactory, and U for unsatisfactory.
Comment: Provincial LROs have been set up in 60 out of the 64 provinces. However, they are currently constrained by a lack of skilled staff and equipment. LROs have also been established in
districts with high demand for land registration and LUC issuance (reportedly about 15 percent of districts).
35
Comment: Being a new area for the Ministry of Natural Resources and the Environment (MONRE) staff, progress though visible, is less than expected. Regulations to implement charges for waste
water have been further developed. Analytical work is underway on issuance of a fee regime for solid waste, and developing environmental quality standards.
34
54
Overview of Policy Actions under the PRSC 1 – 5
Sector
Land and
forests
Environment
PRSC 1
PRSC 2
Issue LUCs for 35
percent of urban land
users and 60 percent of
forest land users
Approve the National
Strategy for
Environmental
Protection
PRSC 3
Support access to land
for all sectors and
community land-use
practices
Issue the decree on
wetlands conservation
and sustainable
development
Decentralize responsibility
for EIA of investment
projects to local levels
Establish the “polluter
pays” principle
irrespective of enterprise
ownership
PRSC 4
Issue a new law on Forest
Protection and Development
Improve the implementation
of the Land Law, focusing on
land registration and land
valuation
Issue State Forestry
Enterprise (SFE) Decree,
including the transfer of land
to households, communities
and the private sector
Submit the amended Law on
Environmental Protection,
jointly with implementation
decree
Issue directive to strengthen
the management of solid
waste in urban and industrial
zones
PRSC 5
Set up provincial LROs in
compliance with the 2003
Land Law
Pilot a MTEF for agriculture
and rural development
Issue the National Forest
Strategy for 2006-2020
Develop economic,
administrative and
information tools for
environmental protection
Pilot strategic environmental
assessments for selected
sectors
Issue implementing
guidelines for Clean
Development Mechanism
under Kyoto protocol
Issue regulation to
upgrade, move or close
the worst pollution
offenders
55
Annex 4: TFF Portfolio Status - 30 June 2007
Implementing
Agency /
Applicant
Duration
(months)
Total amount
approved/requested
from TFF (Euro)
Forest
Department,
MARD
9
50.000
Gender study
MARD/ CFAW
12
50.000
Development of the
Government’s Decree on
Guiding the implementation of
Law on Forest Protection and
Development
Forest
Department,
MARD
11
42.000
GA 004/05
Forest University Conference
Forestry
University, Xuan
mai
1
8.000
FF GA 005/05
Preparation of legal documents
by the Forest Protection
Department in support of the
new Forest Protection and
Development Law
Forest Protection
Department
10
81.036
GA 008/05
Preparation of the National
Forest Strategy 2006-2020
Forest
Department,
MARD
20
260.000
Code
Project title
2.1
Completed projects - Un-earmarked funds
GA 003/05
National forest strategy
preparation
GA 001/05
GA 002/05
Sub-total
2.2.1
Other
funding (Euro)
491.036
Ongoing projects - Earmarked funds
WN loan co-financing Forest Sector Development
Project
Forest Project
Management
Board
72
Sub-total
2.2.2
GA 006/05
Ongoing projects - Un-earmarked funds
Preparation of legal documents Forest
by the Forest Department in
Department,
support of the new Forest
MARD
Protection and Development
Law
GA 007/05
Preparation of legal documents
by the Legal Department in
support of the new Forest
Protection and Development
Law
Small grant
GA 009/06
9.200.000
38.113.760
9.200.000
38.113.760
26
70.541
Legal Department
21
85.202
FOMIS
FSSP CO
11
50.000
Development of an integrated
pilot approach to the
conservation, development and
management of non-timber
forest products (NTFPs) in Tam
Dao National Park (TDNP)
Tam Dao National
Park
24
31.539
390
56
GA 010/06
Researching and making policy
for production forest
development to ensure timber,
raw material for exported
wooden produces and paper
powder on market orientation.
(Steering of the Prime Minister
in the Letter: 195/TB- VPCP
dated 18 October 2005)
Department of
Agricultural
Economy - MPI
5
39.500
GA 011/06
Inventory, assessment, selection
and planning of forest seed
sources network for
establishment of the national
quality seed sources system in
Vietnam
Study on impacts of economic
integration on forest resource
management and sustainable
livelihoods of the local people in
upland mountainous region of
Vietnam
Forest
Department,
MARD
12
48.000
National Institute
of Policy and
Strategy for
Agriculture and
Rural
Development
(NIPSARD)
MARD, Forest
Department
24
42.500
24
1.463.000
Department of
Forestry
MARD
FPD Thua Thien
Hue province
24
377.007
12
40.000
The State Owned 24
Enterprise reform
committee of
MARD/ Division of
Enterprises, Farms
and Forests of
MARD
Forest Protection
36
Department,
MARD
50.000
GA 012/06
GA 014/06
Community Forest Management
Pilot Program 2006-2007
GEF co-financing GA 015/06
Preparation of a Program
Partnership for Sustainable
Forest Land Management
Exploring the opportunities for
financing forest conservation
and improving livelihoods
through sustainable forest
management: a case study at
Bach Ma National Park and its
buffer zone in Thua Thien Hue
Assistance for Monitoring the
Implementation of State Forest
Enterprise Reform
GA 017/06
GA 016/06
GA 018/07
Development, piloting and
institutionalization of national
short term training curricula to
improve capacity of sector
agencies in forest and
biodiversity protection and law
enforcement
GA 019/07
Piloting an Approach to Multiple- Department of
36
use Forest Management in Lam Agriculture and
Dong Province
Rural
Development, Lam
Dong
Pro-poor Forestry in upland
Forest Inventory
48
North Central Agro-ecological
Planning Institute,
Zone (NCAEZ)
MARD
926.092
3.147.755
1.007.098
Forests for Livelihood
Improvement in the Central
Highlands Sector Project –
FLITCH
12.340.000
55.851.166
Sub-total
19.307.542
57.174.054
TOTAL – Earmarked
9.200.000
38.113.760
TOTAL Unearmarked
19.798.578
57.174.054
GA 020/08
ADB loan cofinancing
MARD/ADB
96
596.406
293.405
21.995
57
Annex 5
Comparing National Forest Development Strategies36
In terms of contents, the overall objective of the new Vietnam Forestry Development Strategy (VFDS
2006-2020) is similar to the previous version (Forestry Development Strategy 2001-2010) but now
includes socio-economic and environmental services as well as biodiversity. It decides on how to move
away from a centrally planned to a market economy with social objectives in the forest sector.
Specific objectives have been modified significantly.
• The economic objective has been modified, amongst others through monetization of
environmental services which greatly increase the value of environmental services in
comparison to wood production value, and sustainable management and certification.
• The social objectives have been specified, amongst others, through ‘socialization’ (i.e.
broadening stakeholder participation and promoting decentralization and devolution), gender
issues, specific poverty reduction targets and land tenure changes.
• The environmental objectives have been modified, amongst others through reference to
environmental transfers (incl. CO2), emphasis on planning and quality of forest, and reduction
of violations.
A major initiative in the new strategy is the review of forest characterization. The criteria for Protected
Forests and other Special Use Forests were revised, and all provinces required to review and reclassify
forests, so that those with low protection values (i.e., less critical Protection Forests) would be
reclassified as Production Forests. Modern conservation approached will be pursued.
Forest protection will be devolved, to some extent, from State authorities to local communities. The
new policy also pays attention to such themes, as research and policy development, which were
barely presented in the previous strategy.
With respect to poverty alleviation, the new policy no longer aims at sedentarisation of ethnic
minorities. It rather aims at improved land tenure arrangements for local communities and for poor
households. In particular, at diversification towards land-uses such as home gardens and agroforestry, as well community forestry arrangements and pro-poor financial mechanisms.
The 2006-2020 Vietnam Forestry Development Strategy is more analytical in style, including for
example a SWOT analysis of the sector, albeit without using this for the strategy development.
Besides the above mentioned shifts in emphasis, a significant change is the attention to
implementation and operationalisation in the strategy. While the tendency to plan regional targets in
great detail has diminished in the plan, the priority setting and role divisions have received explicit
attention and monitoring and evaluation procedures are included.
36
Based on and adapted from v Raamsdonk (in press)
58
Annex 6
Correlating forestry and poverty targeting
59