Climate Change Financing and Aid Effectiveness: Viet Nam Country Analysis

This report is one of five country studies that have been commissioned by the Capacity Development for Development Effectiveness (CDDE) Facility supported by the Asian Development Bank, Government of Korea, Government of Japan, Swedish SIDA and UNDP as part of a regional dialogue process also supported by the OECD DAC.

Climate Change Financing and Aid Effectiveness:

Viet Nam Country Analysis

August 2010

Nigel Thornton

Table of Contents

Acronyms 3

1 Executive Summary 4

2 Introduction 7

3 Country context 7

5 Alignment 16

6 Harmonisation 18

7 Managing for results 20

8 Mutual Accountability 21

9 Conclusions 21

The views expressed in this report are those of the author alone

AAA Accra Agenda for Action

COP Conferences of the Parties

D&D Deconcentration and Decentralisation

DSENRE Department of Science, Education, Natural Resources

and Environment

MARD Ministry of Agriculture and Rural Development

MoIT Ministry of Infrastructure and Transport

MONRE Ministry of Natural Resources and the Environment

MPI Ministry of Planning and Investment’s

NTP-RCC National Target Programme for the Response to Climate

ChangeOCCA Steering Committee for Climate Change Adaptation and

Mitigation

PD Paris Declaration

PGAE Partnership Group on Aid Effectiveness

REDD Reducing Emissions from Deforestation and Forest

Degradation in Developing CountriesSD&CC Sustainable Development and Climate Planning

SEDP Socio-Economic Development Plan

UNDP United Nations Development Programme

UNFCCC United Nations Framework Convention on Climate

Change

Executive Summary

Background

This report is one of five country studies that have been

commissioned by the Capacity Development for Development

Effectiveness (CDDE) Facility1 supported by the Asian Development

Bank, Government of Korea, Government of Japan, Swedish SIDA

and UNDP as part of a regional dialogue process also supported by

the OECD DAC The purpose of the initiative is to develop a set of

recommendations regarding the programming of climate change

finance at the national level The initiative seeks to strengthen the

management of climate change finance by beneficiaries and donors

through a consideration of Aid Effectiveness principles Findings

from the country studies will be discussed in a workshop to be held

in Bangkok, October 19-20 2010

Interviews for this Viet Nam study were conducted with officials

from key ministries and with the external funders who were

available over a three day period This was thus a very rapid

exercise, and is not a comprehensive study It can only begin to

raise key issues and is meant to be a prompt for discussion

The UNDP UNFCC, UNDP, the World Bank and the Stern Review

have all assessed that Viet Nam is one of the countries particularly

vulnerable to the adverse effects of climate change, notably sea

level rise2 Viet Nam is a signatory to the UNFCCC and the Kyoto

Protocol and has been an active participant in the Conferences of

the Parties (COP) Viet Nam has associated itself with the

Copenhagen Accord It is already benefiting from considerable

external funding for climate change from both global climate

change funds (such as GEF, CTF, UN-REDD), and bilateral sources

(see Annex A)

Viet Nam is seen as a leader in aid effectiveness, having

established mechanisms for donor co-ordination in accordance with

the Paris Declaration and Accra Agenda for Action principles as

localised in the Hanoi Core Statement The Aid Effectiveness

Forum (AEF) was officially established in February 2010 to provide

the overarching architecture for government-donor co-ordination

for ODA

1

More information on the CDDE Facility can be found at www.aideffectiveness.org

2

See Dasgupta, Susmita et al (2007): The Impact of Sea Level Rise on Developing Countries A

Comparative Analysis World Bank Policy Research Working Paper 4136, February 2007, the

UNFCCC 2007 “CLIMATE CHANGE: IMPACTS, VULNERABILITIES AND ADAPTATION IN

DEVELOPING COUNTRIES”, Stern, Nicholas et al (2006): The Economics of Climate Change: The

Stern Review Cambridge,

The Role of the Government

There is a growing understanding of the potential impacts of

climate change on Viet Nam among the country’s leadership

Climate change does not feature in the current Five Year

Socio-Economic Development Plan (SEDP) However, it is expected that

it will be incorporated into the next plan (2011-15)

The National Target Programme to Respond to Climate Change

(NTP-RCC) has been designed to strengthen and consolidate

capacity building and research as well to initiate action with sector

ministries and provinces It is not a national plan with costed

implementation projects, rather the NTP-RCC will lead to the

identification of activities and funding requirements Ministries

and provinces have been asked to develop costed action plans for

the response, but this process is not yet complete In addition,

other policies and programmes exist with an immediate bearing on

climate change action that are however not obviously addressed

under the NTP-RCC and the forthcoming action plans These

include policies on natural disaster risk management, energy

efficiency, renewable energy, and forestry, most of which have

national-international coordination and dialogue forums An

overarching strategy on climate change to address this and to

ensure prioritisation of action does not yet exist but is expected to

be developed

Most of the climate change funding provided to Viet Nam to date

does not appear on the government’s budgets, nor can it yet be

fully captured using government systems Any reporting on

financing for climate change, or its use, takes place through

secondary mechanisms

The Ministry of Natural Resources and the Environment (MONRE)

is the focal point for climate change under the UNFCCC While the

Ministry for Planning and Investment officially co-ordinates

external financing and overall development planning and MOF is

responsible for budgeting, MONRE is tasked with the co-ordination

of the national response to climate change However, it does not

possess the mandate to coordinate other ministries, and itself will

not be the beneficiary of the largest sums of climate change

assistance that are likely to be given to ministries such as the

Ministry of Agriculture and Rural Development (MARD) the

Ministry of Industry and Trade (MOIT), the Ministry of

Construction (MOC) and the Ministry of Transport (MOT), and

provinces This has resulted in a lack of institutional clarity that

the GoV still needs to address

The Role of Donors

Although it has been the subject of some discussion in the AEF,

there is no single forum for the co-ordination of donor funding for

the national response to climate change Given the lack of a single

strategy, donors are also not yet aligning behind government plans

Neither are they implementing their plans in a fully harmonised

way As a result they are not working in a way that is consistent

with the Hanoi Core Statement

External funders are using grants and loans, project and budget

support modalities to support climate change activities These

funds come both from bilateral programmes and from global

funding sources, including the GEF Respondents from the

Ministry of Finance noted they would prefer all assistance for

climate change to be fully integrated into national plans and

provided in the form of budget support It is recognised at present

this is not achievable, but should be the objective, according to

them However, whilst there are some notable exceptions (such as

JICA and AFD assistance for the NTP), the majority of funding

remains in a project-based modality

Indeed there is not yet a formal commitment from external funding

partners to align with government activities for climate change or

harmonise their activities beyond the umbrella of the Hanoi Core

Statement There is no memorandum of understanding or Heads of

Mission agreement that deals explicity with climate change

Donors do expect to include some elements of climate change

financing within the next ODA framework that will coincide with

Viet Nam’s next five year plan There is thus intended to be a

higher level of formal coherence with national budgeting processes

than at present

The Nature of Climate Change Financing

Viet Nam demonstrates the problem of defining what climate

change financing is Some traditional ODA channels and activities,

in part or in whole, deal with adaptation to or mitigation of climate

change (for instance funding for renewable energy or disaster risk

management) For this ODA funding, provided as grants or loans by

multilateral or bilateral partners, it is possible to debate whether

elements of this funding are additional to ‘business as usual’ ODA

Fundamentally, however, such funding would have to have been

provided, in spite of climate change

Alternatively some funds use specific channels, and to be accessed

have to be identified as funding new and additional activities that

will be necessary in order to adapt to or mitigate climate change

impacts These funds are only required because of the detrimental

effects on development that will result from climate change Such

funding is seen not as traditional ODA, but additional ‘climate

finance’ Furthermore, climate finance has introduced new

modalities for funds transfers, with a range of different channels,

including the opportunity for trading of carbon credits between

institutions and countries It thus is arguable whether its operation

should adhere to Aid Effectiveness principles at all However,

whilst Vietnam is able to directly access such funding, it does so

through traditional funding partners who manage such funding,

and the funds in operation share many of the same characteristics

as ODA

Conclusions

Viet Nam will require billions of dollars of external funding if it is to

fully respond to the challenge of climate change The country is

beginning to benefit from such funding, for a wide range of

adaptation and mitigation activities Viet Nam does have the

foundations in place for a coherent response to climate change in

accordance with aid effectiveness principles However, clarity on

what should be included when discussing climate change financing

and the division of roles and responsibility within both GoV and

among donors needs to resolved, if the full response is to be

developed In particular, should all elements of climate finance be

provided in accordance with Aid Effectiveness principles, even

though it additional to ‘business as usual’ ODA? It is expected that

the implementation of the next five-year SEDP will overcome some

of this uncertainty, and lead to increased role clarity between line

ministries Donors will need to improve their co-ordination, and in

particular move to implement more fully their prior commitments

to the Hanoi Core Statement Unfortunately, some of the difficulties

result from the requirements of the international architecture, and

the definitions and operation of funding mechanisms, that are

outside Viet Nam’s control

1 Introduction

This report is one of several that have been commissioned by the

Capacity Development for Development Effectiveness (CDDE)

Facility3 supported by the Asian Development Bank, Government of

Korea, Government of Japan, Swedish SIDA and UNDP as part of a

regional dialogue process also supported by the OECD DAC The

purpose of the initiative is to develop a set of recommendations

regarding the programming of climate change finance at the

national level The initiative seeks to strengthen the management

of climate change finance by beneficiaries and donors through a

consideration of Aid Effectiveness principles Findings from the

country studies will be discussed in a workshop to be held in

Bangkok in October 2010, with a view to influencing the country

and regional response The analysis seeks to prompt discussion

and debate on the nature of financing for climate change,

particularly in relationship to the principles for Aid Effectiveness

articulated in the Paris Declaration (PD) and the Accra Agenda for

Action (AAA) The findings will be synthesized with findings from

similar studies in Bangladesh, Cambodia, Indonesia, the Philippines

and Viet Nam It will be used as an input into a regional workshop

to be held from October 19-20 2010 in Bangkok

This report considers current external climate change financing

mechanisms, specifically identifying whether and how aid

effectiveness principles are being applied

The process for the analysis included interviews with a limited

range of stakeholders (donors and government) as well as

consideration of other written material in country Whilst led by an

international consultant, it benefited significantly from

contributions from the UNDP funded project based in the

Government of Viet Nam’s Ministry of Planning and Investment’s

Department of Science, Education, Natural Resources and

Environment (MPI/DSENRE), the Sustainable Development and

Climate Planning (SD&CC) project, Mr Johan Kieft and Mr Le Duc

Chung Any findings are the author’s alone

In the early 1990s, Vietnam was among the poorest countries in the

world Two decades later, it has achieved Middle Income Country

3 More information on the CDDE Facility can be found at

www.aideffectiveness.org

(MIC) status,4 along the way lifting nearly half of the population

above the national poverty line.5

Vietnam began its transformation from a command to a market

economy in 1986, when the 6th Party Congress launched the Doi

Moi or ‘Renovation’ reform programme Though its impact has

been dramatic, the transformation was a carefully managed

process Economic transformation was accompanied by rebuilding

ties with the international community In 1993, Vietnam resumed

relations with the international financial institutions (World Bank,

IMF and ADB) and bilateral donors, giving it access to large-scale

development assistance It became an ASEAN member in 1995

and signed a Bilateral Trade Agreement with the United States in

2001 In 2006, it became a member of the World Trade

Organization, and embarked on an ambitious programme of

economic reforms aimed to increase the country’s global

competitiveness The Vietnamese economy responded rapidly to

these reforms, growing at an average of 7.5% between 1990 and

2008

Over the last two years, growth rates have slowed as a result of the

global financial crisis There have also been important changes in

the nature of economic growth, linked to Vietnam’s achievement of

MIC status As productivity has increased, higher value-added

exports such as electronic products have become more important

There has been a major real-estate boom (prices jumped 263% in

2007), with FDI shifting from industry into hotels and other real

estate

The shift towards MIC status has also affected the nature of the aid

dialogue in Viet Nam Traditional aid partners (particularly

bilaterals) are beginning to leave or reduce their programmes, and

Viet Nam’s relationship with regional partners is becoming more

important

Government and donor commitment to aid effectiveness is strong in

Viet Nam The 2005 Hanoi Core Statement (HCS) provides the

framework for a highly organised engagement around the Paris and

Accra principles The HCS brought together various reform

initiatives and efforts underway for some years, including National

planning processes, Public Financial Management, Public

Administrative Reform, Deconcentration and Decentralisation

(D&D), as well as Sector reforms and SWAP-type approaches The

country’s engagement with donors is managed by the Ministry of

Planning and Investment (MPI) in collaboration with the Ministry of

4 I.e., per capita GNI of more than US$995, which Vietnam achieved in 2009

According to some definitions, a country must reach this figure in 3 consecutive

years to qualify as a MIC, which would put Vietnam on the threshold.

5 MPI, “Midterm Review of the 2006- 2010 SEDP Performance”, 2008

Finance MPI leads on the implementation of the Hanoi Core

Statement

Following on from the earlier Partnership Group on Aid

Effectiveness (PGAE), the Aid Effectiveness Forum (AEF) was

officially established in February 2010 to provide the overarching

architecture for government-donor co-ordination around aid (and

now development) effectiveness issues The AEF is an umbrella

body for twenty Partnership Groups (PGs), setting the overarching

context for the relationship of the Government of Viet Nam to

external funding partners The individual PGs deal with specific

sectoral or thematic issues

In addition, the AEF (consistent with the spirit of the Accra Agenda

for Action) brings Civil Society Organisations, the National

Assembly and International Non-Governmental Organisations in to

the dialogue with government

The AEF meets in the week preceding the Consultative Group

meeting between external partners and government, allowing it

bring aid effectiveness issues to the attention of senior figures on

both sides of the development partnership

The 2008 Viet Nam Monitoring Survey for the Paris Declaration6

notes, “…ownership specifically concerns a country’s ability to

carry out two, inter- linked activities: exercise effective leadership

over its development policies and strategies; and co-ordinate the

efforts of various development actors working in the country.” The

survey concludes that Viet Nam does both these activities well at a

strategic level, but there are vulnerabilities for policy-making and

planning at sub-national level

Viet Nam is a signatory to the UNFCCC, the Kyoto protocol and has

also associated itself with the Copenhagen accord Viet Nam is

thus committed to implementing the decisions of the Kyoto Protocol

and the subsequent Conferences of the Parties (COP) Viet Nam is

therefore eligible to apply for most forms of climate financing, and

the country is involved in both the UN-REDD and Clean

6

OECD, 2008 SURVEY ON MONITORING THE PARIS DECLARATION: MAKING AID

MORE EFFECTIVE BY 2010

Development Mechanism processes Consequently, the

government has sought to implement the guidelines that derive

from the international agreements These include institutional

requirements, such as the identification and tasking of the relevant

focal points, and development of policies that enable the local

implementation of the global agreements

The Prime Minister has provided the most senior leadership on

climate change to date However, whilst committees of the National

Assembly have discussed elements of the agenda, as yet there is no

statement from the National Assembly that relates to a climate

change policy at the highest level Climate change does not feature

in the current Five Year Socio-Economic Development Plan (SEDP)

nor in the guidance framework for the next SEDP7 However,

indications are that the next Party Congress, to be held in early

2011, will pay particular attention to climate change, and climate

change will be mainstreamed in some form into the 2011-2015

SEDP It is also reported that the National Assembly may propose

that a new Committee for Natural Resources, Environment and

Climate Change is established to replace the current Committee for

Science, Technology and Environment

Respondents indicate that there was a growing understanding of

the potential impacts of climate change on Viet Nam among the

country’s leadership The role of the Prime Minster as chair of the

National Climate Change Steering Committee, recent development

of national programming and ministry action plans on climate

change all demonstrate commitment to action

Viet Nam is particularly vulnerable to the adverse effects of climate

change, notably sea level rise and its associated impacts8

However, as the recent UN-LMDG Joint Country Analysis noted

“Despite media attention and discussion at the national level, it is

evident that at the grassroots level many of the communities which

are most vulnerable still have little knowledge of climate change

and its potential effects.” 9 The climate change response therefore

remains a top-down process, which has not yet engaged the

energies and the self-interest of Vietnamese communities

Since 2003 the focal point for activities related to the UNFCCC has

been the Ministry of Natural Resources and the Environment

(MONRE) In a decision dated April 6th 2007, the Prime Minister

formally assigned responsibility to MONRE and other related

7 In Instruction No.751/2009/CT-Ttg

8 See Dasgupta, Susmita et al (2007): The Impact of Sea Level Rise on Developing

Countries A Comparative Analysis World Bank Policy Research Working Paper 4136,

February 2007, also the UNFCCC 2007 “CLIMATE CHANGE: IMPACTS,

VULNERABILITIES AND ADAPTATION IN DEVELOPING COUNTRIES”, and Stern,

Nicholas et al (2006): The Economics of Climate Change: The Stern Review Cambridge,

9

van Arkadie, B et al “Joint Country Analysis of Vietnam – UN-LMDG” July 2010

ministries/sectors (including local authorities) to implement the

Kyoto Protocol and Clean Development Mechanism (CDM)

A year later in July 2008, MONRE published the draft National

Target Program to Respond to Climate Change10 (the NTP-RCC)

“According to the World Bank (2007), Vietnam is among the countries

which are hardest hit by climate change and sea level rise Mekong and

Red rivers’ delta are projected to be the most seriously inundated With

sea level rise of 1 meter, about 10% of the population would be directly

affected and lost of GDP would be about 10% If sea level rises by 3

meters, about 25% of the population would be directly affected with GDP

lost of about 25%.”

Extract from draft document; the National Target Program to Respond to

Climate Change, July 2008

As well as identifying the potential impact of climate change on the

natural environment, economy and society of Viet Nam, the

NTP-RCC assigned roles and responsibilities for the national response

On the 2nd December 2008, the Prime Minister issued a formal

decision, approving the National Target Program to Respond to

Climate Change11 (Decision 158) Decision 158 sets out that the

NTP will be implemented in three phases:

“ - First Phase (2009 - 2010): Starting up

- Second Phase (2011 - 2015): Implementation

- Third Phase (after 2015): Development”

The initial, starting up, phase seeks to provide the foundations for

implementation Thus it focuses on developing the knowledge

base, specifically a coherent scientific basis for planning The

decision was to complete the analysis of possible climate change

impact scenarios, then pilot different projects to assess impacts on

vulnerable processes and locations At the same time as building

technical knowledge and capacity, the initial phase seeks to

strengthen the institutional response

4 Strengthening the capacities of organization, institutions and

policy on climate change

Review the current legislation and policy system, and assess the current

way of addressing climate change in the State’s legal documents and

policies; develop, supplement and perfect the legal document system,

mechanisms and policies to ensure the legal basis for activities to

respond to climate change.

a) Targets to be achieved by 2010

- Basically develop a framework of legal documents, mechanism, and

policies to respond to climate change;

- Develop, promulgate and implement a mechanism for coordination

among the ministries, sectors, and localities, and the NTP management

and implementation apparatuses

Extract from Decision on approval of the National Target Program to Respond to

Climate Change Decision 158/2008/QD-TTg of 2 nd December 2008

The NTP-RCC has an explicit objective to ensure that climate

change is incorporated into national and provincial plans

Specifically, it sets out that each line ministry and local

administration should have a Climate Change Action Plan These

are being put in place, though the system is not yet fully

functioning MONRE’s role, according to the NTP-RCC should be

to co-ordinate these plans, set guidelines for submission and

comment on them to ensure their technical appropriateness

It should be noted that the NTP-RCC is not, in reality, a national

plan for climate change; rather it created the policy framework for

building the national response Thus while it called upon line

ministries to develop their own action plans, it did not specify what

these plans should contain Therefore it was not a document that

identified all activities or projects for funding However, it set in

process a mechanism for the development of ministry level plans

that, when collated, may become an overall list of activities for

implementation and funding

This fully collated list has yet to emerge The most advanced

ministries, MARD and the Ministry of Infrastructure and Transport

(MOIT) have taken divergent approaches MARD has developed a

list of projects and MOIT has re-presented its existing

commitments under the Energy Efficiency law and the Renewable

Development action plan However, while the government has not

yet instructed MONRE to reframe the NTP-RCC to include the

details outlined in line ministry action plans, there was an

expectation from some respondents interviewed for this study that

it will This should, in theory, lead to a single schedule of funding

requirements

Among other things, the NTP-RCC currently identifies how the

co-ordination of climate change should take place, and begins to

describe the role of external funding partners As a result a

Standing Office for the NTP-RCC has been put in place, as well as

an Executive Board, chaired (according to decision 158) by the

Minister of MONRE The Standing Office and the Executive Board

are accountable to the Prime Minister and the National Steering

Committee, which he chairs

“The National Steering Committee for the National Target Program to

Respond to Climate Change (hereinafter referred to as the Steering

Committee) comprises of: the Prime Minister - Chairman; Minister of the

Ministry of Natural Resources and Environment - Standing Vice

Chairman; Minister of the Ministry of Planning and Investment - Vice

Chairman; Minister of the Ministry of Finance - Vice Chairman; Others

Members are the Minister of the Ministry of Agriculture and Rural

Development and Minister of the Ministry of Foreign Affairs.”

Extract from Decision on approval of the National Target Program to Respond to

Climate Change Decision 158/2008/QD-TTg of 2 nd December 2008

Other line ministries, notably the Ministry of Agriculture and Rural

Development (MARD), have a considerable stake in the

development of the national response MARD has established a

steering committee for climate change adaptation and mitigation

(OCCA), and a series of (primarily adaptation) projects for funding

(totalling up to $12bn for five years) on activities ranging from

rural infrastructure to agriculture systems adaptation These are

set out in its “Action Plan Framework for Adaptation and Mitigation

of Climate Change of the Agriculture and Rural Development

Sector Period 2008-2020” It is notable that this funding, however,

does not include that for REDD12, for which the Forest Management

Division in MARD is the designated focal point Viet Nam is

currently implementing its US$4.5m pilot programme13 to make

Viet Nam “REDD ready”, which will result, it is expected, in a

series of REDD projects within an overall policy framework Again,

this REDD programme will be costed and include funding

requirements

In the context of the Government of Viet Nam, MONRE is a young

and junior ministry (it was established in 2002) In contrast, MARD

is large, powerful and has been at the centre of the development of

Viet Nam for the last 30 years It has excellent policy capacity,

many more human resources than MONRE, and long established

donor partnerships While MONRE has the task of co-ordinating

the government’s policy response to climate change (setting

guidelines for and approving climate change action plans with

every line ministry), it is inhibited in that it does not readily have

the status or capacity to perform these tasks

Viet Nam arguably exhibits a characteristic that is being replicated

in several countries that have implemented the institutional

requirements of the global climate change governance bodies By

requiring the designation of focal points with particular

responsibilities for particular policy areas (e.g MONRE for the

UNFCCC, KP and CDM Designated National Authority, MARD for

UN-REDD and Aforestation/Reforestation, as well as for the

UNCCD) irrespective of the country context, unhelpful dynamics

between ministries and agencies for the co-ordination of climate

change policy may result In particular, this can affect how policy

ministries relate to each other over the competition for, and access

12 United Nations Collaborative Programme on Reducing Emissions from

Deforestation and Forest Degradation in Developing Countries

13

http://www.un-redd.org/UNREDDProgramme/CountryActions/VietNam/tabid/1025/

language/en-US/Default.aspx

to, funding for climate change from the different channels.

Climate change, like its related issue Disaster Risk Reduction, cuts

across sectors, and arguably requires management that is seeks to

integrate, not fragment policy, implementation and budgeting

processes

Since donor relations and overall Social-Economic development are

managed by the MPI, this ministry is also a critical player in the

management of external climate change financing Decree No

131/2006/NĐ-CP dated 9 November 2006 provides guidelines on

ODA management and utilization It regulates the establishment,

operation and completion of national systems for ODA, including

setting out how projects should be managed and monitored and

how information is to be shared between Vietnamese agencies and

donors Decree 131 identifies that whilst sectoral or thematic

policies are to be determined by the appropriate ministry or

agency, financial planning relating to ODA is the responsibility of

MPI, in co-ordination with the Ministry of Finance (MoF)

In interview, officials from the MOF said they were recommending

that MONRE build on its role as set out in the NTP and develop a

set of clear criteria for priority projects, which other line ministries

should use to plan accordingly Line ministries and provinces

should, it suggested, design their projects based on these priorities,

and then submit projects to MONRE, MOF and MPI for approval

(the latter being defined in this role as set out in decree 131) This

is a step change since the current NTP process identifies that

MONRE only set broad guidelines for ministries to set their own

priorities and design their own activities

Again it is worth reinforcing, however, that the leadership for

individual climate change projects is not MONRE, even though it is

the focal point for the UNFCCC By the same token, MONRE or

line ministries should not submit projects directly to the Prime

Minister for approval, but should submit proposals through MPI

MPI report that they have communicated this process (which is the

generic one for external financing to the donors)

MPI also report that they have not to date had discussions with

donors on the dynamics of climate change financing specifically

Certainly it appears that donors are not yet fully clear how the

agenda for climate change is fully owned within the GoV and the

respective roles of the key ministries Decision 158 of 2008 sets

specific targets for the GoV building international co-operation

around the national program

“6 Enhancement of International Cooperation

Taking opportunity to obtain and effectively use support from the

international community, including financial support and technological

transfer through bilateral and multilateral cooperation channels.

Participate in regional and global cooperation activities on climate

change.

a) Targets to be achieved by 2010

- Establish a cooperation mechanism between Vietnam and international

donors in implementing the NTP;

-Establish bilateral and multilateral cooperation between Vietnam and

some other countries/international organizations to respond to climate

change;

- Vietnam proactively contributes to the development of international

agreements/documents on climate change;

- Supplement and perfect the framework of legal documents on

mechanisms/policies to encourage investment into CDM projects, climate

change response projects, and environmentally friendly technology

transfer projects to facilitate foreign partners to invest into projects in

Vietnam

b) Targets to be achieved by 2015

- Complete and effectively implement the cooperation mechanism

between Vietnam and international donors in implementing the NTP;

- Continue to expand bilateral and multilateral cooperation between

Vietnam and other countries/international organizations to respond to

climate change;

- Promote the role of Vietnam in regional and international negotiations

and cooperation on climate change.”

Extract from Decision on approval of the National Target Program to Respond to

Climate Change Decision 158/2008/QD-TTg of 2 nd December 2008

MOF report that it has concerns about the administrative capacity

to deal with the range of projects and multiple funding channels

that are developing for climate change, both at the centre of

government (particularly in MONRE) but also in the provinces

There is the expectation that the poorer provinces will need direct

assistance from the centre

Equally, it is not yet clear how the implementation of the projects

will be monitored, albeit that the NTP begins to define such a

process At present there appear to be no plans for bodies outside

the central and provincial government institutions to implement or

monitor climate change projects

Institutional constraints not only affect the absorptive capacity for

funds aimed at government A recent review was clear that a lack

of capacity (in both the government and business) and an

unsupportive regulatory framework, results in Viet Nam not

benefiting from funding opportunities for the private sector

“The Clean Development Mechanism (CDM) under the Kyoto Protocol,

which relates to the generating and trading of emissions reduction

credits, is functioning in Viet Nam but not yet on a large scale Blockages