Page 1 1 PROGRAM INFORMATION DOCUMENT (PID) CONCEPT STAGE April 12, 2011 Report No.: AB6484 (The report # is automatically generated by IDU and should not be changed) Operation Name Higher Education Development Policy Program - Third Operation (HEDPO3) Region EAST ASIA AND PACIFIC Country Vietnam Sector Tertiary education (100%) Operation ID P116354 Lending Instrument Development Policy Lending Borrower(s) SOCIALIST REPUBLIC OF VIETNAM Implementing Agency INISTRY OF EDUCATION AND TRAINING Ministry of Education and Training 49 Dai Co Viet Street Hanoi Vietnam Tel: (84-4) 869-2397 Fax: (84-4) 869-4085 nkkhoi@moet.gov.vn Date PID Prepared April 12, 2011 Estimated Date of Appraisal March, 2012 Estimated Date of Board Approval July, 2013 Corporate Review Decision Following the corporate review, the decision was taken to proceed with the preparation of the operation. I. Key development issues and rationale for Bank involvement 1. Vietnam became one of the fastest-growing economies in the world following market reforms (known as "Doi Moi" or renovation) that opened up the country to foreign investment and improved the business climate. Growth of gross domestic product (GDP) averaged 8 percent in the 1990s, slowing slightly to 5.3 percent in 2009 as impacted by the global economic crisis and then quickly recovering to 6.8 percent in 2010. 2. Rapid growth has been accompanied by dramatic poverty reduction . The shift away from a centrally planned economy to a more market-oriented economic model has improved the quality of life for many Vietnamese. Per capita income rose from $220 in 1994 to $1,059 in 2009. The poverty rate has declined from 58.1 percent in 1993 to 28.9 percent in 2002 and to 14.5 percent in 2008, and has continued to decline since. 1 Vietnam is one of the top MDG Progress Index Performers (MDGs) 2 and, riding on its successful record, is aiming to become an industrialized country (MIC) by 2020. 3. Vietnam has become increasingly integrated with the world economy, and joined the WTO in November 2006. In February 2009 Vietnam officially joined the Trans-Pacific Partnership (TPP) as an 1 The more recent statistics are not directly comparable to the 1993 and 2006 figures, but the poverty reduction trend is continuing since 2006. See the poverty reduction section below. 2 Who are the MDG Trailblazers: A New MDG Progress Index; Center for Global Development, working paper 222, August 2010. Page 2 2 “associate member.” The integration with the world economy has become one of the cornerstones of its reform program. Exports have been the main drivers for growth, and foreign investment has been buoyant in recent years. The share of agriculture in GDP declined from 27 to 21 percent of GDP over the period 1995-2010 while that of industry rose from 29 to 41 percent over the same period. The services sector picked up 39 percent share of GDP in 2010. Tourism-related services have been especially buoyant. 4. Vietnam’s further growth and development will require a well-trained work force with the ability to adjust to changing needs and opportunities in the labor market. Judging by the experience of other MICs in the region and around the world, the demand for skills in Vietnam can be expected to evolve rapidly over the coming decade. Already there have been signs of increasing skills shortages, especially in larger, foreign owned and exporting firms. 3 5. GOV sets clear goals for higher education in its “Socio-Economic Development Plan 2006- 2010,” (SEDP). 4 The SEDP aims for an overall quantitative goal of “increasing enrollment in universities and colleges by 10 percent annually, to reach a level of 200 students over 10,000 population by 2010” and an overall qualitative goal of “approaching the advanced education standards of the region and the world,. 6. GOV elaborates on its goals for higher education in its “Higher Education Reform Agenda” (HERA) . 5 HERA develops forward-looking strategy for the development of higher education and research. Through HERA, GOV shows its commitment to improving the higher education system in a rapidly changing economic and social environment. It is strategic and comprehensive, with major emphasis on key operational reforms that the World Bank supports, namely: (i) improving the quality of teaching and research, with a view to integration into the increasingly globalized economy; (ii) extending HEI autonomy, especially in academic and administrative matters, with a view to improving responsiveness to the needs of beneficiaries; and (iii) increasing private sector investment, vital in the fiscal sustainability of an expanding sector. GOV’s main challenge is to operationalize these strategic goals by addressing broad governance issues (e.g. legal and financial frameworks) while promoting local, HEI-level modernization. GOV has requested the World Bank to provide continued support for Vietnam’s higher education agenda, recognizing the success of past collaboration in the sector. 7. The World Bank looks at economic development in a comprehensive way and can therefore work with GOV on a higher education strategy that is consistent with, and in support of, Vietnam’s overall development strategy . This is all the more critical at a time when Vietnam, having recently acceded to membership of the World Trade Organization, is looking to develop a skilled population, with a strong knowledge base, that will position the country well for expansion and integration with the global economy. More specifically, the World Bank can bring its international experience in the higher education sector to help Vietnam implement its HERA program. The World Bank has in-depth experience across many higher education projects in the design and implementation of competitive funding, institutional autonomy and performance-based financing to drive improved standards in research and teaching and improvements in the relevance of higher education, all of which are important objectives set out in HERA. 3 Vietnam Enterprise Surveys 2005 and 2009 4 Kê hoa ch Pha t triê n Kinh tê - Xa hô i 5 n m 2006 -2010 (Socio-Economic Development Plan 2006-2010), attachment to Government Resolution No. 25/2006/NQ-CP, dated October 9, 2006. 5 Nghi quyê t vê ô i m i C ba n va Toa n diê n Gia o du c a i ho c Viê t Nam Giai oa n 2006 -2020 (Government Resolution No. 14/2005/NQ-CP, dated November 2, 2005, on substantial and comprehensive renewal of Vietnam’s tertiary education in the 2006-2020 period). See Annex 1. Page 3 3 II. Proposed Objective(s) 8. The proposed program aims to support the government in the implementation of HERA to improve the higher education responsiveness and overcoming skill bottlenecks for a rapidly changing economic and social environment. In particular, the proposed program, through a Development Policy Lending instrument, will assist the MoET to develop and implement a series of policies and regulations defined in HERA which will create a more flexible, responsive and diverse higher education system, with more private sector participation, supporting governance and financing frameworks. Preliminary Description 9. The program consists of a series of key policy measures, each financed by a separate credit, linked to an indicative program of reform. The proposed operation is the third in a programmatic series of three to support the sustained implementation of selected elements of the GOV’s reform agenda. In particular, the proposed operation aims to continue support for the government efforts in strengthening governance, rationalizing the financing system, improving the quality of teaching and research, improving accountability for performance, and enhancing transparency in financial management within the higher education sector that have been started under the HEDPO1. Measures implemented by Government on the basis of policy analysis and development will be carried out with technical assistance under grant- financed component of HEP2 in the four key areas, including governance, financing, quality assurance and public finance management. The brief description is as follows: 10. Governance . The proposed program aims to improve the governance of the higher education and research system at both national, regional and HEIs levels, This implies, in particular, giving greater autonomy to individual institutions, increasing their accountability and introducing measures in order to create a climate of competition between and within institutions that promotes improvement. 11. Financing. The proposed program aims to enhance efficiency and equity of higher education financing through promoting greater autonomy of higher education institutions in managing their own finance and ensuring equitable opportunities to all students based on ability and aspirations and society’s needs. 12. Quality assurance. The proposed program aims to improve the quality of teaching and research of higher education to meet the market demands by establishment of independent quality assurance system using standards –based and credit - based framework for higher education institutions qualifications. 13. Public finance management. The proposed program aims to improve the efficiency and transparency in public resource use by adopt and apply a reliable financial management system, including internal and external audit system in accordance with sound financial management practices. III. Poverty and Social Impacts and Environment Aspects Poverty and Social Impacts 14. The policy actions included in this second operation are expected to have generally positive or at worst no adverse poverty and social impacts. In its support to restructure HE system toward greater autonomy to HEIs, promote participation of private sector delivery and a comprehensive financing strategy to address needs for fund diversification but also equitable access the reform is expected to have generally positive effects. The proposed policy measures will make the HE system more efficient, accountable and effective which should benefit every student, including the poor and disadvantaged. Environmental Aspects 15. The policies supported by the proposed operation relate to governance, financing, and quality of teaching and are not likely to have any significant positive or negative effects on the country's environment, forest, and other natural resources. Page 4 4 IV. Tentative financing Source: ($m.) BORROWER/RECIPIENT 0 International Development Association (IDA) 50 Total 50 V. Contact point TTL Contact: Binh Thanh Vu Title: Sr Education Spec. Tel: 202-458-8954 Fax: 202-522-3394 Email: Tvu@worldbank.org Location: Washington DC, (IBRD) Borrower Contact: Bui Van Ga Title: Vice Minister, Higher Education Department, Ministry of Education and Training Fax: (84-4) 869-4085 Tel: (84-4) 869-2397 Email: Buivanga@ac.udn.vn nkkhoi@moet.gov.vn Location: Hanoi, Vietnam VI. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop