Document of The World Bank Report No: ICR00004434 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A SERIES OF IDA CREDITS (CREDIT NO. 5211-VN AND CREDIT NOS. 5481-VN AND 5482-VN) IN THE AMOUNTS OF SDR 162.7 MILLION (US$250 MILLION EQUIVALENT) AND SDR 161.8 MILLION (US$250 MILLION EQUIVALENT) AND AN IBRD LOAN (LOAN NO. 8612-VN) IN THE AMOUNT OF US$150 MILLION TO THE SOCIALIST REPUBLIC OF VIETNAM FOR THE FIRST, SECOND AND THIRD ECONOMIC MANAGEMENT AND COMPETITIVENESS DEVEOPMENT POLICY OPERATIONS (2013, 2014, AND 2016) MAY 23, 2018 Macroeconomics, Trade and Investment Global Practice Vietnam Country Management Unit East Asia and Pacific Region CURRENCY EQUIVALENTS (Exchange Rate Effective 16 March 2018) Vietnamese Dong Currency Unit = (VND) 1.00 VND = US$ 0.000044 1.00 US$ = VND 22,748.30 1.00 US$ = SDR 0.69 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AAAs Analytical and Advisory Activities ADB Asian Development Bank APs Administrative Procedures APCA Administrative Procedures Control Agency ASEAN Association of South East Asian Nations ABP Australia-WB Strategic Partnership in Vietnam CFAA Country Financial Accountability Assessment CIEM Central Institute for Economic Management CIT Corporate Income Tax CPIA Country Policy and Institutional Assessment CPS Country Partnership Strategy DA Deposit Account DFAT Department of Foreign Affairs and Trade, Australia DFID Department for International Development DPF Development Policy Finance DSA Debt Sustainability Analysis EMCC Economic Management and Competitiveness Credit FA Financial Agreement FDI Foreign Direct Investment FATDC Foreign Affairs, Trade and Development Canada FSAP Financial Sector Assessment Program GDP Gross Domestic Product GDT General Department of Taxation GCs General Corporations GOV Government of Vietnam GSO General Statistics Office IDA International Development Association IDF Institutional Development Fund IFC International Finance Corporation ILO International Labor Organization IMF International Monetary Fund JICA Japan International Cooperation Agency MDGs Millennium Development Goals MDTF Multi-Donor Trust Fund MOF Ministry of Finance MOIT Ministry of Industry and Trade MOJ Ministry of Justice MONRE Ministry of Natural Resources and Environment MPI Ministry of Planning and Investment MTDS Medium-Term Debt Management Strategy MTIF Medium-Term Investment Framework NPLs Non-performing Loans OECD Organization for Economic Cooperation and Development PAPI Public Administration Performance Index PCI Provincial Competitive Index PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PFMRP Public Financial Management Reform Project PIM Public Investment Management PIR Public Investment Reform PPP Public Private Partnership PRSC Poverty Reduction Support Credit ROSC Report on the Observance of Standards and Codes SAV State Audit of Vietnam SBV State Bank of Vietnam SECO Swiss State Secretariat for Economic Affairs SEDS Socio-Economic Development Strategy SEDP Socio-Economic Development Program SEGs State Economic Groups SMEs Small and Medium Enterprises SOCBs State-owned Commercial Banks SOEs State-owned Enterprises TAMP Tax Administration Modernization Project TWG Technical Working Group UNIDO United Nations Industrial Development Organization UNDP United Nations Development Programme VAT Value-Added Tax VAMC Vietnam Asset Management Company VASS Vietnam Academy of Social Sciences VCCI Vietnam Chamber of Commerce and Industry VDR Vietnam Development Report WTO World Trade Organization Regional Vice President: Victoria Kwakwa Country Director: Ousmane Dione Senior Global Practice Director: Carlos Felipe Jaramillo Sector Manager: Deepak K. Mishra Project Team Leaders: Habib Rab and Sebastian Eckardt ICR Team Leader: Annette De Kleine Feige Vietnam First, Second and Third Economic Management and Competitiveness Credits and Loan Contents Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring 1. Project Context, Development Objectives And Design ........................................................................ 1 2. Key Factors Affecting Implementation and Outcomes ....................................................................... 11 3. Assessment of Outcomes .................................................................................................................... 14 4. Assessment of Risk to Development Outcome ................................................................................... 20 5. Assessment of Bank and Borrower Performance................................................................................ 20 6. Lessons Learned.................................................................................................................................. 23 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ..................................... 24 Annex 1: Bank Lending and Implementation Support/Supervision Processes .......................................... 26 Annex 2: Beneficiary Survey Results ........................................................................................................ 29 Annex 3: Stakeholder Workshop Report And Results ............................................................................... 30 Annex 4: Borrower's Letter of Assessment of the ICR Report for the EMCC Series ............................... 31 Annex 5: Comments of Cofinanciers and Other Partners/Stakeholders .................................................... 33 Annex 6: List of Supporting Documents ................................................................................................... 34 Annex 7: Summary of Prior Actions by Operation.................................................................................... 35 Annex 8: Prior Actions Achieved by DPF in the EMCC Series ................................................................ 42 Annex 10: AAA Underpinnings for the EMCC Program .......................................................................... 50 Annex 11. Summary of EMCC Programmatice AAAs and TA Activities ................................................ 51 Map of Vietnam .......................................................................................................................................... 53 The ICR Report for the First, Second and Third Economic Management and Competitiveness Credits and Loan was prepared by a team consisting of (in alphabetical order) : Adu-Gyamfi Abunyewa (Senior Procurement Specialist, GGOPP) ; Duc Minh Pham (Senior Economist, GMTP1) ; Annette De Kleine Feige (Team Leader and Senior Economist, GMTP1) ; Sebastian Eckardt (Program Lead, EACVF) ; Minh Van Nguyen (Senior Economist, GGOEP) ; Phuong Anh Nguyen (Public Sector Specialist, GGOEP) ; Khanh Linh Thi Le (Program Assistant, EACVF) ; Quang Hong Doan (Senior Economist, GMTP1) ; and, Quyen Hoang Vu (Senior Economist, GGOEP). Peer Reviewers for the ICR are Birgit Hansl (Program Leader, EACPF), Cem Dener (Lead Governance Specialist, GGOSC), and David Knight (Senior Economist, GMTP2). Comments were also received from Achim Fock (Manager, Operations, EACVF), Emmy Yokoyama (Senior Operations Officer, GMTOS), Naito Yuko (Representative), Japan International Cooperation Agency (JICA), Nguyen Hong Giang (Senior Program Officer (Economist)), Swiss State Secretariat For Economic Affairs Swiss State Secretariat for Economic Affairs (SECO), and the International Cooperation Department (ICD) at the State Bank of Vietnam (SBV). Data Sheet A. Basic Information Program ID - P122793 - Economic P146095 - Economic P157405 - Third Operation Name Management Management Economic Competitiveness Competitiveness Management and Credit 1 Credit 2 Competitiveness Credit L/C/TF Number(s) IDA-52110 IDA-54810, IDA- IBRD-86120, IDA- 54820 54810, IDA-54820 Country Vietnam Vietnam Vietnam Borrower THE SOCIALIST THE SOCIALIST THE SOCIALIST REPUBLIC OF VIET REPUBLIC OF VIET REPUBLIC OF VIET NAM NAM NAM Financing DPL DPL DPL Instrument: Original Total USD 250.00M USD 250.00M USD 150.00M Commitment Revised Amount: USD 250.00M USD 250.00M USD 150.00M GCDisbursed Amount USD 247.01M USD 236.82M USD 150.00M Implementing The State Bank of The State Bank of The State Bank of Agencies Vietnam (SBV) Vietnam (SBV) Vietnam (SBV) Cofinanciers and Japanese International Japanese International Japanese International Other External Cooperation Agency Cooperation Agency Cooperation Agency Partners (JICA), Asian (JICA), Asian (JICA), Swiss Development Bank Development Bank Secretariat for (ADB), Swiss (ADB), Swiss Economic Affairs Secretariat for Secretariat for (SECO), UK Economic Affairs Economic Affairs Department for (SECO), UK (SECO), UK International Department for Department for Development (DfID), International International Australian Department Development (DfID), Development (DfID), of Foreign Affairs and Australian Department Australian Department Trade (DFAT), Foreign of Foreign Affairs and of Foreign Affairs and Affairs, Trade and Trade (DFAT), Foreign Trade (DFAT), Foreign Development Canada Affairs, Trade and Affairs, Trade and (FATDC) Development Canada Development Canada (FATDC) (FATDC) B. Key Dates P122793 - Economic P146095 - Economic P157405 - Third Management Management Economic Management Competitiveness Credit Competitiveness Credit and Competitiveness 1 2 Credit Concept Review 10/09/2012 11/18/2013 11/24/2015 Appraisal 12/14/2012 01/17/2014 02/15/2016 Approval 03/19/2013 06/05/2014 05/12/2016 i Effectiveness Original Date Not available 10/15/2014 12/30/2016 Revised / Actual Date(s) 08/01/2013 10/30/2014 04/30/2017 Restructuring(s) Midterm Review Original Date Not applicable Not applicable Not applicable Revised / Actual Date(s) Not applicable Not applicable Not applicable Closing Original Date 01/30/2014 01/31/2015 04/30/2017 Revised / Actual Date(s) 01/30/2014 01/31/2015 04/30/2017 C. Ratings Summary C.1 Performance Rating by ICR Overall Program Rating Outcomes Moderately Satisfactory Risk to Development Outcome Moderate Bank Performance Moderately Satisfactory Borrower Performance Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performancy (by ICR) Overall Program Rating Bank Ratings Borrower Ratings Quality at Entry Moderately Satisfactory Government Implementing Moderately Satisfactory Quality of Supervision Moderately Satisfactory Agency/Agencies Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance Performance C.3 Quality at Entry and Implementation Performance Indicators P122793 - Economic Management Competitiveness Credit 1 Implementation QAG Assessments (if Rating Indicators Performance any) Potential Problem No Quality at Entry (QEA) Not applicable Program at any time (Yes/No): Problem Program at any No Quality of Supervision Satisfactory time (Yes/No): (QSA) DO rating before Moderately Satisfactory Closing/Inactive status P146095 - Economic Management Competitiveness Credit 2 Implementation Indicators QAG Assessments (if Rating Performance any) Potential Problem No Quality at Entry (QEA) Not applicable Program at any time (Yes/No): ii Problem Program at any No Quality of Supervision Satisfactory time (Yes/No): (QSA) DO rating before Moderately Satisfactory Closing/Inactive status P157405 - Third Economic Management and Competitiveness Credit Implementation QAG Assessments (if Rating Indicators Performance any) Potential Problem No Quality at Entry (QEA) Not applicable Program at any time (Yes/No): Problem Program at any No Quality of Supervision Moderately Satisfactory time (Yes/No): (QSA) DO rating before Moderately Satisfactory Closing/Inactive status D. Sector and Theme Codes P122793 - Economic P146095 - Economic P157405 - Third Economic Management Competitiveness Management Competitiveness Management and Competitiveness Credit 1 Credit 2 Credit D.1 Major Sector/Sector and Original number / Actual number Public Administration Public Administration Public Administration Other Public Administration Other Public Administration Other Public Administration 22 / 34 / 34 37 / 37 22 Central Government (Central Central Government Central Government (Central Agencies) 22 / 22 (Central Agencies) 27 / 27 Agencies) 22 / 22 Financial Sector Financial Sector Financial Sector Banking Institutions 22 / 22 Banking Institutions 18 / 18 Banking Institutions 23 / 23 Industry, Trade and Services Industry, Trade and Services Industry, Trade and Services Other Industry, Trade and Other Industry, Trade and Other Industry, Trade and Services 22 / 22 Services 18 / 18 Services 33 / 33 P122793 - Economic P146095 - Economic P157405 - Third Economic Management Competitiveness Management Competitiveness Management and Competitiveness Credit 1 Credit 2 Credit D.2 Major Theme/Theme/Sub Theme and Original number / Actual number Economic Policy Economic Policy Economic Policy • Fiscal Policy 6 / 6 • Fiscal Policy 9 / 9 • Fiscal Policy 11 / 11 • Fiscal sustainability 2 / 2 • Tax policy 9 / 9 • Fiscal sustainability 11 / 11 Finance Private Sector Development • Financial Stability 28 / 28 • Business Enabling Environment • Public Expenditure Policy 2 / • Financial Sector oversight 33 / 33 2 and policy/banking • Regulation and Competition regulation & restructuring Policy 33 / 33 28 / 28 • Tax policy 2 / 2 Public Sector Management Public Sector Management iii • Public Finance Management • Public Finance Management 22 / 23 / 23 22 • Public Expenditure • Public Expenditure Management Management 14 / 14 11 / 11 • Macro-financial policies 6 / 6 • Domestic Revenue • Debt Management 11 / 11 • External Finance 2 / 2 Administration 9 / 9 • Public Administration 41 / 41 • Public Administration 34 / 34 • Monetary and Credit Policies • Transparency, • Transparency, Accountability 2/2 Accountability and Good and Good Governance 11 / 11 Governance 23 / 23 • State-owned Enterprise • Macroeconomic Resilience 2 / • State-owned Enterprise Reform Reform and Privatization 18 2 and Privatization 23 / 23 / 18 Private Sector Development • Jobs 100 / 100 • Business Enabling Environment 22 / 22 • Regulation and Competition Policy 22 / 22 Public Sector Management • Public Finance Management 17 / 17 • Public Expenditure Management 17 / 17 • Public Administration 50 / 50 • Transparency, Accountability and Good Governance 28 / 28 • State-owned Enterprise Reform and Privatization 22 / 22 E. Bank Staff P122793 - Economic Management Competitiveness Credit 1 Positions At ICR At Approval Vice President Victoria Kwakwa Axel van Trotsenburg Country Director Ousmane Dione Victoria Kwakwa Practice Manager/Sector Director Deepak Mishra Sudhir Shetty Task Team Leader Sebastian Eckardt Habib Rab ICR Team Leader Annette De Kleine Feige ICR Primary Author Annette De Kleine Feige P146095 - Economic Management Competitiveness Credit 2 Positions At ICR At Approval Vice President Victoria Kwakwa Axel van Trotsenburg iv Country Director Ousmane Dione Victoria Kwakwa Practice Manager/Sector Director Deepak Mishra Sudhir Shetty Task Team Leader Sebastian Eckardt Habib Rab ICR Team Leader Annette De Kleine Feige ICR Primary Author Annette De Kleine Feige P157405 - Third Economic Management and Competitiveness Credit Positions At ICR At Approval Vice President Victoria Kwakwa Xiaoqing Yu Country Director Ousmane Dione Victoria Kwakwa Practice Manager/Global Practice Deepak Mishra Satu Kristiina J. Kahkonen Director Task Team Leader Sebastian Eckardt Sebastian Eckardt ICR Team Leader Annette De Kleine Feige ICR Primary Author Annette De Kleine Feige F. Results Framework Analysis Program Development Objectives (from Program Document) The program develoment objectives (PDO) is as follows: “The EMCC series contributes to (i) strengthened financial sector governance and fiscal management; (ii) improved public administration, SOE management and public investment management; and (iii) reduced administrative burden and strengthened tax and procurement policies.” This supports the Government’s priorities set out in its Socio-Economic Development Plan (SEDP, 2011-2015) and Socio-Ecnomic Development Strategy (SEDS, 2011-2020), and in its priorities for structural reforms around state-owned enterprises (SOEs), the banking sector, and public investment that had been announced at the time of preparation for EMCC-1. Results Indicators The program concluded with twelve RIs that are organized under three Pillars and contribute to the measurement of achievement of the EMCC-supported reform measures pursued under these Pillars. There are four RIs under Pillar 1, Strengthened Financial Sector Governance and Fiscal Management; six RIs under Pillar 2, Strengthened Public Administration, SOE Management and Public Investment Management; and, two RIs under Pillar 3, Reduced Administrative Burden and Strengthened Tax and Procurement Policies. The RIs for the EMCC Series is presented in Table F.1, which includes information on the revisions to the indicators and their targets, along with reasons and processes followed for modifications introduced. Eleven of the twelve RIs were 100 percent achieved, and one RI was partially (substantially) achieved (90 percent). More specifically: under Pillar 1, among the four RIs, three were achieved (RI-1, RI-3, RI-4), and one was partially achieved (RI-2); under Pillar 2, all six RIs were achieved (RI-5, RI-6, RI-7, RI-8, RI-9, RI-10); and, under Pillar 3, both of the RIs were achieved (RI-11, RI-12). v F.2 Evolution of Results Indicators (RIs) for the EMCC Series Final Results Indicator- Baseline Value, Original Formally Actual Value number from EMCC-3 / incl. any updates Target Values Revised Achieved at Pillars (Source, as (from approval Target Completion or (RI without number = available) documents) Values Target Years dropped indicator) (DPO-#, if dropped) PILLAR 1: Strengthened Financial Sector Governance and Fiscal Management RI-1 Reduction in reported Non-performing loans (NPLs) Value EMCC-1: March End 2015 = 5 2015 = 2012 = 8.6 percent percent or less1 2.55 percent EMCC-2: 2016 = 4.6 percent 2.46 percent EMCC-3: n.a. 2017 = (SBV)1 1.99 percent Status - Achieved March 2018 SBV Update for 2012 = 4.08 percent Comments 100 percent achieved. The wording of the Indicator was simplified with (incl. % achievement) EMCC-2 from the original, “Reduced proportion of outstanding loans defined as nonperforming.” The Baseline was revised and reported at 4.6% according to the then existing regulation (Decision 493) for EMCC-2. The Baseline was subsequently revised as of 1 June 2014 with the effectiveness of the new regulation (Circular 2) for EMCC-3, and changed to “n.a.” with EMCC-3, given inconsistencies between the new and old methodology to calculate NPLs. The Client agreed to these changes, following consultations during the preparation of the two operations. RI-2 Number of joint stock commercial banks Value EMCC-1: EMCC-2: 2017 = 31 2010 = 42 2017 = 30 EMCC-2: EMCC-3: <30 2010 = 39 Status – Partially Updated 2010 Partially achieved achieved from SBV: 40 Comments 90 percent achieved. (Target change = 10 from updated baseline, actual = (incl. % achievement) 9). The target was very nearly met. This Indicator was introduced with EMCC-3 to measure progress in banking sector restructuring, following discussions with the Client. RI-3 Number of years during 2011-2015 in which public and publically guaranteed debt to GDP remain below statutory limit (65 percent) Value End 2012 = 1 2015 = 4 Below legal (MOF definition of threshold of PPG debt) 65 percent of GDP for all 5 years 2011- 2015 1 Based on Vietnam’s Accounting Standards. vi Status - Achieved Below threshold of 65 percent from 2011 through 2017 Comments 100 percent achieved. The wording of the Indicator was simplified and (incl. % achievement) clarified to be more explicit with EMCC-3, following consultation with the Client. Original Indicator wording: “Number of years the public debt is below the government target of 65 percent of GDP.” The wording for the Target was also revised with EMCC-3 to be more precise. RI-4 Number of treasury accounts Value End 2012 = 701 Target (2017): accounts (State 5 Treasury Treasury, MOF) Main Accounts Status - Achieved 5 main TSAs as of 2017 Comments 100 percent achieved. Following consultations with the Client, the new (incl. % achievement) Indicator was introduced with EMCC-2 to measure Treasury Singly Account (TSA) implementation. The Indictor was reworded to streamline and simplify with EMCC-3 from the original, “Consolidation of Treasury Main Accounts as a result of TSA implementation.” PILLAR 2: Strengthened Public Administration, SOE Management and Public Investment Management RI-5 Number of Provinces that disclose information on land management Value 2010 = 6 out of 63 15 by 2013 and EMCC-3: websites posted 45 by 20152 (2017): 45 maps of current provinces land use situations should (WB Land disclose Information information Disclosure on land Surveys) management by end 2015 Status - Achieved Achieved Comments 100 percent achieved. The Indictor was reworded to simplify it and make it (incl. % achievement) more explicit with EMCC-3 from the original, “Increased disclosure of information on land management.” The Target Value wording was also revised with EMCC-3 for clarification. These changes were discussed with and agreed to by the Client. RI-6 Share disclosed public officials’ income and asset declarations (%) Value 2012 = None 20 percent of 2013 = disclosed declarations 59.4 percent (Annual Anti- disclosed by 2015 = Corruption Report 2013 98.3 percent to National and 50 percent 2016 = Assembly) by 20153 98.9 percent 2017 = 2 Land is among the five most corrupt sectors according to the WB-GOV 2012 Anti-Corruption Diagnostic. 3 The amended Law on Anti-Corruption requires that asset and income declarations of public officials be disclosed at the office of the filers. vii 99.8 percent Status - Achieved Government Inspectorate update for 2010 = 18.7 percent Comments 100% achieved. The Indictor was reworded to streamline and simplify in (incl. % achievement) order to eliminate additional layer of objective with EMCC-3 from the original, “Enhanced disclosure of public officials’ income and asset declarations.” These changes were made in consultation with the Client. RI-7 Share of Risk-Based Audits in Total Audits for corporate taxpayers Value EMCC-2: EMCC-2: 2017: >50 39.44 percent of 35 percent of percent businesses businesses surveyed in surveyed in median province median reporting less province negotiation with reporting less tax authority at negotiation end 2013 with tax EMCC-3: authority at 2010 = 0 end 2015 Status – Achieved >90 percent in 2017 Comments 100 percent achieved. The new indicator was introduced with EMCC-2 to (incl. % achievement) measure progress in implementation of the amendments to the Tax Administration Law. It was replaced subsequently at the Client’s request with EMCC-3 from the original, “Businesses reporting less negotiation with tax authority as part of doing business.” The original measure is a perception based indicator, and ambiguous. It is unclear whether ‘negotiations’ in the original wording refers to formal negotiations or informal practices, and therefore difficult to interpret results. The revised indicator measures increased use of risk based audit selection, and is more directly linked to the prior action. RI-8 Reduced investments by SEGs in high risk non-core areas as a share of SEG capital Value End 2012 = End-2015 = 2017 = 0 (i) 0.13 percent for target (i) 0 percent securities; (ii) percent for 0.06 percent for securities; investment fund; (ii) 0 percent (iii) 0.16 percent for investment for insurance; (iv) fund; (iii) 0.8 1.53 percent for percent for banking; and, (v) insurance; (iv) 0.7 percent for real 0.8 percent for estate; (Report banking; and, 490/BC-CP, (v) 0.3 percent MOF) for real estate. Status – Achieved 2017 = 0 viii Comments 100 percent achieved. Following consultations with the Client, this (incl. % achievement) Indicator was introduced with EMCC-2 to measure implementation of prior action on divestment of high risk non-core businesses from SEGs. EMCC-3 revised the Target based on updated data to reflect SEGs (as opposed to other SOEs) and aggregated for all non-core asset types since all non-core assets be divested. RI-9 Number of SEGs disclosing their audited financial statements on their websites. Value End 2012 = 4 End 2015 = 8 EMCC-3: SEGs (2017): 8 SEGs Status – Achieved 2017 = 8 Comments 100 percent achieved. New indicator introduced with EMCC-2 to (incl. % achievement) implementation of Decree 61 (Prior Action 4.4) requiring all SEGs to disclose financial and non-financial information, as agreed with the Client. The wording was revised for simplification and streamlining with EMCC-3 from the original, “All SEGs disclose their audited financial statements on their websites.” RI-10 Capital expenditure arrears from the central budget (VND trillion) Value EMCC-3: June 2017 = VND 2013 = VND 43 30 trillion trillion Status – Achieved 2017 = VND 30 trillion Comments 100 percent achieved. The new Indicator introduced with EMCC-2 to (incl. % achievement) measure arrears clearance, as discussed with the Client. The wording of the Indicator was revised with EMCC-3 for simplification and streamlining to eliminate additional layer of objective (e.g. efficient capital expenditure). The original wording is, “Reduction in ratio capital spending to capital budget.” These changes were made in consultation with the Client. PILLAR 3: Reduced Administrative Burden and Strengthened Tax and Procurement Policies RI-11 Share of direct contracting over total contracting value (%) Value End 2012 = 40 End 2015 = 30 percent percent Status - Achieved Updated baseline: 2015 = 2012 = 34.1 21.08 percent percent Comments 100 percent achieved. In consultation with the Client, this Indicator was (incl. % achievement) introduced with EMCC-2 to measure implementation of the Procurement Law. EMCC-3 simplified and streamlined the wording of the indicator to eliminate additional layer of objective (e.g. efficient, equitable and transparent business environment) The original wording is, “Reduced percentage of direct contracting over total contracting value.” RI-12 Time needed to comply with tax payment requirements Value 2012 = (i) 320 End 2017 = (i) hours for VAT; 220 hours for (ii) 217 hours for VAT; (ii) 150 CIT (Paying Taxes hours for CIT Report) ix Status - Achieved End 2017 = (i) 219 hours for VAT; (ii) 132 hours for CIT Comments 100 percent achieved. Following consultations with the Client, EMCC-3 (incl. % achievement) simplified and streamlined the wording of the indicator to eliminate additional layer of objective (e.g. efficient, equitable and transparent business environment) The original wording is, “Reduced time needed to comply with tax payment requirements.” G. Ratings of Project Performance in ISRs P122793 - Economic Management Competitiveness Credit 1 Actual Disbursements (USD No. Date ISR Archived DO IP Millions) Moderately Moderately 01 08/11/2013 247.01 Satisfactory Satisfactory P146095 - Economic Management Competitiveness Credit 2 Actual Disbursements (USD No. Date ISR Archived DO IP Millions) Moderately Moderately 01 01/28/2015 236.82 Satisfactory Satisfactory P157405 - Third Economic Management and Competitiveness Credit Actual Disbursements (USD No. Date ISR Archived DO IP Millions) N/A N/A N/A N/A 150.00 H. Retructuring (if any) Not Applicable x 1. Project Context, Development Objectives And Design 1. This Implementation Completion and Results (ICR) report assesses the achievements of the intended outcomes of the Economic Management and Competitiveness (EMCC) programmatic series. More specifically, the EMCC Series of three development policy finance (DPF) operations was intended to support the Government of Vietnam’s (GoV) reform efforts from 2013 through 2016 in three critical cross-cutting outcomes: (i) Macroeconomic stability through enhanced financial sector stability, and maintenance of fiscal discipline; (ii) A transparent, efficient and accountable public sector through improved public administration and accountability, strengthened state enterprise management, and enhanced public investment management; and, (iii) An enabling business environment through a more efficient business environment, and greater transparency and equity of the business environment. The first two operations in the series are IDA credits in the amounts of SDR 162.7 million (US$250 million equivalent) for EMCC-1, and SDR 161.8 million (US$250 million equivalent) for EMCC-2. The third and final operation in the series, EMCC-3, is a loan in the amount of US$150 million.4 The three DPFs were approved by the Board of the World Bank (Bank) on March 19, 2013, May 5, 2014, and May 12, 2016, respectively, and fully were disbursed. They all were subsequently closed at the end of the respective twelve month periods. 1.1 Context at Appraisal 2. Vietnam graduated to middle income status in 2009, and had transformed from one of the poorest countries in the world, with annual per capita income below US$100, to a lower middle- income country within a quarter of a century. At the end of 2011, Vietnam’s annual per capita income was estimated at US$ 1,374.5 Using a ‘basic needs’ poverty line initially agreed in 19986, the poverty headcount fell from 58 percent in the early 1990s, to 14.5 percent by 2008, and by these standards is estimated to have fallen further by 2010.7 At the time of appraisal (end-2012) for the first operation in the series, the country had attained five of its ten original millennium development goal (MDG) targets, and was expected to attain two more by 2015. This remarkable record was supported by robust growth outcomes, buoyed by a systemic set of political and economic reforms (Đổi Mới) introduced in 1986, which had transformed the country into a more market oriented economy. 3. Following a robust growth record, the global financial crisis in 2008 exposed important gaps in Vietnam’s economic and institutional framework, and led to the recognition that reforms were needed to strengthen and sustain growth. Prior to the global financial crisis during the period from 2000 through 2007, real GDP growth averaged a vibrant 6.9 percent, driven mostly by factor accumulation, and in particular capital deepening. In part this reflected that the economy had benefitted from reforms in advance of joining the World Trade Organization (WTO) in 2007, which had contributed to higher private 4 The program was complemented by Trust Fund support: EMCC-2 and EMCC-3 were both supported by TF- 17737, and EMCC-3 was also supported by TF-A3028. 5 Source: World Bank, http://data.worldbank.org/country/vietnam. 6 The GSO-WB poverty line was presented in the 2000 Country Economic Memorandum Attacking Poverty (World Bank, 2000) and is approximately $1.10 (2005 Purchasing Power Parity (PPP)). It was constructed on the basis of the consumption behavior of the poor in the 1993 Vietnam Living Standards Survey (VLSS), and has been updated for inflation for each round of the VLSS. 7 A new poverty line was estimated for 2010 by the General Statistics Office (GSO) and World Bank (also referred to as the GSO-WB poverty line) that better reflects living conditions of the poor. The new poverty line is equal to VND 653,000 person/month ($2.25 person/day, PPP 2005). Based on the new line and updated monitoring system, the national poverty rate in 2010 is 20.7 percent, which compares to an official poverty rate of only 14.2 percent in 2010 using official MOLISA urban and rural poverty lines (VND 500,000 person/month and VND 400,000 person/month, respectively). 1 investment and FDI inflows, robust export growth and greater eficiency in the enterprise sector. 8 However, real GDP growth slowed subsequently to an average of 5.8 percent from 2008 through 2012, as labor productivity growth moderated sharply due to a skills deficit that led to a decline in the marginal productivity of capital accumulationAssessments and surveys at the time indicated that competitiveness constraints stemmed largely from a number of policy and institutional weaknesses.9 4. The slowdown in growth following the global financial crisis partly reflected bouts of heightened macroeconomic challenges. In the post-crisis years prior to the EMCC program, including 2011, Vietnam had been confronting significant macroeconomic stresses, including high inflation, volatility in the foreign exchange market, deceleration in real GDP growth, and vulnerabilities in the banking sector. Various factors contributed to these stresses, including: public sector governance weaknesses in implementating rules and regulations; inefficient public investments were contributing to declines in the marginal productivity of capital ; rapid credit growth led to high NPLs, and to severe liquidity problems for a set of very small banks. 5. The EMCC Series was central to the Bank’s engagement with the GoV to address the challenges of weakened growth and macroeconomic instability, and to avoid the middle-income trap. The GoV recognized that it needed to address underlying structural issues and strengthen its competitiveness to support stronger and sustainable growth outturns. EMCC was targetted at addressing these challenges and was closely aligned with the GoV’s Socio-Economic Development Strategy (SEDS 2011-2020), and the Bank’s Country Partnership Strategy (CPS FY2012-FY2016). The SEDS sets out the country’s goals over the ten year period through 2020, and the EMCC was designed to support the strategic breakthrough areas of the SEDS on improving market institutions and administrative reforms. This focus includes the policy areas of macroeconomic management, public financial management, public investment management, SOEs, financial sector, and business regulations. Correspondingy, the EMCC program was also directly aligned to the objectives under the first pillar of the CPS, focusing on improving national competitiveness, and supports measures to strengthen CPS Outcome 1.1: Improved Economic Management and Business Environment. This includes reforms to strengthen Vietnam’s macroeconomic policy framework, public financial management, the financial sector, and market-based regulations. 6. Buidling on consultations with the GoV, and lessons from the previous DPF program, the Bank prepared EMCC in 2012 in response to the GoV’s request for budget support. It was agreed that the program should focus on economic management reforms to enhance Vietnam’s competitiveness for sustained growth and poverty reduction. Competitiveness is broadly defined as “the set of institutions, policies and factors that determine the level of productivity in a country.”10 Macroeconomic instability, poor public service delivery, and high costs of doing business are symptoms of low competitiveness resulting from weak (or poor implementation of) policies and institutions. EMCC succeeded Vietnam’s Poverty Reduction Support Credit (PRSC) Series that was concluding in FY2012, and was significantly informed by lessons learned during its implementation. Key PRSC lessons adopted by EMCC include having: (i) a more focused reform program (e.g., only three pillars) with fewer operatoins (e.g., three DPOs), fewer triggers, and a more limited number of Government counterparts; (ii) the GoV lead in proposing triggers; and, (iii) dedicated resources to strengthen both the analytical work around specific reforms and the capacity of implenting line agencies. Design of the series was also informed by analytical work, in cluding the Vietnam Competitiveness Report (2010), and the Vietnam Development Reports (2009, 2010, 8 See VDR 2012 p.13-15 for an overview. 9 Ref: (i) CIEM, ACI and NUS, “Vietnam Competitiveness Report,” (p. 39 -57); (ii) VDR 2012; (iii) MOIT, UN, UNIDO, “Vietnam Industrial Competitiveness Report,” 2011 – Executive Summary; (iv) European Chamber of Commerce in Vietnam, “White Book of Trade, Investment Issues and Recommendations,” (2012) and the EuroCham Business Climate Index. 10 World Economic Forum, Global Competitiveness Report. 2 and 2012). Subsequently, with EMCC-2 and EMCC-3, the operations were informed by other analsys as it was completed, such as the Public Expenditure Review and other AAA, including various policy notes (Annex 9, Summary of EMCC Programatic AAA and TA Activities). The EMCC Series was highly relevant to the challenges identified at the time and continues to be relevant. 7. EMCC was also developed and implemented in close consultation with Development Partners. From the onset, the EMCC series served as a central platform for a coordinated policy dialogue between the GoV and several development partners, including IDA, Japan, Switzerland, Australia, UK and Canada. Throughout the preparation and implementation of the three operations of the series, all development partners participated actively in the policy dialogue. This has helped align policy messages, build consensus on and reinforced support for reforms among the country’s main development partners around a core set of reform measures. The Bank has also coordinated on major structural reforms through regular staff level exchange with the IMF. Co-financing for EMCC-3 was provided by the Swiss Secretariat for Economic Affairs (SECO) and the Department of Foreign Affairs, Trade and Development Canada (DFATD).11 8. The macroeconomic framework was broadly adequate for EMCC-1, and generally improved during the period of preparation and implementation for the remaining two operations. While Vietnam continued to face important macroeconomic management challenges in 2012 during the preparation for EMCC-1, the macroeconomic situation had stablized by 2012, as inflationary pressures were significantly reduced and investment growth began to recover following a contraction in 2011. For the subsequent two operations that were delivered to the Board in 2014 and 2016, macroeconomic conditions further improved, as evidenced by a firming in real GDP growth from 5.2 percent in 2012 to over 6 percent during these years, buoyed in particular by a recovery in investment, for which growth exceeded 9 percent throughout the period. Inflationary pressures also receded to much more subdued levels. The fiscal primary balance improved incrementally during the period of preparation and implementation, although remaining at a relatively high deficit, exceeding 4 percent of GDP, compared with over 5 percent in 2012 and 2013. Reflecting persistent fiscal deficits, in contrast the government’s debt position deteriorated; public debt posted a securlar and sizeable increase from 2012 through 2016—albeit remaining below the legislated threshold of 65 percent of GDP, and peaked at a share of 63.6 percent in 2016 before declining to an estimated 61.4 percent in 2017. (Table 1). Table 1. Selected Macroecnomic and Social Indicators 2010 2011 2012 2013 2014 2015 2016 2017e Real GDP growth (%) 6.4 6.2 5.2 5.4 6.0 6.7 6.2 6.7 Gross fixed capital formation growth (%) 10.9 -7.8 1.9 5.3 9.3 9.4 9.9 10.0 Consumer price index (annual average, %) 9.2 18.7 9.1 6.6 4.1 0.6 2.7 3.5 Fiscal balance (% of GDP) -5.1 -4.0 -5.4 -6.6 -6.3 -6.2 -6.3 -4.0 Primary balance (% of GDP) -1.6 -0.1 -5.6 -5.9 -4.6 -4.2 -4.4 -3.8 Public and publicly guaranteed debt (% of GDP, MoF definition) 47.1 48.3 50.8 54.5 58.0 61.0 63.6 61.4 Current account balance (% of GDP) -3.7 0.2 6.1 4.5 5.0 0.1 4.1 2.5 Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population) 4.2 .. 2.8 .. 2.8 .. .. .. Sources: GoV, World Bank World Development Indicators (WDI), and International Monetary Fund International Financial Statistics (IFS). E = estimate 11 SECO provided co-financing for EMCC3 with an indicative amount of CHF8 million. DFATD Canada provided co-financing with an indicative amount of CAD6 million. 3 1.2 Original Project Development Objectives (PDO) and Key Indicators 9. EMCC-1 defined the program development objectives (PDO) as follows : The EMCC’s overall goal is to contribute to “enhanced competitiveness to boost growth and poverty reduction.” This supports the Government’s priorities set out in its Socio-Economic Development Plan (SEDP) 2011-2015, and in its recently announced priorities for structural reforms around state-owned enterprises (SOEs), the banking sector and public investment. 10. The EMCC-1 project document (PD) specifies desired program outcomes for the EMCC Series to be monitored by results indicators (RIs). The original outcomes identified in EMCC-1 include: adoption of a comprehensive banking sector restructuring plan ; adoption of a Medium-Term Debt Strategy ; establishment of a Treasury Single Account (TSA) ; amendments to the Anti-Corruption Law and the Tax Administration Law ; introduction of regular disclosure of financial information of all SEGs ; the launch of a new Management Information System to track, monitor, and evaluate large investments funded through the State Budget ; a reduction in total capital expenditure arrears in the central budget ; and, amendments to the Value Added Tax (VAT) Law and the Corporate Income Tax (CIT) Law. 1.3 Revised PDO and Key Indicators, and Reasons/Justification 11. The original PDO was revised in both of the subsequent operations of the series. While the wording of the PDOs had been rephrased, the essential objectives remained the same and were fully consistent across the operations, i.e., that the EMCC series was designed to support structural and economic governance reforms—including financial sector and fiscal management, strengthened public administration, SOE and public investment reforms—to enhance Vietnam’s competitiveness and medium growth potential, thereby laying the foundation for sustained progress in poverty reduction and shared prosperity. The revisions in EMCC-2 made the PDO more explicit by incorporating the areas of reform efforts to support the objectives, and effectively incorporated the ‘means’ to the ‘ends’ in the PDO. The most meaningful changes to the PDO were introduced with EMCC-3, for which the program scope had been partially scaled back. The rationale for the revision to the PDO in EMCC-3 was to accordingly more closely align it to the somewhat narrower pillar objectives. The evolution of the PDOs for the series is presented in Table 2, below. Table 2. Evolution of PDOs for the EMCC Series EMCC-1 The EMCC’s overall goal is to contribute to “enhanced competitiveness to boost growth and poverty reduction.” This supports the Government’s priorities set out in its SEDP 2011-2015, and in its recently announced priorities for structural reforms around state- owned enterprises (SOEs), the banking sector and public investment. EMCC-2 Enhanced competitiveness through strengthened financial sector and fiscal management; strengthened public administration through anti-corruption, SOE and public investment reforms; and reduced administrative burden through improved tax and procurement policies. EMCC-3 The EMCC series contributes to (i) strengthened financial sector governance and fiscal management; (ii) improved public administration, SOE management and public investment management; and (iii) reduced administrative burden and strengthened tax and procurement policies. 12. EMCC-1 had originally identified a total of ten results indicators (RIs), and subsequently in the course of the program some were revised, new ones added, and some were dropped. Most of the original RIs were sustained throughout the series, and the evolution of the RIs is presented in Annex 9. The program concluded with twelve RIs in the third and final operation and are presented in Table F.2, above. 4 The changes to the original RIs were made in consultation with the Client during preparation for EMCC-2 and EMCC-3. The modifications reflect various efforts, including to: strengthen the alignment of RIs with the policy reforms; clarify the wording; remove additional layers of objectives; and, to contain the number of RIs. More specifically, a number of RIs were added with EMCC-2, including, for exampe the RI to measure the number of treasury accounts to assess implementation of the TSA. With EMCC-3, for example, the RI on the number of joint stock commercial banks was added to measure progress in banking sector restructuring, while an RI measuing the primary fiscal balance was dropped, as there were no prior actions directly supporting consolidation of the fiscal position. In another example, an RI was replaced at the Client’s request with EMCC-3 from the original measure, for which the wording was too ambiguous to interpret results (i.e., unclear whether ‘negotiations’ refered to formal negotiations or informal practices). The revised indicator measures increased use of risk based audit selection, and is more directly linked to the prior action. One RI was dropped with EMCC-2, for insufficient attribution to the policy action (i.e., improvement in the economic and industry risk score measured by the Banking Industry Country Risk Assessments). Further, the implementation of AAAs and TA provided under the EMCC umbrella informed the dialogue on the reforms, and led to some changes in the RIs for better alignment with the reforms. For example, with EMCC-2, the TA on procurement supported the introduction of the RIs on the percentage of direct contracting over total contracting to monitor the anticipated reduction of direct contracting after effectiveness of the revised Procurement Law that was delivered early with EMCC-2 instead of with EMCC-3 as originally envisioned. Changes to the original outcomes are discussed in section 1.5, below. 1.4 Original Policy Areas Supported by the Program 13. The original DPF supported the GOV’s Socio-Economic Development Program’s (SEDP 2011-2015) aim of striving for a new economic growth model that targeted competitiveness and the quality of growth. At the time of preparation for EMCC-1, the economy had been experiencing a loss in competitiveness that was adversely impacting Vietnam’s medium to long-term development potential. The EMCC Series focused on addressing these challenges, and supported the GoV’s economic management reforms aimed at contributing to raising productivity in the economy. The original DPF reforms and outcomes were organized under three pillars : (i) Macroeconomic stability through: enhanced financial sector stability; and, maintenance of fiscal discipline; (ii) A transparent, efficient and accountable public sector through: improved public administration and accountability; strengthened state enterprise management; and, enhanced public investment management; and, (iii) An enabling business environment through: a more efficient business environment; and, greater transparency and equity of the business environment. Under these three pillars, the EMCC program supported seven overarching policy areas and objectives or sub-pillars : (i) financial sector; (ii) fiscal policy; (iii) public administration and accountability; (iv) state enterprise management; (v) public investment management; (vi) efficiency of the business environment; and (vii) equity and transparency of the business environment. 14. EMCC reforms were designed to reinforce stronger and more sustainable growth outcomes, and the number of reforms were fairly evenly distributed among the three pillars. For example, financial sector reforms under Pillar 1 were aimed at reducing the risk of a systemic crisis, as were SOE governance and restructuring reforms under Pillar 2. Similarly, fiscal policy reforms under Pillar 1 and public administration reforms under Pillar 2 were aimed at enhancing public sector management for improved service delivery and resource management, as were state enterprise and public investment management measures, also under Pillar 2. Efforts to improve efficiency and equity of the business environment under Pillar 3 would support increaed private sector investment and long-term growth prospects, reinforcing the positive growth impacts tied to improved public sector management under Pillar 1, including strengthened confidence. EMCC-1 identified a total of 32 reform measures to support these outcomes, nine of which were identified as EMCC-1 prior actions, and the remaining 23 as triggers for EMCC-2 and EMCC-3.There are ten policy reforms under Pillar 1, eleven under Pillar 2, and eight under Pillar 3. 5 1.5 Revised Policy Areas 15. There were a number of revisions to the EMCC policy areas. The three pillars and seven objectives or sub-pillars of the original DPF were revised in the subsequent operations. Overall, the pillars and objectives remained fundamentally the same across the operations, and revisions generally involved some refinement with a couple of exceptions. With EMCC-2, greater detail was introduced to the pillars and objectives. More specifically, under EMCC-2 the respective sub-objectives of the pillars from EMCC- 1 were incorporated into the pillars, which provided more detail. Further, Objective 7 was incorporated into Objective 6 with EMCC-2 for simplification since these were both related to the business environment, and this change was maintained with EMCC-3. With EMCC-3, the pillars were simplified, and the more specific language of the sub-pillars that had been incorporated with EMCC-2 (e.g., “Strengthened financial sector governance and fiscal management”) was retained and the overarching themes of the pillars from EMCC- 1 were dropped (e.g., “macroeconomic stability”). These changes in EMCC-2 and EMCC-3 highlighted the intent of the objectives and provided greater detail of the reform agenda. The exceptions are a couple of instances where more substantive changes were introduced. In particular with EMCC-3, the scope of Pillar 2 and of one of the three sub-pillars (Objective 3) were narrowed, reflecting that the program had been scaled back somewhat with EMCC-3. The evolution of the pillars and objectives for each of the operations is presented in Table 3. Table 3. Evolution of the Pillars and Objectives or Sub-pillars of the Original DPF EMCC-1 EMCC-2 EMCC-3 Pillar 1 Macroeconomic Strengthened financial sector governance and Strengthened financial stability fiscal management for macroeconomic stability sector governance and fiscal management Objective 1 Enhanced Strenthened policies for management of NPLs Same as EMCC-2 financial sector and promoting the restructuring of banks stability Objective 2 Maintenance of Strengthened debt and treasury management for Strengthened debt and fiscal discipline increased transparency and efficiency of PFM treasury management Pillar 2 Transparent, Strengthened public administration, SOE Strengthened public efficient and management and public investment management administration, SOE accountable for more transparency, efficiency and management and public public sector accountability of the public sector investment management Objective 3 Improved public Increased transparency and improved tax Increased transparency and administration administration for public sector accountability improved tax and and reduced corruption administration accountability Objective 4 Strengthened Improved regulatory environment and corporate Same as EMCC-2 state enterprise governance reforms for more transparency and management restructuring of SOEs Objective 5 Enhanced public Strengthened policies for public investment Strengthened policies for investment management for more efficient capital public investment management expenditure management Pillar 3 Enabling Reduced administrative burden and strengthened Reduced administrative business tax and procurement policies for an enabling burden and strengthened environment business environment tax and procurement policies Objective 6 More efficient Streamlined administrative procedures, and Streamlined administrative business strengthened tax and procurement policies for a procedures, and environoment more efficient, equitable and transparent strengthened tax and business environment procurement policies 6 EMCC-1 EMCC-2 EMCC-3 Objective 7 Greater Objective 7 was revised and incorporated into Same as EMCC-2 transparency and Objective 6 equity of business environment 16. Most of the original policy actions and triggers to support the pillars were sustained during the series, with eleven achieved for EMCC-2 and nine for EMCC-3, following ten for EMCC-1 for a total of 29 actions. This compares with the original 32 prior actions and triggers envisioned under EMCC- 1. While some triggers were added, particularly with EMCC-2, and other were dropped, particularly with EMCC-3, all of the ultimately agreed upon prior actions for each of the DPFs were fulfilled prior to the respective Board dates, and none of these reforms have been reversed. The evolution of the indicative triggers and prior actions is presented in Annex 7, and a summary of prior actions accomplished with each operation are presented in Annex 8. 17. The revisions reflect various factors, including overly ambitous and complex design, efforts to strengthen implementation, changing conditions, and late recognition of need to claw back the agenda. The program design was very ambitious in terms of scope and complexity, although compared with the predecessor program PRSC Series that encompassed ten operations, these had been substantially narrowed to help reduce fragmentation and risk of slippage. While the original design for the EMCC Series was ambitious in terms of scope, the reform agenda was viewed as heavy on institutional and legislative reforms and lighter on implementation reforms (albeit with the latter being supported in part by AAAs and TA). Given this perception, with EMCC-2 the program was modified to introduce more reforms to strengthen implementation. Some of these modifications, however, proved too ambitious and led to slippages and delays, and ultimately the Bank and Authorities agreed to scale back the program for EMCC- 3 (discussed further below). The context also started to change during the program implementation, with improving conditions that might have eased pressures to sustain the reform momentum. Another factor is that there was significant backloading of reforms in EMCC-3, and consensus to move forward with some of the more deeper reforms had not yet been consolidated. There were delays tied to the slippages that emerged following EMCC-2, and with the late recognition of needed revisions to permit moving forward with EMCC-3 the final operation was delivered in 2016 instead of 2015. This delay might also have played a role in the changes to the program, as elections were held in early-2016, and had EMCC-3 moved forward in early-2015 as originally expected, the elections would have come well after delivery. There was a change in the Bank’s team during implementation of the program, with a new task manager for the series coming on board in April 2015. However, there was no gap following the departure of the predecessor, and close engagement with Authorities was maintained. 18. Changes to the program under EMCC-2 mainly reflect an attempt to provide for greater implementation, which in part were clawed back under EMCC-3 due to slippages. A key example of scaling up is the introduction of a policy trigger for EMCC-3 for a specialized audit of the portfolio/credit quality of at least one systemically important bank. Delays were encountered, as the Authorities contended that they were already conducting more comprehensive and intensified audits, and eventually the trigger was dropped. Another example is the trigger for SOEs to disclose their financial information, which was modified to the ‘adoption of regulations’ for publication as a trigger for EMCC-3. It was then agreed to revert to the original version of this SOE trigger due to delays in implementation. Other factors came into play as well under EMCC-2, and changes were also introduced due to delays with implementation, and was taken as an opportunity to strengthen the reforms. Notably, the reform to launch a new management information system for large investments funded through the State Budget was dropped. This was replaced with a more critical reform measure of the clearance of capital expenditure arrears. The challenge of expenditure arrears had only become apparent after EMCC-1 was delivered, and was seen as an essential 7 reform to facilitate implementation of the Public Invesmtent Law, a key achievement of the program. Some reforms measures were dropped with EMCC-2, due to delays with implementation, for instance the trigger providing that the GoV formally classify the SEGs and GCs with time bound restructuring targets for individual SEGs and GCs, which was not replaced with a new trigger. 19. Ultimately, EMCC-3 was delayed by a year from 2015 to 2016 due to policy slippages, and the scope and scale of the operation were trimmed down in response to implementation challenges . The policy program for EMCC-3 was narrowed to focus on a selected set of nine prior actions, compared with eleven EMCC-3 triggers that were presented in the EMCC-2 board document (two prior actions were dropped and one was modified, as discussed further below). That said, EMCC-3 also included strengthening of reforms, notably by replacing the trigger for adopting an M&E system for administrative procedures control (that had been achieved) with the adoption of Resolution 19 on investment climate reforms—which is a more ambitious policy action towards the EMCC objective of improving the business environment, and is among the main successes of the program. Overall, the modifications of the EMCC-3 were guided by three main objectives; (i) given the relatively large number of initial triggers, the modifications aimed to streamline the program and focus on core reform measures; (ii) the modifications reflected feasibility of actions in light of an evolving reform environment, as the EMCC policy program addressed technically complex and politically challenging reforms and some triggers originally included the program were no longer feasible at the time; and, (iii) the modifications sought to selectively strengthen the policy content and in particular ensure direct links to the stated program objectives. The main modifications to EMCC-3 are as follows: • Trigger 1.6 “GOV has initiated a specialized audit of the portfolio/credit quality of at least one systemically important bank” (Dropped): This trigger was intended to support the pilot implementation of special financial audit of at least one systemically important bank to help to identify systemic risks and potential recapitalization needs. The Bank and the Development Partners had negotiated with the Authorities to conduct the audit according to international good practices, but could not reach an agreement. While the authorities undertook audits in several banks, these were conducted according to the outdated loan classification (Decision 493), limiting the quality of the results and the audit. As such, these audits did not constitute fulfillment of the requirements to mark it as completed. The Bank (and other Development Partners, including JICA) considered this an essential trigger to achieve the Pillar 1 objective (financial sector stability), and dropping it was a key factor in adjusting the loan amount (discussed below). • Trigger 4.4 “GOV has submitted a draft Law to NA setting out rules, regulations and oversight for investment and management of state capital in State Enterprises including consolidation of state accountabilities” (Dropped): The Law on Management of State Capital was passed by the NA in November 2014. The law is a significant step forward in strengthening the framework for management of SOE and state equity holdings. However, the law does not address the issue of consolidation of accountabilities and separation of regulatory and ownership functions. There are many legitimate reasons for this, in particular the challenge of finding a suitable model for a more consolidated ownership function that is workable in the context of Vietnam with a large number of remaining SOEs. Given that the stated original objectives of the trigger are not feasible in the short term, the related trigger has been dropped from the program. The authorities are now exploring alternative institutional models to achieve a stricter separation of regulatory and ownership functions. Moreover, since the remaining triggers related to reform of the SOE sector (pertaining to divestment of non-core assets and disclosure) are strong, the overall objective of this pillar remains relevant and feasible. • Trigger 6.4 “The Administrative Procedures Control Agency has adopted a Monitoring and Evaluation system for administrative procedures control” (Replaced): While the implementation 8 of the M&E system has been achieved, this trigger is replaced with the adoption of resolution 19 on investment climate reforms, which constitutes a stronger policy action towards the EMCC objective of improving the business environment and competitiveness by streamlining administrative and tax procedures. 20. Reflecting the adjustments to the program, the loan amount for EMCC-3 was adjusted to US$150 million (compared to US$250 million originally planned). This adjustment in the loan amount recognized that the remaining core program comprises several strong and credible reform measures, while at the same time that some important triggers, envisaged in the original program, had slipped. The other co- financers also adjusted the loan amount, including JICA, which reduced its loan from JPY15 billion to JPY 11 billion. The reduction was also supported by the GoV which was under strong pressure of the rapidly increased public debt. In 2016, the appraisal time of EMCC 3, the debt GDP ratio nearly reached 65 percent, the mandatory ceiling set by the National Assembly. 21. The final three pillars, six objectives, and 29 policy actions pursued under the EMCC program are presented in Figure 1, below. 1.6 Other Significant Changes 22. Not applicable. 9 10 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance 23. The programmatic series consisted of three single-tranche DPFs that were disbursed upon effectiveness for a total amount of US$650 million. The DPF funds were disbursed in single tranches, as reflected in the Financing and Loan Agreements. There were no special effectiveness conditions for any of the EMCC operations. Effectiveness was delayed with the third and final operation due to administrative porcedures and requirements on the GoV’s side12. (Table 3). All of the prior actions for each of the EMCC operations were satisfied before Board approval, and none of the prior actions has subsequently been reversed. (Annex 7 presents the evolution of the prior actions and triggers by operation, and Annex 8 presents a summary of prior actions achieved by each operation). Table 4. Key Dates of the EMCC-Series Operation Amount Approval Effectiveness Date Release Date (Received/Value) EMCC 1 US$250.00 million 03/19/2013 08/01/2013 08/02/2013 / 08/07/2013 EMCC 2 US$250.00 million 06/05/2014 10/30/2014 12/09/1014 / 12/15/2014 EMCC 3 US$150.00 million 05/12/2016 03/30/2017 04/04/2017 / 04/05/2017 2.2 Major Factors Affecting Implementation 24. Strong partnership with the GoV and Development Partners, strengthened by complementary AAAs and TA: The program benefited from close and longstanding engagemement between the Bank and the GoV, which was deepened for implementation of the EMCC Series with complementary AAAs and TA that was aimed at supporting capacity building and effective implementation to sustain reform momentum, and was intended to inform the evolution of the program as it progressed. The program also benefited from continued close collaboration with Development Partners, which provided complementary financing for AAAs and TA that also helped to build consensus around the reform agenda. While the number of IFIs involved with the EMCC program declined in comparison with the previous DPO series (PRSC), as Vietnam had graduated to middle-income status an no longer qualified for support in some instances, the close coordination, including the complementary AAAs and TA, led to a deepening of the collaboration between the Bank and Development Partners. 25. Adequacy of GoV’s commitment: The government was in principle strongly committed to the reforms of the program. However, the GoV was not able to fully control implementation because near-term priorities shifted with economic and political developments, and it took time to build consensus for far- reaching reforms in Vietnam, where the political process is strongly consultative. 26. Assessment of the design of the EMCC progm: While the operation was underpinned by sound diagnostics and a shared understanding of Vietnam’s development constraints, the program was ambitious in scope in particular. At the time of preparation, the country was facing significant economic and financial stresses, and expectations were optimistic about the time needed for deep legal and institutional reforms to be implemented and achieve their impact. 12 The high level of public debt was an important factor behind the delay of EMCC 3, which was prepared at the conclusion of SEDP 2011-15 and the preparation of SEDP 2016-20. In 2016, the reported debt GDP ratio was 64 percent, slighly below the mandatory level of 65 percent set by the National Assembly, causing particular concerns of the public and leading to a more cautious approach for new loans. 11 27. Soundness of the background analysis: The program was supported by extensive analysis carried out by the Bank and other Development Partners, including the IMF, ADB, and JICA, among others. For example, the strategic and analytical underpinnings for the EMCC were based on the GoV’s SEDS (2011- 2020), the Bank’s CPS (2012-2016), the Vietnam Competitiveness Report, and Vietnam Development Reports (2009, 2010, and 2012). 28. Risks identified: Risks were adequately perceived, but their potential severity was perhaps underestimated, particularly with the introduction of more ambitious reforms under EMCC-2 that were scaled back with EMCC-3. For instance, it was anticipated that a potential lack of ownership and leadership over the EMCC program could affect its end results. Among program risks, it was anticipated that a lack of ownership might stem from pusuing complex reforms through multiple agencies, despite the mitigation efforts to help strengthen Government ownership and coordination through new governance arrangements, i.e., with establishment of a Steering Committee. . 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization (a) Design 29. The SBV was the lead coordinating agency for the EMCC program and held overall responsibility for M&E. SBV was assissted by key implementing agencies, including for instance the Ministry of Finance (MoF), Government Inspectorate (GI), Ministry of Planning and Investment (MPI), Ministry of Industry and Trade (MoIT), General Department of Taxation (GDT) and the Ministry of Justice (MoJ). 30. To complement SBV’s role, the EMCC program had identified a three-tiered governance structure to strengthen M&E, implementation and utilization, and to facilitate coordination of the program. A Steering Committee chaired by a Deputy Prime Minister was envisioned to review and endorse the proposed areas of focus for the operations. A Technical Working Group (TWG) would lead technical discussions and analysis for triggers and prior actions. The TWG would help oversee the preparation of the operation, discuss the technical elements of prior actions, decide on analytical work, and brief the Steering Committee and Development Partners. This governance structure was intended to help build greater ownership for the EMCC operation among the lead technical staff both in Government and among Development Partners, which also supported the design of the three-tiered structure. The SBV was expected be responsible for overall coordination of the program. 31. The design of the Monitoring and Evaluation (M&E) arrangements was informed by the lessons from the predecessor PRSC budget support program. Under PRSC, which was much broader in scope and included many more implementing agencies, communication and coordination across the agencies proved a challenge. This resulted in fragmentation of the dialogue and ownership challenges. As a consequence to address these challenges, EMCC included the establishment of the Steering Committee and TWG that were aimed at introducing high level oversight. The design of the M&E system and the results framework of the DPOs was jointly designed with the Authorities and Development Partners. The results framework was developed to both monitor progress with the program and for internal review and reporting by the implementing agencies. The results indicators were directly related to the project objectives, and the data was collected by the line ministries and other agencies. (b) Implementation 32. The SBV coordinated the program at the technical level and facilitated the policy dialogue, and while the Steering Committee was officially established, its role during the implementation was limited. The Steering Committee was formed in 2012 and headed by a Deputy Prime Minister, however, 12 in part due to time constraints, it has not yet officially met. The envisioned TWG under the Steering Committee has yet to meet as well. Other factors might have contributed to the three-tiered implementation framework not working as envisioned, including that the Deputy Prime Minister appointed to head the Steering Committee was not responsible for all of the EMCC reforms under the existing division of labor of the GoV, although other members of the committee also provided some oversight.13 That said, the Steering Committee supported implementation of the program with written comments, along with SBV’s critical role in facilitating the policy dialogue across the implementing agencies. 33. Despite the shortcomings in the implementation of the M&E system, SBV helped to maintain a results-oriented dialogue through sustained close engagement. The dialogue between the GoV and the Bank on program implentation and outcomes was maintained, facilitated to SBV’s coordinating role. SBV supported the dialogue by continuing to coordinate across the agencies and in facilitating meetings between the implementing agenices and the Bank’s teams, and knowledge sharing (including for AAAs and TA), along with coordinating and gathering information for program monitoring and reporting. 34. While not explicitly identified as part of the M&E system, the extensive AAAs and TA under the EMCC umbrella proved an effective and sustainable alternative M&E system. The AAAs and TA were directly linked to the EMCC program objectives, and greatly deepened the dialogue with the Authorities. The AAAs and TA engagements essentially provided a bottom up M&E complementary sytem that also fostered supervision to the more top-down Steering Committee and TWG arrangements. Annex 11 provides a summary of the EMCC programmatic AAAs and TA activities. (c) Utilization 35. The dialogue with the Authorities was focused on prior actions and the RIs, coordinated by SBV and supported by ongoing AAAs and TA, during preparation and implementation of the EMCC program. The results indicators and AAAs and TA played a central role in the dialogue on reforms with the Authorities. For example, aides-memoires urged the GoV to take specific and concrete actions to meet agreed RIs and associated intended outcomes of the program. Additionally, as discussed above, TA provided for procurement reforms led to a strenghtening of the reform program. As a consequence, although design flaws of the governance structure might have confined the dialogue to a narrower group of policy- makers, the use of the prior actions and RIs as milestones in the dialogue, along with the intensive dialogue to deliver the AAAs and TA for the program proved effective, and supported delivery of EMCC-2 and EMCC-3. 2.4 Expected Next Phase/Follow-up Operation 36. The Bank has remained engaged in several of the EMCC program policy areas. The Bank continues to undertak AAAs and provide TA associated with the reform areas supported by the DPFs, such as in the areas of governance, public investment management, and procurement. The most recent CPS (FY2017-FY2021) maps out an active program aligned with the GoV’s SEDS (2011 -2020) that supports continued Bank engagement in the EMCC reform areas. 37. Correspondingly, the GoV remains committed to the EMCC progrom, and indeed has accelerated implementation of reforms supported by it. The reform momentum has strengthened, 13 The deputy head of the Steering Committee was a Deputy Governor of the State Bank of Vietnam; and the Steering Committee members included officials from the Government Office, the Ministry of Finance, the Ministry of Planning and Investment, the Ministry of Industry and Trade, the Ministry of Labor, Invalids and Social Affairs, the Ministry of Foreign Affairs, the Ministry of Justice, the Ministry of Home Affairs and the Government Inspectorate. 13 including in 2017 and into early-2018, with the new cabinet putting strong emphasis on the creation of a facilitating state. Notable measures include: (i) issuance of the Medium Term Fiscal Plan 2016-2020, which strengthens fiscal disciplines, and envisages adjustment of the fiscal position over the coming four years with the aim of reducing the fiscal deficit to 3.5 percent of GDP by 2020 ; (ii) the National Assembly’s Resolution 42 and Prime Minister Decision 1058 on a banking restructuring program in 2017 to strengthen the legal framework for dealing with NPLs and linking NPLs’ resolution to the restructuring of commercial banks; and, (iii) the issuance of a PM Decision on Restructuring the SOEs and SEGs in 2016-20, as well as the establishment of a board in 2018 to exercise state management and ownership functions in SOEs, which supports separation of the state regulatory and ownership functions. 38. In 2016, the GoV jointly with the Bank launched the Vietnam 2035 report that lays out a long-term vision for Vietnam and carriers forward the reforms pursued under the EMCC Series. This includes a wide-ranging reform agenda with key structural and governance reforms to address lagging productivity growth, modernize the governance framework, and enhance competitiveness. The SEDP (2016-2021) elaborates on this reform agenda and places priority on the continuation of EMCC reform pillars and policy areas, namely public financial management, banking sector, and business climate. The MPI and the Bank have also recently initiated a collaboration program to implement the reform agenda of the Vietnam 2035 report. The main objectives of the program are to integrate the VN2035 agenda in: (i) the preparation of the SEDP2021-25 (medium-term); and, (ii) the preparation of Resolutions 1 with specific actions each year. A fundamental output of the program will be an Action Plan for Vietnam 2035 with emphasis on priority reforms in SOEs, competition neutrality, business environment, factor markets, and efficiency of State management. These reforms are essentially a continuation of reform priorities of the EMCC series. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Overall Rating: Modest (a) Relevance of objectives: High 39. The EMCC program remains relevant to the current country and global priorities, and the Bank’s assistance strategy for Vietnam. The country continues to face important short-term domestic macroeconomic management challenges, including high credit growth that could impinge on growth propects and asset quality. The objectives of the program were underpinned by extensive diagnostic work, and closely aligned with the GoV’s development objectives. Annex 10 provides a summary of the analytical work underpinning the program reform objectives. (b) Relevance of design: Modest 40. The design of the EMCC Series was aimed at achieving the PDOs, and the policy reforms and RIs were broadly well-aligned with the objectives. The reform measures supported by the program remain highly relevant and were clearly linked to the objectives. The design of the reform objectives was aligned with the GoV’s reform program and with the CPS matrix. Further, the design of the EMCC program was closely coordinated with the Development Partners. That said, policy reforms are significantly focused on legal and institutional measures, and reforms to support implementation were somewhat limited. Additionally, policy reforms supported by the program were aimed at addressing a broad range of complex issues (albeit markedly less broad compared with the predecessor PRSC series). Targetting a narrower set of issues—e.g., with the program focusing only on banking sector or SOE sector reforms—might have facilitated greater progress in implementation for the given area. Correspondingly, while the RIs are 14 generally well aligned with the associated policy reforms, in a couple of instances they could have been better defined. For example, an RI covering a broader measure of NPLs for the banking sector reforms, or an RI covering fiscal consolidation directly instead of the threshold of public debt-to-GDP ratio, might have also facilitated deeper implementation in these aeas. (c) Relevance of implementation: Modest 41. Implementation arrangements were relevant, albeit not sufficiently tailored to local conditions. The three-tiered governance structure, including the introduction of a new Steering Committee and TWG, did not function as envisioned, and reflected challenges, including time constraints. Additionally, had an existing governing body been enlisted instead of setting up a unique and new framework to only serve the EMCC program, the implementation arrangement might have functioned better. That said, the dialogue to support the implementation effort was maintained and focused on ensuring prior actions were taken to support the objectives of the program. The Bank’s teams that supported implementation of the program were responsive to changing needs as the program evolved, which is reflected in the supervision record and delivery of analysis and TAs. This supported a deep ongoing dialogue. 3.2 Achievement of Program Development Objectives Overall Rating: Moderately Satisfactory 42. Achievement of the PDO is moderately satisfactory, measured in terms of progress on RIs and broader reform momentum across the three EMCC pillars. As detailed below, progress was especially notable in the reform areas of strengthened macroeconomic stability, supported in particular by enhanced banking sector and fiscal management, enhanced legal and regulatory frameworks for SOEs and public investment, and streamlining of administrative procedures, and strengthened tax and procurement policies to enhance the business environment. Nevertheless, reforms pursued in some of these areas were limited in their impact, in particular with the banking sector. To a lesser extent this is also true of fiscal management, where fiscal consolidation challenges remain significant, although the primary deficit has narrowed under the program. Additionally, there substantial progress was achieved under fiscal management in particular with the introduction of the TSA and government debt management. Pillar 1: Strengthened Financial Sector Governance and Fiscal Management Rating: Moderately Satisfactory 43. The first pillar identified two sub-pillars: (i) Strengthened Policies for Management of Non- Performing Loans and promoting the restructuring of banks; and, (ii) Strengthened debt and treasury management for increased transparency and efficiency in PFM. 44. Five policy actions were supported under the first sub-pillar: formally adopting a comprehensive restructuring plan for credit institutions, enabling increased foreign investor participation in domestic commercial banks, improving banking supervision through strengthened regulations on asset classification, internal credit rating, and loan loss provision, and improving transparency through regular public disclosure on the GoV’s official website of the level of NPLs in commercial banks. Emphasis of these reforms was placed on stabilizing the banking sector, reducing risks of systemic crisis, and strengthening oversight and regulation. 45. Similarly, five policy actions were pursued under the second sub-pillar: adoption of a Decision to strengthen the institutional framework for debt management, approval of a medium-term debt 15 management program (MTDMP) for the period 2013-2015, preparation of an updated and strengthened MTDMP (with more extensive risk analysis) for the period 2016-2020, and implementation of a Treasury Single Account (TSA) in five banks (the Joint Stock Bank for Investment and Development of Vietnam and Vietnam Joint Stock Commercial Bank for Industry and Trade for EMCC-2, and the State Bank of Vietnam, Vietcombank, and Vietnam Bank for Agriculture and Rural Development for EMCC-3). These reforms focused on adopting more strategic management of the public sector’s debt portfolio to enhance cost-effective borrowing, and on the consolidation of the GoV’s operational accounts to improve cash management and reduce short-term liquidity needs. 46. Progress with these reforms under Pillar 1 have supported Vietnam achieve strengthened macroeconomic stability. Macroeconomic stabilization and some progress in banking sector restructuring and NPL resolution have fostered greater banking sector stability. Similarly, fiscal management has improved with strengthened debt and treasury administration, including implementation of a MTDMP and the TSA. These improvements, along with greater transparency, including reporting on NPLs, also bolstered the GoV’s credibility. Enhanced confidence in the GoV is evidenced for example by declines in sovereign borrowing interest rates and improved sovereign credit risk ratings14. Various other factors have also contributed significantly to the positive macroeconomic outturns, including robust growth in exports and FDI inflows, as the economy benefitted markedly from reforms associated with the accession to the WTO in 2007. Three of the targets for the four RIs agreed upon to measure progress in implementation of the policy actions for this pillar have been met (100 percent achieved), and the RI on the number of joint stock commercial banks has been very nearly met (90 percent achieved). 47. While impressive gains have been achieved under Pillar 1, important challenges remain. For example, a broader measure encompassing all impaired loans (e.g., including loans sold to the Vietnam Asset Management Company, VAMC) indicates that NPLs are 8.4 percent of total loans, compared with 2.46 percent if only those officially classified as NPLs are included (as of end-2016). While 8.4 percent is a significant improvement from prior years (e.g., NPLs of 12.7 percent in mid-2015), it suggests there remain significant portfolio exposures to be addressed. Further, while the public debt level has remained below the statutory limit, it has risen substantially during the EMCC program, and greater fiscal consolidation is needed to stabilize and reduce debt levels. Additionally, while international reserves have risen from US$26.1 billion in 2012 to US$41.2 billion in 2017, months of import cover remains relatively low by international standards at 2.2 months (2017). Pillar 2: Strengthened Public Administration, SOE Management and Public Investment Management Rating: Moderately Satisfactory 48. There are three-subpillars identified under the second pillar: (i) Increased transparency and improved tax administration for public sector accountability and reduced corruption; (ii) Improved regulatory environment and corporate governance reforms for more transparency in and restructuring of SOEs; and, (iii) strengthened policies for public investment management for more efficient capital expenditure. Significant progress was achieved in these areas, albeit the record is somewhat mixed. Key achievements include the passage of the Public Investment Law, the reduction in investments by SEGs in high risk non-core areas, greater transparency with the expanded disclosure of audited financial statements by SEGs, and the marked reduction in capital expenditure arrears to the central budget to support implementation of the Public Investment Law. Progress in achieving greater transparency, however, is more limited. While there are some indications of progress, others point to a deterioration, notably outcomes of 14 For example most recently, Fitch upgraded Vietnam’s Long-Term Foreign-Currency Issuer Default Rating to ‘BB’: Outlook Stable on May 14, 2018 (from ‘BB-‘). 16 the surveys conducted for the Vietnam Provincial Governance and Public Administration Performance Index. 49. The GoV undertook three policy actions under the first sub-pillar: the passage of legislation and supporting regulations for stricter transparency guidelines in the areas and sectors most vulnerable to corruption, and passage of legislation to streamline tax procedures, introduce advance pricing arrangements, increased risk-based management, and improved transparency. 50. Five policy actions were supported under the second objective: including the issuance of Decisions to restructure the SOEs and State Economic Groups (SEGs), along with the issuance of Decrees that cover state investment in enterprises and financial management of enterprises with 100 percent of charter capital owned by the state, the regulation of financial supervision, performance assessment, and the adoption of audited reports on the public dissemination of the key financial performance of all SEGs, and disclosure of financial information of SOEs and SEGs. The five policy reforms also include the divestiture by the GoV of 80 percent of five high-risk, non-core businesses in six SEGs. Divestment from the high risk non-core assets is key step in SOE restructuring. Non-core assets that are considered high risk, include banking, insurance, real estate, securities trading, and investment funds. 51. Three policy actions were pursued under the third sub-pillar: submission of a report to the NA on the development investment status of 2012 and Medium-Term Investment Plan for the period 2013- 2015 to set medium-term capital expenditure priorities in the State Budget; a Directive to accelerate clearance of capital expenditure arrears and report to the National Assembly on the current status and solutions going forward; and, adoption of legislation to establish a comprehensive legal framework to improve capital spending efficiency, reduce public investment fragmentation; align public investments with national development plans and improve public disclosure and transparency. 52. Reforms achieved under Pillar 2 of the EMCC program have contributed to a more transparent, efficient and accountable public sector in Vietnam, but outcomes are mixed and important challenges remain. It is challenging to measure progress toward improved transparency, efficiency and accountability, as objective measures are limited, and are typically based on perceptions. Some gains in transparency are indicated by the recent improvement in Vietnam’s ranking in Transparency International’s Corruption Perceptions Index, from 123rd in 2012 to 113th in 2016 (latest available, out of 176 countries and territories for both periods). More specifically, key areas of greater transparency is evidenced by the significant expansion in the number of provinces that disclose information on land management (from a baseline of 6 to the target of 45 out of 63) and the doubling in the number of SEGs that are disclosing their audited financial statements on their websites (from a baseline of 4 to a target of 8). Transparency has also improved through reinforcing reforms under Pillar 1, with the regular publication of NPL data, which had not been published prior to program. In contrast, outcomes of the surveys conducted for the Vietnam Provincial Governance and Public Administration Performance Index (PAPI) suggest that transparency, efficiency, and accountability remain important concerns for citizens, and that there has been some reversal in progress. PAPI mean scores for transparency, vertical accountability, and control of corruption, were lower in 2015 (latest available) compared with scores from 2012. The targets for all the three RIs were achieved for the sub-objective of increased transparency and improved tax administration. 53. SOE reforms achieved under Pillar 2 have largely supported an improved legal framework with the issuance of a number of Laws, Decrees, and other legal documents. The GoV has issued various regulations to facilitate SOE restructuring, including Decree 99 that regulates the decentralized roles of the State in managing SOEs and Decree 71 on the investment and management of state capital in SOEs. The Government also issued Decree 61 on financial supervision and disclosure of SOEs to improve SOE corporate governance through better transparency. Further, important changes were introduced by the amendments to the Enterprise Law, passed in 2014, to ensure more equal treatment of enterprises 17 irrespective of ownership types as well as to improve corporate governance of SOEs. In 2014 the Law on Management and Use of State Capital Invested in Production and Business and its associated Decrees laid the legal foundation for a more effective ownership function and strengthened the overall management framework for SOE, including restrictions on SOEs investment in non-core assets (unless these sectors are their main lines of business). Both of the targets have been met for the two RIs to support the sub-objective of an improved regulatory environment and corporate governance reforms for more transparency in and restructuring of SOEs. 54. Further under Pillar 2, there has been substantial improvements in the regulatory framework for the management of public investment came with the promulgation of the Public Investment Law and the amendment of the Construction Law. The Public Investment Law has institutionalized a medium-term investment planning cycle, clarified the roles and responsibilities of involved agencies in decision making for investment projects, and strengthened the prioritization and appraisal process. The law aims to tackle allocative efficiency by clearly stipulating the sources of public investment and how they are aligned with the national priorities. The law also helps to increase disclosure and transparency of public investment and holds implementing agencies more accountable to their investment decisions. To address the issue of expenditure arrears that had arisen in investment projects due to inefficient implementation, the Government adopted of Directive 14, tightens the requirement for capital budget allocations to help free up resources for arrears clearance. The RI for the sub-objective to strengthen policies for public investment management has been achieved. 55. Consistent implementation remains a key priority, following the reforms achieved in the legal and regulatory framework across these areas of reforms under Pillar 2. For instance, progress in equitizing SOEs remains limited, and further progress in needed in continuing divestment from non-core assets in the remainning SOEs not covered by the EMCC-reforms. Additionally, the more medium-term agenda for restructuring public investment focuses on strengthening accountability, improving efficiency, and reducing fragmentation. Vietnam continues to operate a dual budgeting system, where the MoF is responsible for recurrent expenditure and the MoPI is responsible for capital expenditure. Coordination between the two agencies needs to be strengthened and continued progress in addressing the challenges of fragmentation in investment would support greater efficiency in management of expenditures. Pillar 3: Reduced Administrative Burden and Strengthened Tax and Procurement Policies Rating: Satisfactory 56. There is one sub-pillar supported under Pillar 3 of the EMCC program: Streamlined administrative procedures, and strengthened tax and procurement policies for a more efficient, equitable and transparent business environment. The reform areas supported under this pillar have resulted in substantial gains in the enabling business environment that has supported a strengthening in Vietnam’s overall competitiveness. This is evidenced, for example, by the marked rise in Vietnam’s overall ranking in the World Bank’s Ease of Doing Business (DB) surveys and similarly suggested by the vibrant secular rise in investment activity, including FDI during the period of the program’s implementation. 57. The GoV pursued eight policy reforms under the sub-pillar: including, revisions to several key business environment laws—e.g., the corporate income tax law, the value added tax law, the procurement law—and issuance of a Circular to enable the launch of the government’s online business registration portal. Additionally, a policy reform under this pillar supports the lifting of foreign ownership restrictions in Vietnam’s stock market, paving the way for foreign participation in key sectors of the economy. The set of reforms under Pillar 3 of the program are intended to support faster processing, including a reduced compliance burden imposed on taxpayers, and to bring practices closer into alignment with international good practice. 18 58. Progress with the reforms under Pillar 3 have supported substantial strengthened enabling business environment in Vietnam and improved the country’s overall competitiveness. The reforms have substantially streamlined administrative procedures, and strengthened tax and procurement policies to support improvement in the business environment. The implementation of two government resolutions (both No. 19) issued in 2014 and 2015 led to a marked reduction in the time spent to pay taxes. Other important reforms include the revision of several key business environment laws, including the Enterprise Law, the Investment Law, and the Bankruptcy Law. The pilot launch of the government’s online business registration portal in April 2013 (that covers five key agencies), has seen expanding use and has directly helped to reduce the burden on the businesses. The revised procurement law helped to modernize the existing legislation, and brought it closer to international good practice, and introduced a number of innovative and modern procurement practices (such as competitive selection of investors under PPP projects and online procurement). By reducing opportunities for direct contracting and preferential procurement, the law marks an important step towards creating a level playing field for all players in the market. Implementation of has progressed, including through institutional capacity building with extensive traning on the new legislation since it was passed in 2014: the number of persons trained has nearly doubled from 5,175 during 2010-2013 to 10,125 during 2014-2017. Revisions to the corporate income tax (CIT) law introduced a reduction in corporate tax rates to attract new investment to Vietnam. Similarly, revisions to the value added tax (VAT) law exempted small businesses from having to register for VAT under the invoice credit method, which substantially reduceed the administrative burden. Significantly reflecting the impacts of these reforms, Vietnam’s overall ranking in the World Bank’s Ease of Doing Business (DB) surveys improved significantly in recent years, rising to 68 out of 190 countries in the 2018 report compared with a ranking of 99 out of 185 countries in the 2013 report, and the DB scores have improved markedly in key areas supported by the EMCC program. The two associated RIs for the sub-objective of streamlined administrative procedures, and strengthened tax and procurement policies have been achieved. 3.3 Justification of Overall Outcome Rating Rating: Moderately Satisfactory 59. The reform objectives were built upon the shared priorities of the GoV and the Bank, and were substantially relevant. The design of the EMCC program was also substantially relevant. Overall, the policy actions were well-selected, however, an ambitious and complex reform program, coupled with a deeply consultative process to build consensus for the reforms in Vietnam led to some slippage with the final operation. The three DPFs made important contributions to enhanced macroeconomic stability, public sector governancing and enabling business environment. Sustaining these reforms and building upon them as the GoV is advancing with the agenda should further strengthen the indended results and outcomes, and further support strengthened growth and poverty reduction outcomes. 3.4 Overarching Themes, Other Outcomes and Impacts 60. Following years of significant macroeconomic stresses, including financial and corporate distres, in the years prior to the EMCC Series, macroeconomic stability has improved markedly in Vietnam. Real GDP growth accelerated from 5.2 percent in 2012 (the year prior to the first operation in the EMCC program) to an estimated 6.8 percent in 2017 (the year following the conclusion of the program), and the headline inflation rate moderated sharply from 6.8 percent to 2.6 percent over the same period. Investment growth accelerated from 1.9 percent to an estimated 10.0 percent in 2017. (a) Poverty Impacts, Gender Aspects, and Social Development 61. Improved public sector and financial sector management, improved governance, and an enhanced private sector environment are all pro-poor. Overall, policies aimed at improving the quality 19 of public services and increasing growth and employment (through improved financial sector and macroeconomic stability, public sector governance, and an enhanced enabling business environment) are expected to benefit the poor. 62. Strengthened economic outcomes and diminished vulnerabilities in Vietnam are evidenced by a reduction in poverty rates. Measured at the lower middle-income class poverty line, poverty in Vietnam fell from 17.3 percent in 2010 to 11.6 percent in 2014 (latest available), and this trend is expected to have continued given strong growth outturns and job creation, stemming particularly from robust foreign direct investment (FDI). The World Bank projects that poverty has further diminished to seven percent in 2017. (b) Institutional Change/Strengthening 63. The EMCC Series made significant contributions toward enhancing the legal framework and instituional capacity across the reform pillars. In particular, the operations helped to strengthen banking supervision, public sector cash management, the institutional framework for debt management, and tax and anti-corruption legislation, and regulations for SOE management, among other reforms. Elsewhere, the operations supported more streamlined administration of procurement and tax procedures for businesses. The operations also supported enhanced transparency with the public disclosure of NPLs by commercial banks and of financial statements by SEGs. (c) Other Unintended Outcomes and Impacts 64. Not applicable. 3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 65. Not applicable. 4. Assessment of Risk to Development Outcome Rating: Moderate 66. Macroeconomic and polictical risks emanating from a variety of factors, including regional conflicts, commodity price volatility, and shifts in external demand, are substantial over the medium term. While the GoV is reform-minded, and is continuing to build on the reform agenda pursued under EMCC during 2013 through 2016, the agenda is far-reaching and involves deep reforms that entail building buy-in from important stakeholders that will take time. Internal and external shocks could amplify legacy vulnerabiities, as evidenced by the global financial crisis, which had contributed to an increase in NPLs in the banking sector that was aggravated by lackluster business performance of the state-owned enterprises. Overall, the risk to the Development Outcome is moderate. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 67. The EMCC program was aligned with the shared priorities of the GoV and the Bank, and the objectives were and remain substantially relevant. The objectives were developed in close collaboration with the Authorities and Develoment Partners, reinforcing consensus on the reform program. 20 A broad set of lessons learned from PRSC, the previous DPF series, was incorporated into the design, and the program objectives and outcomes were supported by extensive background analysis and research. Examples of the latter include the aforementioned SEDS and CPS, along with the Vienam Competitiveness Report (2010), and the World Econnomic Forum Global Competitiveness Index (Annex XX). While substantially scaled back from the previous DPF series, taking on board lessons from the previous DPF program, in retrospect the EMCC program encompassed substantial multi-sector reforms, which in and of themselves could have merited stand-alone DPFs (e.g., for reform programs for the financial sector or SOEs). That said, Vietnam was facing critical multi-sector stresses and seeking to adress these challenges was highly relevant. Against the backdrop of these attributes, other aspects were not fully anticipated. 68. The M&E system was ambitious by establishing a new governing structure, and reflected lessons from the PRSC on the need to address fragmentation and support high level oversight. The new governing structure for the EMCC Series involved the establishment of a Steering Committee to be chaired by a Deputy Prime Minister and a Technical Working Group (TWG) to underpin the dialogue and support implementation of the reform agenda. However, the Committee never met, without which the TWG could not function. As a consequence, a key channel to support M&E failed to materialize. In retrospect, given that there are already many steering committees in Vietnam (over 60), and the challenges of convening high-level Authorities, the formal M&E system as envisioned was overly ambitious and did not fully consider the local circumstances. (See M&E discussion above). 69. The Bank’s teams were responsive and client-oriented, and adapted to changing demands as the program moved forward. Correspondingly, the Authorities accepted a scaling up of the program with EMCC-2, although this introduced greater complexity and a deeper reform agenda than was originally envisioned. Ultimately, as discussed above, the GoV reconsidered some of the changes introduced with EMCC-2, and the reform agenda for EMCC-3 was scaled back. Perhaps the implementation risks could have been better anticipated, given the local conditions of a strongly consultative process to reach consensus, particularly in the context of a deepening of the reform agenda with the second operation and the challenges that had already been encountered with the convening of the Steering Committee and TWG. 70. The broad set of AAAs and TA underpinned the reform agenda, and strengthened GoV ownership, and functioned as a very effective alternative M&E system that supported supervision. The AAAs and TA had strong buy-in from the GoV and supported capacity building and incentivized line ministries. The analysis and TA similarly incentivized the core and sector Bank teams, and Development Partners. Prioritties for the analytical work and TA were decided jointly by the GoV and the Development Partners, and analysis was often conducted jointly by the Bank, government counterparts, Development Partners and external consultants. A couple of examples include; (i) assessing the impact of CIT and VAT policy changes (jointly with the IFC and in cordination with the IMF and European Union), and (ii) reviewing the potential labor market impacts of SOE restructuring (jointly with ADB and in coordination with the International Labor Organization). An independent review of the AAAs and TA was conducted and financed by the Australian Agency for International Development, and determined that excellent progress was achieved in meeting the objectives to help the government meet the triggers supported by EMCC and inform the policy dialogue on the next generation of reforms.15 Further, the independent review notes that the analysis specifically targeted Vietnam’s macro policy concerns at the time and were very relevant to Vietnamese counterparts. The strength of the extensive set of AAAs and TA directly linked to the EMCC program markedly helped mitigate the risks of reform slippage and supported achievement of the PDO, and in retrospect is widely considered one of the key strengths of the program. 15 Australia World Bank Strategic Partnership (ABP) in Vietnam Mid-Term Review Report, January 12, 2015. 21 (b) Quality of Supervision Rating: Moderately Satisfactory 71. The EMCC teams, including sector specialists, conducted regular monitoring and maintained a close dialogue with the GoV for the EMCC program. Regular supervision was conducted through missions and aide memoires, implementation status reports (ISRs), and ongoing monitoring of the broader macroeconomic develoments. Monitoring and supervision was also significantly supported by the team, including sector specialists, through complementary TA and AAA that supported implementation. The aide memoires and ISRs for the EMCC operations highlight that the pace of implementation was mixed, a number of the triggers for the forthcoming program were not being met (particularly in the case of EMCC- 3), and in some areas there had been slippages on the program result indicators. For the ISR on EMCC-1, the team noted that while progress on individual parts of the program was mixed, overall there was continued progress, supported by regular policy dialogue and TA and AAAs under the EMCC umbrella. For the ISR on EMCC-2, the team noted that the policy dialogue had been challenging for the preparation of EMCC-3, particularly around structural reforms in the banking sector, SOEs, and public investment. The ISRs indicate that the mixed progress reflected the high level of ambition and complexity of the program, which presented implementation challenges. Similar points were raised in the aide memoires, including those conducted in December 2014, March 2015, August 2015, and November 2015. Management was kept informed of the concerns raised, and the Bank and counterparts maintained an intensive dialogue, strong TA, and close collaboration, including with other Development Partners, to move forward with the program to support completion of the series. While no ISR was submitted for EMCC-3 (required before the operation closed), the team mainted the close engagement with the Authorities, and the dialogue and monitoring of key reforms was continued through various TA engagements. Key examples of TA include; a) Financial sector soundness and stability program, b) Public debt management TA including on MTDS, c) SOE reforms - TA on ownership arrangements, d) TADAT tax administration assessment (financed under EMCC3), and e) follow-up on implementation of Resolution 19. The ISRs ratings rated progress toward achievement of the PDO and Overall Implementation Progress all as Moderately Satisfactory. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 72. With quality at entry rated Moderately Satisfactory and quality of supervision rated Moderately Satisfactory, the overall rating for Bank performance is Moderately Satisfactory. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 73. Senior officials in the GoV were and remain committed to the EMCC program, which is aligned with national development priorities, and they maintained frank and open discussions of the reforms. Under the genearl coordination of the SBV, a number of government agencies were responsible for parts of the program, including the Ministry of Finance, Ministry of Justice and Ministry of Planning and Investment. Across these agencies, there appears to have been broad-based support to carry out the policy measures, although some could have been more proactive in monitoring the achievements. The GoV maintained a frank and open dialogue on the reform program in close engagement with the Bank and other Development Partners, during the preparation, implementation, and review of the program. The sustained engagement proved essential in completing the EMCC program, although the dialogue did not fully function as originally intended. Overall critical progress was achieved with the EMCC reform agenda, although the scope of reforms was partially scaled back in some areas with the final operation, as circumstances evolved and building consensus for far-reaching structural reforms takes time. 22 (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory 74. The SBV was the lead implementing agency for the EMCC series and held overall responsibility for M&E and coordination of the program. In this capacity, the SBV also coordinated implementation and was assissted by key implementing agencies, including the Ministry of Finance (MoF), Government Inspectorate (GI), Ministry of Planning and Investment (MPI), Ministry of Industry and Trade (MoIT), General Department of Taxation (GDT) and the Ministry of Justice (MoJ). 75. To strengthen M&E and implementation and complement the SBV’s role, the EMCC program had identified a three-tiered governance structure, which failed in practice. As discussed above, a Steering Committee chaired by the Deputy Prime Minister was envisioned to review and endorse the proposed areas of focus for the operations. A Technical Working Group (TWG) would lead technical discussions and analysis for triggers and prior actions. The TWG would help oversee the preparation of the operation, discuss the technical elements of prior actions, decide on analytical work, and brief the Steering Committee and Development Partners. This governance structure was intended to help build greater ownership for the EMCC operation among the lead technical staff both in Government and among Development Partners. While the SBV coordinated the program at the technical level and facilitated the policy dialogue, neither the Steering Committee nor the TWG were constituted in practice. 76. Despite the shortcomings in the implementation of the M&E governance structure as envisioned, SBV helped to maintain a results-oriented dialogue. The dialogue between the GoV and the Bank on program implentation and outcomes was maintained, facilitated to SBV’s coordinating role. This reflected their ongoing support in facilitating meetings, coordinating on knowledge sharing, including for AAAs and TA, and for monitroing and reporting of implementation of the program. While alternative approaches were sought and engagement was maintained, this resulted in some complications, e.g., with the high level dialogue on reforms, and coordination with other Development Partners. (c) Justification of Rating for Overall Borrower Performance Ratings: Moderately Satisfactory 77. With government performance rated Moderately Satisfactory and implementing agency performance rated Moderately Satisfactory, the overall rating for Borrower performance is Moderately Satisfactory. 6. Lessons Learned 78. There are several lessons that have emerged from the experience with the EMCC series to consider for the future: • While the EMCC program was highly relevant in pursuing wide-ranging reforms across sectors, a less complex program could have facilitated deeper reform progress in a selected sector. Although the EMCC program was significantly narrower than the PRSCs (the predecessor DPF series that included reforms in education, health, social protection, infrastructure and the environment), scaling back the scope to a more sharply focused program on a selected sector with a narrower set of reform measures could have engendered more far-reaching reforms for a given sector. • Given that there are already many steering committees in Vietnam (over 60), and the challenges of convening high-level Authorities, the formal M&E system as envisioned was overly ambitious and did not fully consider the local circumstances. Two of the three-tiers in the program’s 23 governance structure did not function as envisioned (i.e., the Steering Committee and the TWG did not meet), which limited the avenues to address implementation challenges. • Flexibility in adjusting the triggers and RIs, while supporting a partially scaled back reform agenda that remained true to the development objectives, was critical to moving forward with EMCC-3. The sustained dialogue and flexibility to make adjustments, and taking the additional time to reach agreement on the reform agenda, facilitated delivery of EMCC-3 and completion of the EMCC Series. • Complementary AAAs and TA aimed at supporting capacity building and implementation of many of the policy reforms proved critical for the delivery of EMCC and provided an effective alternative M&E system. The GoV commended the Bank on the AAAs and TA, and given the positive experience, continued and new AAAs and TA for ongoing reform efforts would be especially welcome. • Although the three-tiered governance structure failed in practice, establishing a top-down M&E mechanism should be considered in the future to provide high-level oversight for challenging reform programs involving various inter-ministerial stakeholders. One option is to consider using oversight bodies that have a clear mandate, function and roles from the GoV’s existing and available decision-making framework for each reform measure, rather than setting up a unique and new framework to only serve a specific program. • While the AAAs and TA were welcomed, there is some scope for enhancing the Bank’s AAAs and TA process, including a reduction in the number of clearances required to improve timeliness. Introducing a mechanism for adjusting the instruments as Client needs change would also be welcome. Given the number of clearances involved, the Client encountered some delays with the Bank’s delivery, and once it became available, the support was no longer needed by the recipient agencies, and there was no process for redirecting the resources. • More closely aligning the scope of reform agenda with the near- and medium-term focus of the Bank’s DPO financing instrument might support stronger implementation. Pursuing far-reaching and longer-term reform objectives, given evolving circumstances, presents significant challenges for the Authorities. Delays were encountered in delivery of the reformw with EMCC-3, as the GoV’s priorities and desired pace of reform had shifted in some areas. Abridging the time horizon of future DPF programs could help to better calibrate the pace of reforms with the instrument. • Active participation by all Development Partners in the policy dialogue helped align policy messages and build consensus around a core set of reform measures. Close consultation with many of Vietnam’s Development Partners, which also provided significant co -financing and complementary AAAs and TA to the World Bank’s operations, significantly contributed to the successes of the series. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies 79. The SBV shared a number of observations, including that the World Bank played a pioneering role with EMCC, in terms of knowledge sharing and technical assistance to support reforms to address Vietnam’s macroeconomic management and competitiveness challenges. They relayed that the Bank has also played an important coordination role among the IFI community in Vietnam with the EMCC Series, which has helped to reinforce the reform incentives and knowledge transfer, in 24 addition to the collaboration that facilitated co-financing for the operations. SBV also observed that, while the funds associated with the three operations in the series are very important, the GoV considers the support provided through the Bank’s knowledge, expertise, and leadership role as more vital in facilitating the process of reform and in providing incentives to continue reforms. 80. While the Bank is regarded as a valued development partner for the GoV, and having played a key role in supporting the realization of the reforms pursued under the EMCC program, there is room for improvement. Going forward there is scope to enhance communication and coordination between the agencies and the Bank. It would be useful, for example to take more time in developing prior actions and RIs to align them more closely to local conditions and improve their consistency. Similarly, building in greater flexibility in policy triggers at the outset to facilitate adjustments in the reform agenda as the program advances would help to better accommodate evolving circumstances. (b) Cofinanciers 81. Cofinancers shared a number of comments on the EMCC program. EMCC was developed and implemented in close consultation with Development Partners, and from the onset, the series served as a central platform for a coordinated policy dialogue between the GoV and several development partners, including Japan, Switzerland, Australia, the United Kingdom and Canada, along with the Bank. Throughout the preparation and implementation of the three operations of the series, all development partners participated actively in the policy dialogue. This has helped align policy messages, build consensus on and reinforced support for reforms among the country’s main development partners around a core set of reform measures. The Bank has also coordinated on major structural reforms through regular staff level exchange with the IMF. Co-financing for the EMCC Series was provided by the United Kingdom’s Department for International Development (DfID), and the Australian Agency for International Development (AusAID), Japan International Cooperation Agency (JICA). the Swiss Secretariat for Economic Affairs (SECO) and and Canada International Development Agency (CIDA). These Development Partners, including the Asia Development Bank (ADB) provided AAA and TA support to EMCC counterpart ministries. (c) Other partners and stakeholders 82. Broad consultations and partnerships helped build the EMCC program and facilitated implementation. Extensive consultations were held both during design and implementation of the program, including with SBV and concerned line ministries (MOF, MOJ, MOIP). Moreover, individual policy measures supported under the EMCC have undergone extensive consultations with a wide range of stakeholders. Draft laws and regulations are circulated within government agencies but also published on ministry or agency websites for public comments. The government has held dedicated seminars and workshops with relevant stakeholders to discuss early proposals on all the prior actions under EMCC. In addition, the EMCC AAAs program, which complemented the DPO series, supported a number of consultation workshops in key prior actions. For example, the program supported a consultation event on the Public Investment Law with provincial authorities, which informed PIM provisions in the final law that could be realistically implemented. The program also supported workshops on decree 67 on SOE transparency that enabled the MOF to engage and consult with SOEs, to inform the design pf a reporting system that was suited to SOE reporting capacity. Equally, the on the Procurement Law and accompanying implementation regulations, the AAAs program financed workshops with provincial governments and private sector representatives to gather feedback and inform the provisions of the law. 25 Annex 1: Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Responsibility/ Specialty EMCC-1 Lending Anjali Acharya Senior Environmental Specialist EASVS Environment Christian Bodewig Senior Economist EASHS Macro, Trade, Investment Deepak Mishra Lead Economist EASPV Macro, Trade, Investment Duc Minh Pham Senior Economist EASPV Macro, Trade, Investment Hisham Abdo Kahin Senior Counsel LEGES Legal Huong Thi Lan Tran Governance Specialist EASPV Governance Huong Thi Mai Nong Junior Counsel EACVF Legal James Anderson Senior Governance Specialist EASPV Governance Kien Trung Tran Senior Procurement Specialist EASR2 Governance Lan Phuong Nguyen Team Assistant EACVF Team Assistance Linh Anh Thi Vu Team Assistant EACVF Team Assistance Linh Hoang Vu Economist EASPV Macro, Trade, Investment Mette Frost Bertelsen Country Officer, EACVF Country Program Nga Thi Quynh Dang Trust Fund Coordinator EACVF Trust Fund Coordination Phuong Anh Nguyen Consultant EASPV Consultant Quang Hong Doan Senior Economist EASPV Macro, Trade, Investment Quyen Hoang Vu Economist EASPV Macro, Trade, Investment Habib Nasser Rab Team Leader, Sr. Economist EASPV Team Leader Robert Gilfoyle Sr. Financial Management Specialist EASFM Financial Management Sameer Goyal Senior Financial Sector Specialist EASFP Financial Sector Thang Long Ton Country Economist EASPR Macro, Trade, Investment Viet Quoc Trieu Financial Sector Specialist EASFP Financial Sector Viet Tuan Dinh Senior Economist EASPV Macro, Trade, Investment Yuling Zhou Lead Procurement Specialist EASR2 Procurement Supervision Habib Nasser Rab Team Leader, Sr. Economist EASPV Team Leader Quang Hong Doan Senior Economist MFMDR Macro, Trade, Investment Sebastian Eckardt Program Leader, Senior Economist GMF02 Team Leader Deepak Mishra Lead Economist GMF01 Macro, Trade, Investment Vu Hai Tran Text Editor, Translator Proofreading, Translation EMCC-2 Lending Abha Prasad Senior Debt Specialist PRMED Debt Adu-Gyamfi Abunyewa Senior Procurement Specialist EASR2 Procurement Anjali Acharya Senior Environmental Specialist EASVS Environment Christopher Robert Senior Financial Management Specialist EASFM Financial Management Fabling Deepak Mishra Lead Economist EASPR Macro, Trade, Investment Duc Minh Pham Senior Economist EASPV Macro, Trade, Investment Greg Smith Economist AFTP3 Macro, Trade, Investment Habib Nasser Rab Team Leader, Senior Economist EASPV Team Leader Nina Masako Eejima Senior Counsel LEGES Legal Hoon Sahib Soh Operations Advisor EASOS Operations Huong Thi Lan Tran Governance Specialist EASPV Governance 26 Huong Thi Mai Nong Junior Counsel EACVF Legal James Anderson Senior Governance Specialist EASPV Governance Kien Trung Tran Senior Procurement Specialist EASR2 Procurement Linh Anh Thi Vu Program Assistant EACVF Program Assistance Linh Hoang Vu Economist EASPV Macro, Trade, Investment Lynn Yeargin Senior Program Assistant EASPW Program Assistance Miguel-Santiago Oliveira Senior Finance Officer CTRLN Finance Minh Van Nguyen Senior Economist EASPV Macro, Trade, Investment Nga Thi Quynh Dang Trust Fund Coordinator EACVF Trust Fund Coordination Phuong Anh Nguyen Research Analyst EASPV Team Member Quang Hong Doan Senior Economist EASPV Macro, Trade, Investment Quyen Hoang Vu Economist EASPV Macro, Trade, Investment Sameer Goyal Sector Leader, Finance and Private Sector EASFP Finance, Private Sector Development Sandeep Mahajan Lead Economist EASPR Viet Quoc Trieu Financial Sector Specialist EASFP Financial Sector Viet Tuan Dinh Senior Economist EASPV Yuling Zhou Lead Procurement Specialist EASR2 Procurement Lan Van Nguyen Senior Operations Officer, IFC CEAIC Operations Nhanh Thi Thu Nguyen Operations Officer, IFC CEAIC Operations Viet Anh Nguyen Operations Officer, IFC CEAIC Operations Supervision Quang Hong Doan Senior Economist MFMDR Macro, Trade, Investment Habib Nasser Rab Team Leader, Senior Economist GMF02 Team Leader EMCC-3 Lending Sebastian Eckardt Program Leader, Senior Economist GMF02 Team Leader Robert J. Gilfoyle Sr Financial Management Specialist GGOEP Financial Management Chau-Ching Shen Senior Finance Officer WFACS Finance Thao Thi Do Finance Analyst WFACS Finance Ma. Thelma R.E. Ramos Senior Finance Assistant WFAAS Finance Adu-Gyamfi Abunyewa Senior Procurement Specialist GGODR Procurement Anjali Acharya Senior Environmental Specialist GENDR Environment Christopher Fabling Senior Financial Management Specialist GGODR Financial Management Duc Minh Pham Senior Economist GGODR Governance Nina Masako Eejima Senior Counsel LEGES Legal Kien Trung Tran Senior Procurement Specialist GGODR Procurement Linh Anh Thi Vu Program Assistant EACVF Program Assistance Linh Hoang Vu Economist GPVDR Macro, Trade, Investment Angkanee Luangpenthong Program Assistant EACTF Program Assistance Minh Van Nguyen Senior Economist GGODR Governance Phuong Anh Nguyen Research Analyst GGODR Team Member Quang Hong Doan Senior Economist MFMDR Macro, Trade, Investment Quyen Hoang Vu Senior Economist GGODR Governance Sandeep Mahajan Program Leader EACVF Macro, Trade, Investment Viet Quoc Trieu Senior Financial Sector Specialist GFMDR Financial Sector Viet Tuan Dinh Senior Economist MFMDR Macro, Trade, Investment Yuling Zhou Lead Procurement Specialist GGODR Procurement Supervision Quang Hong Doan Senior Economist MFMDR Macro, Trade, Investment Sebastian Eckardt Program Leader, Senior Economist GMF02 Team Leader Quyen Thi Nguyen Program Assitant BPSAF Program Assistance Anh Hai Nguyen Consultant GFCLT Team Member Annette De Kleine Feige Senior Economist GMF01 ICR Lead Author 27 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including travel No. of staff weeks and consultant costs) EMCC-1 Lending 45.36 230,739.70 Supervision/ICR 5.73 20,251.19 EMCC-3 Total: 51.09 250,990.89 EMCC-2 Lending 6.66 32,614.85 Supervision/ICR 0.00 0.00 EMCC-3 Total: 6.66 32,614.85 EMCC-3 Lending 21.83 85,643.92 Supervision/ICR 2.88 21,429.29 EMCC-3 Total: 24.71 107,073.21 TOTAL for EMCC Series 82.46 390,678.95 28 Annex 2: Beneficiary Survey Results Not applicable. 29 Annex 3: Stakeholder Workshop Report And Results Not applicable. 30 Annex 4: Borrower's Letter of Assessment of the ICR Report for the EMCC Series 31 32 Annex 5: Comments of Cofinanciers and Other Partners/Stakeholders Not applicable. 33 Annex 6: List of Supporting Documents 1. Program Documents: Report No.: 72940-VN, Report No.: 87865-VN, and Report No.: 101008-VN 2. Vietnam: Country Partnership Strategy (FY2012–FY2016) 3. Economic Management and Competitiveness Credit Approach Note 4. Aide Memoire: EMCC Progress Review Mission, June 24-28, 2013 5. Aide Memoire: EMCC Progress Review Mission, December 1–5, 2014 6. Project Performance Assessment Report for PRSC 6-10 for Vietnam, June 30, 2015 34 Annex 7: Summary of Prior Actions by Operation Table 7.1. EMCC-1 Prior Actions and Status Areas of Reform Prior Actions, Board Date = March 19, 2013 Status Enhanced Financial 1.1 GOV has formally adopted a comprehensive Credit Both completed by Sector Stability Institutions restructuring plan and direction on related policy Board date actions including enhancing role of foreign participation in domestic commercial banks, incentives for consolidation of banks (especially weak banks) and a plan to deal with nonperforming loan (NPLs) (Decision 254/QD-TTg, March 1, 2012) 1.2 SBV has issued a Circular to improve banking supervision through strengthened regulations on asset classification, internal credit rating, and loan loss provisioning to better address credit risks (Circular 02/2013/TTNHNN, January 21, 2013) Maintenance of 2.1 GOV has adopted a Decision to strengthen the institutional Completed by Board Fiscal Discipline framework for debt management and establish prudential debt date thresholds for medium-term fiscal sustainability (Decision 958/QD-TTg, July 27, 2012) Improved Public 5.1 GOV has issued Law 27/2012/QH13 amending Law Both completed by Administration and 55/2005/QH11 on Anti-Corruption and stricter transparency Board date Accountability guidelines in areas and sectors most vulnerable to corruption (Law 27/2012/QH13 dated November 23, 2012) 5.2 GOV has issued Law 21/2012/QH13 amending Law 78/2006/QH11 on Tax Administration to streamline procedures; introduce Advance Pricing Arrangements; increase risk-based management; and improve transparency (Law 21/2012, November 20, 2012 amending Law 78/2006/QH11) Strengthened State 4.1 GOV has issued a Decision to restructure State Economic Completed by Board Enterprise Groups (SEGs) and General Corporations (GCs), which date Management includes a classification of these groups and corporations by level of ownership, and time bound actions with responsibilities across government agencies (Decision 929/QD-TTg, July 17, 2012) Enhanced Public 5.1 GOV has submitted to the National Assembly a Report on Completed by Board Investment the development investment status of 2012 and Medium-Term date Management Investment Plan for the period 2013-2015 to set medium-term capital expenditure priorities in the State Budget and including off-budget bond financing for 2013 (Submission of Report 283/BC-CP, October 19, 2012) More Efficient 6.2 MPI has issued a Circular to enable adoption of e-signature Completed by Board Business and epayment procedures to allow the roll out of ebusiness date Environment registration, and the public disclosure of business registration information (Circular 01/2013/TT-BKHDT, January 21, 2013) 6.1 GOV has adopted a Decision for ministries and provincial authorities to review the impact of administrative procedures on the business environment and recommend actions to streamline procedures, avoid duplication, and reduce regulatory burden on the private sector (Decision 263/QD-TTg, March 5,2012) Greater No prior action with EMCC-1 Not applicable Transparency and Equity of Business Environment 35 Table 7.2. EMCC-2 Prior Actions and Status Areas of Original Triggers in EMCC-1 Prior Actions, Board date = May 5, 2014 Status Reform Strengthened 1.3 GOV has amended legislation 1.3 GOV has issued Decree Number Both Policies for to enable increased foreign 01/2014/ND-CP dated January 3, 2014 completed Management of investment, and allow injection of replacing Decree Number 69/2007/ND-CP by Board Non- capital and transfer of technology dated April 20, 2007 to enable increased date Performing and knowledge in local foreign investor participation in domestic Loans and commercial banks (Adoption of commercial banks. promoting the amended Decree 69) 1.4 GOV, through Prime Minister has issued restructuring of 1.4 GOV has adopted a Decision Number 843/QD- TTg dated May banks. comprehensive policy framework 31, 2013, and has issued Decree Number to address the problem of Non- 53/2013/ND-CP dated May 18, 2013, Performing Loans across the providing a comprehensive policy banking sector (Policy framework framework to address the problem of approved by GOV) nonperforming loans across the banking sector. Strengthened 2.1 GOV has adopted a rolling 2.2 GOV through Prime Minister, has issued Both debt and Medium-Term Debt Strategy to Decision Number 689/QDTTg, dated May 4, completed treasury project and monitor costs and 2013, approving a medium-term debt by Board management risks of the public debt portfolio management program for the period 2013- date for increased and inform financing decisions 2015. transparency (Adoption of MTDS). 2.3 GOV through State Treasury, has and efficiency 2.2 GOV has adopted a Decree to implemented the treasury single in PFM establish a Treasury Single accountprocedures in the Joint Stock Bank Account; strengthen cash flow for Investment and Development of Vietnam forecasting; and modernize cash and the Vietnam Joint Stock Commercial management (Issuance of Decree Bank for Industry and Trade, and provided on Modernized cash reports on the implementation. management) Increased 3.3 GOV has issued Decrees to 3.3 GOV has issued Decree Number Completed transparency regulate and guide the 59/2013/ND-CP dated June 17, 2013, by Board and improved implementation of the amended Decree Number 78/2013/ND-CP dated July date tax Anti-Corruption Law to 17, 2013, and Decree Number 90/2013/ND- administration strengthen disclosure and CP dated August 8, 2013, to regulate and for public transparency; control assets and guide the implementation of the amended sector income of public officials; and Law on Anti-Corruption, including accountability strengthen the dealing with increased transparency, income and asset and reduced corrupted activities (Issuance of declaration of public officials, and corruption Decree to replace Decree accountability of public agencies and 120/2006/ND-CP, Decree officials. replacing Decree 37/2007/NDCP and Decree 68/2011/NDCP; Decree on Accountability of state agencies) Improved 4.2 GOV has formally classified 4.2 GOV through Prime Both regulatory SEGs and GCs with time bound Minister has issued completed environment restructuring targets for Decision Number 320/QDTTg by Board and corporate individual SEG and GCs dated February 8, 2013, date governance (Adoption of amended Decision Decision Number 1782/QDTTg dated reforms for 14) November 23, 2012, Decision Number more 4.3 GOV has disclosed Prime 314/QD-TTg dated February 7, 2013, transparency in Ministerial Decisions on Decision Number 38/QD-TTg dated January and restructuring of all SEGs, 5, 2013, Decision Number 753/QD-TTg including time bound action dated May 17, 2013, Decision Number 36 Areas of Original Triggers in EMCC-1 Prior Actions, Board date = May 5, 2014 Status Reform restructuring of plans, and system to monitor 2097/QD-TTg dated December 28, 2012, SOEs implementation. and Decision Number 46/QD-TTg dated 4.4 GOV has started regular January 5, 2013 on restructuring of state disclosure of financial economic groups; the government has also information of all State Economic issued Decree Number 71/2013/ND-CP Groups. dated July 11, 2013 on state investment in enterprises and financial management of enterprises with 100% of charter capital owned by the state. 4.3 GOV has issued Decree Number 61/2013/ND-CP dated June 25, 2013, to regulate financial supervision, performance assessment, and disclosure of financial information of state owned enterprises. Strengthened 5.2 MPI has launched a new 5.2 GOV through Prime Minister, has issued Completed policies for Management Information System Directive Number 14/CTTTg, dated June 28, by Board Public to track, monitor, and evaluate 2013, to accelerate clearance of capital date Investment large investments funded through expenditure arrears and report to the Management the State Budget (Launch of new National Assembly the current status and for more MIS as per Decision 937/QD- solutions going forward. efficient capital BKHDT, July 23, 2012) expenditure Streamlined 6.3 The Administrative 6.3 GOV through National Assembly, has Completed administrative Procedures Control Agency has adopted the Amended Law on Procurement by Board procedures, and adopted a Monitoring and Number 43/2013/QH13 to strengthen date strengthened Evaluation system for transparency and competition in public tax and administrative procedures procurement procurement simplification reforms (Adoption policies for a of scorecard and survey more efficient, methodology) equitable and transparent business environment Reform area 7.1 GOV has submitted to 7.1 GOV through National Assembly, has Both combined into National Assembly an amended adopted the Amended Law on Corporate completed number 6, Corporate Income Tax Law to Income Tax to establish competitive by Board while establish competitive CIT rates, corporate income tax rates, clarify rules and date numbering of clarify rules and regulations on regulations on transfer pricing, and introduce prior actions transfer pricing, and introduce provisions on deductible expenses. and triggers provisions on deductible 7.2 GOV through National Assembly, has was retained. expenses (Submission of amended adopted the Amended Law on Value Added CIT Law to NA) Tax to: (a) adjust the group of goods and services not subject to value added tax; (b) clearly specify the goods and services subject to 0% value added tax rate; and (c) apply thresholds as appropriate. 37 Table 7.3. EMCC-3 Prior Actions and Status Areas of Original Triggers Prior Actions, Board Status Original Triggers in EMCC-1 Reform in EMCC-2 date = May 12, 2016 Strengthened 1.5 SBV has issued a Circular 1.5 Public reporting 1.5 The Borrower, Completed Policies for requiring banks to meet capital on the ratio of NPLs through State Bank of by Board Management adequacy and other prudential across the banking Vietnam, has publicized date of Non- thresholds that are consistent system based on publicly disclosed Performing with international standards implementation of through its official Loans and (Issuance of SBV Circular on Circular 02 on loan website the level of non- promoting the international standards) loss classification performing loans in restructuring and provisioning. commercial banks by of banks The SBV has end of 2015 in reported to the accordance with Circular World Bank the 02/2013/TT-NHNN level of dated January 21, 2013 provisioning in on asset classification commercial banks and provisioning as in accordance with amended by Circular Circular 02 based 09/2014/TT-NHNN on audited financial dated March 18, 2014 as statements43 evidenced through a received by SBV letter dated March 22, for the year ending 2016 provided by the December 31, 2014. State Bank of Vietnam 1.6 GOV has to the Bank. initiated a 1.6 trigger from EMCC- specialized audit of 2 was dropped. the portfolio/credit quality of at least one systemically important bank. Strengthened No trigger identifed with 2.4 GOV has 2.1 The Borrower, Both debt and EMCC-2 prepared an updated through the Ministry of completed treasury Medium-Term Debt Finance, has prepared an by Board management Management updated medium-term date for increased Program for the debt management transparency period 2014-2016 program for the period and efficiency with 2016-20, with in PFM strengthened risk strengthened risk analysis based on analysis based on additional scenarios additional scenarios and and updated updated macroeconomic macroeconomic assumptions as assumptions. evidenced through 2.5 GOV has fully official letter of Ministry implemented TSA of Finance and excerpt arrangements at of report 111/BTC- SBV, Vietcombank NSNN, dated February and Vietnam Bank 19th 2016. for Agriculture and 2.2 The Borrower, Development. through State Treasury, has implemented Treasury Single Account procedures in the State Bank of Vietnam, 38 Areas of Original Triggers Prior Actions, Board Status Original Triggers in EMCC-1 Reform in EMCC-2 date = May 12, 2016 Vietcombank, and Vietnam Bank for Agriculture and Rural Development as evidenced through a number of official letters on implementation provided by the Ministry of Finance to the Bank. Increased 3.4 GOV has submitted to the No triggers No prior action Not transparency National Assembly an amended identified identified applicable and improved Customs Law to streamline tax administrative procedures and administration improve operational efficiency for public (Submission of Customs Law to sector NA) accountability and reduced corruption Improved 4.6 GOV has submitted a draft 4.4 GOV has 4.4 The Borrower, Both regulatory Law to NA setting out rules, submitted a draft through the Ministry of completed environment regulations and oversight for Law to NA setting Finance and State by Board and corporate investment of state capital in out rules, Economic Groups, has date governance State Enterprises (Submission regulations and implemented divestment reforms for of SCI Law to NA) oversight for of eighty (80) percent of more 4.7 GOV has completed its end investment and five high-risk, non-core transparency 2014 target for equitization of management of businesses in six State in and SEGs. state capital in State Economic Groups restructuring 4.8 GOV has launched a system Enterprises consistent with of SOEs to monitor and publish a set of including Instruments on consolidated financial and consolidation of Restructuring of State operational performance state Economic Groups, as indicators for SOEs (Adoption accountabilities. evidenced through a of financial supervision and 4.5 At least five report on performance monitoring system SEGs have implementation provided for SOEs) completed the by the Ministry of 4.9 GOV has updated the divestment of five Finance to the Bank. policy framework for dealing high-risk non-core 4.5 The Borrower, with potential retrenchment businesses through its Government, from SOE restructuring consistent with has implemented Decree (Adoption of Decree on SOE relevant Prime Number 61/2013/ND- restructuring and labor issues) Ministerial CP, dated June 25, 2013 decisions (ref prior which has been replaced action 4.2 in by Decree Number EMCC-2). 87/2015/ND-CP, dated 4.6 GOV has October 6, 2015, implemented adopting the audited Decree 61 with reports on the public publication of key dissemination of the key financial and financial performance of operational all State Economic performance of all Groups, as evidenced SEGs. through a report on implementation provided 39 Areas of Original Triggers Prior Actions, Board Status Original Triggers in EMCC-1 Reform in EMCC-2 date = May 12, 2016 by the Ministry of Finance to the Bank. Strengthened 5.3 GOV has submitted a draft 5.4 A Public 5.3 The Borrower, Completed policies for Public Investment Law to NA, Investment Law has through National by Board Public which establishes a consistent been issued, Assembly, has adopted date Investment framework for appraisal, establishing a the Public Investment Management budgeting, implementation, comprehensive Law Number for more monitoring and review of legal framework to 49/2014/QH13, dated efficient public investment decisions improve efficiency June 18, 2014 to: capital (Submission of PI Law to NA) of capital spending; establish a expenditure reduce comprehensive legal fragmentation in framework to improve public investments; capital spending align public efficiency; reduce public investments to investment national fragmentation; align development plans; public investments with address leakage and national development waste; and improve plans and improve public disclosure public disclosure and and transparency. transparency. Streamlined 6.4 GOV has submitted to 6.4 The 6.6 The Borrower, All three administrative National Assembly a revised Administrative through its Government , completed procedures, Procurement Law to strengthen Procedures Control has adopted appropriate by Board and transparency and competition in Agency has adopted Implementation date strengthened public procurement a Monitoring and Instruments in tax and (Submission of Procurement Evaluation system accordance with the procurement Law to NA) for administrative Amended Law on policies for a procedures control. Procurement. more 6.5 GOV through 6.7 The Borrower, efficient, MPI has adopted through Government has equitable and decrees and adopted Resolution transparent circulars for 19/NQ-CP, dated March business implementation the 12, 2015, on key duties environment amended and solutions to improve Procurement Law. business environment and national competitiveness in 2015 – 2016 and enhance the Borrower’s business environment through the simplification of tax procedures for taxpayers. 6.8 The Borrower, through its Government, has adopted Decree 60/2015/ND-CP dated June 26th 2015, eliminating limitations on foreign investors’ participation in public companies in selected 40 Areas of Original Triggers Prior Actions, Board Status Original Triggers in EMCC-1 Reform in EMCC-2 date = May 12, 2016 areas of the stock market. Reform area 7.2 GOV has submitted to NA 7.3 GOV has Moved to reform area 7 Not combined into an amended VAT Law to adjust adopted a Decision (renumbered 6.8) applicable number 6, the group of goods and services to increase the and exempt from VAT, clearly percentage of numbering of specify the goods and services foreign investors’ prior actions subject 0%VAT rate, and apply participation in adjusted thresholds as appropriate selected areas in the accordingly (Submission of amended VAT stock market. Law to NA) 7.3 GOV has submitted to NA an amended Competition Law to strengthen regulation and sanctioning of anti-competitive behavior through updated provisions on price-fixing cartels and notification of mergers (Submission of amended CL to NA) 7.4 GOV has submitted to NA an amended Enterprise Law to promote a level playing field by removing restrictions on business activities for foreign investors (Submission of amended EL to NA) 7.5 GOV has submitted to NA a new Law on Foreign Trade Management to increase transparency of external trade regime through consolidation of rules and regulations on external trade (Submis ion of new FT Law to NA) 41 Annex 8: Prior Actions Achieved by DPF in the EMCC Series Table 8.1. Prior Actions Achieved by EMCC-1 All actions were completed by the Board date, and none have been reversed Prior Action Prior Action 1: GOV has formally adopted a comprehensive Credit Institutions restructuring plan and direction on related policy actions including enhancing role of foreign participation in domestic commercial banks, incentives for consolidation of banks (especially weak banks) and a plan to deal with nonperforming loan (NPLs) (Decision 254/QD-TTg, March 1, 2012) Prior Action 2: SBV has issued a Circular to improve banking supervision through strengthened regulations on asset classification, internal credit rating, and loan loss provisioning to better address credit risks (Circular 02/2013/TTNHNN, January 21, 2013) Prior Action 3: GOV has adopted a Decision to strengthen the institutional framework for debt management and establish prudential debt thresholds for medium-term fiscal sustainability (Decision 958/QD-TTg, July 27, 2012) Prior Action 4: GOV has issued Law 27/2012/QH13 amending Law 55/2005/QH11 on Anti-Corruption and stricter transparency guidelines in areas and sectors most vulnerable to corruption ( Law 27/2012/QH13 dated November 23, 2012) Prior Action 5: GOV has issued Law 21/2012/QH13 amending Law 78/2006/QH11 on Tax Administration to streamline procedures; introduce Advance Pricing Arrangements; increase risk-based management; and improve transparency (Law 21/2012, November 20, 2012 amending Law 78/2006/QH11) Prior Action 6: GOV has issued a Decision to restructure State Economic Groups (SEGs) and General Corporations (GCs), which includes a classification of these groups and corporations by level of ownership, and time bound actions with responsibilities across government agencies (Decision 929/QD-TTg, July 17, 2012) Prior Action 7: GOV has submitted to the National Assembly a Report on the development investment status of 2012 and Medium-Term Investment Plan for the period 2013-2015 to set medium-term capital expenditure priorities in the State Budget and including off-budget bond financing for 2013 (Submission of Report 283/BC- CP, October 19, 2012) Prior Action 8: MPI has issued a Circular to enable adoption of e-signature and e-payment procedures to allow the roll out of e-business registration, and the public disclosure of business registration information (Circular 01/2013/TT-BKHDT, January 21, 2013) Prior Action 9: GOV has adopted a Decision for ministries and provincial authorities to review the impact of administrative procedures on the business environment and recommend actions to streamline procedures, avoid duplication, and reduce regulatory burden on the private sector (Decision 263/QD-TTg, March 5,2012) Table 8.2. Prior Actions Achieved by EMCC-2 All actions were completed by the Board date, and none have been reversed Prior Action Prior Action 1: GOV has issued Decree Number 01/2014/ND-CP dated January 3, 2014 replacing Decree Number 69/2007/ND-CP dated April 20, 2007 to enable increased foreign investor participation in domestic commercial banks. Prior Action 2: GOV, through Prime Minister has issued Decision Number 843/QD- TTg dated May 31, 2013, and has issued Decree Number 53/2013/ND-CP dated May 18, 2013, providing a comprehensive policy framework to address the problem of nonperforming loans across the banking sector. Prior Action 3: GOV through Prime Minister, has issued Decision Number 689/QDTTg, dated May 4, 2013, approving a medium-term debt management program for the period 2013-2015. Prior Action 4: GOV through State Treasury, has implemented the treasury single accountprocedures in the Joint Stock Bank for Investment and Development of Vietnam and the Vietnam Joint Stock Commercial Bank for Industry and Trade, and provided reports on the implementation. Prior Action 5: GOV has issued Decree Number 59/2013/ND-CP dated June 17, 2013, Decree Number 78/2013/ND-CP dated July 17, 2013, and Decree Number 90/2013/ND-CP dated August 8, 2013, to regulate and guide the implementation of the amended Law on Anti-Corruption, including increased transparency, income and asset declaration of public officials, and accountability of public agencies and officials. Prior Action 6: GOV through Prime Minister has issued Decision Number 320/QDTTg dated February 8, 2013, Decision Number 1782/QDTTg dated November 23, 2012, Decision Number 314/QD-TTg dated February 7, 42 2013, Decision Number 38/QD-TTg dated January 5, 2013, Decision Number 753/QD-TTg dated May 17, 2013, Decision Number 2097/QD-TTg dated December 28, 2012, and Decision Number 46/QD-TTg dated January 5, 2013 on restructuring of state economic groups; the government has also issued Decree Number 71/2013/ND-CP dated July 11, 2013 on state investment in enterprises and financial management of enterprises with 100% of charter capital owned by the state. Prior Action 7: GOV has issued Decree Number 61/2013/ND-CP dated June 25, 2013, to regulate financial supervision, performance assessment, and disclosure of financial information of state owned enterprises. Prior Action 8: GOV through Prime Minister, has issued Directive Number 14/CTTTg, dated June 28, 2013, to accelerate clearance of capital expenditure arrears and report to the National Assembly the current status and solutions going forward. Prior Action 9: GOV through National Assembly, has adopted the Amended Law on Procurement Number 43/2013/QH13 to strengthen transparency and competition in public procurement. Prior Action 10: GOV through National Assembly, has adopted the Amended Law on Corporate Income Tax to establish competitive corporate income tax rates, clarify rules and regulations on transfer pricing, and introduce provisions on deductible expenses. Prior Action 11: GOV through National Assembly, has adopted the Amended Law on Value Added Tax to: (a) adjust the group of goods and services not subject to value added tax; (b) clearly specify the goods and services subject to 0% value added tax rate; and (c) apply thresholds as appropriate. Table 8.3. Prior Actions Achieved by EMCC-3 All actions were completed by the Board date, and none have been reversed Prior Action Prior Action 1: GOV through National Assembly, has adopted the Amended Law on Value Added Tax to: (a) adjust the group of goods and services not subject to value added tax; (b) clearly specify the goods and services subject to 0% value added tax rate; and (c) apply thresholds as appropriate. Prior Action 2: The Borrower, through the Ministry of Finance, has prepared an update d medium-term debt management program for the period 2016-20, with strengthened risk analysis based on additional scenarios and updated macroeconomic assumptions as evidenced through official letter of Ministry of Finance and excerpt of report 111/BTC-NSNN, dated February 19th 2016. Prior Action 3: The Borrower, through State Treasury, has implemented Treasury Single Account procedures in the State Bank of Vietnam, Vietcombank, and Vietnam Bank for Agriculture and Rural Development as evidenced through a number of official letters on implementation provided by the Ministry of Finance to the Bank. Prior Action 4: The Borrower, through the Ministry of Finance and State Economic Groups, has implemented divestment of eighty (80) percent of five high-risk, non-core businesses in six State Economic Groups consistent with Instruments on Restructuring of State Economic Groups, as evidenced through a report on implementation provided by the Ministry of Finance to the Bank. Prior Action 5: The Borrower, through its Government, has implemented Decree Number 61/2013/ND-CP, dated June 25, 2013 which has been replaced by Decree Number 87/2015/ND-CP, dated October 6, 2015, adopting the audited reports on the public dissemination of the key financial performance of all State Economic Groups, as evidenced through a report on implementation provided by the Ministry of Finance to the Bank. Prior Action 6: The Borrower, through National Assembly, has adopted the Public Investment Law Number 49/2014/QH13, dated June 18, 2014 to: establish a comprehensive legal framework to improve capital spending efficiency; reduce public investment fragmentation; align public investments with national development plans and improve public disclosure and transparency. Prior Action 7: The Borrower, through its Government , has adopted appropriate Implementation Instruments in accordance with the Amended Law on Procurement. Prior Action 8: The Borrower, through Government has adopted Resolution 19/NQ-CP, dated March 12, 2015, on key duties and solutions to improve business environment and national competitiveness in 2015 – 2016 and enhance the Borrower’s business environment through the simplification of tax procedures for taxpayers. Prior Action 9: The Borrower, through its Government, has adopted Decree 60/2015/ND-CP dated June 26th 2015, eliminating limitations on foreign investors’ participation in public companies in selected areas of the stock market. 43 Annex 9: Evolution of Results Indicators (RIs) for the EMCC Series Final Results Indicator- Baseline Value, Original Formally Actual Value number from EMCC-3 / incl. any updates Target Values Revised Achieved at Pillars (Source, as (from approval Target Completion or (RI without number = available) documents) Values Target Years dropped indicator) (DPO-#, if dropped) PILLAR 1: Strengthened Financial Sector Governance and Fiscal Management RI-1 Reduction in reported Non-performing loans (NPLs) Value EMCC-1: March End 2015 = 5 2015 = 2012 = 8.6 percent percent or less1 2.55 percent EMCC-2: 2016 = 4.6 percent 2.46 percent EMCC-3: n.a. 2017 = (SBV)16 1.99 percent Status - Achieved March 2018 SBV Update for 2012 = 4.08 percent Comments 100 percent achieved. The wording of the Indicator was simplified with (incl. % achievement) EMCC-2 from the original, “Reduced proportion of outstanding loans defined as nonperforming.” The Baseline was revised and reported at 4.6% according to the then existing regulation (Decision 493) for EMCC- 2. The Baseline was subsequently revised as of 1 June 2014 with the effectiveness of the new regulation (Circular 2) for EMCC-3. No Baseline data was available based on Circular 2 for EMCC-3. The Client agreed to these changes, following consultations during the preparation of the two operations. RI-2 Number of joint stock commercial banks Value EMCC-1: EMCC-2: 2017 = 31 2010 = 42 2017 = 30 EMCC-2: EMCC-3: <30 2010 = 39 Status – Partially Updated 2010 Partially achieved from SBV: 40 achieved Comments 90 percent achieved. (Target change = 10 from updated baseline, actual = (incl. % achievement) 9). The target was very nearly met. This Indicator was introduced with EMCC-3 to measure progress in banking sector restructuring, following discussions with the Client. RI (Dropped) Improved economic and Industry risk score (grouped 1-10, from lowest to highest), measured by Banking Industry Country Risk Assessments (BICRA) Value October 2012 = End 2015 = End 2015 = Group 9 (Standard Group 8 Group 7 & Poor's) Status - Dropped EMCC-3 16 Based on Vietnam’s Accounting Standards. 44 Comments Dropped, as agreed with the Client. The Target Value was revised to a (incl. % achievement) more ambitious score of 7 with EMCC-2. With EMCC-3, the Indicator was dropped to reduce number of result indicators. These changes were discussed with the Client during preparation of the two operations. RI-3 Number of years during 2011-2015 in which public and publically guaranteed debt to GDP remain below statutory limit (65 percent) Value End 2012 = 1 2015 = 4 Below legal (MOF definition of threshold of PPG debt) 65 percent of GDP for all 5 years 2011- 2015 Status - Achieved Below threshold of 65 percent from 2011 through 2017 Comments 100 percent achieved. The wording of the Indicator was simplified and (incl. % achievement) streamlined with EMCC-3 to eliminate additional layer of objective (e.g. transparency and efficiency in PFM), following consultation with the Client. Original Indicator wording: “Number of years the public debt is below the government target of 65 percent of GDP.” The wording for the Target was also revised with EMCC-3 to be more precise. RI (Dropped) The primary fiscal balance average over the past three years Value End 2012 = -2.7 End 2015 = percent of GDP < -4 percent of GDP Status - Dropped EMCC-3 Comments Dropped, as agreed with the Client. The new Indicator was introduced (incl. % achievement) with EMCC-2 to measure budget discipline, after consultations with the Cient. The indicator was eliminated with EMCC-3, as there were no Prior Actions directly affecting the fiscal balance. RI-4 Number of treasury accounts Value End 2012 = 701 Target (2017): accounts (State 5 Treasury Treasury, MOF) Main Accounts Status - Achieved 5 main TSAs as of 2017 Comments 100 percent achieved. Following consultations with the Client, the new (incl. % achievement) Indicator was introduced with EMCC-2 to measure Treasury Singly Account (TSA) implementation. The Indictor was reworded to streamline and simplify with EMCC-3 from the original, “Consolidation of Treasury Main Accounts as a result of TSA implementation.” 45 PILLAR 2: Strengthened Public Administration, SOE Management and Public Investment Management RI-5 Number of Provinces that disclose information on land management Value 2010 = 6 out of 63 15 by 2013 and EMCC-3: websites posted 45 by 201517 (2017): 45 maps of current provinces land use situations should (WB Land disclose Information information Disclosure on land Surveys) management by end 2015 Status - Achieved Achieved Comments 100% achieved. The Indictor was reworded to streamline and simplify it, (incl. % achievement) and to eliminate additional layer of objective with EMCC-3 from the original, “Increased disclosure of information on land management.” The Target Value wording was also revised with EMCC-3 for clarification. These changes were discussed with and agreed to by the Client. RI-6 Share disclosed public officials’ income and asset declarations (%) Value 2012 = None 20 percent of 2013 = disclosed declarations 59.4 percent (Annual Anti- disclosed by 2015 = Corruption Report 2013 98.3 percent to National and 50 percent 2016 = Assembly) by 201518 98.9 percent 2017 = 99.8 percent Status - Achieved Government Inspectorate update for 2010 = 18.7 percent Comments 100% achieved. The Indictor was reworded to streamline and simplify in (incl. % achievement) order to eliminate additional layer of objective with EMCC-3 from the original, “Enhanced disclosure of public officials’ income and asset declarations.” These changes were made in consultation with the Client. RI-7 Share of Risk-Based Audits in Total Audits for corporate taxpayers Value EMCC-2: EMCC-2: 2017: >50 39.44 percent of 35 percent of percent businesses businesses surveyed in surveyed in median province median reporting less province negotiation with reporting less tax authority at negotiation end 2013 with tax EMCC-3: 17 Land is among the five most corrupt sectors according to the WB-GOV 2012 Anti-Corruption Diagnostic. 18 The amended Law on Anti-Corruption requires that asset and income declarations of public officials be disclosed at the office of the filers. 46 2010 = 0 authority at end 2015 Status – Achieved >90 percent in 2017 Comments 100 percent achieved. The new indicator was introduced with EMCC-2 to (incl. % achievement) measure progress in implementation of the amendments to the Tax Administration Law. It was replaced subsequently at the Client’s request with EMCC-3 from the original, “Businesses reporting less negotiation with tax authority as part of doing business.” The original measure is a perception based indicator, and ambiguous. It is unclear whether ‘negotiations’ in the original wording refers to formal negotiations or informal practices, and therefore difficult to interpret results. The revised indicator measures increased use of risk based audit selection, and is more directly linked to the prior action. RI (Dropped) Accelerate liquidation of nonviable SOEs Value End 2012 = NA, End 2012 = percent of NA, percent of nonviable SOEs19 nonviable SOEs4 Status - Dropped EMCC-2 Comments Dropped, as agreed with the Client. Following consultations with the (incl. % achievement) Client, the indicator was eliminated with EMCC-2 to reduce the number of Indicators. RI-8 Reduced investments by SEGs in high risk non-core areas as a share of SEG capital Value End 2012 = End-2015 = 2017 = 0 (i) 0.13 percent for target (i) 0 percent securities; (ii) percent for 0.06 percent for securities; investment fund; (ii) 0 percent (iii) 0.16 percent for investment for insurance; (iv) fund; (iii) 0.8 1.53 percent for percent for banking; and, (v) insurance; (iv) 0.7 percent for real 0.8 percent for estate; (Report banking; and, 490/BC-CP, MOF) (v) 0.3 percent for real estate. Status – Achieved 2017 = 0 Comments 100 percent achieved. Following consultations with the Client, this (incl. % achievement) Indicator was introduced with EMCC-2 to measure implementation of prior action on divestment of high risk non-core businesses from SEGs. EMCC-3 revised the Target based on updated data to reflect SEGs (as opposed to other SOEs) and aggregated for all non-core asset types since all non-core assets be divested. RI-9 Number of SEGs disclosing their audited financial statements on their websites. 19 Targets were to be finalized during preparation of EMCC-2 as Restructuring Plans were being finalized by the Government. 47 Value End 2012 = 4 End 2015 = 8 EMCC-3: SEGs (2017): 8 SEGs Status – Achieved 2017 = 8 Comments 100 percent achieved. New indicator introduced with EMCC-2 to (incl. % achievement) implementation of Decree 61 (Prior Action 4.4) requiring all SEGs to disclose financial and non-financial information, as agreed with the Client. The wording was revised for simplification and streamlining with EMCC-3 from the original, “All SEGs disclose their audited financial statements on their websites.” RI (Dropped) Number of State Economic Groups (SEGs) that have non-core businesses Value End 2012 = 10 End 2015 = 5 Status - Dropped EMCC-2 Comments Dropped, as agreed with the Client. Following consultations with the (incl. % achievement) Client, the indicator was eliminated with EMCC-2 to reduce the number of Indicators. RI (Dropped) MOF discloses the reports on financial supervision and financial supervision result of SEGs/GCs on its website Value End 2012 = 0 End 2015 = at least 30 percent of SEGs/GCs Status - Dropped EMCC-3 Comments Dropped, as agreed with the Client. The new Indicator was introduced (incl. % achievement) with EMCC-2 to measure broader transparency efforts by SEGs. The Indicator was subsequently dropped with EMCC-3 to reduce the number of separate indictors and duplication. Similar to RI-9 it measures the impact of EMCC-2 Prior Action 4.3 and EMCC-3 Prior Action 4.6. These changes were discussed with the Client with preparation of the two operations. RI-10 Capital expenditure arrears from the central budget (VND trillion) Value EMCC-3: June 2017 = VND 2013 = VND 43 30 trillion trillion Status – Achieved 2017 = VND 30 trillion Comments 100 percent achieved. The new Indicator introduced with EMCC-2 to (incl. % achievement) measure arrears clearance, as discussed with the Client. The wording of the Indicator was revised with EMCC-3 for simplification and streamlining to eliminate additional layer of objective (e.g. efficient capital expenditure). The original wording is, “Reduction in ratio capital spending to capital budget.” These changes were made in consultation with the Client. RI (Dropped) Reduction in total capital expenditure arrears in the central budget Value EMCC-2: average EMCC-2: End 2009-2011 = 135 2015 = 115 percent percent Status - Dropped EMCC-3 48 Comments Dropped, as agreed by the Client. The Indicator was dropped with (incl. % achievement) EMCC-3, as it is not directly affected by program actions and measures the same impact as RI-10. PILLAR 3: Reduced Administrative Burden and Strengthened Tax and Procurement Policies RI (Dropped) Reduced percentage of domestic firms spending over 10 percent of their time dealing with bureaucracy or bureaucratic regulations Value 2011 survey = End 2015 = 10 11.26 percent in percent or less median province in median (Provincial province Competitiveness Index) Status - Dropped EMCC-3 Comments Dropped, as agreed by the Client. The Indicator was dropped with (incl. % achievement) EMCC-3 to reduce the number of indicators and was not directly affected by program actions. RI-11 Share of direct contracting over total contracting value (%) Value End 2012 = 40 End 2015 = 30 percent percent Status - Achieved Updated baseline: 2015 = 2012 = 34.1 21.08 percent percent Comments 100 percent achieved. In consultation with the Client, this Indicator was (incl. % achievement) introduced with EMCC-2 to measure implementation of the Procurement Law. EMCC-3 simplified and streamlined the wording of the indicator to eliminate additional layer of objective (e.g. efficient, equitable and transparent business environment) The original wording is, “Reduced percentage of direct contracting over total contracting value.” RI-12 Time needed to comply with tax payment requirements Value 2012 = (i) 320 End 2015 = (i) hours for VAT; (ii) 220 hours for 217 hours for CIT VAT; (ii) 150 (Paying Taxes hours for CIT Report) Status - Achieved End 2015 = (i) 219 hours for VAT; (ii) 132 hours for CIT Comments 100 percent achieved. Following consultations with the Client, EMCC-3 (incl. % achievement) simplified and streamlined the wording of the indicator to eliminate additional layer of objective (e.g. efficient, equitable and transparent business environment) The original wording is, “Reduced time needed to comply with tax payment requirements.” 49 Annex 10: AAA Underpinnings for the EMCC Program 50 Annex 11. Summary of EMCC Programmatice AAAs and TA Activities No. Activity and Key Issues Outputs Strenthened debt and treasury management for PFM transparency and efficiency 1 TA and Policy Note on Treasury Single EMCC AAAs funded external expert to help Account and cash management: GOV currently review steps taken to roll out TSA arrangements does not have a TSA, which creates inefficiencies and provide advice based on international in cash management. Rollout of the TSA is experience. Recommendations have already been expected to reduce borrowing costs and provide shared with GOV. They are summarized in a policy more central oversight and control on cash note, which was recently reviewed and will be management. Partial TSA implementation was a shared with GOV. prior action under EMCC-2 and full implementation is a trigger under EMCC-3. Improved regulations and corporate governance for SOE transparency and restructuring 2 TA and Policy Note on SOE disclosure EMCC AAAs funded external experts to share practices: SOE transparency has been an ongoing experience of SOE disclosure practices in other concern. Disclosure of financial statements and countries. TA helped review the current legal balance sheet information is largely voluntary. framework and carry out a survey of existing GOV/MOF has been working on regulations to disclosure practices. These were summarized in a improve disclosure and monitor risks. We have policy note, which was reviewed and has been SOE transparency-related triggers in EMCC-2 and published after review. 3. 3 TA on implementation of Decree 61 on EMCC AAAs is funding Ernst and Young to help disclosure of information on SOE performance: implement Decree 61. E&Y helped develop the MOF has developed Decree 61, which took on original decree 61 under the PFMRP. The TA board some of the recommendations from (2) provided under EMCC AAAs is working with above, to improve reporting on SOE performance. MOF and the SOE themselves to review challenges The Decree was a prior action under EMCC-2. to implementing decree 61 and how to overcome Implementation of the decree is a trigger EMCC-3 these. The TA will provide training to SOEs also. and an overall result indicator for EMCC. Initial reports have already been submitted. 4 TA and Policy Note on development of a Law EMCC AAAs has provided extensive external on State Capital Investment and Management advice on international good practice with in Enterprises: Ownership of SOEs in Vietnam is governance structures for SOE ownership. The TA spread across line ministries, provincial has worked with MOF and held several workshops, authorities, MOF and MPI. Different ministries provided drafting inputs into the Law, and have some responsibility over different SOE summarized recommendations in a policy note, functions but there is lack of overall which was internally reviewed. The note has been accountability. To address this GOV is preparing a shared with MOF. Law on State Capital Invested and Managed in Enterprises, which is a trigger in EMCC-3 5 Policy Note on labor market impacts of SOE Under EMCC AAAs, the Bank worked with the restructuring: GOV has embarked on a ADB and ILO to take stock of SOE employment in restructuring program for SOEs, but with little Vietnam and estimate the potential retrenchment consideration on potential labor market impacts. impact of SOE privatization based on a model With slowing growth, potential to absorb developed earlier by Martin Rama. It also reviewed retrenched workers in the private sector is lower existing policies for dealing with retrenched than in the previous round of restructuring. workers. This work provided the basis for the Reviewing this was part of our poverty and social EMCC-1 and 2 Poverty and Social Impact impact analysis. Assessments. A policy note has been prepared but not yet reviewed. 6 TA on revision to Decision 14 on classification EMCC AAAs provided extensive TA to review of SOEs: Vietnam over the past two decades has challenges with implementing Decision 14 (e.g. in issued a series of regulations placing limits on terms of delays in privatization) through interviews state ownership in enterprises depending on which with selected SOEs, and bring international sectors they operate in. The most recent regulation experience with SOE classification. It was decided 51 No. Activity and Key Issues Outputs is Decision 14, which GOV wanted to review to to drop the revised draft decision prepared by GOV further reduce state ownership in enterprises. as a trigger for EMCC-2 because it was found not Revision of Decision 14 was a trigger for EMCC- to be strong enough based on the advice provided 2. under EMCC AAAs. Streamlined administration for enabling business environment 7 TA and Report on revision to the Corporate EMCC AAAs provided extensive TA to review the Income Tax Law: Revision of the CIT Law was CIT Law in depth, and advise on specific part of GOV’s tax reform strategy (2011-2020). provisions. The recommendations were shared in They wanted to address a number of major issues writing and through workshops, and compiled in a around the CIT rate, tax exemptions, TA report submitted to GOV. The team worked determination of taxable income, deductible closely with the IMF and EU, who were providing expenses, and tax incentives. Their aim was to complementary support on this Law. The team make the system simpler, more efficiency and prepared a summary note on the key changes in the more equitable (as with VAT reforms below). This revised Law with recommendations for further was a prior action under EMCC-2. work. 8 TA and Report on revision to the Value Added As with the support on the CIT Law, EMCC AAAs Tax Law: Like the CIT Law, the revision of the provided TA to review the VAT Law in depth, and VAT Law was also a major part of the GOV’s tax advise on specific provisions. The team worked reform strategy. Discussions around revision of closely with the IFC on this who were providing the Law looked at VAT registration thresholds, the complementary support. The team prepared a VAT rate structure, criteria for exemptions, VAT summary note on the key changes in the revised refunds and other issues. The revised Law was a Law with recommendations for further work. prior action under EMCC-2. 9 TA on international experience with reform of EMCC AAAs provided brought in international public procurement: The Bank has had a procurement experts, including practitioners, to longstanding engagement procurement reform in share experience on specific elements of Vietnam. The revision to the Procurement Law – procurement reform. These were shared through to promote more competition, transparency and workshops and written comments. It also provided value for money – was a prior action for EMCC-2. TA to develop a capacity building plan to help implement the revised procurement law, which was later adopted by an MPI Decision. 10 TA on development of an Information System EMCC AAAs provided TA to develop a to monitor simplification of administrative Management Information System, which will help procedures: The Ministry of Justice has an to implement the M&E framework prepared with Administrative Procedures Control Agency, which IFC assistance. We collaborated closely on this is tasked with monitoring administrative with IFC. The TA was recently completed, and the procedures across the government and recommend MIS is now up and running. The APCA is now simplification to reduce burden on private training over 10,000 users across the government to businesses. The IFC assisted APCA to develop a submit data through the system so that they can monitoring and evaluation system for monitor progress on reforms. The first reports from simplification of administrative procedures. the system should be available by the end of this Implementation of this system is a trigger for year. The system is now live on the APCA website. EMCC-3. 11 TA on preparation of implementation decrees EMCC AAAs is providing TA to develop the for revised Procurement Law: As follow up to regulations in specific areas such as competitive adoption of the revised Procurement Law, GOV bidding procedures, technical specifications for requested assistance in developing supporting bidding documents, development of standardized regulations for implementation of the new Request for Proposals, and other areas. provisions. 52 Map of Vietnam Source: World Bank 53