Italian development aid in brief

1. Background and reasons for the presence of Italian cooperation
The presence of the Italian Cooperation in Vietnam started in 1990, when the first Financial Technical Agreement of Cooperation between the two Countries was signed. Since those years, Vietnam has made significant steps forwards in terms of socio-economic development. It reached the rank of the Middle Income Country (MIC) and it shows good performance in the achievement of the Millennium Development Goals. However, the Country is now facing the challenge of making its growth stable, egalitarian and sustainable and other emerging issues related to: the Middle Income Trap, the global economic recession and environmental emergencies related to the unsustainable exploitation of resources and climate change. Today Italy, an important and historic partner of the Country, sets up its cooperation intervention in response to these new challenges, in the framework of the latest Development Cooperation Agreement, signed by both countries in 2009. Moreover, the Italian Cooperation responds to these changes in the socio-economic context through an increased involvement of Italian and Vietnamese private sector in its programmes.

2. Other major international donors, coordination and the possibility of division of labor, joint evaluation exercises (Harmonization)
Many actors of development cooperation are active in Vietnam, including 21 bilateral and 19 multilateral donors. Both this international community and the Vietnamese government spend numerous efforts to maximize the effectiveness of the intervention of development co-operation in the Country, through different mechanisms of coordination and harmonization. Vietnam is one of the pilot countries for the "One UN" model, which aims to encompass the actions of all UN agencies under one programmatic, budgetary and monitoring framework. Italy is actively involved in the formulation of the governance strategy of this mechanism through the relevant working groups, but does not contribute, for the moment, to the financing of the One UN Plan. On the other side, Italy is actively involved in the coordination effort with the Member States of the European Union. Italy committed to participate to the exercise of joint programming from 2016 (date chosen to match synchronization with the programming of the Vietna mes e Government) together with the Member States still present in Vietnam and the Delegation of the European Union. In order to maximize its impact in the context of Vietnam, the exercise is going to be applied only to specific sectors with a clear potential for a joint programmatic approach. The sectors will be defined during the transition period until 2015. Moreover, from 2013 to 2016, Italy and some concerned Member States will pilot this approach in the sector of technical and vocational training. Finally, coherently with the commitments made at the conference of Busan, the Vietnamese government and the Aid Effectiveness Forum (AEF), a group of donors led by the World Bank and Koika, drafted the Vietnamese Partnership Document, which contains an action plan and a monitoring framework designed to improve the effectiveness of the aid in Vietnam. Italy took part in the process of drafting this document, to which it adheres, and will be engaged in the coming years in subsequent actions for its implementation.

3. Other presence of the Italian Cooperation System in the Country (NGOs, Universities, Local authorities, Private sector) and their involvement
Vietnam sees the presence of numerous Italian actors. The Italian Development Cooperation works together with several Italian NGOs: GVC, UCODEP, Centro ELIS, AIFO and AISPO, promoting their projects of social and environmental development. Moreover, other NGOs are present in the Country though other financial sources: GVT, CIAI e CARE THE PEOPLE. The Embassy of Italy is in contact with these organizations for thematic and geographic coordination and for future collaborations. Moreover, there is a large and growing presence of the Italian private sector, of which ICE (Institute for Foreign Trade) records 32 active firms with investments and joint ventures and 29 firms present with representative offices or exploratory missions. The Italian Cooperation is active in channeling the resources and the potential of these actors in its programs. For example, the Italian Cooperation finances an UNIDO program, which also aims at promoting twinning between Italian and Vietnamese SMEs. Over the years affected by this policy framework, the involvement of the private sector is expected to further increase in additional programs of: promotion of the private sector, vocational training and infrastructural development through soft loans. The same applies to academic institutions, active in Vietnam with 35 Universities and 68 cooperation agreements. The University of Sassari and the Polytechnic of Milan are already directly involved in Italian Development Cooperation programs. Greater interaction with academic institutions is foreseen in the in period of 2013-2015, for the activation of joint Italian and Vietnamese programs of higher education and vocational training. Finally, the regions of Veneto, Marche, Trentino Alto Adige and the autonomous provinces of Trento and Bolzano are present in Vietnam, through the funding of various initiatives in the humanitarian and cultural cooperation.

4. General objectives of the Italian cooperation in the country, local partners’ ownership and consistency with the international guidelines on development effectiveness
The Italian Cooperation in Vietnam is framed within the programmatic lines of the Socio- Economic Development Strategy 2010-2020 and the Socio-Economic Development Plan 2010- 2015. The latter expresses the development priorities of Vietnam in four pillars: improving the business environment, strengthening social inclusion, strengthening the management of natural and environmental resources and governance improvement. These documents are complemented by the Strategic Framework for the Mobilization, Management and Use of the Development Assistance 2011-2015, published with the aim of directing international interventions in the areas of greatest need, identified as: • Improving the physical and social infrastructure of the country, particularly with regard to the development of high quality human resources and the development of an economy of science and technology;
• Support the promotion of investment, trade, business and production and design of an appropriate legislative and institutional framework for a socialist market economy;
• Support for the protection of the environment and of natural resources;
• Supporting rural and agricultural development and the most disadvantaged areas.
The choice of the priorities of Italian intervention is inspired by these documents and is developed jointly with the Vietnamese national authorities, particularly the Ministry of Planning and Investment and with local authorities and counterparts. Consistent with this process of ownership, the Italian intervention has the following objectives: to support local economic development through the improvement of technical and professional training system, strengthening the ability to attract investment, production and access to markets for small and medium enterprises and, in the agro-forestry, for small-scale producers; the promotion of better management and greater preservation of the environment and natural resources, particularly with regard to water and forest resources; improvement of the quality and access to health care system in the central provinces of the country. In order to maximize the effectiveness and impact of Italian intervention, the programs are concentrated in the central provinces and in the surroundings of Hanoi.

5. Priority sectors and expected results
The current Italian intervention lies within the terms of the Development Cooperation Agreement signed by Italy and Vietnam in 2009 (programming the period 2010-2012), of the amount of EUR 30 Mn in soft loans and EUR 4.5 Mn in grants. A new cooperation agreement is been developed for the years up to 2015. Considering Italian limited financial resources for development assistance and the relatively high income of Vietnam, soft loan is the main financial instrument of the Italian activities. Moreover, being a relatively small donor, Italy prefers the financing and implementation of specific programs, rather than sector support or state budget support, where its action would be less effective. Hereafter is the list of Italian priority sectors and the related expected results: Endogenous and sustainable economic development and Education (EUR 16 Mn):
• Production and marketing capacity building for SMEs’ and strengthening of human capital.
• Improvement of vocational training in the technical and industrial fields.
• Improvement of the access for SMEs to investments and foreign markets.
• Improvement of training in archaeological and monumental fields.
• Promotion of rural development through: improvement of the management of agricultural and forest resources by small farmers; development of supply chains, of marketing and of agro-tourism.

Environmental protection and development (EUR 56 Mn and EUR 7.6 Mn of funds drawn from a debt swap program): • Construction of water supply facilities and of urban renewal infrastructures in 6 provinces of the Country.
• Integrated management and sustainable development of river basins.
• Modernization of the flood warning system in the central provinces of the Country.
• Activation of initiatives aimed at environmental protection and development by local authorities, NGOs and international organizations in the central provinces of the Country.

Health (EUR 13 Mn):
• Improvement of the health services of the central areas of the Country.
• Improvement of the capacities of diagnosis and treatment of respiratory diseases in central Vietnam.