MARD proposes special coordination mechanism with the World Bank

This meeting marked Sherman’s first visit to the Ministry, underscoring her strong commitment in collaborating with and supporting the Vietnamese Government in its efforts to address key priorities for sustainable agricultural development.

Minister Le Minh Hoan welcomed Ms. Mariam Sherman in her new role and expressed his eagerness to strengthen cooperation with the World Bank. He first shared some of the challenges Vietnam is currently facing, particularly the regulatory overlaps in laws such as the Decree on the Management and Use of Official Development Assistance (ODA), the State Budget Law, and the Public Investment Law, which have complicated access to concessional loans from foreign donors.

The Minister expressed hope that under Sherman’s leadership, the World Bank will organize more events and workshops to enhance Vietnam’s capacity for effectively managing international projects. He emphasized the need for the Bank to act as a liaison between various ministries and sectors, facilitating better coordination across state agencies.

World Bank’s Director Sherman acknowledged the Ministry’s proposals and agreed to explore suitable mechanisms to work effectively with the Vietnamese Government and international organizations.

On behalf of the WB delegation, Sherman expressed her condolences for the severe impact of typhoon Yagi on Vietnam, stating: “The disaster has left behind devastating consequences. We recognize the urgent need to support Vietnam in enhancing the climate resilience of its infrastructure, while also assisting Vietnamese farmers in transitioning to agricultural models tailored to the specific climate of each region.”

Minister Le Minh Hoan agreed, highlighting the importance of addressing clear economic impacts in regions vulnerable to climate change, such as the Northern mountainous areas, the Central Coast, and the Mekong Delta. He proposed formalizing cooperation between the WB and Vietnam to foster future projects.

One such project, the Integrated Climate Resilience and Sustainable Livelihoods Project (WB9), over eight years, has directly benefited more than 1.8 million farmers in the Mekong Delta, supporting their transition to more resilient livelihoods. The project has improved farming practices across over 200,000 hectares, helping farmers adopt climate-adaptive agricultural models.

In addition, the Vietnam Sustainable Agriculture Transformation Project (VnSAT) stands out as a regional success in advancing sustainable farming methods and strengthening the rice and coffee value chains. This project has laid a strong foundation for the World Bank to continue supporting the Ministry’s ambitious initiative to cultivate 1 million hectares of high-quality, low-emission rice (1MH).

Updating Ms. Sherman on the 1MH project’s progress, Minister Le Minh Hoan remarked: “While there are still challenges in accessing World Bank loans due to the absence of a dedicated loan mechanism, the initial results of the pilot models within the project framework have exceeded the Ministry’s expectations.”

The Minister also shared that recently, the WB has proposed a payment-for-results (PforR) mechanism for the 1MH project. Accordingly, the MARD has worked with ministries and sectors to discuss the possibility of developing a separate payment mechanism for the 1MH project. 

He affirmed that PforR is a mechanism that many parties agree on and highly appreciate its feasibility. Regarding the inter-local lending mechanism, the Minister said that the 12 provinces in the project will be given more favorable conditions to access capital sources.

The Minister also shared that the World Bank recently proposed a payment-for-results (PforR) mechanism for the 1 MH project. In response, the MARD has engaged with other ministries and sectors to explore the feasibility of developing a dedicated payment mechanism for the 1MH project.

He affirmed that PforR is widely supported, with many stakeholders recognizing its potential and practicality. Regarding the inter-provincial lending mechanism, the Minister mentioned that the 12 provinces involved in the project would be granted more favorable conditions to access funding sources.

In response, Director Sherman praised the Ministry’s initiative and congratulated the six North Central provinces participating in the Emission Reduction Program (ERP) on their impressive achievement of generating 16.2 million emission reduction units between 2018 and 2019, which is 5.9 million more than the 10.3 million contract volume in the Emission Reduction Payment Agreement. The World Bank has issued a call option notice to buy an additional 1 million emission reductions beyond the contracted amount.

In March 2024, the World Bank disbursed the entire 51.5 million USD to the MARD. This funding is currently being distributed to nearly 70,000 beneficiaries and is supporting local livelihood activities under the benefit-sharing plan.

Further in the discussion, Mr. Doan Hoai Nam, Deputy Director of the Forestry Department (MARD), confirmed that the Vietnam Forest Protection & Development Fund (VNFF) has received the payment from the World Bank, and Vietnam has disbursed 77% of the process so far. It is expected that the payment will be finalized by the end of 2024. 

Mr. Nam expressed hope that the World Bank would continue to support sustainable forest development projects, particularly in areas vulnerable to natural disasters, to help these regions better adapt to climate change.

During the discussion on potential projects related to water security and irrigation modernization, the MARD emphasized the need to prioritize multi-purpose water infrastructure projects with broad-reaching impacts. Specifically, the Ministry hopes the World Bank will support the construction of large irrigation reservoirs and water supply projects for communities in disadvantaged areas, as well as regions frequently affected by droughts, water shortages, and saltwater intrusion.