US embassy cable - 03HANOI2630

UNCLAS SECTION 01 OF 06 HANOI 002630 
 
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E.O. 12958: N/A 
TAGS: ECON, EAID, EAGR, KSCA, SENV, TSPL, VM 
SUBJECT: VIETNAM -- CANDIDATE FOR THE UN COMMISSION ON 
SUSTAINABLE DEVELOPMENT'S WATER INITIATIVE 
 
REF: STATE 275504 
 
1. SUMMARY: Post nominates Vietnam as a candidate country 
for the water initiative of the UN Commission on Sustainable 
Development (see reftel). Vietnam has an incredibly diverse 
geography with accompanying water issues. Vietnam has a 
national water plan, and on-going research projects with a 
wide range of international donors, NGOs, and UN agencies. 
However, Vietnam still needs outside assistance in 
developing and implementing an integrated water resource 
management plan that highlights safe water systems at the 
household level and uses innovative financing systems to 
build the most crucial water projects in a timely fashion. 
An investment in clean water in Vietnam would improve the 
prospects for its present and future workforce.  Post stands 
ready to work with the Department to undertake such an 
effort in Vietnam.  END SUMMARY. 
 
2. GEOGRAPHY - Blessing and Curse: Vietnam has an incredibly 
diverse geography -- ranging from dry mountainous regions 
along the border with China and Laos to the mangrove swamps 
along the coast to the vast tidal basin of the Mekong River 
Delta. That incredible breadth of geography also accompanies 
a vast span of water issues.  Vietnam must address water 
management (and disaster mitigation) issues associated with 
the annual floods in the Mekong River Delta, flash floods 
along the central coast regions, and droughts in the dry 
northern regions (where water harvesting is key). Along the 
coast and in the Mekong River Delta, there are many efforts 
to delay, or reverse, the salt infiltration and heavy metal 
accumulation arising from both natural and man-made 
activities. 
 
3. BACKGROUND: Per reftel, Post conducted an in-house 
evaluation of Vietnam's existing water strategies and 
programs. Vietnam has a national water strategy, developed 
with the assistance of various donors.  However, 
implementation of that plan lags behind schedule. No doubt, 
Vietnamese officials would welcome the chance to review 
their existing plans and to development a comprehensive 
water resource strategy by working hand-in-hand with the 
proposed multi-agency/multi-donor expert teams. Per reftel 
instructions, we have not contacted national or provincial 
water resource mangers, but there is a wealth of information 
and experience that needs better coordination and a more 
priority-ranked approach to tackling the most critical 
needs. It would also be vital to obtain close support from 
the international NGOs, World Bank, and UN agencies working 
here on an impressive, but scattered, array of water-related 
initiatives. 
 
IMPORTANCE OF WATER AND WASTEWATER SERVICE 
------------------------------------------ 
 
4. There is a persistent correlation between a country's 
prosperity and the quality of its water supply coverage. The 
World Bank recently calculated that a dollar spent on 
provision of sanitation buys more health than a dollar spent 
on health services. Subsequent to the World Summit on 
Sustainable Development in Johannesburg in 2002, in 
recognition of the importance of water, the United States is 
committing almost a billion dollars to improve access to 
water and sanitation, promote watershed management and 
proper hygiene practices, and increase the productivity of 
water. While many parts of the Vietnamese government (and 
donors working here) would agree on the importance of water 
and sanitation issues, there is little true coordination of 
regional (e.g., Mekong River Commission), national, 
provincial, and district level projects. 
 
5. According to a recent World Bank/Danida study, over the 
last five decades Vietnam has lost more than 80 percent of 
its mangrove forests/swamps. About 96 percent of Vietnam's 
coral reefs are severely threatened by human activities. 
Although the marine catch (offshore fishing) has doubled in 
recent years, the catch per unit of effort is quickly 
declining. Moreover, a 1991-2000 study found that floods in 
the Mekong River Delta were become more severe. Meanwhile, 
four areas in central Vietnam are showing evidence of 
desertification. 
 
LEVEL OF BASIC WATER AND SANITATION SERVICES 
-------------------------------------------- 
 
6. Presently, only 36 percent of Vietnam's 80 million people 
have access to piped water. Roughly 50 percent of urban 
populations are covered by piped water works and in major 
cities this figure is upwards of 70 percent 
coverage. Shortages and intermittent flow are usual, and 80 
percent of household water sources are below national 
quality standards. In general, more affluent neighborhoods 
receive better coverage than poorer communities and slum 
areas. 
 
LEVEL OF HOST GOVERNMENT COMMITMENT 
----------------------------------- 
 
7. The GVN has set out its objectives for the water sector 
in a number of programs and goals, including: 
 
-- a) institutional and management reform to enhance and 
attract participation of all sectors and to transform the 
water supply companies into more commercially-oriented 
enterprises; 
 
-- b) investment and financial reform; more specifically, 
transforming from subsidized management to a commercially- 
oriented mechanism, phasing in tariff increases, and linking 
tariff levels with the operational and investment 
requirements of water companies; and 
 
-- c) improving the effectiveness and quality of urban 
services by enhancing the capacity of water supply companies 
and sewerage and drainage companies to cover operational 
costs and generate investment resources to expand and 
improve services. 
 
STATUS OF VIETNAM'S STRATEGIES/PLANS 
------------------------------------ 
 
8. Vietnam is currently embarking on a national water 
program to expand piped water coverage in rural areas.  It 
is also attempting to reform subsidized state-owned water 
utilities so that they operate as profitable state-owned 
commercial enterprises. 
 
9. URBAN WATER: For urban water supply and sewerage, 
ordinances in 1998 and 1999 focused on increasing coverage 
levels, improving sector management, and achieving the 
financial viability for service providers. The main GVN 
regulation on urban water is Decision 63, dated March 18, 
1998, on "Guiding Directions for the Development of Urban 
Waster Supply until 2020". 
 
10. NRWSS: The National Rural Clean Water Supply and 
Sanitation Strategy (NRWSS) focuses on a demand-driven 
approach in which rural people are educated about health and 
hygiene. The NRWSS was defined by GVN Decision 104 on August 
25, 2000. Details of the NRWSS strategy, the law, progress 
reports, and technical details can be found on the Center 
for Rural Water Supply and Sanitation (CERWASS) web site at: 
www.cerwass.org.vn/english. CERWASS is an administrative 
unit under the Ministry of Agriculture and Rural Development 
(MARD). In addition, each province has a provincial center 
for rural water issues (pCERWASS). 
 
11. DEMAND DRIVEN MODEL: The GVN, with strong support from 
several donors, especially DANIDA (Danish International 
Development Agency) and UNICEF, is piloting a rural water 
strategy in three provinces -- Dak Lak, Ha Tinh, and Nghe 
An. A major emphasis of the pilot is on the development of a 
"demand driven approach" in which rural citizens are 
educated about health and hygiene and hence increase the 
demand for water supply and sanitation systems. To date, the 
model seems to be working and is expected to be sustainable. 
If results continue to be good, the "demand driven" model 
will be used in the remaining (50+) provinces. 
 
12. RIVER BASINS: The regional Mekong River Commission was 
established in April 1995.  Master plans on water resources 
for the Red River delta and the Mekong River delta are under 
preparation. 
 
13. UNIVERSITIES: In addition to GVN, donor, and NGO 
activities, many of the Vietnam's universities are also 
pursuing water-related research topics.  The two leading 
universities in the Mekong River Delta (Can Tho and An Giang 
Universities) are both studying water resource issues 
ranging from improving irrigation systems to better 
sanitation treatment. Given that both universities are 
situated near the Mekong River, they have a stake in making 
sure the river basin remains safe, secure, and sustainable. 
 
DEGREE OF COORDINATION AMONG GOVERNMENT MINISTRIES 
--------------------------------------------- ----- 
 
14. Total investment over the period 1991-2001 for 139 
projects was valued at $335 million ($100 million domestic 
and $235 million ODA). Higher levels of investment for water 
and wastewater projects are expected in the near term, 
including 31 approved projects valued at US$450 million in 
bilateral and multilateral ODA. 
 
15. The GVN is also exploring how to apply financial 
incentives (e.g. low interest rate loans or longer-term 
loans) to improve water sector investments and apply 
decentralized public and private mechanisms to manage water 
and wastewater service. In addition, tariff systems are 
under review, and several more innovative water utilities 
have developed business management and performance models to 
enhance the performance and service delivery among service 
providers in urban water supply and sanitation. Public 
awareness campaigns have also been used to raise awareness 
of the need to increase water tariffs, which in some cities 
only cover 30-50 percent of the actual cost of water 
production and delivery. 
 
16.  Coordination between ministries is vital, as Vietnam 
has more than 10 ministries actively involved in various 
aspects of water and sanitation issues.  For many issues, 
the National Environmental Agency (NEA), formerly under the 
Ministry of Science and Technology (MOST) and now under the 
Ministry of Natural Resources and the Environment (MONRE), 
is the lead agency.  In addition to those organizations, the 
Ministry of Agriculture and Rural Development (MARD), the 
Ministry of Construction (MOC), the Ministry of Fisheries, 
the Ministry of Industry, the Ministry of Planning and 
Investment, the Ministry of Public Health, the Ministry of 
Transportation, the General Department of Meteorology and 
Hydrology, and the National Center for Natural Sciences and 
Technology are key players. 
 
17.  A recent report, "Vietnam Environment Monitor 2002" by 
the World Bank, Danida, and NEA noted, "...These ministries 
and agencies are highly segmented with limited cooperation 
among them. There are significant functional overlaps, 
making coordination time consuming and resource intensive, 
and accountability difficult." 
 
EXISTING MECHANISMS FOR ADDRESSING WATER ISSUES IN VIETNAM 
--------------------------------------------- ------------- 
 
18. GOVERNMENT: Mechanisms for addressing water issues in 
Vietnam are categorized as governmental and donor support 
institutions. Governmental institutions include the Agency 
of Water Resources and the Forest Protection Department 
under the Ministry of Agriculture and Rural Development 
(MARD), Land Resources Management Department under the new 
Ministry of Natural Resources and Environment (MONRE), the 
Ministry of Construction (for urban public works) (MOC), and 
the Preventive Medicine Department of the Ministry of Health 
(MOH). 
 
19. DONOR: Donor support mechanisms include DANIDA's Support 
Implementation of National RWSS Strategy; MARD/DANIDA's 
Water Support Program Strategy; Vietnam-Australia Water 
Resources management Assistance Project; World Bank Water & 
Sanitation Program; UNDP Capacity Building for Disaster 
Mitigation; and various other bilateral and multilateral 
projects. There is an active water issues donor working 
group trying to coordinate (or at least inform) on-going 
activities. 
 
20. NGO: Several NGOs have recently founded a water issues 
working group. More than 30 groups (NGOs, donors, and 
several GOV agencies) are represented on this new working 
group, which several U.S. NGOs are helping organize. 
 
OTHER DONOR ACTIVITIES ON WATER 
------------------------------- 
 
21. The Finnish government provided the first bilateral 
development effort in the water sector between 1985 and 1990 
for Hanoi. Expansion of water supply coverage has been 
emphasized in development plans since 1991. During the 
period 1991 to 2001, 139 projects were completed, some of 
them at very high cost. There are about 50 ongoing 
investment projects being implemented with funds from the 
World Bank, Asian Development Bank, United Nations, Japan, 
France, Australia, Finland, and Denmark. In the rural 
sector, DANIDA, UNICEF, and AusAid are a few of the larger 
donors. Contracts have been signed for four BOT projects, 
most of them in Ho Chi Minh City. 
 
22.  AusAid's water and sanitation project is targeted at 
three towns (280,000 people) in the Mekong River Delta. The 
project aims to address a wide range of issues to ensure its 
ongoing success and sustainability. More information about 
this project can be found at http://www.3deltatowns.org 
 
23. IWMI: The International Water Management Institute, one 
of the 16 research centers of the Consultative Group on 
International Agricultural Research (CGIAR), has sponsored 
several research projects in Vietnam. One of the projects 
focused on developing pro-poor irrigation interventions 
while also reviewing soil conservation and water management 
issues. A more recent project studied the environmental and 
human health aspects of wastewater irrigation. That study 
examined the infection patterns of various internal 
parasites associated with wastewater irrigation and also 
undertook a national survey to assess the extent of 
wastewater use for agriculture and aquaculture. IWMI's main 
partners for those studies included, the Vietnamese Center 
for Irrigation and Water Supply Research, the National 
Institute of Hygiene and Epidemiology, the Veterinary and 
Agricultural University, the Vietnamese Institute for Water 
Resources Research, and Danida. 
 
24.  IWMI's 5 research themes are: 1) Integrated Water 
Management for Agriculture; 2) Sustainable Smallholder Land 
& Water Management Systems; 3) Sustainable Groundwater 
Management; 4) Water Resource Institutions & Policies; 5) 
Water, Health and Environment. Additional details about IWMI 
can be found at http://www.iwmi.org 
 
25.  NGOs: Several U.S. NGOs are active in water issues. The 
Catholic Relief Service (CRS) has worked on disaster 
response measures, as well as disaster warning systems. 
USAID and UNDP have also funded activities to mitigate and 
migrate people away from disaster-prone areas. The Church 
World Service, in part funded by a USDA commodity 
monetization, has a three-year project to improve rural 
water supply and sanitation facilities in four rural 
provinces. Their main target has been to improve water and 
sanitation facilities at rural clinics, primary schools, and 
kindergartens to build a demand-driven model leading to 
better water systems. Many other NGOs have water issues as 
part of a comprehensive approach to village-level 
development. 
 
FEASIBILITY OF COMMERCIAL AND/OR SOCIAL MARKETING FOR 
ADDRESSING WATER AND HYGIENE ISSUES 
--------------------------------------------- -------- 
 
26. Social marketing for water/hygiene is conducted through 
government and non-governmental programs. Government 
initiatives include health extension through health clinics, 
Women's Unions, and schools, which are located throughout 
the country at the commune level. Methodologies are limited 
to pamphlets, posters, and public service (radio/PA) 
announcements. In poorer rural areas, access to alternatives 
(e.g. latrines, water pumps, soap) is more limited in supply 
than awareness of proper hygiene. 
 
POST SUPPORT - US-AEP 
-------------------- 
 
27. USAID/Vietnam, an office of the USAID Bangkok Regional 
Development Mission, recognizes the far-reaching impact of 
improved access to services for selected vulnerable groups 
(Strategic Objective - SO2) and cleaner cities and 
industries in Asia (SO3).  USAID/Vietnam's SO3 is 
implemented through the US-Asia Environmental Partnership 
(US-AEP), a regional program operating in six Asian 
countries: India, Indonesia, The Philippines, Thailand, Sri 
Lanka, and Vietnam. Programming focuses on policy and 
governance, urban management and industrial management. 
28. US-AEP has been working to promote efficiency, 
transparency and improved service in the water sector by 
promoting networking and sharing lessons among water 
utilities in Southeast Asia (Indonesia, Malaysia, the 
Philippines, Thailand, and Vietnam). To strengthen this 
regional network (entitled SEAWUN), US-AEP developed a 
follow-on project entitled Certification and Training 
Support for Professional Associations in Water (CATSPAW), 
which comprised of a series of regional workshops in each of 
the cooperating nations. In Vietnam, US-AEP has partnered 
the American Waterworks Association (AWWA) and Water 
Environment Federation (WEF) with the Vietnam Water Supply 
Association (VWSA), which is the center for professional 
development and knowledge sharing among Vietnam's 68 water 
companies (in 61 provinces) and scattered municipal 
wastewater treatment facilities under construction. 
 
29. In FY04, US-AEP/Vietnam will support the Water for 
People (WFP) initiative, whose goal is to help the most 
impoverished people improve their livelihoods through access 
of sustainable drinking water. This 3-year, $700,000 project 
aims to strengthen the capacity of VWSA to deliver 
affordable piped water through an effective and sustainable 
certification and training program for mid- and lower-level 
managers. The methodology and lessons learned will be 
incorporated into VWSA's expanded national information 
sharing and training system. Full cost recovery, a process 
to wean public utilities off subsidies, is a core objective 
of the initiative. 
 
30. To address both urban water quality and sanitation 
issues in Ho Chi Minh City, US-AEP/Vietnam is actively 
implementing a community based environmental management 
project in Ho Chi Minh City (HCMC) to restore the water 
quality in the Tan Hoa - Lo Gom Canal. Key Vietnamese 
partners include the HCMC People's Committee, HCMC 
Department of Natural Resources and Environment (DoNRE) and 
Institute of Environment and Resources (CEFINEA) of the 
National University of HCMC. As an initial phase of this 
project, The Asia Foundation (TAF) awarded a grant to 
CEFINEA to assess environmental challenges surrounding the 
canal, complete a citizen awareness campaign, develop a 
pilot cleaner production demonstration project and complete 
a community action planning process. In addition, US-AEP 
through its State Environmental Initiative (SEI) program 
awarded a grant to Portland State University to assist in 
strengthening stakeholder participation in the restoration 
of the Tan Hoa - Lo Gom Canal. In FY03, US-AEP has received 
a matching grant from EGAT's Making Cities Work partnership 
in FY03. The combined 2-year $500,000 project involving TAF, 
PADCO and Portland State University aims to pilot community- 
based environmental management along the Tan Hoa-Lo Gom 
Canal, a water drainage that suffers from industrial 
pollution and unplanned settlement/slums. 
 
31. US-AEP also supports a $200,000 project entitled 
Socialization of Solid Waste, which provides technical 
assistance, training, and study exchanges to the HCMC 
People's Committee and DoNRE. The project aims to increase 
the efficiency of solid waste collection services, thereby 
reducing the cost burden on city revenues, and improve the 
legal status and working conditions of informal waste 
collectors. The project consists of technical assistance 
provided by ICMA for the legal framework and a TAF grant to 
a local NGO to develop a pilot "syndicate" for the informal 
sector in District 5. Implemented by IIE, study exchanges to 
Hong Kong and Taiwan on privatized transfer and disposal 
schemes and to India to learn lessons on empowering informal 
waste collectors are taking place. 
 
32. To address water resource issues at the landscape level 
in HCMC, US-AEP has developed a partnership with the 
National Oceanic and Atmospheric Administration (NOAA), 
Office of Response and Restoration (ORR), Hazardous 
Materials (HazMat) Response Division and PetroVietnam (the 
primary oil spill responder) and Vung Tau DOSTE. In FY04, 
this activity will focus on implementation of NOAA training 
and inception of a SEI grant to the University of Oklahoma 
for oil spill fingerprinting with PetroVietnam.  With 
implementing support from PADCO, US-AEP will seek to expand 
the partnership to other relevant institutions in Vung Tau 
and HCMC, including the port authorities and oil companies 
operating in the project area, and secondly to strengthen 
inter-agency and private sector coordination in responding 
to oil spill pollution. US-AEP will also explore 
opportunities to leverage interests in Oklahoma and Houston, 
TX (e.g. the Port Authority of Houston and ConocoPhilips) in 
the partnership. 
 
POST SUPPORT - USDA 
------------------- 
 
33. FY-99 USDA: Under a FY-1999 USDA Section 416b commodity 
donation (25,000 metric tons of wheat) to the Government of 
Vietnam roughly $3 million dollars was generated to fund 
various rehabilitation projects in 17 central coast 
provinces following severe flooding in 1999 and 2000. 
Projects included repairing schools, medical clinics, roads, 
and hospitals. 
 
34. FY-2003 USDA:  Under a similar program in FY-2002/2003, 
USDA worked to sponsor irrigation systems in three central 
provinces, a good aquacultural practices project, and 
various new clinics and primary schools. 
 
35. SCHOOL LUNCH:  Under a FY-2002-2004 program, USDA has 
been sponsoring a school milk and nutrition program in 
selected poor areas of Vietnam. A small part of that program 
has been to disseminate sanitation and health information in 
the selected (400+) primary schools. 
 
36.  NGO CONSORTIUM:  Under a FY-2002 NGO consortium 
monetization, USDA partially funded the safe water and 
sanitation projects of Church World Service in 4 provinces. 
CWS has a three-year project to increase the rural demand 
for safe water.  See paragraph 25 for more details. 
 
37.  RECOMMENDATION:   Post believes that Viet Nam would be 
an excellent candidate country for the water initiative of 
the UN Commission on Sustainable Development.  Besides the 
reasons give above, there are clear demographic and economic 
justifications for its candidacy.  Vietnam is the fastest 
growing economy in Southeast Asia this year.  Over half of 
its population is under the age of 30 so that programs to 
improve water supply would improve the prospects for its 
current and future work force.  In recent years, Vietnam has 
made impressive strides to eliminate poverty.  It is now 
very highly regarded as a high-quality manufacturing site 
for garments and textiles.  For these reasons, an investment 
in clean water here can pay big dividends in the future. 
 
BURGHARDT