b

HANOI UNIVERSITY OF BUSINESS AND

TECHNOLOGY.

“NORWAY – VIETNAM DEVELOPMENT CO-OPERATION

PRESENT SITUATION AND PERSPECTIVE FOR VIETNAM.”

TRAN HOANG ANH

October 2010.
 Acknowledgement.

I wish to express my deep gratitude to the lecturers of the Hanoi University of

Business and Technology, who have taught me invaluable knowledge in my
studying years, especially Dr. Nguyen Quoc Huy, so that I can complete this thesis.

I would like to thanks Mrs. Hoang Thi Tuyet Hoa, Deputy Director General and
her staff at the Planning Department of MOIT for creating me an internship
opportunity for me to do my internship at in her department and for providing me the
necessary information for me to do my thesis.

I would also would like to thank the staff of the Royal Norwegian Embassy in
Hanoi for sharing with metheir valuable information and providing a tremendous
amount of encouragementsupport.

My thanks also go to my family and friends for their encouragement, which helps
me in during my study.

In addition, shortcomings and errors are unavoidable due to the lack of my actual
experience and time. Therefore, I wish would be grateful to receive any constructive
opinions and suggestions from the teachers and my colleague friends for making the
improving this thesis better.

2
 INTRODUCTION.

Although diplomatic relations between Vietnam and Norway were established in

1971, Norwegian assistance to Vietnam was virtually non-existent in late 1980s
and until the early 1990’s. The visit of the Prime Minister of Vietnam, Vo Van
Kiet, to Norway in 1994 resulted in a modest increase of support. Further political
stimulus to Norwegian support to Vietnam was given to Vietnam when the
Norwegian Prime Minister Gro Brunland visited Vietnam in 1996. Since that time,
Norway has provided a consistent stream of support to Vietnam. The relationship
between the two countries has been further strengthened by the establishment of
the a Norwegian Embassy in Hanoi in 1997. and Later in 2009, a Vietnamese
embassy was established in Oslo in 2009 as well as to exchanges visits of high
ranking officials from the two countries including the visit of the President of
Vietnam Tran Duc Luong to Norway in 2003 and the King of Norway Harald V to
Vietnam in 2004.

The aim of Norway’s involvement in Vietnam is to support the positive social

development politically, socially and economically. Ever since the establishment of
Norwegian assistance, Norway has provided technical assistance in development
cooperation with Vietnam. Norwegian assistance to Vietnam focuses on three main
areas: 1) cultural and social development, 2) economic development and 3) good
governance.

3
Of these areas, economic development focuses the most attention from both
governments as Norway uses its competitive advantages to help Vietnam in
growing and developing in the areas that Vietnam has plentiful the Vietnamese
natural resources sectorsin, including marine, maritime, and oil & gas. In addition,
Norway is also co-operating with Vietnam to implement projects on renewable
energy and hydropower plants.

Through the development co-operation in economic different sectors, many

Norwegian companies have a chances to know gain an understanding in about the
Vietnamese business environment and to find out for them explore business
opportunities. A number of the Norwegian companies have invested in Vietnam
particularly in shipbuilding, maritime, oil and gas, and fisheries as a result. Others
opens their representative offices in Vietnam to do business with the Vietnamese
partners.

The relationship between Vietnam and Norway is a highly valued as it is built

upon trust and bilateral co-operation development. Norway provides the
technology and skillful knowledge, and while Vietnam provides low-cost labor
with an eagerness to learn and potential to grow. On the other hand, there are still
certain challenges that both Vietnam and Norway have to work through in order to
promote maintain this successful relationship.

With the purposes of seeking a more general way view of looking at the Vietnam-
Norway relationship, as well as suggesting some solutions in order to further
develop this relationship between the two nations, I have decided to choose the
subject “Bilateral Development Cooperation between Vietnam and Norway: real
situations and solutions”.

Besides introduction, conclusion, and reference material, my dissertation will be is

divided into three chapters as follows:

Chapter I: Introduction to the Vietnam-Norway relationship.

Chapter II: Real situation of the bilateral development cooperation between

Vietnam and Norway.

4
Chapter III: Opportunities and some solutions to further develop the relationship.

Chapter I: INTRODUCTION TO THE VIETNAM-NORWAY

RELATIONSHIP.

1. Overview of Norway:

5
1.1 Geographical identities and population.

Norway (originally Nordweg, “The Northern Way”) forms the western part
of the Scandinavian peninsula and comprises 40% of the peninsula’s total land
area. The capital city of Oslo is situated at latitude of 60 degree north. Along
2,531km, Norway shares borders with Sweden, Finland and Russia. Excluding
the fjords, which are long, narrow inlets with steep sides, the Norwegian
coastline measures an impressive 2,650km. Due to the country’s longitudinal
size and geographic conditions, there are vast climatic variations in Norway.

The Norwegian government is based on hereditary constitutional monarchy.

The branches of the government are as followed: Executive—king, prime
minister (head of government), Council of Ministers (cabinet);, and Legislative
—modified unicameral parliament;, and Judicial—Supreme Court, appellate
courts, city and county courts. There are seven major political parties in
Norway.

6
 As of January 2010, the population of Norway approached 4,858,199 with
an annual growth rate (2008) of 1.31%. The majority of the population is of
Nordic descent. The Sami people form an ethnic minority of some 40,000
individuals, mostly in the North.

1.1. Social and economic achievements.

Norway is often referred to as a welfare state. Living standards are among

the highest in the world, and most people have well-paid jobs. As of May 2010,
the unemployment rate in Norway was 3.60%. The Norwegian welfare state is
based on ideals of equality and justice. Everyone has the right to housing,
education, a basic living standard, and health care. The state is also obliged to
ensure that everyone can earn a minimum salary base. Discrimination against
anyone on the basis of race, religion, political conviction or sex is prohibited.

Norway has enjoyed a period of prosperity and strong economic growth

since 1993. Norway has an open economy, where 37% of the total domestic
demand is met by imports, while 40% of added value is exported. Norway is
strongly influenced therefore, by present trends in the international economy,
especially in Europe and in the USA. Norway’s GDP in 2009 was at US$
416bln, with the an economic annual
growth rate of 3.2% (2007).

During the last twenty years,

Norway has increased its activity in oil
and gas extraction in the North Sea,
making Norway the second largest
exporter of crude oil, only after Saudi Arabia. In addition, Norway has an
ample source of hydroelectric power due to its high mountains and great
waterfalls.

7
 ???

Source: Minifacts about Norway/2009

The figures above represent Norway’s key trade partners, according to trade
statistics in 2007. Asia is also becoming a more important market for the export of
Norwegian goods.

The Norwegian Trade Council has

chosen to focus its efforts on five
sectors within the following
investment areas:

• Maritime operations
(including the export of
shipping, fishing and fish farming equipment)

• Oil and gas operations (with emphasis on off-shore activities)

• Foodstuff (including fish and agricultural products)

8
 • Electricity (including hydro-power plants, power distributions and the
Energy Economy project ENOK)

• Military repurchase.

2. Vietnam.

2.1. Geographic identities and population

Vietnam (officially the Socialist Republic of Vietnam) is the easternmost

country on the Indochina Peninsula in Southeast Asia. It is bordered by with the
People's Republic of China (PRC) to the north, Laos to the northwest,
Cambodia to the southwest, and the South China Sea, referred to as East Sea, to
the east.

The population, which is now about 86 million, is increasing rapidly. Due to

the a young population, Vietnam can offer a large labor force where the
willingness to relocate is high., iIn addition, Vietnamese wages are still
relatively low compared to with the other countries around.

2.2. Social and economic achievements.

Reaching peace in 1975, Vietnam has experienced rapid growth especially

in the last 15 years. Although Vietnam did experience some slowdown during
the Asian financial crisis in the late 1990, Vietnam was not as affected as some
of the other countries in the region. Vietnam today is the fastest growing
economy in South East Asia based on strong investment, consumption and
exports. Vietnam is now the third on the list of FDI in Asia, only after China
and India.

3. Bilateral development cooperation between the two nations.

3.1. Overview of the relationship.

9
Diplomatic relations between Vietnam and Norway were first established in 1971.
Norway was the second country (after Sweden) from the Western world to
recognized Vietnam. Right after the liberation of the country, Norway began to
provide development assistance to Vietnam mainly in the areas of fisheries and
shipbuilding. Nonetheless, Norwegian assistance to Vietnam was virtually non-
existent in late 1980s and early 1990s. This was a political decision, motivated
bybecause of Vietnam’s involvement in Cambodia. The visit of the Prime
Minister of Vietnam, Mr. Vo Van Kiet, to Norway in 1994 resulted in a modest
increase of support. This support was used for scoping and identification. Further
political stimulus to Norwegian support to Vietnam was given when the
Norwegian Prime Minister Ms. Gro Brunland visited Vietnam in 1996. Since that
time, Norway has provided a consistent stream of support to Vietnam. The
relationship between the two countries has been further strengthened by
establishment of the Norwegian Embassy in Hanoi in 1997 and Vietnamese
Embassy in Oslo in 2009 as well as exchanges visits of high ranking officials from
the two countries including the visit of the President of Vietnam Tran Duc Luong
to Norway in 2003 and King of Norway Harald V to Vietnam in 2004.

3.2. The relationship’s development until now.

Until 2002, the main part of Norwegian assistance to Vietnam was covered
through bilateral agreements. However, with increased focus on harmonization
and simplification of ODA management procedures in order to improve aid
effectiveness, one-half of the disbursed funds are now covering schemes co-
financed with one or more bilateral/ multilateral donor organizations. Total
bilateral assistance in 2007 amounted to USD 27.7 millions.

The aim of Norway’s involvement in Vietnam is to support this positive

social development politically, socially and economically. In 2008, Norway
provided technical assistance in development cooperation with Vietnam.
Norwegian expertise was transferred in the fields of natural resource
management in the field of petroleum, and fisheries sector, energy, governance,
environment/climate and gender equality. More than 50% of the disbursements

10
in the present project portfolio are directly targeted to the poorest sections of
the population directly.

Norwegian assistance for Vietnam, by sector, 2007

Sectors USD 1000 Percentage
Economic development and trade 9,478 34.1
Emergency relief and other unspecified assistance 1,066 3.8
Environment and energy 642 2.3
Good governance 1,924 6.9
Health, education and other social sector areas 14,410 51.9
HIV/AIDS 236 0.9
Total 27,756 100.0

Source: Development Assistance to Vietnam Database: www.dad.mpi.gov.vn

3.3 Foreign Direct investment from Norway to Vietnam:

Foreign direct investment (FDI) from Norway to Vietnam is still modest in

comparison with the potential size of the Norwegian economy. From 1988 to
2009, Norwegian investors had invested in 25 projects in Vietnam with the a
total invested capital of USD 86.3 millions. Only iIn 2009, there were two new
projects have been licensed, in 2008 while only one project and in both 2008
and 2007 one project with investment capital of 3.2 million. However, in 8
month of 2010, there were two big Norwegian projects have been invested in
Vietnam. The first oOne was Akar shipyard’s USD 33 million investmented in
Vung Tau shipyard, with total invested capital of USD 33 million and the other
was SAPA group’s USD 15 million investment in an Aluminum Extrusion

11
 Plant in Dong Nai of USD 15 million. Norwegian FDI is mainly focused ion
shipbuilding, chemical, oil and gas related industriesy and marine aquaculture.

3.4 Foreign trade between Vietnam and Norway:

Norway exports to Vietnam in $ (000)

2007 2008 2009
Food and live animals 12,262 11,963 19,203
Raw materials excl Fuels 1,325 1,923 23,773
Chemicals 6,296 15,867 28,916
Manufactured goods 944 6,084 12,132
Machinery 11,021 13,212 64,361
Miscellaneous 2,245 5,836 1,975
Total 34,091 54,884 98,107

Norway imports from Vietnam 2007 2008 2009

Food and live animals 11,287 17,696 17,719

Raw materials excl fuels 701 607 545
Chemicals 375 668 691
Manufactured goods 11,294 13,065 17,804
Machinery 14,885 15,684 9,093
Miscellaneous 96,355 113,382 124,568
Total 134,896 161,102 170,421

Source: Innovation Norway, Hanoi office http://www.innovasjonnorge.no/Internasjonale-

markeder/Kontorer-i-utlandet/Vietnam/

As the trade statistics showed, Vietnam imports a great deal of machinery

equipment from Norway. This is because Norway is a highly developed country
and Norway has great comparative advantage in high-skilled labor and high-skilled
manufacturing. Not only does Vietnam and Norway have done extensive
cooperation in the marine sector, thus Norway also imports a recognizable
considerable amount of food and live animals from Vietnam.

12
A major component that makes up Vietnam’s export to Norway is in the
miscellaneous categories that include footwear, clothing, furniture, etc. Of these
items, footwear and clothing make up the majority of the miscellaneous imports
from Vietnam. This is chiefly due to Vietnam’s comparative advantage of low-cost
labor.

Chapter II: REAL SITUATIONS OF THE BILATERAL

DEVELOPMENT CO-OPERATION BETWEEN NORWAY
AND VIETNAM.

Diplomatic relations between Vietnam and Norway were established in 1971.

Norway was the second country (after Sweden) from the Western world to
recognized Vietnam. Right after the liberation of the country, Norway began to
provide development assistance to Vietnam mainly in the areas of fisheries and
shipbuilding. Nonetheless, Norwegian assistance to Vietnam was virtually non-
existent in late 1980s and early 1990s. This was a political decision, motivated
by Vietnam’s involvement in Cambodia. The visit of the Prime Minister of
Vietnam Mr. Vo Van Kiet to Norway in 1994 resulted in a modest increase of
support. This support was used for scoping and identification. Further political
stimulus to Norwegian support to Vietnam was given when the Norwegian
Prime Minister Ms. Gro Brunland visited Vietnam in 1996. Since that time,
Norway has provided a consistent stream of support to Vietnam. The
relationship between the two countries has been further strengthened by
establishment of the Norwegian Embassy in Hanoi in 1997 and Vietnamese
Embassy in Oslo in 2009 as well as exchanges visits of high ranking officials
from the two countries including the visit of the President of Vietnam Tran Duc
Luong to Norway in 2003 and King of Norway Harald V to Vietnam in 2004.

The development co-operation between Norway and Vietnam was reestablished

in 1996 by signing the framework agreement on development co-operation
13
 between the two countries, where the main principles of the co-operation were
agreed upon and by signing of the Memorandum of Understanding between the
two countries which defines three main areas for development co-operation,
namely: culture and social; economic development and good governance.
Although Norway’s assistance to Vietnam is divided up in various sectors, this
paper aims to provide a broader look at the development co-operation by
looking at three main areas where Norway’s assistance is directed at.

1. Cultural and social development.

1.1. Cultural cooperation.

Norway contributed to exchange projects and institutional development to

support a free, varied cultural life. Ibsen plays and Norwegian Vietnamese
Contemporary Life entered its fourth year in 2010. Several exchange projects
took place in the course of the year. “The Wild Duck” - one of the most
outstanding works by Ibsen, has officially been shown in July of 2010 in
Vietnam and has received high public appreciations of the public. Up to now,
The Youth Theatre (A Doll’s House – 2006, 2009; Brand – 2010) and Vietnam
Dramatic Theatre (Hedda Gabler – 2006; The Wild Duck – 2010) have showed
four outstanding works of Ibsen on Vietnamese stages...

Technical assistance is an important part of Norway’s cooperation policy

with Vietnam.; tTherefore, Norway focuses on capacity building for local
counterparts. This is Capacity building is achieved through institution-to-
institution cooperation between Vietnamese and Norwegian counterparts. and
tThe Embassy has used this model in a program between Hanoi University of
Cinema and Theatre and their Norwegian counterparts, the Dance and Theatre
Centre.

Apart from cooperation with theatres in Vietnam, Norway has had a number
of joint programs in different areas such as music, sculptures, and arts
exhibition. Some of the programs include: support to build the model of Cham
House at in the Museum of Ethnology in 2006;, support through UNESCO to
promote the Central Highlands Gong Culture Space in 2007;, the establishment
14
of a Norwegian-Vietnamese sculpture center in Da Nang in 2008;, organizeing
Norwegian Cultural Days in the Mekong Delta in 2009;, have a Norwegian
Books Display at the National Library of Vietnam; and , a string of
Vietnamese-Norwegian art exhibitions both in Vietnam and Norway in 2010,
etc.

In the future Norway will put more emphasis on the “Transposition

program” - a diverse and multi-facetted development, a and co-operational
project between the leading music institutions in Norway and Vietnam. The
project is based primarily on the European classical music tradition., and It aims
to support the standards and professionalism of Vietnamese music institutions
which involve capacity building on different levels, such as upkeep and
maintenance of instruments, correct handling of sheet music and copy-rights,
the knowledge of technical execution and codes of performance.

Within the “Transposition Program”, four musicians from The Norwegian

Military Bands and two world famous soloists are coming to Vietnam., and iIn
cooperation with Vietnam National Symphony Orchestra (VNSO), they four
musicians will set up and perform Mahler’s eighth Symphony on 24 October in
connection with Thang Long’s 1000 years in Hanoi. The Norwegian Embassy
will also co-sponsor the Concert ‘Journey of Love’ by Vietnam Opera & Ballet
Theatre (VNOB) to be scheduled on 28 & 29 October 2010.

1.2. Education.

Most Norwegian aid was spent particularly on improving the quality of

education for disadvantaged children, including ethnic minorities. Teaching
materials were produced in three minority languages and 90 teachers received
training in bilingual education. So far, aAlmost 400 five-year-olds have
received benefited from mother-tongue tuition as part of a research project run
by the UNICEF.

Between the period 2005 – 2009, Norway worked wWith the World Bank
and several other development partners, in the period from 2005- 2009 Norway
to helped ensure that education services for more disadvantaged children to
15
attend school achieved more than the original target for the number of children
attending school. More than Over 97 per cent of the disadvantaged children
completed the course. Less than two per cent of children dropped out along the
way. A review of the program shows that more than one million of the
disadvantaged children educated under this program have received satisfactory
teaching materials.

1.3. Women and gender equality.

In 2008, Norway signed a three-year agreement with the Norwegian Church

Aid in Vietnam to help combat domestic violence and human trafficking, where
women awere particularly vulnerable.

To combat sexualized violence, reconciliation and conversation groups were

established, as well as emergency shelters. More than 300 members of the
Women’s Union and Farmers’ Association were trained to raise awareness of
gender equality and domestic violence. Rapid intervention groups were
established in seven of the eighteen pilot municipalities involved in the project.

In efforts to combat human trafficking, approximately 2,400 potential

migrants were informed educated on about the topic of safe migration. Ten
victims of human trafficking received Norwegian assistance for to undergo
social reintegration program through this project, which is supported by
Norway.

1.4. Climate changes and the environment.

One of Norway’s main aim goals was to support Vietnam’s efforts to both
prevent reduce and deal with react to impacts caused by natural disasters.
Institutional cooperation was initiated between the Norwegian Geotechnical

16
 Institute and the Vietnam National University (VNU). Courses on modern
research methodology relating to for geo-disasters were held in Oslo.

70,000 households affected by floods in 2008 were given rice for a month
with the help of Norwegian aid channeled through the International Committee
of the Red Cross. Norway also provided transitional aid for water and sanitation
in the a ten-month follow-up program to establish a normal situation for ensure
the livelihoods of the affected families were restored.

2. Good governance.

2.1. Public administration reform.

Norwegian assistance was allocated for measures utilized in to improvinge

Vietnamese people’s access to public services and improve Vietnamese
people’s in raising their awareness of to their rights. With Norwegian support,
the Vietnamese authorities have established “One-Stop Shops” in connection
with the reform of the business registration sector. The simplified cation of
administrative procedures has been successful. and a A user survey was carried
out in 2008 showed showing that it only now took only five days to register an
new enterprise, whereas it used to take compared to between 45 and 60 days
before the reform. The registration of property took 20 days, compared with the
former average of 54 days. Modern equipment and the training of public
employees have significantly improved public services.

In cooperation with the International Labor Organization, more than 2,000

people have been trained in areas such as collective bargaining and industrial
relations in 11 pilot companies. The women participation rate for the training
programs of women was an important element of training programs in all
projects and the participation rate for women was has improved considerably to
reach 44%.

Vietnam is one of the pilot countries for improved coordination of

international assistance (“One UN” at country level) and Norway channelsed
support for administrative and judicial reform through the UN. There were are

17
clear signs that the UN gives priority to policy dialogue with the Vietnamese
authorities on the theme of governance. Among other things, the UN has taken
the initiative for a dialogue on administrative reform to involve the Vietnamese
provincial authorities that now, to a greater extent, involves the provincial
authorities, in accordance with Vietnam’s decentralization strategy.

2.2. Human Rights Dialogue.

The situation for human rights in Vietnam has improved on several levels
over the last decades, mainly due to the country’s general shift in openness and
the economic reform process. Questions Issues concerning economic and social
rights can now be discussed relatively openly. However, questions issues
concerning political and civil rights are not in the same way open for
discussionstill remain to be a taboo.

Since 2003, Vietnam and Norway have conducted an annual bilateral

dialogue on human rights. Through the dialogue, both parties address human
rights issues and discuss challenges in an open and direct manner. The
overriding aim of Norway’s bilateral human rights dialogues is to strengthen
the adherence to counterparty’s understanding of international human rights.
The political level dialogue offers an opportunity to exchange views on often
quite difficult issues. Such discussions are supported through the building of
networks between government officials, members of the judiciary, legal
professionals, and other experts.

The ongoing cooperation projects between Norwegian and Vietnamese

institutions and the exchange of experts in different fields are very important for
the dialogue. Key projects include access to information legislation, journalistic
standards, criminal procedure standards and gender equality. The networks and
contacts between institutions and experts make it possible to exchange
information and to engage in discussions regarding concerns and criticism,
through relationships based on mutual trust and respect.

The overall goal for the Vietnam Program is to improve the knowledge and
to strengthen the implementation of international human rights in Vietnam. The
18
 program works actively with stakeholders in government, academia and
professional groups., and The program also runs projects on human rights
education, access to information and legal research/criminology (fair trial
standards), with a special focus on civil and political rights.

3. Economic development.

The main areas for cooperation on economic development were fisheries,

maritime, oil & gas, and renewable energy, where Norway has competitive
advantages.

3.1. Fisheries.

Vietnamese seafood products have been exported to 160 countries and

territories worldwide. Vietnam is currently the world’s No.1 and No.3
pangasius and shrimp producer and exporter, respectively. The shrimp industry
is the largest aquaculture export earner, accounting for US$1.68bln. Pangasius
industry is the second largest with a value of US$1.34bln, and continues to be
cornerstone in Vietnam with more expansion.

The Norwegians transfer their aquaculture expertise has been built up to the
Vietnamese by hands-on experience and innovation because of close
cooperation among stakeholders including authorities, companies, and research
institutes in the whole fisheries value chain for many years. Even though tThe
Vietnamese marine sector is young, and it has proved to be a very dynamic
sector in recent years. Because of Norway’s support for the fishery sector, it
was possible to develop a more resistant resilient fish species have been
developed for aquaculture. Practical research resulted in improved fishery
disease control. 38 number of Vietnamese took master’s degrees in fishery in
during 2008 in connection with the Norwegian-Vietnamese cooperation in the
fishery sector.

Once the decision to support the fisheries sector in Vietnam had been made,
two general areas of bilateral support were identified. These were:

19
 • Support to building enabling institutions for the development of the
sector. The pProjects that evolved from this support were Establishment
of Fisheries Laws and regulations, Phase 1 and 2.

• Support for building research capacity and technology to support assist

development of the sector. The pProjects that evolved from this support
were Building Advanced Research and Education Capacity in Research
Institute for Aquaculture (RIA) 1, Phase 1 & 2 and Improving Research
and Education Capacity at the University of Nha Trang.

Between 1999 and 2006, Norwegian expenditure on fisheries support in

Vietnam was approximately NOK 65million. In addition, Vietnam has also
benefited from projects financed by Norwegian Program for Research,
Development and Education (NUFU). Both RIA 3 and Nha Trang University
have received support through NUFU. Projects include:

• Aquaculture and coastal management in Vietnam – environmental

capacity, biodiversity and fish health in culturing systems, which is
implemented by University of Bergen, Nha Trang University and RIA 3
is established.

• Marine Aquaculture in Vietnam, which is was implemented by Nha

Trang University, the Norwegian University of Science and Technology
and the Universidade do Algarve, Portugal.

Norway has also supported private sector development through Norfund,

although the amount of assistance is only to a very limited extent. Support was
has been given to:

• Support to the undertaking of Carry out a feasibility study for marine

aquaculture (Marine Farm AS)

• Carry out a Ppre-feasibility study on the establishment of a Tilapia Farm

(Genomar)

20
 In the context of the Five Year Socio-economic Development Plan, 2006 to
2011, NORAD projects in Vietnam are highly relevant. This is exemplified by
the RIA 1 projects, which address:

• Increased productivity in the aquaculture sector through developing new

strains fishery species and also through addressing disease prevention.
problems

• Risk reduction , through the diversification of ying Vietnam’s

aquaculture economy base and by the development ing of new species
used for commercial farming.

• Poverty reduction , through developing fishery species that lend

themselves tocould be kept economically viable farming by smaller farm
operators.

The fisheries law projects haves a direct impact on governance of the

fisheries sector, thus these projects creating an environment for growth. The
project supporting Nha Trang University has an indirect impact on poverty, in
that, which better aquaculture practice is being supportedpromoted, and small-
scale aquaculture farmers are given advice as well as demonstrations. The
university also contributes to national capacity to understand the economic
implications of strategies and interventions. The RIA 1 projects are helping to
increase rural incomes due to the expansion of aquaculture production and the
creation of new jobs. Both freshwater and marine aquaculture production are
contributing to livelihood diversification in rural and coastal areas. RIA 1 has
played a catalyst role in the expansion of tilapia – due to project exposure fish
farmers acquired better knowledge of tilapia production and were prepared to
invest in pond construction.

3.2. Maritime.

With a coastal line of more than 3,200 km, low labor costs and a huge
market of 86.2 million people, Vietnam is an attractive destination for maritime
related foreign investors and exporters.

21
 Ship-building is one of the major industries in Vietnam and it utilizes the
output from many other industries such as steel, mechanical, welding, paint
manufacturing etc., and provides employment for about a hundred thousand
people. Vietnam has around 165 shipbuilding and repair yards, and about 30 of
these which have export capacity. In general, Vietnamese yards produce
smaller tonnage vessels such as tankers, bulkers and multipurpose vessels.
Recently, Vietnam’s new ship building order book increased recently with new
orders of Aframax and VLCC tankers.

Typical Breaking down Vietnam New Building Ship Price

Source: Andrew Westwood, DNV, Oslo, June 2009

Vietnam Shipbuilding industry Group (Vinashin) is the biggest shipbuilding
group in Vietnam, accounting for 70% of the Vietnamese shipbuilding industry.
Due to financial difficulty, the Government of Vietnam recently decided to re-
structure Vinashin in order to improve its financial capability, productivity and
management efficiency.

The Vietnamese fleet ranks 60 out of 150 in the world and 4 out of 10
among Asian nations. Vietnam targets to have a fleet with total capacity of 4.4
million DWT and 7.1 million DWT by 2010 and 2020 respectively. The target
for 2010 has already been achieved in 2008.

Several donors contribute support to Vietnam’s shipping sector.

Nonetheless, Norway is the only donor that serves as a donor specifically to the
shipbuilding industry. NORAD’s support to the shipbuilding sector appears to

22
 be unique in Vietnam. NORAD has been co-funding a training program
prepared by DNV and other Norwegian companies, in which training is given
to shipyard staff of Vinashin on specific technical and management skills. Both
institutional and private stakeholders indicate their appreciation of this support
and suggest support its continuation.

Furthermore funding of scholarships to Norwegian universities and institutes

is being mentionedhas been initiated. In addition, to this Norway also has a
business match making program (BMMP) to enhance cooperation between
Norwegian and Vietnamese companies. BMMP aims to facilitate partnerships
between Norwegian and Vietnamese businesses through support for partner
search, business plan development, advise on corporate social responsibility
(CSR) issues, and give general advice on business in Vietnam.

3.3. Oil & Gas.

Vietnam is the third largest oil producer in Southeast Asia region. The
petroleum sector significantly contributes to the country’s development, as oil
& gas have been essential export commodities of Vietnam for dozen years.

The petroleum reserves are mainly located on offshore basins of Ba Ria –

Vung Tau province in the, south of Vietnam. Vietnam has identified eight
sedimentary basins with potential oil & gas reserves are of 8.5 billion barrels
and 100 TCF (tetra cubic feet) respectively. (The proven oil reserves are 4.73
billion barrels and proven gas reserves are 23 TCF). In 2009, oil production was
16.3 million tons; gas production was 8.0 billion cubic meters as when
cumulative production by May 2009 had been 250 million tons of crude oil and
50 billion cubic meter of gas.

Vietnam’s strategic development targets in coming years:

Production 2011 - 2015 2016 - 2020

(million tons)
Domestic 27 - 39 30 – 33
International 3-7 10 -15
Total 30 - 46 40 – 48

23
Source: Petrovietnam http://www.pvn.vn/?portal=news&page=file_list

PetroVietnam (PVN) is the dominant player in all petroleum sector development,

both upstream and downstream. PetroVietnam was established by the Vietnamese
government in 1997 and has more than 30 subordinate and associated companies
with 24,000 employees. PVN has a good general knowledge of Norwegian
offshore technologies and has a high regard for Norwegian petroleum
competenciese.

So far, the gas has mainly been used for power generation. However, Vietnam
also has plans to use wet gas for polypropylene and polyethylene production. Such
plants will be located adjacent to one of the two planned oil refineries.

Some of Norwegian assistance programs include:

• “Assistance to Development of Management Systems on Safety and

environmental Pollution Control in Vietnam Petroleum Industry”, where
PetroVietnam cooperating partner with NPD/SFT.

• “Vietnam total resource assessment, Phase II”, which is performed under

cooperation between PetroVietnam and NPD.

• “Petroleum Policy and Management” a program in CCOP where

Vietnam is an active participant. The Norwegian assistance is co-
coordinated by NPD.

• Petrad arranges different professional seminars to meet Vietnam’s

demand for oil and gas training and technology transfer.

In 2008, the Petroleum Safety Authority Norway (PSA) and the Vietnamese
oil company PetroVietnam were in the process of implementing the third phase
of their 12-year institutional collaboration on health, safety and the environment
(HSE) in the Vietnamese petroleum sector. The PSA, the Norwegian Pollution
Control Authority (SFT) and the Norwegian National Coastal Administration
have collaborated with PetroVietnam and Vietnamese authorities since 1997.
The main objective is to establish a sustainable and efficient management of

24
HSE and reduce the risk of personal injuries, serious accidents and
environmental damage in the Vietnamese oil and gas sector. The background
for the collaboration was inquiries from Vietnamese authorities, which
contacted NORAD in 1994 requesting HSE assistance in the petroleum sector.

The PSA is to coordinate the final phase of the project towards 2012, with
the goal of implementing expertise and management systems in all parts of
PetroVietnam and underlying companies. The phase is a continuation of the
work completed in the two previous project periods, including development and
set-up of management systems. A committee consisting of representatives from
PetroVietnam, the Norwegian Pollution Control Authority and the PSA
manages the collaboration. Det Norske Veritas (DNV) has been the supplier of
tools for training and implementation of risk analyses.

Through the Norwegian projects under the Oil for Development program,
Vietnam had access to upgraded software to map oil and gas resources.
Together with new administrative tools, this improved Vietnam’s ability to
produce analyses and plan the extraction and use of natural resources. Norway
continued its cooperation with the state oil company PetroVietnam on
environment, health and safety in the petroleum sector. Capacity building led to
revised environment, health and safety regulations Norwegian experts were
used as lecturers on transparency and economic management.

3.4. Renewable Energy.

Vietnam is well endowed with diverse energy resources that consist of coal
(in the north), natural oil and gas (in the south), hydropower, and renewable
energies (biomass, small hydropower, geo- thermal, bio-fuel, wind, solar
energy, etc). Recently, energy production has dramatically increased: annual
growing rates of coal production and crude oil are 13% and 17% respectively.
Electricity production increases by 15.3 % per year.

Vietnam primary energy demand is expected to rapidly increase with 9% of

growing rate per year. National primary energy demand is forecasted to
increase by eightfold within 25 years (2000-2025). Vietnam energy
25
 consumption per capital is 165 kgOE/year (among the lowest figure in the
world), and is projected to 700– 800 kgOE in 2025.

In 2009, total installed capacity of Vietnam power sector was 18,481 MW,
while electricity production was 89,019 GWh. Hydropower and gas turbine
each contributed 38%. Coal-thermal accounted for 11% only. At present,
Electricity of Vietnam (EVN) owns 54% of total installation capacity.

Although energy resources in Viet Nam are relatively abundant and diverse,
Viet Nam is likely to fall into shortage of domestic energy in the coming period
shortly after 2015. Consequently, Viet Nam has to further look for new energy
resources and import energy.

With the help of Norwegian aid, a manual for licensing hydroelectric power
plants was prepared, which included requirements for environmental impact
analysis and assessment of social consequences. Norway also assists Vietnam
in finding energy substitution. For example, solar radiation levels are good in
the southern and central regions. Wind energy potential for large-scale
generation in coastal area is estimated at about 100-200 MW. Bio-energy
potential is estimated at 43-46 million TOE/year, which includes fuel wood’s
energy, agriculture sub-products’ energy, biogas and bio-fuel (bio-diesel and
bio-ethanol). Opportunities also exist for economic production of bio-ethanol
from sugar factory’s molasses and for electricity co-generation from biomass
(biogases and rice husk).

4. Evaluation of the bilateral cooperation development.

From Vietnam and Norway’s long cooperation of more than 30 years, there
have been many mutual visits between people in various sectors where the two
countries have common interests, like: fisheries, the water sector and others.
People have built relationships and friendships that have lasted over time. For
instance, if you talk to people at the university in Nha Trang, you will find
many Vietnamese who know Norway well.

4.1. Advantages.

26
 The countries have particular close ties due to the fact that around 19,000
Norwegian citizens are of Vietnamese origin; one of the largest groups in
Norway. Norway is one of the countries that Vietnam really appreciates.
Norway has recognized Vietnam and its potential since Vietnam was still
involved in the battles with America. Norwegian citizens held many
demonstrations against the war in support to the Vietnamese government and
citizens. Right after the war ended in 1975, Norwegian government sent
specialists to Vietnam in order to examine Vietnam’s abilities and to co-operate
with Vietnam in rebuilding the country and regaining the economy. Norway is
the second country (after Sweden) to establish an official relationship with
Vietnam. Because of these reasons, Vietnam really appreciates Norwegian
assistance. The relationship between Vietnam and Norway is built upon trust
and bilateral co-operation development, thus free of personal motivations.

In addition, Vietnam and Norway shares many similarities. Both countries

have similar geographical identities with relatively same size and long
coastline. Vietnam and Norway are both rich in natural resources such as oil &
gas and marine. Thus, the relationship development between Vietnam and
Norway is based upon competitive advantages of both countries. Norway is a
well-developed country with one of the highest GDP per capita in the world.
Thus, Norway is able to help Vietnam in research and development, and
training. Norway’s ships rank 2nd in the world and Norway is in the top five
exporting oil products in the world. Vietnam, on the other hand, has great labor
resources with low labor costs; Vietnamese people are genuinely diligent and
eager to learn and absorb new knowledge. In addition, Vietnam’s political
establishment with only one major party helps to stabilize the country. Based on
these, Vietnam has the opportunity to grow in the development co-operations
that Norwegian assistance is put in.

4.2. Disadvantages.

Norway and Vietnam have a stable and peaceful relationship. Nonetheless,

the relationship is not yet up to the level of the potentials that the two countries
bear. Some of the difficulties reside in the following fields.
27
 Though having similarities in geographical identities, the countries are far
away from each other physically. That portrays some difficulties in terms of
communications and traveling difficulties. In addition, Norway is a
Scandinavian country with the top GDP in the world, and Vietnam is still a
developing country that just recently got to the low middle-income level. That
possesses the risk of Vietnam falling into the middle-income trap.

Furthermore, one of Vietnam’s main challenges is corruption, which is

widely spread, and especially in institutions and firms controlled by the
government. The 2007 International Corruption Perception, published by
Transparency International in October ranked Vietnam 111th out of 163
countries. Recent scandals of corruption within government bodies have caused
much public resentment and this is seen as a serious risk to the popularity and
legitimacy of the regime. The governmental involvement can be seen in many
parts of the society, for instance the way they control the power supply.
Infrastructure is a huge problem in Vietnam and so far, there is no evident
solution. Improvement is needed as the growing economy has led to a booming
number of cars contributing to already overstressed roads.

Complicated administrative procedures in the Vietnamese government

structure also hidden the process of development co-operation between the two
countries. Long and cumbersome procedure for approval of project delay the
Norwegian assistance to its Vietnamese partners and complicated financial
management requirement slow down the disbursement of the Norwegian fund
set aside for support the country.

Besides, Norway is highly developed in technology and high-skills

workforce, while Vietnam is rooted in the agricultural side. Thus, the difference
between the two country’s recognition and knowledge of high-technology is
very high. There is a need for technology and technological competency
throughout all sectors in the Vietnamese economy. Lack of skilled personnel
and universities that do not have adequate resources to do significant research
and development contribute to Vietnam being below international standards
when it comes to research activities. Researches that are being carried out tend
28
 to be theoretical, supply-driven and not connected to the needs of the productive
sector.

Chapter III: OPPORTUNITIES AND SOME BASIC

RECOMMENDATION TO VIETNAM.

1. Government’s directions in industrialization and modernization process:

Vietnam’s economy is growing at a fast pace of 7.5% per year. Vietnam has
transformed from an agricultural-based and closed economy to a globally
integrated economy, attracting FDI as well as private investment. Professor
Kenichi Ohno from the Vietnam Development Forum (VDF) implied that
Vietnam’s directions must be unique in comparison to any other ASEAN
countries.

Vietnam plans to implement its socio-economic development plan from now

until 2020. The general goal is to transform Vietnam into an industrialized
nation with high-technology base, appropriate economic policy structure,
manufacturing development relevant to the growth rate of labor force, high
living standards, stable national security and a welfare state. By 2020, Vietnam
aims to become an industrialized nation where the industrialized sector
dominates other sectors contributing to Vietnam’s GDP. In order to achieve the
goals, Vietnam has to resolve obstacles such as: un-uniform market policy,
weak stock market, weak investment approach.

The government’s viewpoints of the industrialization process include:

• Stabilize Vietnam’s economic standpoint, as well as cooperate with other

nations to promote socio-economic development. Vietnam is to depend
on its own resources but is encouraged to maximize foreign investments
to build an open economy.

29
 • The industrialization and modernization process is every citizen’s
responsibility, attracting every economic particle. The process is based
on increasing the living standards and socialization, developing social
equality.

• Vietnam is to depend on socio-economic results to build up a

development scheme, choose appropriate investment projects in order to
maximize the nation’s resources. Favorable environment is given to small
and medium projects with a high-tech base that can lead to job creation,
high investment turnover, alongside with building large-scale projects
that are necessary and efficient.

2. Government’s directions in the relationship with Norway.

Vietnam’s relation with Norway has been positive since its official
establishment in 1996. The fact that Vietnam Embassy in Norway was officially
in operations in December 2008 after 17 years of interruption marked a turning
point for the relationship between Vietnam and Norway and contributed to the
development cooperation between the two nations. In development co-
operation between the two countries, the latest Memorandum of Understanding
(MoU) between the two governments singed in 2004 was the main direction for
the relationship. In this MoU, both countries agreed to focus on the areas where
Norway has comparative advantages and Vietnam is in need of.

Deputy Prime Minister Hoang Trung Hai during his visit to Norway in June
2010 voiced his opinion that Vietnam has the potential to co-operate with
Norway in the fields that Norway is interested in. For example, in the electricity
sector, Vietnam is trying to open up the competitive market because now,
Electricity of Vietnam (EVN) only supplies 58% of the total consumption. In
the future, EVN’s role in the market will likely decrease because EVN does not
have enough capital resources to fulfill the rapidly increasing power demand.
As such, Vietnam would like Norway to participate in Vietnam’s economic
develop and speed up the commercial development and investment between the
two nations. Mr. Hai also emphasized that Vietnamese government will create a

30
 favorable environment for Norwegian businesses to invest and operate in
Vietnam based on equality and mutual benefits, especially in the cooperative
fields that fall under Norway’s advantages.

3. Opportunities to assist each nation’s development.

3.1. Norway’s comparative advantages.

Norway’s major comparative advantages include oil, gas, and human

development. At the end of the 1990s and beginning of 2000, Norwegian trade
and industry experienced a particularly strong growth in the export of goods
and services that is not directly connected to the oil industry. As Norway is
unusually rich in energy resources, during the last twenty years, Norway has
increased its activity in oil and gas extraction in the North Sea making Norway
the second largest exporter of crude oil after Saudi Arabia. Not only do the high
mountains and great waterfalls provide an ample source of hydroelectric power,
but also the Norwegian continental shelf contains considerable amounts of
crude oil and gas, that has provided an increasing oil production since the
middle of the 1970s. Oil sales throughout the world and natural gas pipelines
extending to several European countries have become the largest export
business. The significant oil income has provided Norway with profits in
foreign trade and has given the Norwegian State a considerable annual income.

In addition, Norway is ranked number one in the world according to the

United Nation’s Human Development Index (HDI) in 2009. Norway has a large
general availability of highly educated personnel, low level of corruption,
language skills amongst young researchers, and so on as a necessary condition
for a high level of academic output. The openness and general availability of
education for all Norwegians leads to a maximized pool of talent to recruit from
and also to a high degree of competition amongst areas of research in order to
attract the most talented human resources. One other aspect is the relatively low
level of corruption and high level of scientific independence.

3.2. Vietnam’s comparative advantages.

31
 Thanks to the Doi Moi Policy implemented in 1986 where developed
countries encouraged Vietnam to privatize to be able to participate in the global
economy, Vietnam has been gradually reforming and privatizing, approaching a
more market-oriented economy. Vietnam today is the fastest growing economy
in South East Asia based on strong investment, consumption and exports.

Vietnamese workers are described as hard working with high morals and a
genuine interested to help. Although Vietnamese has experienced hard times,
social development has been a priority the last years improving the life of the
Vietnamese people. Labor cost in Vietnam is generally low, thus helps
attracting businesses to Vietnam.

In addition, Vietnam is also rich in natural resources. Vietnam has a long

coastline, which helps speed up the development of the fisheries sector.
Vietnam has many oil-wells, which explains the reason why Vietnam exports a
lot of crude oil.

Based on these comparative advantages from both nations, we should carry

out the following strategies:

4. Strategies to boost the development of Vietnam-Norway relationship

4.1. Macro- strategies implemented by the government.

With its rapid economic development and high growth rate, Vietnam is now
already in the list of Low Middle Income Countries. It means that the ODA
flow from international donors in general and from Norway in particular will be
finished in some years ahead. To bring into full play the Norway’s comparative
advantages to meet the need of Vietnam and further develop the relationship
with Norway, the Government needs to implement the following strategies:

4.1.1. Ensuring the economic and political stability, maintaining peace with
other countries in the region and all over the world, creating a favorable
business environment to attract investment from Norway.

32
 4.1.2. Establishing a uniform legal system in accordance with international
laws and regulations; creating a transparent legal framework for economic
activities. In addition, the Government should issue policies to facilitate its
enterprises to cooperate effectively and equally with their Norwegian
counterparts.

4.1.3. Implementing administrative reform, reinforcing the governmental

organization, applying the “one door policy” on economic activities to tackle
the cumbersome and complicated administrative procedures.

4.1.4. Upgrading the socio-economic infrastructure, including the

transportation and telecom systems, basic services and especially the
country’s economic centers, to set up an international-standard business
environment for both domestic businesses and foreign investors. In addition,
setting up a comprehensive strategy on the Norwegian market is an
important task in the near future. To formulate the strategy, the Ministry of
Industry and Trade needs to get all information about the Norwegian market
to help local companies expand the range of exported products, the suitable
volume of exports, the way to transport goods, the major competitors, the
competition schemes and problems arising in bilateral relations.

4.1.5. Promptly training skilled technical officers and workers, especially

foreign business personnel that are capable of working with foreign
companies. The Government should encourage businesses to provide skill
and language training, particularly English for their staff, including officials
working in ODA.

4.1.6. Simplify and improve regulation and administrative procedure

regarding the receipt of ODA including ODA attraction, ODA approval,
financial disbursement and implementation to speed up the absorption of
ODA from all donors in general and from Norway in particular.

4.2. Micro strategies implemented by Vietnamese partners

33
To exploit the bilateral relations between Vietnam and Norway, Vietnamese
organizations and enterprises should carry out the following measures:

4.2.1. Improving product quality, apply ISO, HACCP system

One of the main components of Vietnam’s exports to Norway is consumer

goods (including food). As part of the EU requirements, Norway applies
strict conditions on the quality of these products. Product quality is seen as
the key factor for goods to penetrate Norwegian market. Improving product
quality also promotes product trademarks and brands.

4.2.2. Cooperation to win large-scale orders

Vietnamese exporters are often incapable of fulfilling large-scale orders,

although the country’ export volume is still small. Going large-scale will
attract more Norwegian importers especially in the manufacturing industry
where most of Norwegian imports from Vietnam accounts for.

However, Vietnam’s medium and small companies are unable to meet large-
scale orders because of the lack of a strong production and financial
capacity. Therefore, the enterprises must cooperate with each other to be
strong enough to fulfill big orders.

4.2.3. Boosting trade via the Internet

Companies have been making huge investment for adopting information

technologies, particularly using the Internet. Therefore, to boost trade with
Norwegian companies, Vietnamese companies should establish e-commerce.
To do so, they should follow the following steps:

• Preparing for an English-speaking business environment since English

will become office language in Vietnam.

• Getting familiar with Internet services in business activities, first the e-

mail. Via the e-mail, enterprises will be able to exchange text document,
picture and even video in the near future. By this way, enterprises can
study markets and products and contact with customers.
34
4.2.4. Making full use of the Norwegian ODA:

Norway has some comparative advantages in the areas that Vietnam is in

most needs like oil and gas, shipbuilding, maritime, fisheries, energy
including hydropower. Relevant Vietnamese authorities and businesses,
which are in needs of the Norwegian support, should be more active in
finding its counterparts to develop proposal calling for support. Norad
through Innovation Norway – a trading arm of Norwegian business
associations implement a Business Match Making program to facilitate
business contact between companies from the two countries wishing to do
business with each other. The program has been in operation since 2008 and
will last until 2012. This is a unique opportunities for the Vietnamese
businesses to establish business contact with its Norwegian partners. There
are also other programs run by Norad that Vietnamese business circle can be
benefited like Program to support Private Sector Development, where cost
for making Feasibility Study for Norwegian company to invest in Vietnam
will be supported by Norad or scholarship program where company can send
their staff to Norway for higher education.

4.2.5. Making full use of the Vietnamese overseas

The countries have particular close ties because around 19,000 Norwegian
citizens are of Vietnamese origin - one of the largest groups in Norway. If
enterprises get help from the Vietnamese overseas, they will be able to boost
exports to Norway. There are two ways to exploit this force:

• First, employ Vietnamese overseas who are marketing, technical experts

and law advisors. Their deep understanding about the Norwegian and
laws will be a crucial strength for Vietnamese companies.

• Second, exploit the patriotic spirit among the Vietnamese overseas

community. In addition, Vietnamese exporters should call on the support
35
 from the Vietnamese overseas’ relatives currently living in Vietnam.
However, businesses should avoid excessive exploitation to avoid losing
the Vietnamese overseas’ confidence.

Conclusion.

The Vietnam – Norway Bilateral Development Cooperation has been crucial

in the development of Vietnam both socially and economically. It has also
provided Norway with a potential business partner for the years to come.

The cooperation marks a milestone in the normalization process of the two

countries’ political and economic relations, and set up a legal framework to
boost potential trade ties. Furthermore, the cooperation is built based on mutual
benefits and trust. It is an appropriate step, benefiting both Vietnam and
Norway in the integration process.

The cooperation also created excellent opportunities for import-export and

investment growth between the two countries. However, it also set up great
obstacles for both the Vietnamese government and businesses having trade
relations with Norway. The successful implementation of the cooperation is the
most important task for Vietnam to gain an advantageous position in the global
world and to make the best out of its WTO membership.

Reference.

ECORYS Research and Consulting. Study of the Vietnamese

Shipbuilding/Maritime Sector. June 2010

Innovation Norway. Market opportunities in the Vietnam Maritime Sector. Hanoi.

December 2008.
36
 Innovation Norway. Market opportunities for waste and wastewater treatment
technology for Pangasius farming in Vietnam. Hanoi. December 2009

Norwegian Agency for Development Cooperation. Evaluation of Norwegian

Development Co-operation in the Fisheries Sector. June 2008

Asia Competitiveness Institute. Vietnam Competitiveness Report 2010. June 2010

Norwegian Agency for Development Cooperation. Study on Private Sector

Development and Prospects for Norwegian Trade and Investment Interests in
Vietnam. September 2003

Human Rights Dialogue between Vietnam and Norway. Norway – The Official
Site in Vietnam, September 2010

Norwegian Agency for Development Cooperation. Norwegian Bilateral

Development.

Norwegian Ministry of Foreign Affairs: Minifacts about Norway/2009

Development Assistance to Vietnam Database: www.dad.mpi.gov.vn

37