Common use of Situation Analysis Clause in Contracts

Situation Analysis. 9. Viet Nam has enjoyed rapid economic growth since the launch of the Doi Moi reform process in 1986, with current growth rates averaging around 7-8% per annum. Viet Nam is making impressive progress toward achieving the Millennium Development Goals (MDGs). The country has more than halved its poverty rate and seen improvements in under-five mortality, primary school enrolment, child malnutrition, maternal mortality, life expectancy, and access to clean water and sanitation. Moreover, the reforms have created space for economic, social and cultural activities beyond the confines of Government and Party institutions. As Viet Nam rapidly moves toward middle-income status, it faces a new set of challenges. The complexity of these challenges call for a comprehensive, robust and diversified response from the UN Organizations operating in Viet Nam through the One Plan. 10. The recorded poverty rate fell from 58.1 % in 1993 to 19.5 % in 2004 and to 15.9 % in 2006 as based on the international poverty line (GSO – VHLSS). According to the Vietnamese poverty line, poverty decreased from 18% in 2001 to 7% in 2005 (see SEDP). Poverty rates are however still high and extreme poverty remains heavily concentrated in remote, isolated and ethnic minority regions. Furthermore, drug and crime related problems and transnational organized crime, including human trafficking, smuggling of migrants, money laundering, corruption, and domestic violence, are closely linked to poverty and social policy issues for sustainable development. 11. Pressure to create sustainable, productive and decent employment for all, especially for youth, remains high. Shortage of skilled workers for the burgeoning manufacturing and service sectors has already emerged as a serious bottleneck. As the economy continues to grow, manufacturing and service sectors will require a rapid transfer of workers from agriculture, and an increased demand of specialised skills. Gender sensitive human resource development, vocational and skills training are primary strategies to ensure progress. 12. Helping people stay out of poverty will become increasingly important, as poverty reduction strategies will gradually give way to social policy strategies to address life cycle vulnerabilities and risks attached to ill health, disability, unemployment, maternity, old age and the costs of having and raising children. 13. The domestic private sector is increasingly the main engine of economic growth and job creation. Both inward flows of FDI and domestic demand remain strong, as the Government further accelerates the reform process to liberalize markets and move closer to integration with world markets. Accession to the World Trade Organisation and other international trade and investment agreements will stimulate private sector activity. Globalization and further integration into the world economy may however benefit some groups more than others and international competition may impose large economic costs on some industries and groups. Social safety nets and ancillary national policies should be developed in areas including education, training, vocational education, entrepreneurship, through regional and sector-specific programmes, and protecting women and children, vulnerable groups from a two-tiered health and education systems, which so far prevail, and result from an excessive reliance on user fees and out of pocket financing. 14. Viet Nam is a leading exporter of agricultural commodities including rice, coffee, pepper, rubber, fish and seafood products; higher world prices are further encouraging production and commercialization in this sector. Agriculture is the largest employer (57% of the total labor force) and will continue to play a significant role in employment creation and poverty reduction, although its share of the national economy has continued to decline to about 20% of GDP. Rising incomes have started to shift consumer preferences towards higher value, added value and processed products. Therefore Viet Nam still needs to improve the competitiveness of its products, particularly quality and food safety, and to control plant and animal diseases. 15. The industrial sector has become the driving force for Viet Nam’s economic growth, accounting for 41.5% of GDP in 2007. The female dominated manufacturing sector (at the lower level), which accounted for 21.3% of GDP in 2006, recorded strong growth at an annual average rate of 11 % over the past decade. While Viet Nam continues to have a comparative advantage in light industries, other sectors such as electrical and motorcycle assembly have been emerging. If Viet Nam aims to achieve becoming an industrialized economy by 2020, it needs clear and realistic gender sensitive business environment, industrial innovation, science, technology and export strategies to increase value added and improve competitiveness. 16. As a result of greater competition with international markets, focus should be placed on further elimination of structural weaknesses in state enterprises and the banking sector, enhancing productivity, developing basic infrastructure and enhancing human resource development, securing more efficient public service delivery and continued macroeconomic stability. Compliance with WTO SPS/TBT7 commitments and standards (for product quality and assurance, hygiene and safety, human health and environment) is a challenge that will affect export growth in both agricultural and industrial products, requiring measures such as enhanced capacity of national standards setting and managing bodies, investments in physical and human resource infrastructure in metrology, quality testing and highly specialized technical services.