A Changing Landscape of Foreign Aid
In the decades following major conflicts, Vietnam and Cambodia became significant recipients of international aid.
Vietnam, after the conclusion of the Vietnam War in 1975, received large-scale assistance primarily focused on post-war reconstruction and economic recovery.
Cambodia, meanwhile, began receiving substantial aid after the fall of the Khmer Rouge regime in 1979, as the country faced the enormous challenges of genocide, famine, and infrastructure collapse.
From 2000 to 2020, both nations benefited from international development assistance, but their paths diverged.
Vietnam officially achieved lower-middle-income status in 2011, relying less on aid by the 2020s, while Cambodia continued to depend on external funding, particularly as a “Least Developed Country” (LDC).
In this article, Mekong Plus explores the impact of foreign aid or ODA (Official Development Assistance) over two decades, particularly in key sectors that have shaped both countries’ development.
Vietnam (2000–2020)
Between 2000 and 2020, Vietnam was a major recipient of Official Development Assistance (ODA), receiving between $1 – $4 billion annually.
This aid was critical in transforming Vietnam into a rapidly growing, lower-middle-income economy. The aid was directed towards infrastructure, education, healthcare, and more, which contributed to the country’s modernization and economic resilience.
1. Infrastructure & Transportation
(30% of total ODA, ~$1.05 – $1.2 billion annually)
Foreign aid played a central role in the development of Vietnam’s infrastructure, particularly transportation. With rapid economic growth and urbanization, projects such as the Nhat Tan Bridge and Noi Bai International Airport expansion, both funded by the Japan International Cooperation Agency (JICA), were critical.
These projects improved mobility and trade, boosted economic activities, and facilitated foreign investment.
Vietnamese and Japanese students visiting Nhat Tan Bridge, a project funded by JICA. Source: Vietnamese Ministry of Transportation.
Vietnam also focused on the modernization of urban transportation and the development of smart cities, with donor backing supporting infrastructure that could handle the pressures of a growing population and economy.
2. Education
(15% of total ODA, ~$525 – $600 million annually)
Vietnam’s educational achievements owe much to foreign aid, which improved access and quality, particularly in rural areas.
Vietnam’s literacy rate of citizens aged 15 and above from 1999 to 2019. Source: Infographics.vn.
The World Bank’s Escuela Nueva Project introduced innovative teaching methods across the country, and the Asian Development Bank (ADB) invested in vocational training programs that aligned workforce skills with market demands.
“With more than 60% of the population under age 35, Vietnam has the potential to help deliver high and sustainable economic growth,” ADB senior social sector specialist Sakiko Tanaka stated when addressing the country’s lack of skilled workers for competitiveness in global markets.
These programs contributed to Vietnam’s rise as a manufacturing hub by ensuring a trained, adaptable labor force.
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3. Healthcare
(15% of total ODA, ~$525 – $600 million annually)
With the support of international donors like USAID and the Global Fund, Vietnam made remarkable progress in healthcare.
There were significant advances in combating communicable diseases like HIV/AIDS, malaria, and tuberculosis. Maternal and child health services expanded in rural regions, leading to reductions in infant mortality and better overall healthcare outcomes.
According to reports, the infant mortality rate in Vietnam dropped from 26.1 deaths per 1,000 live births in 2000 to 16.7 in 2020, while the under-five mortality rate declined from 30 fatalities per 1,000 live births to 21 during the same time period.
This is a positive progress yet still a humble number when compared with the average infant mortality among OECD countries of 4 deaths per 1,000 live births (and 8 per 1,000 in nearby China).
The number of doctors per 10,000 inhabitants in Vietnam have also shown a positive trend from 7.2 in 2010 to 10 in 2022, showing a slow but steady rise. Vietnam still has a long way to go to achieve the OECD average of 34 doctors per 10,000 population.
Vietnamese Minister of Health Dao Hong Lan said that since 2003, the Global Fund has aided over 650 million USD for activities to fight AIDS, TB and malaria in Vietnam. USAID confidently claimed that with this pace of improvement in the last two decades, the goal of erasing AIDS completely by 2030 of the Vietnamese Government is highly attainable.
Vietnam’s current HIV infection prevalence stands impressively at 6 cases per 100,000 population; whereas, OECD countries’ HIV rates range from 2 to 18 HIV infection cases per 100,000 population (with an average of 6.4).
4. Economic Development
(10% of total ODA, ~$350 – $400 million annually)
Vietnam’s transition to a market-oriented economy was greatly supported by the World Bank and Asian Development Bank (ADB). Aid was directed toward developing an inclusive, sustainable and digital-driven economy and small and medium enterprises (SMEs), particularly through programs like the ADB’s Small and Medium Enterprise Development Program and Development Policy Financing (DPF).
These programs have immensely driven forward the economic evolution of Vietnam.
For example, the DPF series has already facilitated notable accomplishments, even if the full effects of this operation are anticipated to become apparent by 2024. In 2021, a tax relief program provided tax benefits to about 140,000 enterprises.
Gender equality in the workplace has also been facilitated by the provision of subsidized childcare for over 85,000 children. Online access to government services has doubled.
Vietnam’s GDP per capita from 2000 to 2023, in Thousands of USD. Source: World Bank.
From 2000 to 2020, despite being humble numbers in comparison to OECD’s average of USD 38,592 GDP per capita, Vietnam’s figures increased over 9 times, reaching USD 3,586 by the end of the period.
This underscores Vietnam’s significant growth potential, though the country remains far from the economic levels of developed nations, with considerable disparities in wealth distribution across its population.
Vietnam has a Gini coefficient of around 0.4, while the OECD average is closer to 0.3, indicating that income inequality is higher in Vietnam compared to most OECD countries.
Finally, Vietnam’s Multidimensional Poverty Index currently stands at 0.008, with 1.9% of its population living in multidimensional poverty, and 3.5% considered as “vulnerable”. The MPI identifies individuals facing multiple disadvantages, such as lack of access to clean water, inadequate nutrition, poor education, and insufficient living conditions.
Over the last 20 years, Vietnam has made significant strides in poverty reduction, with the MPI decreasing from over 10% in the early 2000s.
5. Governance & Institutional Development
(10% of total ODA, ~$350 – $400 million annually)
Aid for governance reforms focused on increasing transparency and improving public administration.
The United Nations Development Programme (UNDP) and other international donors provided technical support to streamline government processes and promote anti-corruption initiatives, which were essential for attracting foreign investment and fostering economic growth.
Transparency International’s 2023 Corruption Perceptions Index, which scored 180 countries on a scale from 0 (“highly corrupt“) to 100 (“very clean“), gave Vietnam a score of 41, ranking 83 out of 180 countries. This is a 10-point growth since their first year in this chart in 2012.
“Over the past 14 years, the PAPI research program (by UNDP) has had a positive impact, transforming the awareness and actions of provincial governments. It has practically contributed to public administration reforms – a key content of three strategic breakthroughs in socio-economic development that the Party and State of Viet Nam have been making efforts to implement” said Dr. Nguyễn Hữu Dũng, Vice President of the Viet Nam Fatherland Front Central Committee.
6. Environmental Protection & Climate Change
(10% of total ODA, ~$350 – $400 million annually)
Vietnam is well-known for its magnificent natural beauty and countless fauna, flora and natural resources.
With over 3,200 km of coastline and many low-lying cities and river delta regions, it is one of the most vulnerable countries in the world to climate change.
Therefore, the Green Climate Fund and World Bank supported climate resilience projects, particularly in the flood-prone Mekong Delta.
Renewable energy projects, such as wind farms, received backing from Germany and Denmark, helping Vietnam move towards more sustainable energy solutions. And on December 2, 2023, Vietnam and the EU finalized a plan to mobilize over $15 billion for Vietnam’s energy transition, backed by the G7 and other wealthy nations.
Although coal still remains as the main source of energy, Vietnam’s green energy generation continues to grow over the period. With great determination, the Vietnamese Government set a goal to achieve the percentage of renewable energy in the total primary energy of 15-20% by 2030 and 65-70% by 2045.
Denmark’s Ørsted Group’s wind farm in Hai Phong expects to supply green energy to 30 million people by 2030. Source: Vietnam+.
At Mekong Plus, we focus on environmental sustainability through initiatives like waste treatment, plastic recycling, sustainable agriculture, eco-friendly construction, and tree planting. Our efforts aim to mitigate the impacts of climate change while aiding the socio-economic well-being of local communities.
7. Humanitarian Assistance
(5% of total ODA, ~$175 – $200 million annually)
Although Vietnam’s need for humanitarian aid decreased over the years, foreign assistance remained crucial in the aftermath of natural disasters, such as typhoons and floods. The International Red Cross, UN organizations and other agencies provided relief and supported disaster preparedness programs to mitigate future risks.
One of the most prominent examples is Typhoon Yagi, which struck Vietnam in early September 2024. It was one of the most devastating typhoons to hit the country in decades, causing severe storm damage, widespread flooding, landslides, and flash floods, particularly affecting 26 northern provinces. The typhoon resulted in 324 people dead or missing, including 24 children. Approximately 141,469 homes, 550 health facilities, and 805 schools were damaged. Around 400,000 homes were left without access to safe water.
The Ministry of Agriculture and Rural Development appealed to the international community to support relief and recovery efforts. Countries like the UK, Australia, Japan, and the USA provided ODA in the form of emergency supplies and financial aid. UNICEF provided immediate relief, including water purification tablets, water tanks, and hygiene supplies to the most affected areas. The European Union allocated additional funds to support 130,000 people in the hardest-hit provinces.
USAID and the Red Cross workers giving a Vietnamese first-aid instruction after Typhoon Yagi. Source: USAID.
8. Other Areas of Aid
(5% of total ODA, ~$175 – $200 million annually)
Aid also supported sectors like technology and culture. Foreign donors contributed to the growth of Vietnam’s tech industry, fostering partnerships with global tech companies and promoting innovation. Additionally, cultural preservation and agricultural development were focal points, aiding both rural and urban development.
Cambodia
Cambodia, as a Least Developed Country, remains more dependent on international assistance, receiving $0.25 – $1.5 billion annually. Foreign aid plays a crucial role in rebuilding infrastructure, developing human capital, and supporting key economic sectors.
1. Infrastructure & Transportation
(25% of total ODA, ~$375 – $500 million annually)
Post-conflict, Cambodia relied heavily on aid to rebuild its infrastructure. Major projects were funded by international donors that significantly contributed to Cambodia’s road network.
For example, the rehabilitation of National Road 5 which connects Phnom Penh to the Thai border was mostly funded by Japan. China has also invested heavily in Cambodia’s infrastructure through the Belt and Road Initiative (BRI), funding the construction of over 3,000 kilometers of roads and several bridges.
These ODA projects have played a crucial role in enhancing Cambodia’s infrastructure, facilitating trade, and promoting economic growth.
2. Education
(20% of total ODA, ~$300 – $400 million annually)
Education in Cambodia has seen major improvements thanks to international support. Projects like UNICEF’s Quality Basic Education initiative provided scholarships to disadvantaged students and expanded access to quality education in rural areas. Additionally, the Global Partnership for Education (GPE) played a critical role in curriculum reform and teacher training.
Thanks to these international efforts, the literacy rate of Cambodia increased significantly from 67,34% in 1998 to 83,78% in 2022.
Despite these improvements, there is still much work to be done. In comparison to OECD countries, Cambodian students are underperforming, as reflected in the PISA test in 2022. Only 12% of Cambodian students attained at least Level 2 proficiency in mathematics significantly lower than the OECD average of 69%.
Almost no Cambodian students were top performers in mathematics (Level 5 or 6), whereas 69% of students in OECD countries achieved this level. Source: OECD, PISA 2022.
Organizations like Mekong Plus are crucial in continuing the progress in Cambodian education. We focus on community development, including education, in Cambodia and Vietnam. Your support can make a significant difference.
Donate to Mekong Plus today and help build a brighter future for Cambodian children!
3. Healthcare
(25% of total ODA, ~$375 – $500 million annually)
Foreign aid is a pillar of Cambodia’s healthcare system. Among them the US was one of the biggest, from 2010 to 2019, they donated around US$339 million towards Cambodian health and population.
Organizations like World Health Organization (WHO), Global Fund and USAID supported the fight against diseases such as malaria and tuberculosis. In particular, since 2003, the Global Fund has maintained a partnership with Cambodia. As of 2017, seventeen grants amounting to US$483 million have been signed of which 88% (US$428 million) have since been disbursed for HIV and AIDS, TB, malaria and health systems strengthening interventions.
These programs have shown their results:
- Reported malaria cases in Cambodia decreased by 92% from 2000 to 2022. Estimated deaths from malaria reduced by 88% during the same period.
- Similarly, the number of cases of HIV in Cambodia have dropped significantly over the last two decades from 40% of female sex workers at its peak to 4.9% now.
Programs funded by USAID also improved maternal and child health services, especially in remote areas, helping reduce mortality rates. For instance, maternal mortality decreased from 472 deaths per 100,000 live births in 2000 to 160 deaths per 100,000 live births in 2020. Despite the remarkable progress, Vietnam’s rate is still 15 times higher than the average of OECD countries, indicating a lot of room for improvement.
4. Economic Development
(10% of total ODA, ~$150 – $200 million annually)
Cambodia’s economic development is heavily supported by international aid, particularly in agriculture and tourism. Aid programs have increased agricultural productivity through modern farming techniques.
For example, USAID’s program Food for Progress assisted the Cambodian government in the agricultural sector in increasing productivity. The US also supported the forestry sector. In 2019, USAID’s Greening Prey Lang project which is estimated to be worth US$21 million was launched.
Such ODAs have facilitated a significant transformation, with agricultural growth averaging 5.3% during 2004-2012, driven by increased yields, mechanization, and expansion of farmland.
Meanwhile, investments in tourism, such as around Angkor Wat, have bolstered one of Cambodia’s most important economic sectors. Another example is when ADB approved a 100 million USD aid package to support the development of tourism infrastructure in the three Mekong River countries of Cambodia, Vietnam and Laos in 2013.
In 2019, the tourism sector directly employed 630,000 people and generated tourism receipts peaking at USD 4.9 billion, accounting for 18.2% of Cambodia’s GDP.
Unfortunately, COVID-19 struck and damaged Cambodia’s overall economic expansion and, in particular, its tourism growth. From 2020 to 2022, Cambodia’s poverty rate has increased by 2.8 percentage points, indicating that around 460,000 people have fallen below poverty income thresholds, once again erasing a big part of the previous decade’s progress.
The decline of Cambodia’s economy in the COVID period also matched with the decline in ODA and loss of trade privileges after LDC graduation, indicating the importance of ODA to Cambodia’s economic growth.
Cambodia’s GDP per capita has been growing steadily for the past two decades, owing much to ODA. Source: Macrotrends.
Regarding the Multidimensional Poverty Index, Cambodia’s levels are much higher than the one of Vietnam’s, standing at 0.070 (The Asian average MPI is approximately 0.063, while the African average remains at 0.119), with 16.6% of its population experiencing multidimensional poverty, decreasing from about 30% in the early 2000s, indicating persistent challenges in overcoming poverty.
To this day, 20.5% of the population is considered “vulnerable” for this index.
5. Governance & Institutional Development
(10% of total ODA, ~$150 – $200 million annually)
Governance reforms remain a key focus of foreign aid in Cambodia. The United Nations and the European Union have supported electoral reforms, legal capacity building, and initiatives to promote transparency and rule of law, though governance challenges persist.
In the early 2000s, Cambodia was emerging from a period of conflict and was in the early stages of establishing its governance structures. By 2020, the country had made strides in certain areas even though it still faced criticisms regarding some factors and the rule of law.
By 2022, Cambodia has a score of 24 in the Corruption Perception Index, with a change of +2 since 2012, ranking 158 out of 180 countries.
However, this number fell back to 22 by 2023, showing no remarkable improvement over a whole decade. This is an upsetting trend, considering both Vietnam and Laos witnessed considerable increases over the same period (Vietnam: 31-41 , Laos: 21-28).
Secretary-General António Guterres meets with Samdech Akka Moha Sena Padei Techo Hun Sen, Prime Minister of the Kingdom of Cambodia in New York. Source: UN.
6. Environmental Protection & Climate Change
(10% of total ODA, ~$150 – $200 million annually)
Cambodia is vulnerable to climate change, and international aid has supported sustainable agricultural practices and natural resource management.
JICA has been instrumental in improving water infrastructure and flood management through projects like the Phnom Penh Water Supply Projects and the Flood Protection and Drainage Improvement Projects. Meanwhile, ADB funded initiatives such as the West Tonle Sap Irrigation and Drainage Rehabilitation and Improvement Project, enhancing agricultural productivity and water management.
In 2005, around 40% of the population lacked basic access to safe drinking water. By 2020, this number had decreased to 21%.
Regarding green energy development, JICA also supported clean energy initiatives, including the Introduction of Clean Energy by Solar Electricity Generation System, promoting sustainable energy solutions.
By 2020, over 50% of Cambodia’s energy came from renewable sources with hydropower playing the major role and solar energy witnessing rapid expansion.
At the same time, the EU has focused on sustainable development and climate resilience, while UNDP has contributed to projects aimed at improving environmental sustainability and community resilience to climate change.
These donors have played a vital role in supporting Cambodia’s efforts to enhance environmental sustainability and resilience.
At Mekong Plus, we focus on the well-being of the environment and local communities. We are dedicated to promoting tree-planting initiatives by motivating villagers to participate through a system of small bonuses based on the survival rate of planted trees, to foster long-term commitment to tree planting. Our success rate stood impressively at 80%!
7. Humanitarian Assistance
(5% of total ODA, ~$75 – $100 million annually)
Cambodia remains reliant on humanitarian aid, especially during times of flooding or drought. One of the worst natural disasters to hit the country in decades was the 2016 drought in Cambodia.
This drought affected 18 out of 25 provinces, impacting approximately 2.5 million people. The lack of rainfall led to significant water shortages, affecting agriculture, livestock, and daily living conditions for many Cambodians.
A fisherman smokes on his boat at a dried up pond at the drought-hit Kandal province in Cambodia. Source: The Financial Times.
In such an adversary, ADB provided grants, loans, and technical assistance totaling US$208.28 million. While agencies like the World Food Programme (WFP) provide critical assistance, particularly in food security for rural communities where poverty levels remain high.
To fight against natural disasters, JICA has funded multiple phases of flood protection and drainage improvement projects in Phnom Penh, as well as the Rural Road Connectivity Improvement Project to enhance rural road networks and resilience during natural disasters. With similar purposes, UNDP, funded by the Global Environment Facility-Least Developed Countries Fund, has implemented the Strengthening Climate Information and Early Warning Systems project to enhance Cambodia’s capacity to collect reliable climate data and improve early warning systems for better disaster preparedness.
8. Other Areas of Aid
(2% of total ODA, ~$30 – $40 million annually)
Cultural preservation is a notable area of aid in Cambodia, with UNESCO and other donors supporting the restoration of historical sites such as Angkor Wat. These efforts not only protect Cambodia’s cultural heritage but also promote tourism, a significant contributor to the national economy.
These are just a few examples of the diverse areas where foreign aid is making a positive impact in Cambodia. By addressing a wide range of needs, donors are helping to build a more sustainable and resilient future for the country.
Conclusion
Over two decades, foreign aid has been crucial for both Vietnam and Cambodia, though their trajectories have diverged.
Vietnam, having achieved lower-middle-income status, has seen its reliance on aid decrease, focusing on economic growth, infrastructure development, and climate resilience.
Cambodia, still facing greater developmental challenges, remains heavily reliant on international support, particularly in areas such as infrastructure, education, and healthcare.
Both countries, however, highlight the evolving role of ODA in addressing new global challenges.
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