BOOSTING VIET NAM’S SUSTAINABLE MARINE ECONOMY A Public Expenditure & Investment Review (PEIR) A summ r r port Muthukum r M ni Thu Thi L N u n Photo credit: © Nguyen Minh Tuu / Shutterstock. BOOSTING VIET NAM’S SUSTAINABLE MARINE ECONOMY A Public Expenditure & Investment Review (PEIR) A summary report Muthukumara Mani Thu Thi Le Nguyen ©2025 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the staff of the World Bank with external contributions. The findings, interpretations and conclusions expressed in this work do not necessarily reflect the views of the World Bank and its Board of Executive Directors. The World Bank do not guarantee the accuracy of the data included in this work. 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Cover design by Ha Doan, cover photo credit: © alexkoral / Shutterstock.com TABLE OF CONTENTS LIST OF TABLES................................................................................................ vii LIST OF FIGURES.............................................................................................. viii LIST OF BOXES................................................................................................... ix ABBREVIATIONS................................................................................................. x ACKNOWLEDGMENTS...................................................................................... xi OVERVIEW......................................................................................................... xii Key Findings............................................................................................................. xiii Conclusion................................................................................................................... xv Key Recommendations............................................................................................ xvi I. GENERAL INFORMATION.......................................................................... 1 1.1. Background........................................................................................................... 2 1.1.1. Key marine sectors driving economic growth................................................2 1.1.2. Strategic resolutions for marine economy development...............................3 1.1.3. Public Expenditure and Investment Review for Viet Nam’s marine economy..............................................................................................3 1.1.4. Key findings and recommendations...............................................................3 1.2. Research methodology........................................................................................ 6 1.2.1. Desk review..................................................................................................... 6 1.2.2. Analysis of secondary data on State budget expenditure and private investment for the marine economy in coastal provinces ............................ 6 1.3. Limitations of the study..................................................................................... 8 II. OVERVIEW OF MARINE ECONOMY IN VIET NAM................................. 9 2.1. Potential and status of Viet Nam’s marine economy ................................ 10 2.1.1. Methods to estimate the potential and status of marine economy ............10 2.1.2. Contributions of marine economic sectors.................................................12 2.1.3 Value of marine ecosystems ..........................................................................18 2.2. Environmental costs of coastal industrialization hinder the path to sustainably balancing Viet Nam’s marine economy .............................. 20 III. INVESTMENT IN VIET NAM’S MARINE ECONOMY DURING 2016-22 ...................................................................................... 23 3.1. Overview of investment for the marine economy in coastal provinces............................................................................................... 24 3.1.1. Overview of total investments......................................................................24 3.1.2. Public investment in the marine economy ..................................................29 Boosting Viet Nam’s Sustainable Marine Economy v 3.1.3. Recurrent expenditures for the marine economy........................................38 3.1.4. Status of private investment including FDI.................................................40 3.2. Conclusions......................................................................................................... 42 IV. GENERAL ASSESSMENT OF MECHANISM AND POLICIES TO PROMOTE MARINE ECONOMIC DEVELOPMENT................................ 43 4.1. Strategies, plans, and policies on marine economic development............ 44 4.1.1. Strategic orientation for marine economic development............................44 4.1.2. Viet Nam’s marine economy: balancing growth and ecosystem value.......46 4.1.3. Concretizing strategies into implementation plans and policies.................47 4.1.4. Conflicts in development goals and territorial space allocation..................51 4.1.5. Policy and fiscal gaps hindering breakthrough solutions for marine economic development ................................................................................57 V. WAY FORWARD.......................................................................................... 61 Key Recommendations............................................................................................. 70 REFERENCES...................................................................................................... 73 ANNEX................................................................................................................. 79 A.1. Institutions, Mechanisms, and Policies for the Development of Viet Nam’s Marine Economy.......................................................................... 79 A.1.1. Institutional Framework of Public Expenditure Management for the Marine Economy in Viet Nam.....................................................................79 A.2. Viet Nam’s Marine Economy: Charting a Path to Sustainable Growth ......................................................................................... 84 A.3. Role of Aquaculture and Tourism in Marine Economic Development..... 91 A.3.1. Contribution of aquaculture to Viet Nam’s marine economic development .................................................................................................91 A.3.2. Contribution of tourism in development of Viet Nam’s marine economy ...........................................................................................93 A.4. Marine Aquaculture – Marine Economic Development towards Modernization in Agricultural Development.........................................95 A.4.1. Benefits and challenges for marine aquaculture ..........................................95 A.4.2. Current status of marine aquaculture in Viet Nam and policy barriers.....99 A.4.3. Developing a marine aquaculture model linked with the aquatic value chain ..................................................................................................102 A.5. Development of Marine Ecotourism......................................................... 104 A.5.1. Benefits and challenges of the development of marine ecotourism .........104 A.5.2. Current status of marine ecotourism development in Viet Nam and policy barriers.......................................................................................110 A.5.3. Building the symbiotic model of community-based tourism development................................................................................................115 vi Boosting Viet Nam’s Sustainable Marine Economy LIST OF TABLES Table 1. Data availability of Viet Nam’s marine economic sectors and ecosystem services............. 10 Table 2. Total value added at 2010 constant prices of activities related to Viet Nam’s marine economy (2010–20, billion dong)........................................................................................ 14 Table 3. Employment in ocean economic industries in Viet Nam between 2010 and 2020 (formal employees in registered enterprises)........................................................................ 15 Table 4. Selected estimates of values of ocean-based industries........................................................ 16 Table 5. Values of marine coastal biome, mangrove, and coral ecosystems adjusted to 2010 prices.19 Table 6. Loss of value of mangrove service by type of service in Mekong Delta per year (US$/year based on 1997–2017 values)............................................................................... 19 Table 7. Comparison of ICOR indices across regions and periods.................................................. 26 Table 8. Growth rate of total investment (2016–22) (%).................................................................. 27 Table 9. Growth rate of marine economy public investment (2016–22)......................................... 31 Table 10. Public investment structure in 2016–19 and 2021–22 (according to investment decisions)............................................................................................................ 32 Table 11. Investment structure by budget sources (2016–22, according to investment decisions) (%)........................................................................................................................ 34 Table 12. Investment structure of marine economy projects by sector and project scale (%)............ 35 Table 13. Implementation progress of all marine economy projects (2016–22)................................ 37 Table 14. Recurrent expenditure on fisheries and aquaculture and tourism (only for coastal districts, million VND)........................................................................................................ 38 Table 15. Number of private investment marine economy projects in aquaculture and tourism (2022)...................................................................................................................... 40 Table 16. Average capital of private and FDI projects in 2022 (billion VND)................................... 41 Table 17. Integration of marine economic development goals in coastal province administrative documents............................................................................................................................. 46 Table 18. Comparison of suitability of public investment projects in fisheries with Resolution 26 (2021–23).............................................................................................................................. 48 Table 19. Public investment structure between inland freshwater fisheries, coastal and marine seafood (2021–23)................................................................................................................ 50 Table 20. Interactions between marine economic sectors in Viet Nam............................................. 53 Box Table 7. India’s blue economy: overview of established and emerging sectors............................ 66 Table A.1 Marine economic sectors according to OECD classification.............................................. 85 Table A.2 Marine and coastal ecosystem services.................................................................................. 85 Table A.3 Marine economic sectors following the classification in Resolutions 36 and 26............... 86 Boosting Viet Nam’s Sustainable Marine Economy vii Table A.4 Chosen methodology and data sources to estimate contributions of each covered ocean economic sector ......................................................................................................... 88 Table A.5 Definitions and examples of major producer countries of coastal, off-coast and offshore farming.................................................................................................................... 95 Table A.6 Potential environmental risks of offshore aquaculture and ways to reduce risks for good management................................................................................................................. 97 Table A.7 Marine ecotourism activities.............................................................................................. 107 LIST OF FIGURES Figure 1. Shares of marine economic sector contributions to GVA in 2019.................................. 13 Figure 2. The number of industrial parks and export processing zones in some localities has come into operation, but few centralized wastewater treatment plants meet the required standards...... 21 Figure 3. Comparison of economic growth and urbanization rate between coastal and non-coastal provinces (2010–22)...................................................................................... 24 Figure 4. Social investment-GDP nationwide and by region (2016–21) (%)................................. 25 Figure 5. Comparison of investment-GDP ratios between coastal and non-coastal provinces (2010–22)........................................................................................................................... 25 Figure 6. Proportion of investment by economic sector.................................................................. 27 Figure 7. Proportion of non-State and State budget investment by region (VND)....................... 29 Figure 8. Public investment-to-GDP ratio in the marine economy during 2016–22 (%).............. 30 Figure 9. Total public investment in marine economy (2016–22).................................................. 30 Figure 10. Total investment structure according to investment decisions from 2016–22............... 31 Figure 11. Capital structure by economic sectors 2016–19 and 2020–22 (%)................................. 32 Figure 12. Structure of public investment capital in marine economic sectors (2016–22).............. 36 Figure 13. Implementation progress of all marine economic sector projects (2016–22)................. 38 Figure 14. Relationship of recurrent expenditure with public and private investment in 2022 (billion VND).................................................................................................................... 40 Figure A.1 Simplified diagram showing the integrated budget system in Viet Nam......................... 80 Figure A.2 Schematic representation of budget preparation process in Viet Nam........................... 81 Figure A.3 Public Investment Management Process in Viet Nam..................................................... 82 Figure A.4 Marine economy classification........................................................................................... 84 Figure A.5 Travel tourism revenue of coastal provinces compared to nationwide.......................... 111 viii Boosting Viet Nam’s Sustainable Marine Economy LIST OF BOXES Box 1. Titanium mining or fisheries development?........................................................................ 57 Box 2. Businesses want to invest, but are waiting for a policy......................................................... 58 Box 3. Indonesia’s Blue Economy approach.................................................................................... 58 Box 4. Development of Viet Nam’s seaport clusters: a loose link.................................................. 60 Box 5. Innovation – bringing coral to life in Nha Trang ................................................................ 63 Box 6. Lessons from community participation in protecting mangrove forests in Thai Binh........................................................................................................................... 64 Box 7. India’s prioritization of sectors in marine economy development strategies...................... 66 Box 8. Ecological-fiscal transfer mechanism.................................................................................... 68 Box 9. Indicators to monitor, evaluate and rank countries with a marine economy .................... 69 Box A.1 Making Quang Ninh a strong province in marine aquaculture development......................100 Box A.2 Leasing forests for ecotourism development - obstacles to be removed............................ 113 Box A.3 Principles of ecotourism according to the guidelines of the United Nations Environment Programme (UNEP).................................................................................... 114 Box A.4 Co-management model in protecting aquatic resources combined with community tourism development in Nhon Ly commune, Quy Nhon city, Binh Dinh province..............115 Box A.5 Ca Mau develops ecotourism from the advantages of local forests and seas..................... 117 Boosting Viet Nam’s Sustainable Marine Economy ix ABBREVIATIONS ADB Asian Development Bank MARD Ministry of Agriculture and Rural BAU Business-as-usual Development BR-VT Ba Ria-Vung Tau MCST Ministry of Culture, Sports, and Tourism CEZ Coastal Economic Zone MOF Ministry of Finance DARD Department of Agriculture and Rural Development MONRE Ministry of Natural Resources and Environment DOF Department of Finance MPA Marine Protected Areas DOT Department of Transport MPI Ministry of Planning and DPI Department of Planning and Investment Investment MSP Marine Spatial Planning/Plan EIA Environmental Impact Assessment MTPIP Medium-Term Public Investment EFT Ecological-fiscal transfers Plan EU European Union MW Megawatt EUR Euro NGO Non-Governmental Organization FAO Food and Agriculture Organization ODA Official Development Assistance FDI Foreign Direct Investment OECD Organisation for Economic Co- GDP Gross Domestic Product operation and Development GNI Gross National Income PEIR Public Expenditure and Investment GRDP Gross Regional Domestic Product Review GSO General Statistics Office PPP Public-Private Partnership GVA Gross Value Added R&D Research and Development Ha Hectare SDGs Sustainable Development Goals ICOR Incremental Capital-Output Ratio SEDP Socio-Economic Development Plan ISIC International Standard Industrial SFDP Sustainable Fisheries Development Classification Project ISPONRE Institute of Strategy, Policy TOE Tons of oil equivalent on Natural Resources and UN United Nations Environment UNDP United Nations Development IUU Illegal, unreported, and unregulated Programme JNCC Joint Nature Conservation UNSW The University of New South Wales Committee VND Vietnamese Dong Km Kilometer VIRAC Vietnam Industry Research And M Meter Consultancy WB World Bank x Boosting Viet Nam’s Sustainable Marine Economy ACKNOWLEDGMENTS This report was prepared by a core team led by Muthukumara S. Mani and Thu Thi Le Nguyen. The team also included Anil Markandya, Hanh Minh Duong, Hang Minh Dang, Nguyet Thi Thuy Hoang, Thang Toan Tran, Hoa Quynh Nguyen, Cuong Vu, Anh Viet Le, Nga Thanh Nguyen, and Duy Phuong Doan. The team is grateful for the valuable feedback provided by participants in the technical meetings with the Ministry of Planning and Investment (MPI), which has since been integrated into the Ministry of Finance (MOF). Government representatives included Nguyen Thanh Nga (Department of Sectoral Finance and Economics, Ministry of Finance), Ba Minh Le (Ministry of Agriculture and Environment), Lam Van Pham (Viet Nam Administration of Seas and Islands (VASI), Ministry of Agriculture and Environment), Hong Thi Hoa Nguyen (Ministry of Agriculture and Environment), and Hien The Ngo (Ministry of Agriculture and Environment). The team also appreciates the insights and collaboration of the broader Viet Nam 2045 team, including Andrea Coppola, Dorsati Madani, Phuong Anh Nguyen, and the peer reviewers Margaret Triyana, Stefanie Onder, and Habib Rab. Administrative support was kindly provided by Phuong Thi Minh Bui and Hoa Thi Thanh Nguyen. This study was prepared under the overall guidance of Carolyn Turk (former Country Director for Viet Nam), Mariam Sherman (Division Director for Viet Nam, Cambodia, and Lao PDR), Lalita Moorty (Regional Director, Prosperity, East Asia and Pacific), Africa Eshogba Olojoba (Practice Manager, Environment, East Asia and Pacific), and Sebastian Eckardt (Practice Manager, Economic Policy, East Asia and Pacific). Generous financial support from the PROBLUE Trust Fund is gratefully acknowledged. With the execution of Resolution 27/NQ-CP dated February 7, 2025, and Conclusion 121-KL/ TW in 2025 issued by The Central Executive Committee on the summary of Resolution 18-NQ/ TW regarding several issues related to continuing the reform and reorganization of the political system, the Vietnamese government structure formed into 17 ministries with six newly established ministries. They are the Ministry of Agriculture and Environment (merging the Ministry of Agriculture and Rural Development with the Ministry of Natural Resources and Environment), the Ministry of Science & Technology (merging the Ministry of Science & Technology and the Ministry of Information and Communications), Ministry of Home Affairs (merging Ministry of Home Affairs and Ministry of Labor, Invalids & Social Affairs), and Ministry of Ethnicity and Religion (newly established based on Ethnicity Committee). Other 11 ministries (Ministry of National Defense, Ministry of Public Security, Ministry of Justice, Ministry of Industry and Trade, Ministry of Culture, Sports, and Tourism, Ministry of Foreign Affairs, Ministry of Education and Training, Ministry of Health, Government Office, Government Inspectorate, State Photo credit: © Dong Nhat Huy / Shutterstock. Bank of Vietnam) remain unchanged. Throughout this document, since data and information were collected and analyzed in the pre-restructuring period, references and documents used the old names to maintain consistency of data before restructuring, providing clarity. However, the report has provided recommendations tailored to each ministry to align with the new ministry structure. Boosting Viet Nam’s Sustainable Marine Economy xi OVERVIEW The World Bank’s Public Expenditure and Investment Review (PEIR) for Viet Nam’s marine economy, the first-ever Blue PEIR developed for any country, assesses public expenditure and investment in eight priority marine economy sectors from 2016 to 2022. This review, conducted in collaboration with Viet Nam’s Ministry of Planning and Investment (MPI)1, highlights opportunities and challenges in attracting investment to the marine economy, and makes key recommendations to optimize public expenditure efficiency and institutional policies. Viet Nam possesses significant competitive advantages in marine economic development, supported by its diverse marine and coastal ecosystems, which provide essential services for economic growth. However, development of these sectors remains fragmented, with high risks of conflicts of interest and in usage of marine resources. Recognizing the need for sustainable development, in a landmark move the 12th Party Central Committee issued Resolution 36 in 2018, outlining a “Strategy for Sustainable Development of Viet Nam’s Marine Economy to 2030, with a Vision to 2045”. This resolution highlights the marine economy’s vital role in Viet Nam’s future and sets targets to boost its share of national economic growth by 2030. In 2020, a further key step was taken with the government’s issuance of Resolution 26, a master plan for implementing Resolution 36. This strategy identifies eight priority areas for development and to take lead in driving economic growth: tourism, maritime economy, oil and gas, aquaculture, coastal industrial development, renewable energy, marine infrastructure, and new emerging marine economic sectors. The PEIR was developed in response to Resolutions 26 and 36, which emphasize sustainable development and governance of Viet Nam’s marine economy. These resolutions highlight the need for informed, evidence-based policymaking to advance the marine economy, while ensuring environmental sustainability. Covering 2016–22, this PEIR is not intended as a progress review of the resolutions, given that Resolution 26 was adopted just two years ago. Instead, it serves as a forward- looking document to provide policymakers with the data, insights, and strategic guidance necessary to build a strong foundation for achieving the resolutions’ goals. By aligning with the priorities of Resolutions 26 and 36, the PEIR will support development of policies that address critical gaps, anticipate emerging trends, and promote the sustainable use of marine resources. It will ensure that future decisions are informed by robust evidence aligned with the resolutions’ vision for a resilient, inclusive, and sustainable marine economy. Through this approach, the PEIR will serve as an essential tool to help policymakers translate the resolutions’ aspirations into actionable strategies. 1 Based on Resolution 27/NQ-CP dated on February 7, 2025, and Conclusion 121-KL/TW in 2025 issued by The Central Executive Committee on the summary of Resolution 18-NQ/TW regarding several issues related to continuing the reform and reorganization of the political system, the Ministry of Planning and Investment (MPI) in March merged into Ministry of Finance (MOF). xii Boosting Viet Nam’s Sustainable Marine Economy KEY FINDINGS Institutional Gaps in Marine Economic Development The classification of marine economic sectors in Viet Nam is not aligned with international best practices. International frameworks typically distinguish between marine economic sectors and marine ecosystems. Viet Nam’s classification, as outlined in Resolutions 26 and 36, mainly focuses on traditional sectors like oil and gas, fisheries, and tourism, overlooking emerging industries and the critical role of marine ecosystems. Additionally, the lack of a clear, scientific basis for defining “pure marine economic sectors” complicates data collection and monitoring. Despite efforts to develop a robust marine economy, Viet Nam’s contribution to the global marine economy remains modest. The contribution of marine sectors’ value added rose from 5.04 to 5.83 percent of national gross value added (GVA), except for 2020 with a decline to 3.18 percent, and about 8 percent of total employment on average. Without significant changes, the current business- as-usual (BAU) scenario will see marine contributions-to-GVA reach about 9.65 percent by 2030 (see Table 2), which is still short of the 10 percent GDP target set by Resolution 26. Public Investment Challenges Public investment in marine economic development is primarily focused on multipurpose infrastructure projects, particularly coastal transport, that consume 80 percent of the investment pie. While infrastructure is crucial, this narrow focus has left newer sectors underfunded, such as renewable energy and aquaculture. Regions with high marine potential, like the Red River Delta and Central Coast, have seen increased public investment. However, this funding often fails to align with a region’s unique strengths and needs, resulting in inefficiencies. The lack of sector-specific advancements in offshore wind, fisheries or marine tourism, amongst others, highlights the need for a more diversified investment strategy that leverages local advantages. Balancing economic development with environmental conservation is a persistent challenge for provinces. Conflicts commonly arise as local governments attempt to promote marine growth while protecting fragile ecosystems. This impedes effective marine resource management, particularly as the pressure to drive economic output clashes with sustainability goals. This situation is further complicated by fiscal constraints, as local budgets depend heavily on central government allocations, limiting provinces’ ability to explore innovative or locally-tailored approaches to realize marine-driven economic development. This centralized funding structure restricts flexibility, leaving local authorities with little room to prioritize sustainable growth initiatives or address environmental degradation effectively. In response, this report offers several key recommendations: 1. Revising sector classifications: It is incumbent upon Viet Nam to adopt internationally recognized classification systems, such as the United Nations’ System of Environmental- Economic Accounting (SEEA), to accurately reflect the economic value of marine resources and ecosystems. This will also help track the development of emerging marine sectors. Boosting Viet Nam’s Sustainable Marine Economy xiii 2. Improving public investment allocation: Criteria for allocating public investment requires updating to prioritize marine economy sectors, especially those with high potential for growth and sustainability. Investment should focus on infrastructure that supports marine ecosystem conservation and biodiversity, rather than just physical infrastructure. 3. Strengthening institutional frameworks: Viet Nam needs a more integrated, forward- looking approach to managing marine resources. This includes accelerating development of detailed marine spatial plans and addressing regulatory overlaps that hinder investment. Establishing clear guidelines to oversee marine economic activities will help provinces implement strategies more effectively. 4. Enhancing monitoring and accountability: Monitoring tools should be optimized through integrating marine economic targets into national and local development plans. Additionally, introducing a dedicated budget code for marine economy-related expenditures would improve transparency and oversight in spending. 5. Mobilizing private sector investment: While public investment remains crucial, the private sector holds significant potential in sectors such as aquaculture, offshore wind power and tourism. Despite this potential, inconsistent regulations and legal frameworks have discouraged private investors. The government should work to remove these barriers and create more incentives for private sector engagement. Promoting Sustainable Marine Aquaculture and Tourism The report also examines opportunities and challenges within Viet Nam’s marine economy, particularly in marine aquaculture and tourism. Aquaculture, alongside coastal fishing, has been a driving force behind economic growth over the past decade, providing employment for more than two million people. These sectors represent vital components of Viet Nam’s blue economy, offering immense potential for future development. However, rapid expansion has also brought significant challenges, including depletion of marine resources and environmental damage. Issues such as insufficient action against illegal, unreported, and unregulated (IUU) fishing activities resulted in the European Union issuing Viet Nam a “yellow card” in 2017, highlighting the need for improved sustainability measures to ensure long-term economic and ecological viability. Offshore aquaculture offers a solution to these challenges by reducing pressure on nearshore ecosystems. For this transition to succeed, central ministries should create specific policies to regulate marine aquaculture and develop value chains that involve large enterprises and local communities. The government is also encouraged to simplify regulations that currently prevent large enterprises from accessing marine areas for aquaculture development. One of the main challenges for offshore aquaculture, however, is its high production costs— driven by regulatory burdens, steep capital investments, and operational risks—which discourage private sector investment. To make offshore aquaculture viable, governments should invest in research and development (R&D), simplify permitting, and establish supportive policies like designated zones. However, a more immediate and practical approach may be enhancing the sustainability, efficiency, and value addition of existing marine aquaculture rather than prioritizing offshore expansion in the near term. xiv Boosting Viet Nam’s Sustainable Marine Economy In tourism, unsustainable practices have led to environmental damage and low-quality tourism experiences. To address this, Viet Nam can promote community-based marine tourism, combining high-end resort tourism with local community initiatives. This model will allow tourists to engage with local culture and marine conservation efforts, while ensuring that economic benefits are more evenly distributed among the local population. CONCLUSION To realize the full potential of its marine economy, it is critical that Viet Nam adopts a more integrated, sustainable development approach. This will require updating institutional frameworks, improving public investment strategies, and creating a conducive environment for private sector engagement. By doing so, the country can boost its marine economic contribution to national growth, protect its marine ecosystems as well as create sustainable and climate-resilient livelihoods for its coastal communities. This PEIR was developed as a key tool to support Viet Nam in unlocking the full potential of its marine economy. It provides a comprehensive analysis of how public resources are allocated and spent across marine-related sectors, with insights into whether such investments align with the country’s sustainability and growth objectives. By evaluating the effectiveness of spending, the PEIR identifies gaps in public investment strategies, highlights inefficiencies, and proposes reforms to optimize the targeting and impact of government expenditures. To support the updating of institutional frameworks, this report provides actionable recommendations for strengthening governance structures and enhancing coordination across marine sectors. This will foster more integrated and efficient policy implementation. Additionally, the PEIR will play a vital role in creating a more conducive environment for private sector engagement, by identifying areas where public funding can effectively leverage private investment in sustainable marine development. Ultimately, the PEIR will help ensure that public resources are not only used more effectively, but also strategically directed to foster a sustainable blue economy that boosts national growth, safeguards marine ecosystems as well as promotes sustainable and climate-resilient livelihoods for coastal communities. Boosting Viet Nam’s Sustainable Marine Economy xv KEY RECOMMENDATIONS Short-Term Recommendations (0–2 years) These actions are critical and can be implemented immediately with existing resources and minimal structural changes. 1. Strengthen State and community engagement and co-management models • Establish clear legal frameworks to define roles and responsibilities in co- management efforts. • Provide immediate funding to community organizations for conservation and alternative livelihoods, such as ecotourism and sustainable aquaculture. • Deliver capacity-building programs for local communities, focusing on resource management, governance, and sustainable economic practices. 2. Integrate sustainability into public procurement • Mandate environmental and social impact criteria in all marine economy projects involving public procurement. • Use sustainability standards, such as carbon emission reductions, to incentivize green innovations in sectors like shipping and tourism. 3. Initiate data integration for marine economic planning • Develop a unified statistical framework for marine economic data, leveraging existing technologies like Geographic Information Systems (GIS) and remote sensing. • Launch pilot projects to monitor key indicators such as biodiversity, fish stocks, and economic contributions from marine industries. 4. Enhance Public-Private Partnerships (PPPs) • Clearly delineate roles in PPPs to improve accountability and transparency of marine economy projects. • Pilot new PPP models in key sectors, such as aquaculture and offshore wind, focused on reducing risks for private investors. 5. Reform budget allocation processes • Revise criteria for public investment allocation to prioritize high-impact marine sectors and underdeveloped coastal areas. • Provide targeted funding for essential infrastructure, such as ports and aquaculture facilities, to lower entry barriers for private enterprises. xvi Boosting Viet Nam’s Sustainable Marine Economy KEY RECOMMENDATIONS Medium-Term Recommendations (2–5 years) These recommended actions require moderate structural adjustments and additional stakeholder coordination, but are crucial for achieving sustained progress. 1. Expand blended finance mechanisms • Establish a national blended finance facility focused on offshore renewable energy, aquaculture, and large-scale conservation projects. • Facilitate legal reforms, including amendments to the State Budget Law, to enable hybrid financing structures. • Develop a budget index system for tracking marine-related expenditures and ensure transparency in financial flows. 2. Refine Marine Spatial Planning (MSP) • Implement a comprehensive MSP framework that integrates conservation, economic, and community objectives. • Designate zones for specific activities – including conservation, tourism, and industrial development – to reduce conflicts and maximize resource use. • Provide provinces with technical support to align local MSP with national priorities. 3. Promote research and innovation • Invest in research centers focused on sustainable marine technologies, such as renewable energy systems and aquaculture innovations. • Establish partnerships with international institutions to access advanced technologies and expertise. 4. Strengthen international collaboration • Engage with global initiatives like Climate Investor One (CI1) to co-develop renewable energy projects in underserved regions. • Seek bilateral and multilateral funding to support Viet Nam’s transition to a sustainable marine economy. 5. Improve governance and coordination • Operationalize the existing National Steering Committee for Marine Economic Development to streamline decision-making and resolve any inter-agency disputes. • Enhance the capacity of provincial authorities to effectively implement and monitor marine economic initiatives. Boosting Viet Nam’s Sustainable Marine Economy xvii KEY RECOMMENDATIONS Long-Term Recommendations (5–10 years) These initiatives are transformational and require substantial investments, international partnerships, and systemic changes. 1. Establish comprehensive marine economy data systems • Build a centralized marine economy database incorporating real-time data on environmental health, socio-economic impacts, and industrial performance. • Integrate ocean accounting systems into national economic planning, reflecting the value of marine natural capital. 2. Develop inter-regional infrastructure for marine sectors • Implement large-scale infrastructure projects – such as shared ports, marine research hubs, and monitoring systems – that benefit multiple provinces. • Enhance resilience of coastal infrastructure to mitigate the impacts of climate change, including sea level rises and storm surges. 3. Foster ecosystem-based management • Adopt ecosystem-based approaches to integrate conservation and development goals across all marine sectors. • Scale-up ecological fiscal transfers (EFT) to incentivize local governments in biodiversity protection and restoration efforts. 4. Scale-up renewable energy and mariculture • Expand offshore wind capacity through public-private collaborations and continued support for early-stage technologies. • Enhance offshore mariculture infrastructure with government-supported sustainable practices and technology to boost Viet Nam’s production capacity, while minimizing ecological impacts. 5. Promote global leadership in sustainable marine development • Position Viet Nam as a global model for sustainable marine economy development through active participation in international forums. • Showcase successful projects and frameworks, such as advanced MSP and blended finance, to attract global investors and partners. xviii Boosting Viet Nam’s Sustainable Marine Economy I. General Information I GENERAL INFORMATION General Information 1 Photo credit: © Vincent_Nguyen / Shutterstock. 1.1. BACKGROUND Viet Nam’s extensive coastline, abundant marine resources and rich biodiversity present a unique competitive advantage for marine economic development. With more than 3,260 kilometers of coastline and more than 3,000 islands, the country boasts a marine surface area more than triple the size of its mainland. Out of the country’s 63 provinces, 28 are coastal and home to 50 percent of Viet Nam’s population, underscoring the central role that the marine economy plays in the livelihoods of millions of citizens. The country’s marine and coastal ecosystems are a treasure trove of biodiversity, encompassing coastal forests, mangroves, and 20 different marine ecosystems. Coastal forests, covering 1.8 million hectares (ha), provide essential services such as coastal protection, carbon sequestration, and erosion control. Mangroves alone span 250,000 ha and shield seven million people from flooding, representing significant economic value.2 Moreover, marine biodiversity areas serve as habitats for more than 11,000 marine species, contributing to environmental health and economic prosperity.3 1.1.1. Key marine sectors driving economic growth Coastal regions of Viet Nam have benefited from rapid urbanization, economic diversification, and investments in the last two decades. Destinations for these impactful investments include aquaculture, energy, fisheries, industrial production, tourism and transportation. In a Ministry of Natural Resources and Environment (MONRE) report4, by 2022 the Gross Regional Domestic Product (GRDP) per capita in 28 coastal provinces and cities had reached VND97.2 million (US$4,176), and poverty rates in coastal provinces were among the lowest nationwide. Despite this progress, rapid development of these sectors has led to competing interests and acute challenges. Overfishing, pollution, and climate change-driven ocean acidification threaten long-term sustainability of ocean resources. Additionally, a joint report by World Bank and Global Facility for Disaster Risk Reduction and Recovery (GFDRR) in 2020 regarding coastal development’s risks and opportunities highlighted that around 11.8 million people in coastal provinces are vulnerable to flooding, and more than 35 percent of settlements are located on eroding coastlines. The World Bank’s Viet Nam: Plastic Pollution Diagnostic report (2022d) also indicated that Viet Nam is one of the top five contributors to marine plastic pollution globally, leaking 0.28–0.73 million metric tons of debris into the ocean annually5. Resource degradation, climate risks, and inadequate infrastructure planning further complicate efforts to balance growth with sustainability. 2 Ngoc Bich. (2023). “A Measure of the Value of Coastal Forests,” ThienNhien.Net, People and Nature, (October 4), https://www. thiennhien.net/2023/10/04/thuoc-do-cho-gia-tri-rung-ven-bien/. 3 Nong Lam University Ho Chi Minh City. “Seminar: Sharing and Updating Information on the Carbon Forest Market from Coastal Forest Ecosystems.” Nong Lam University Ho Chi Minh City, August 22, 2024. https://4t.hcmuaf.edu.vn/4t-42767-1/vn/toa-dam- chia-se-cap-nhat-thong-tin-ve-thi-truong-rung-cac-bon-tu-he-sinh-thai-rung-ven-bien.html. 4 Presented at a conference “Assessing the state management of resources and protection of the marine and island environment”, organized by the Viet Nam Administration of Seas and Islands in December, 2024. With leaders of the Departments of Natural Resources and Environment of 28 coastal provinces and cities in attendance, the initial results of implementing the Strategy for Sustainable Development of Viet Nam’s Marine Economy to 2030, with a vision to 2045 were presented. 5 World Bank (2022). “Viet Nam: Plastic Pollution Diagnostic.” 2 Boosting Viet Nam’s Sustainable Marine Economy 1.1.2. Strategic resolutions for marine economy development Recognizing these challenges, the Vietnamese Government has taken strategic steps to realize sustainable marine economic growth. Resolution 36, passed in 2018, underscores the importance of the marine economy to Viet Nam’s overall growth trajectory and sets ambitious goals to increase the sector’s contribution to GDP. This “Strategy for Sustainable Development of Viet Nam’s Marine Economy until 2030 with a Vision to 2045” emphasizes the sustainable development of key marine sectors, while addressing environmental challenges. Resolution 26, approved in 2020, translates this strategy into a detailed masterplan, focusing on eight priority areas: 1) tourism and marine services, 2) marine transportation, 3) oil, gas, and mineral resources, 4) aquaculture and capture fisheries, 5) coastal industrial development, 6) renewable energy, 7) new marine economic sectors and 8) development of coastal areas. The success of this strategy relies on long-term investments, cross-sectoral coordination, and engagement from key stakeholders, including line ministries, coastal provinces, and the private sector. The absence of a dedicated budget or unified mechanism for resource mobilization, however, remains a significant obstacle to overcome. 1.1.3. Public Expenditure and Investment Review for Viet Nam’s marine economy To address resource allocation challenges, the MPI6 partnered with the World Bank to conduct a first-ever PEIR of the marine economy for any country. This review evaluates public spending on marine sectors from national and provincial perspectives during 2016–22, identifies investment gaps, and offers policy recommendations to optimize marine economic development. The PEIR’s primary objectives were to: quantify public spending on marine-related sectors, assess investment prioritization for implementing Resolutions 36 and 26, identify institutional and policy challenges, analyze conflicts and synergies between marine economic activities and environmental protection as well as recommend strategies to improve investment effectiveness and realize long-term sustainability. 1.1.4. Key findings and recommendations The PEIR highlights several critical issues: challenges associated with investment gaps, institutional weaknesses, and environmental conflicts in Viet Nam that highlight the complexities of balancing economic development with sustainability goals as follows: 1. Investment gaps: Public investment in Viet Nam has primarily focused on developing infrastructure which, while necessary for economic growth, often overlooks the need for marine sector-specific investments – particularly in emerging sectors like renewable energy. While infrastructure development such as roads, bridges, and ports has dominated public spending, crucial advancements in industries that 6 Based on Resolution 27/NQ-CP dated on February 7, 2025, and Conclusion 121-KL/TW in 2025 issued by The Central Executive Committee on the summary of Resolution 18-NQ/TW regarding several issues related to continuing the reform and reorganization of the political system, the Ministry of Planning and Investment (MPI) in March merged into Ministry of Finance (MOF). General Information 3 could contribute to long-term economic sustainability of the blue economy are underfunded. • Renewable energy: Despite Viet Nam’s significant solar, wind, and hydro energy potential, public investment in renewable energy infrastructure has lagged. While private sector involvement is growing in contrast to absent robust public investment, bottlenecks in grid development, energy storage, and regulatory frameworks must be addressed to fully capitalize on the country’s renewable energy potential. These gaps also make it challenging to meet international climate commitments, such as those under the Paris Agreement. • Sectoral diversification: A lack of targeted investment also hinders diversification of Viet Nam’s economy. With a heavy reliance on traditional sectors like agriculture and manufacturing, emerging areas that could drive future growth are often neglected, such as green technologies and sustainable fisheries. Closing these investment gaps will require not just financial resources, but also strategic planning that prioritizes sectors aligned with long- term development and sustainability goals. 2. Institutional weaknesses: Viet Nam’s marine economic classification system – which is central to planning, regulating, and promoting sustainable marine activities – is not aligned with international standards. This misalignment creates challenges for effective policy implementation, international cooperation, and monitoring progress within the marine economy. • Inconsistent data: Without a standardized and unified classification system, data collection on marine resources, detailed economic activities that are ocean related, and environmental impacts are inconsistent and often unreliable. This hampers the ability of policymakers to make informed decisions about the sustainable use of marine resources. Furthermore, the lack of alignment with international systems prevents effective benchmarking against global best practices, reducing Viet Nam’s competitiveness in the global marine economy. • Marine Spatial Planning: Institutional weaknesses also affect MSP, an essential tool for balancing competing interests such as conservation, fishing, and tourism. Non-alignment with international standards impedes Viet Nam’s ability to implement MSP effectively, leading to overlapping activities that can degrade marine ecosystems. Strengthening institutional frameworks and adopting internationally recognized classifications would help improve transparency, enhance management, and boost Viet Nam’s ability to tap into sustainable marine economic opportunities. 3. Environmental conflicts: The rapid pace of economic development in Viet Nam often runs counter to environmental conservation efforts, particularly in areas where infrastructure development has prioritized short- term economic gains over long-term sustainability goals. • Infrastructure versus sustainability: Large-scale infrastructure projects – such as the construction of highways, industrial zones, and urban expansion – often takes precedence over environmental concerns. For instance, in coastal areas, the building of ports and industrial complexes can damage fragile ecosystems such as mangroves, coral reefs and wetlands, which play vital roles in carbon sequestration and biodiversity preservation. 4 Boosting Viet Nam’s Sustainable Marine Economy • Policy gaps: While Viet Nam has made efforts to integrate sustainability into its development agenda, a lack of environmental regulations enforcement is apparent. Development projects commonly proceed without comprehensive environmental impact assessments (EIAs), or disregard mitigation measures proposed in such assessments. This weak enforcement exacerbates environmental degradation, leading to conflicts between economic growth and conservation. • Balancing development and conservation: Tackling sources of potential conflict requires more robust environmental governance and better coordination between development agencies and environmental authorities. By strengthening implementation of sustainability frameworks and enforcing environmental protection, Viet Nam can achieve more balanced growth aligned with its commitments to international environmental agreements. In summary, addressing these challenges requires a holistic approach that includes increased public investment in emerging sectors like renewable energy, alignment of institutional frameworks with international standards, and a more integrated approach to balancing economic development with environmental conservation. To enhance the sustainability and growth of Viet Nam’s marine economy, the PEIR recommends: 1. Revised sector classifications Align sector classifications with international standards such as the UN’s System of Environmental Economic Accounting. This will enable more accurate measurements, monitoring, and management of marine resources, ensuring sustainable use and integration into national accounting systems. 2. Enhanced public investment allocation Redirect public investment toward projects that safeguard ecosystems while driving sustainable growth. Priority sectors should include renewable energy, aquaculture, and coastal resilience initiatives, which promise long-term environmental and economic benefits. 3. Strengthened institutional frameworks Establish robust institutional mechanisms to improve coordination across ministries and provinces. Key actions include developing integrated MPS, streamlining governance structures, and minimizing regulatory overlaps to create more cohesive and effective management systems. 4. Increased private sector engagement Mobilize private sector participation in critical areas such as aquaculture, renewable energy and tourism. This can be achieved by addressing regulatory barriers, simplifying approval processes, and introducing targeted incentives to attract investment in sustainable and innovative solutions. While Viet Nam’s marine economy holds enormous potential, realizing it requires a balanced approach that considers economic growth and environmental sustainability. By strengthening public investment strategies, adopting more comprehensive institutional frameworks and encouraging private sector participation, Viet Nam can position its marine economy as a cornerstone of national development, benefiting current and future generations. General Information 5 1.2. RESEARCH METHODOLOGY 1.2.1. Desk review The report draws on a comprehensive synthesis of domestic and international studies, legal frameworks, and sector-specific research, providing a robust foundation for its analysis of Viet Nam’s marine economy. Key document sources are categorized as follows: 1. International studies: • OECD and World Bank reports: These include the OECD’s “Report to 2030” (2016) and the World Bank’s “Guidelines for Public Expenditure Review of Marine Economy” (2021). These global references establish an analytical framework, aligning the report with international best practices. • Marine protection and conservation studies: Examples include the World Bank’s “Banking on Protected Areas” (2021) and the Joint Nature Conservation Committee’s (JNCC) “Marine Protected Area Fisheries Management Toolkits” (2020). These documents provide lessons on sustainable marine resource management and introduce practical tools for the protection of marine ecosystems. 2. Vietnamese legal documents: • These encompass laws, decrees, resolutions, and various directives issued by the government and Party, which define the legal framework guiding marine economic development in Viet Nam. These documents are critical to understand the policy landscape within which marine sectors like energy, fisheries and tourism are evolving. 3. Sectoral studies in Viet Nam: • State agencies and research institutions: Studies and schemes from governmental bodies, research institutes, and universities that focus on marine economic activities were reviewed. The detailed exploration of mechanisms and policies affecting the fisheries and aquaculture and tourism sectors is particularly emphasized, providing insights into current development practices and challenges in these key areas. • Non-governmental organizations: Their contributions were also considered, especially in relation to sustainable development and conservation efforts within the marine economy. By integrating these diverse sources, this report ensures a thorough understanding of global best practices and Viet Nam’s unique challenges and opportunities in marine economic development. 1.2.2. Analysis of secondary data on State budget expenditure and private investment for the marine economy in coastal provinces The PEIR project team undertook a detailed process to support collection of data and information on State budget expenditure and investment in the marine economy, focused on a period spanning 2016–22. The key steps were: 6 Boosting Viet Nam’s Sustainable Marine Economy Step 1: Develop guidance on classification of investment and recurrent expenditures • Investment expenditure: Based on classification of eight marine economic sectors from Resolutions 36 and 26, a classification guidance document was developed. It outlined the classification process to ensure consistency in project coding and provided data collection forms for public expenditure and investment in marine sectors. Due to provincial budgets being the primary source for large-scale projects, data collection focused on investment projects funded by provincial budgets. • Recurrent expenditure: Classifying recurrent expenditures was more complex as they are categorized according to broad fields (environment, science), making it difficult to isolate marine-related expenses. Therefore, data was limited to economic aspects directly tied to fisheries and aquaculture and tourism in 2022. Step 2: Pilot the guidance document • A pilot of the classification guidance document was conducted in Quang Ninh province, involving field surveys and discussions with provincial departments (DARD, DOF, DOT and DPI) to ensure clarity and feasibility. Step 3: Training on use of the toolkit • A hybrid workshop was held in Hanoi (March 28, 2024) to train all provincial officials on using the guidance document for expenditure classification. The workshop featured hands-on guidance and agreement on the implementation roadmap. Step 4: Information collection • Following the workshop, the MPI issued an official request for coastal provinces to collect expenditure and investment information for 2016–22. By May 2024, all provinces had submitted the required data. Step 5: Review and process information • The collected data was reviewed by the PEIR team, ensuring logical classification. All marine- related projects were reclassified based on agreed-upon criteria: » Excluded: Projects unrelated to economic activity (e.g., administrative buildings, public services). » Reclassified: For example, coastal road projects were shifted from regional development infrastructure to marine economic infrastructure. • After reclassification, the final dataset included 1,304 investment projects across 28 coastal provinces. Step 6: Data analysis and report writing • The PEIR team analyzed data and drafted this report, focused on investment patterns, sectoral analysis, and policy recommendations. General Information 7 Additional data collection tools included: • Qualitative information: Feedback was collected from provincial departments (DARD, DOF, DOT and DPI) using questionnaires to assess development issues and policy challenges in aquaculture and tourism. • Field surveys: Six provinces were selected for field surveys (Binh Dinh, Ca Mau, Danang, Kien Giang, Quang Ninh and Thai Binh), as a cross section of regions and development levels. In addition to governmental discussions, case studies of private sector participation in the blue economy were conducted. • Central ministry meetings: The PEIR project team also met with key ministries (MARD, MONRE) to further explore marine economy development issues. 1.3. LIMITATIONS OF THE STUDY This study encountered limitations in collecting comprehensive data and analyzing marine economy expenditures across Viet Nam. Despite these challenges, this PEIR provides a solid foundation for understanding public and private investment in the sector, with recommendations to improve data quality and policy implementation. Data collection challenges • The classification of marine economic sectors is a relatively new approach in Viet Nam, with official statistics yet to align with this framework. As a result, categorizations heavily depended on interpretations by provincial authorities, potentially leading to data inconsistencies and errors. Incomplete private investment data • Data on private sector investment is fragmented due to irregular reporting by local investors to the authorities. This lack of consistency hampers the ability to accurately analyze trends in private capital flows and assess their impacts on the marine economy. Limited recurrent expenditure coverage • The scope of recurrent expenditure data collection was restricted to specific categories, primarily fisheries and aquaculture and tourism. This narrow focus excluded critical areas such as research and development activities classified under science and technology, limiting a comprehensive view of marine-related expenditures. Exclusion of indirect expenditures • The study did not account for indirect expenditures – such as financial incentives, taxes, and subsidies – which play a significant role in shaping marine economic activities. This omission due to limited data access, time constraints and in adherence to the objectives outlined in the TOR may result in an incomplete understanding of the financial landscape affecting the sector. 8 Boosting Viet Nam’s Sustainable Marine Economy II. Overview of Marine Economy in Viet Nam II OVERVIEW OF MARINE ECONOMY IN VIET NAM Overview of Marine Economy in Viet Nam 9 Photo credit: © alexkoral / Shutterstock. 2.1. POTENTIAL AND STATUS OF VIET NAM’S MARINE ECONOMY 2.1.1. Methods to estimate the potential and status of marine economy Based on the OECD ocean-based industry classification, data for the marine sectors in Viet Nam comprise the following seven economic sectors (with ISIC7 codes) and four ecosystems that support these sectors: Table 1. Data availability of Viet Nam’s marine economic sectors and ecosystem services Ocean Economy Sector Viet Nam’s core marine Core Categories Viet Nam economic industries economic sectors based (based on the United State’s Type 1 system (VSIC 2018) - 2-digit on Resolution 36 Account, known as the Economics National Ocean Watch (ENOW) Fishing and aquaculture Living Resources Fishing and aquaculture (03) Exploration of oil, gas and Extraction of crude petroleum and other marine mineral Minerals natural gas (06) resources Renewable energy and other Energy Offshore Wind (no code) new marine economic sectors Land transport and transport via railways and pipelines (49) (inland transport) Coastal industry Transport and Trade Water transport (50) Warehousing and support activities for transportation (52) Passenger transport: Land transport, transport via railways and pipelines, Water transport, Air transport, Warehousing and support activities for transportation, Postal and courier activities (49, 50, 51, 52) Tourism and marine services Tourism and Recreation Accommodation, food and beverage service activities (55, 56) Administrative and supporting activities: Travel agency, tour operator and related activities (79) Art, entertainment and recreational 7 ISIC stands for International Standard Industrial Classification and is used to classify statistical units, such as establishments or enterprises, according to the economic activity in which they mainly engage. The codes given are those promulgated by Decision No.27 (July 6, 2018) of the prime minister. 10 Boosting Viet Nam’s Sustainable Marine Economy Ocean Economy Sector Viet Nam’s core marine Core Categories Viet Nam economic industries economic sectors based (based on the United State’s Type 1 system (VSIC 2018) - 2-digit on Resolution 36 Account, known as the Economics National Ocean Watch (ENOW) activities: Creative, art and entertainment activities, Libraries, archives, museums and other cultural activities, Lottery activities, gambling and betting activities, Sports activities and amusement and recreation activities (90-93) Manufacture of other transport equipment (30) Maritime economy Ship and Boat Building Repair, maintenance and installation of machinery and equipment (33) Relevant supporting Manufacture of coke and refined industries (Seafood processed petroleum products (19) products, Oil and gas Manufacture of food products (10) manufacturing) Ecosystem Services Coastal ecosystems, Mangroves Coral reef Open ocean systems excluding mangroves To construct estimates of the marine economy, data from national accounts and other national statistical sources was extracted. To measure the ocean economy’s potential, there are three approaches: production, income and expenditure. This report adopted a mix of the first two approaches (production and income), with the first prioritized. As such, the focus was to quantify the value added of identified ocean economic sectors with “total compensation for employees” data as a proxy for sectors where value added was not available. The period of estimation was 2010 to 2020. The main sources for extracting data were the ADB Input-Output table (updated June 2023)8, World Bank reports, National Statistical Yearbooks from 2010 to 20209, and other public articles found by desk research (see Table 2). The details regarding methodology choices, and data sources of covered marine economic sectors are presented in Table A.4 in the Annex 2. 8 Asian Development Bank (ADB), (2023), “Viet Nam: Input-Output Economic Indicators” 9 An annual General Statistics Office publication focused on basic data reflecting general socio-economic dynamics and situations of localities, regions and nationwide. Overview of Marine Economy in Viet Nam 11 This report’s data compilation effort showcases only preliminary groundwork. A systematically collected dataset that captures both market and non-market transactions, based on the OECD framework, is crucial for a comprehensive ocean satellite account and this report is a first step in that direction. Viet Nam has opportunities to enhance its data collection according to the UN System of Environmental Economic Accounts (SEEA) frameworks, capturing market and non-market transactions to develop SEEA-aligned accounts. These opportunities require coordinated efforts among government and non-governmental stakeholders, capacity building in accounting, modeling, and valuation of ecosystem services skills. However, the most crucial aspect is investment in data infrastructure, beginning with a pilot in a coastal province. Beyond that, in the short and medium terms, standardized technical guidance and cross-border cooperation are essential to support a more practical approach to ocean database management. Estimates of marine sector contributions are separated into economic sectors and those supported by marine ecosystems. 2.1.2. Contributions of marine economic sectors 2.1.2.1. Current contributions of marine economic sectors These measures reflect the GVA and employment across eight key economic sectors from 2010 to 2020, as shown in Tables 2 and 3 and Figure 1. GVA represents the value of goods and services produced in these sectors, highlighting their role in driving economic growth and productivity. By tracking GVA, the measures illustrate how each sector has contributed to overall economic performance, shedding light on trends, challenges, and opportunities within the broader economy. In addition to GVA, the measures also examine employment trends within these sectors, reflecting their capacity to create jobs and support livelihoods over the decade to 2020. This dual focus on GVA and employment offers a comprehensive view of the sectors’ economic significance, providing policymakers with valuable insights to inform decision-making and strategic planning. Together, these metrics reveal how these sectors have evolved over time and their potential to contribute to future economic resilience and development. Key observations include: 1. The contribution of value added from the ocean economic sectors to national GVA has risen slightly over the last decade, from 5.04 to 5.83 percent, except for 2020 witnessing a decline to 3.18 percent due to the fall in travel and tourism that year. Its contribution in terms of employment, however, is much higher at around 8 percent of the total despite a small decline of 0.4 percent between 2010–20. 2. Except for 2020 when COVID-19 negatively affected tourism, between 2010–19 the largest contribution came from marine tourism. In 2019, it accounted for nearly half of the total, followed by extraction and manufacture of crude oil/petroleum and natural gas, then water services (marine transportation) (see Figure 1). 3. Offshore wind has been the fastest growing service since 2014, with significant growth also in extraction of oil and gas. Fishing and aquaculture, however, has seen a decline from a peak in 2017 (see Table 2). 12 Boosting Viet Nam’s Sustainable Marine Economy Figure 1. Shares of marine economic sector 4. In terms of employment, travel and tourism contributions to GVA in 2019 dominated with nearly 98 percent of jobs 1% in marine sectors (four million jobs in 2018). By 2020, marine transportation’s 11% established enterprises employed 41,000 people, followed by aquaculture and fishing 7% (32,000) and oil and gas (9,000). Data for 45% offshore wind employment was not available (see Table 3). 18% Viet Nam’s marine sector leaves an moderate- sized footprint on its economy, but a relatively 12% 3% large one on employment compared to other 3% countries. This is evidenced by a comparison of the estimated values in Tables 2 and 3 with Fishing and aquaculture those from the OECD study (Table 4), which Crude petroleum and natural gas illustrates a broad range of contributions across Seafood processing and preserved nations.10 With Ireland at a low of 0.7 percent and Manufacture of coke and refined Iceland at a high of 26 percent, Viet Nam (4–7 petroleum products percent between 2010 and 2019, as Table 2) aligns Manufacture of ships & boats with Japan, Republic of Korea and Singapore. Marine transportation However, in terms of employment, Viet Nam’s Offshore wind estimate of up to five million jobs, however, Marine tourism surpasses that of all countries except China and Source: World Bank staff estimates based on GSO data. the United States. In percentage terms, Viet Nam’s marine sector employment on average represents around 8-9 percent (see Table 3), higher than all nations except China, Iceland, and the United States. The marine sector’s economic contribution is also reflected in data reported by various publications. Sources such as the Hanoi Times (2021), MONRE (2020), and Viet Nam News Agency (VNA, 2018) suggest that the ocean-based economy annually contributes around 6–30 percent of GDP on average. Specifically, Institute of Strategy, Policy on Natural Resources and Environment (ISPONRE) & The University of New South Wales (UNSW)’s Center for Sustainable Development Reform (2023) estimated that ocean economic sectors directly contributed 5.7 percent of GDP, while along with indirect contributions, the percentage reached 7.2 percent of GDP in 202011. These figures warrant further verification, as it is likely that the higher estimates include the value of all ocean-based exports. In contrast, the OECD methodology does not attribute such values entirely to the marine sector. Thus, the figures calculated in this report could be considered a more accurate representation of the sector’s economic impact. 10 OECD (2016). “The Ocean Economy in 2030.” 11 ISPONRE & UNSW Center for Sustainable Development Reform. (2023). “Building a set of indicators for classifying the ocean economy sector and experimental calculation of the contribution of the ocean economy to Vietnam’s economic growth.”[internally distributed] Overview of Marine Economy in Viet Nam 13 Table 2. Total value added at 2010 constant prices of activities related to Viet Nam’s marine economy (2010–20, billion dong) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2030 (F) Fishing and aquaculture 1,041 1,315 1,448 1,711 1,941 2,386 2,323 2,577 1,944 1,724 1,658 1,880 Oil and gas 23,500 12,102 20,409 48,829 12,309 33,016 20,477 24,808 26,845 28,837 24,070 69,024 Manufacture of food products (seafood 9,354 9,928 10,466 11,292 12,189 14,602 16,263 18,428 18,393 18,497 18,539 111,231 processing and preserved) Manufacture of coke and refined petroleum 15,988 17,676 18,893 19,848 21,724 23,234 25,145 28,285 32,923 46,224 47,885 140,470 products Manufacture of other transport equipment (with share of maritime 4,573 4,714 6,241 5,883 6,118 7,310 8,736 9,012 9,119 9,280 9,114 35,634 transportation industry) - Manufacture of ships and boats Water transportation 17,362 20,397 17,124 20,572 23,566 26,103 27,744 29,281 29,759 31,080 31,829 46,376 Offshore Wind 0 0 0 0 17 76 101 165 1,699 7,166 10,054 178,800 Travel and Tourism 23,253 25,882 29,795 51,811 53,648 60,321 70,591 89,241 105,263 116,475 1,071 3,180 Total Value Added (VA) 95,071 92,015 104,376 159,946 131,512 167,047 171,381 201,798 225,945 259,283 144,218 586,596 Gross Domestic Product 2,157,828 2,292,483 2,412,778 2,543,596 2,695,796 3,696,826 3,054,470 3,262,548 4,532,739 4,866,316 5,005,756 6,707,749 (GDP) Marine as % of GDP 4.41% 4.01% 4.33% 6.29% 4.88% 4.52% 5.61% 6.19% 4.98% 5.328% 2.881% 8.745% Product taxes less 270,746 276,355 271,938 289,409 312,369 329,673 350,706 372,941 395,616 421,188 469,203 subsidies on products Gross Value Added 1,887,082 2,016,128 2,140,840 2,254,187 2,383,427 3,367,153 2,703,764 2,889,607 4,137,123 4,445,128 4,536,553 6,079,014 (GVA) Marine as % of GVA 5.04% 4.56% 4.88% 7.10% 5.52% 4.96% 6.34% 6.98% 5.46% 5.833% 3.179% 9.650% Source: World Bank staff estimates based on GSO data. 14 Boosting Viet Nam’s Sustainable Marine Economy Table 3. Employment in ocean economic industries in Viet Nam between 2010 and 2020 (formal employees in registered enterprises) Employment in Marine-Related Industries in Vietnam. People (formal in registered enterprises) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Fishing and Aquaculture 36,473 38,544 40,482 40,770 44,970 48,691 47,006 53,207 42,201 39,884 32,461 Oil and Gas 7,643 8,200 9,770 10,779 10,857 9,048 8,645 7,786 8,253 8,790 9,075 Offshore Wind - - - - - - - - - - - Water Transportation 36,473 46,163 46,070 42,954 43,748 46,855 47,627 44,696 43,440 43,406 41,394 Travel and Tourism 4,018,900 4,120,300 4,098,900 3,966,100 3,778,400 4,002,800 4,060,900 4,116,800 Manufacture of food products (Seafood 496,446 524,945 509,103 518,520 527,593 542,339 553,879 547,335 539,867 538,557 536,390 Processing and Preserved) Manufacture of coke and refined petroleum 5,410 4,838 5,054 5,136 5,704 5,996 5,590 7,016 7,036 6,685 7,609 products Manufacture of other transport equipment (with the share of 93,768 98,669 97,199 96,445 98,677 105,153 124,178 121,784 125,647 127,073 110,837 maritime transportation industry) - Manufacture of Ship & Boat Total 676,213 4,740,259 4,827,978 4,813,504 4,697,649 4,536,482 4,789,725 4,842,724 4,883,244 764,395 737,766 Total Employment 50,392,900 51,398,400 52,348,000 53,245,600 53,748,000 53,984,200 54,445,300 54,819,600 55,388,000 55,767,400 54,842,900 Marine as % of Total 9.2% 9.2% 9.0% 8.7% 8.4% 8.8% 8.8% 8.8% Source: World Bank staff estimates based on GSO data. Overview of Marine Economy in Viet Nam 15 Table 4. Selected estimates of values of ocean-based industries Employment as % Country % Of GDP or GVA Employment of Total Australia 3.6 253,130 1.7 Belgium 10 Canada 1.2 171,365 0.8 China 9.6 340,240,000 40.2 Dubai (UAE) 4.6 France 2.7 460,396 1.4 Hong Kong (China) 25 Iceland 26 30,000 11.8 Ireland 0.7 17,425 0.6 Japan 1.6 98,124 0.1 Republic of Korea 4.9 919,314 2.9 Netherlands 2.9 21,000 0.2 Portugal 2.5 Singapore 7.0 U.K. 4.2 890,416 2.3 U.S.A. 4.4 28,000,000 14.7 World 3.2 Source: OECD (2016) - Data ranges from the 2000s to 2010s. 2.1.2.2. Projections of marine sector contributions to 2030 Based on targets outlined in Resolution 3612, estimates of the marine sector’s contributions to 2030 were primarily derived by analyzing expected increases in physical outputs across various sectors from 2020–30, assuming unit values (prices) remain unchanged. While this approach provides a general approximation, projecting price changes would require significantly more analysis. The following data were utilized for these projections: (i) In aquaculture and fisheries, output in 2020 was 3 million tons13, with a target of 9.8 million tons by 2030.14 This forecast reflects a 48 percent increase in aquaculture, offset by a 28 percent decline in capture fisheries. Overall, this results in a net increase of 9.8 percent, which also translates to a similar rise in value if prices remained stable. 12 Resolution 36-NQ/TW by the Central Party Committee on Viet Nam’s strategy for sustainable development of Vietnam’s sea-based economy by 2030, vision to 2045. (October 22, 2018). 13 Vietnam Association of Seafood Exporters and Producers (2024). “Fisheries Profile.” https://seafood.vasep.com.vn/why-buy-seafood/ fishery-profile 14 Decision No.1664/QD-TTg approving the project to develop marine aquaculture until 2030, with a vision to 2045. Resolution 48/ NQ-CP of the government, approving the strategy for sustainable exploitation and use of resources and protection of the marine and island environment until 2030, with a vision to 2050. 16 Boosting Viet Nam’s Sustainable Marine Economy (ii) For oil and gas production, output in 2020 was 68 million tons of oil equivalent (TOE), with a 2030 target ranging from 175–195 million TOE.15 Using the higher figure, this represents an increase of 187 percent, which corresponds to the expected rise in value if prices remained unchanged. (iii) Offshore wind capacity stood at 200MW in 2020, with a target of 15,000MW by 2035.16 Assuming a constant growth rate leading up to this target, the estimated capacity for 2030 will be 3,557MW. If production output is directly proportional to capacity, and electricity prices remain constant, the output value will climb by 17.8-fold. (iv) In water transportation, cargo transported in 2020 totaled 0.88 million tons, with a target of 1.14–1.42 million tons by 2030.17 Using the higher figure implies a rise of 62 percent, which would also reflect an increase in value if prices remained at 2020 levels. (v) For tourism, projections are based on the Resolution 36 target of 11.5 percent annual growth in value from 2020 onwards.18 Based on these projections, the marine sector’s contribution to the national economy by 2030 is forecast to climb by three-fold compared to 2020 in real terms. With that rate of projected GVA by 2030, the marine sector’s share of national GVA is expected to rise from 3.2 percent in 2020 to 9.6 percent in 2030 (Table 2). Although this represents a significant increase, it still falls a little short of Resolution 36’s ambitious target of 10 percent of GDP for the marine sector. This discrepancy may stem from differences in marine economy definitions between the Resolution and parameters used for this PEIR. Employment data were accumulated from various sources, mainly from National Statistical Yearbook records on the numbers of employees in enterprises categorized by types of economic activity. Other open sources also showed employment data of ocean economic sectors, which may reflect a more accurate estimate of employment, but inconsistences across 2010–2020 pose a challenge to identify clear trends. Therefore, employment data was mostly tracked from statistical yearbooks as the primary source. To accurately reflect employment contributions to the Vietnamese economy, a more comprehensive approach should be conducted that takes into account formal and informal, self-employed, part-time, and full-time employment. Furthermore, employment projections are challenging without further analysis, as marine sector data will likely fluctuate due to multiple factors, including changes in sector productivity. Currently, a lack of information on offshore wind sector employment is also apparent. 15 Resolution 48/NQ-CP, of the government, approving the strategy for sustainable exploitation and use of resources and protection of the marine and island environment until 2030, with a vision to 2050. 16 National Power Development Plan for 2021–30 (NPDP8) at Decision No. 500/QD-TTg of the Prime Minister on approving the national electricity development plan of 2021–30, with a vision to 2050. 17 Resolution 48/NQ-CP, of the government, approving the strategy for sustainable exploitation and use of resources and protection of the marine and island environment until 2030, with a vision to 2050. 18 Ibid. Overview of Marine Economy in Viet Nam 17 2.1.3 Value of marine ecosystems Estimating the marine economy’s ecosystem services is crucial for understanding the true value of marine resources beyond their direct economic contributions. It highlights the essential benefits that healthy marine ecosystems provide, such as carbon sequestration, coastal protection, biodiversity support, and sustainable livelihoods. This understanding enables policymakers to balance economic development with environmental conservation, ensuring that marine resources are utilized sustainably, while preserving their long-term capacity to support both the economy and well-being of future generations. Ecosystem services can be categorized into four major types – provisioning, regulating, habitat and cultural – with each valued using various approaches, some more suitable for transaction- based valuations than others. For provisioning services, the ecosystem value is determined by the resource rent, calculated from the market value and production costs of final goods supported by these services. There are also transaction-based methods for valuing regulating services, such as flood control and mitigation. One approach is to assess the value of wetlands or open spaces based on avoided costs of property damage or losses in economic activity. Regarding habitat services, another method involves calculating costs associated with replacing the ecosystem service with engineered alternatives. The value of cultural ecosystem services is estimated using revealed preference methods like the travel cost method, which quantifies the value of a beach by analyzing user expenditures for travel to that location. Additionally, stated preference methods are frequently employed, which involve surveying resource users or stakeholders to elicit their value estimates. In Viet Nam, estimates of the value of marine ecosystem services were compiled using local studies referenced in the Ecosystem Services Valuation Database (ESVD) developed by Brander et al. This extensive database encompasses 9,500 valuations worldwide, including 92 observations specific to Viet Nam. To ensure data accuracy, this report utilized only 60 of the 92 data points, specifically those that have undergone peer review. The database includes information about the study areas, types of ecosystem services, and the international dollar value per hectare for various ecosystems or biomes. The value estimates were derived from seven research projects conducted in specific locations across Viet Nam. Most studies reported the total area of the locations, although a few focused-on ecosystems or biomes. Studies conducted in different currencies were converted to US dollars using purchasing power parity exchange rates. This encompassed 16 studies that covered coastal systems excluding mangroves, with mangroves, and coral reefs as separate categories. To standardize the data, values from various years were translated into 2010 prices by first converting them to Vietnamese dong at the purchasing power parity exchange rate for the respective year and then applying the GDP deflator to express them in 2010 prices. No local studies were available for open ocean marine ecosystems, so estimates from international studies were adjusted to reflect differences in willingness to pay between Viet Nam and countries where the studies were conducted, as detailed in Anil Markandya and Hanh Duong (2023). The average values per hectare for all three ecosystems are presented in Table 5. These values are applicable to recent years, as the studies span multiple years. They were applied to areas of these biomes as recorded in 2021, hectares are provided in Table 5, to calculate total values. Of the total, a remarkable 94 percent of the value is derived from mangroves approximately, while coral reefs accounts 18 Boosting Viet Nam’s Sustainable Marine Economy for nearly 2 percent, coastal systems for around 1 percent, and open ocean systems for nearly 3 percent. Collectively, these services contribute approximately 0.60 percent to GVA of the entire economy on average from 2010 to 2020. Table 5. Values of marine coastal biome, mangrove, and coral ecosystems adjusted to 2010 prices Average Average Total Value Value in Value in in VND As % of Biome/Ecosystem Area Ha. International VND 000 Bn. 2010 GVA USD/Ha./Yr. 2010 Prices Prices Coastal System Exc. Mangroves 471,122 21.5 399.5 188.2 0.01% Mangroves 302,359 2,432.2 45,270.8 13,688.0 0.56% Coral Reefs 11,475 1,322.5 24,615.8 282.5 0.01% Open Ocean Marine Ecosystem 169,617 1,950.3 36,300.0 416.5 0.02% Total 784,956 14,575.2 0.06% Source: World Bank estimates are based on studies using ESVD data collected between 2000 and 2021. Marine ecosystems in Viet Nam are being exploited and managed unsustainably. This trend is underlined in the World Bank’s Country Environmental Analysis by the staggering 72 percent loss of its protective mangrove forests during 1950 to 1990, shrinking from 250,000 ha to just 71,000 ha (World Bank, 2022a). This dramatic decline is largely attributed to toxic chemicals in earlier years and recent shrimp farming practices. The past two decades have seen, however, a slowdown in this loss thanks to replanting efforts. But, net losses still totaled 13,500 ha between 1999 and 2015. The World Bank’s analysis also reported that the annual economic losses from degraded mangroves in the Mekong Delta region from 1997 to 2017 reached US$20.3 million, equivalent to 0.01 percent of GDP, with the most significant losses in services related to soil and coastal protection, aquaculture, and carbon sequestration. According to the World Bank (2022a), this unsustainable management extends to marine fisheries. Although capture fisheries have increased over the past two decades, this growth has been marred by overexploitation, with key stocks—such as tuna, anchovy, and seabream—already fully exploited or overexploited.19 Nguyen et al. (2018) estimated that fishing must be reduced by 35 to 39 per cent to reach maximum sustainable and economic yields. Currently, there are no indications that Viet Nam is poised to adopt such measures. Table 6. Loss of value of mangrove service by type of service in Mekong Delta per year (US$/year based on 1997–2017 values) Service Mid-value Lower bound Upper bound Timber 205,008 156,448 250,401 Firewood 1,780,540 1,410,732 2,213,861 19 World Bank. (2022a). “Accelerating Clean, Green, and Climate-Resilient Growth in Viet Nam: A Country Environmental Analysis.” Washington DC: World Bank. https://openknowledge.worldbank.org/handle/10986/37704 Overview of Marine Economy in Viet Nam 19 Service Mid-value Lower bound Upper bound Inshore fish catch 757,966 597,735 939,143 Aquaculture 3,150,566 2,478,304 3,890,204 Soil & coastal protection 11,177,214 8,699,960 13,787,374 Carbon sequestration 2,962,619 2,333,871 3,664,678 Tourism 330,391 255,800 397,396 Total value 20,364,302 15,932,849 25,143,056 As % of GDP 0.009 0.007 0.011 Source: EEPSEA, Direct Communication. Cited in World Bank (2022a). In conclusion, the analysis indicates that, leveraging its location advantages and rich marine ecosystem, Viet Nam’s marine sector has experienced impressive annual growth of nearly 9 percent over the past decade—exceeding the overall economic growth rate. However, the scale of the marine economy remains relatively modest. This is largely due to a focus on exploitation coupled with unsustainable resource management practices, which heightens the risk of marine resource depletion and ecosystem degradation. Additionally, the marine economy largely relies on traditional sectors, resulting in lower added value and limiting opportunities for emerging, more sustainable and profitable sectors. In response, Viet Nam’s marine economic strategy must prioritize sustainable and equitable growth. Development must not only safeguard the natural ecosystem, but also ensure that all members of society, particularly the most vulnerable, benefit from economic advancements. In essence, the preservation of marine ecosystems and the equitable integration of economic benefits from marine development—while minimizing conflicts of interest among marine sectors—must be paramount in Viet Nam’s proposed marine economic development strategy. Prioritizing these goals will foster a more resilient and prosperous marine economy that benefits both people and the environment. 2.2. ENVIRONMENTAL COSTS OF COASTAL INDUSTRIALIZATION HINDER THE PATH TO SUSTAINABLY BALANCING VIET NAM’S MARINE ECONOMY The over-emphasis on coastal industrial infrastructure projects has caused severe environmental harm, contributing to complex efforts to balance economic development with sustainability goals. Expansion of ports, coastal industry with factories, and energy projects place pressure on the environment and people’s livelihoods with oil spills, saline intrusion and marine pollution common. 20 Boosting Viet Nam’s Sustainable Marine Economy Viet Nam is ranked among the top five countries most prone to oil spills over the past three decades.20 In 2022, 1,000 tons of diesel oil (DO) leaked in September at Diem Dien Sea (Thai Binh province), leading to mass losses of hectares of clam farms and disrupting the livelihoods of nearly 100 households.21 Over-exploitation of ground water from freshwater aquifers for industrial and agricultural purposes has resulted into saltwater intrusion and contamination of drinking water and rice cultivation. It is estimated that saline water in the northern and southern deltas accounts for 31.55 and 50 percent of the total water volume of each region respectively, according to a MONRE report on the national environmental status for 2016–20. Industrial pollution hit the headlines in 2016 with the Formosa Ha Tinh disaster, where cyanide and phenol released into the ocean off the province killed millions of fish, crippled fisheries, and slashed local incomes by 46 percent.22 Similar industrial incidents, such as a titanium mining sludge spill in Binh Thuan province in 2016, have inflicted lasting damage on marine habitats and tourism. Figure 2. The number of industrial parks and export processing zones in some localities has come into operation, but few centralized wastewater treatment plants meet the required standards. 7 6 6 5 5 5 5 4 4 4 4 4 3 3 2 2 2 2 1 1 1 0 Hung Yen Thai Binh Ninh Binh Thanh Hoa Quang Binh Thua Thien Lam Dong -Hue Total number of industrial parks and export processing zones that have been put into operations (zones) The number of industrial parks and export processing zones that have been put into operation with concentrated wastewater treatment plants that meet environmental standards (zones) Source: General Statistics Office (2025). In response to these challenges, the government has made strides in policy reforms. This includes a national plan to respond to oil spills, Decree No.65/2025 on marine resource management and Circular No.52/2024 on pollution control indicators. Implementation and enforcement, however, remains insufficient. At the community level, Danang city proactively showcased several actions such as the 2021–25 Environmental Protection Plan, mandating 100 percent waste recycling for 20 International Tanker Owners Pollution Federation, 2019, as cited in VietnamNet (2020). 21 Thanh Nien News, 2022. 22 Tuoi Tre News, 2016. Overview of Marine Economy in Viet Nam 21 industries, while environmental education initiatives like 2023’s Blue Ocean Festival—combining beach cleanups, art installations from recycled waste, and public workshops—demonstrate the power of blending policy with grassroots activism.23 Nevertheless, industrial pollution is still a major concern. This is compounded by the insufficient number of industrial parks and export processing zones with wastewater treatment plants meeting environmental standards, especially in coastal provinces such as Quang Binh and Thai Binh, highlighting the outdated infrastructure and bureaucratic inefficiencies that lead to non-compliance24 (see Figure 2). Without broader reforms, it is challenging to reverse damage to the country’s environment and ecosystems that also risk its long-term sustainable development. Realizing a sustainable blue economy requires Viet Nam to adopt a further concerted and multi-pronged approach, starting with investment in technologies and infrastructure that can reduce large-scale industrial pollution. The government also needs systemized structural reforms in administrative frameworks and integrate ecological resilience into every policy decision to achieve a sustainable balance. Only decisive and courageous actions can safeguard Viet Nam’s coastline and communities. 23 Finance Magazine, 2024. 24 General Statistics Office, 2025. 22 Boosting Viet Nam’s Sustainable Marine Economy III. Investment in Viet Nam’s Marine Economy During 2016-22 III INVESTMENT IN VIET NAM’S MARINE ECONOMY DURING 2016-22 Investment in Viet Nam’s Marine Economy During 2016-22 23 Photo credit: © Igor Grochev / Shutterstock. 3.1. OVERVIEW OF INVESTMENT FOR THE MARINE ECONOMY IN COASTAL PROVINCES 3.1.1. Overview of total investments Viet Nam’s coastal provinces are generally more developed than non-coastal counterparts, as indicated by higher GDP growth and urbanization rates. This is evidenced by GDP growth rates of coastal provinces exceeding the national average in certain years (Figure 3). In 2018 and 2019, coastal provinces grew approximately 1 percentage point faster than non-coastal provinces. During the post- pandemic recovery, they also experienced slightly quicker growth. In terms of urbanization, by 2016, the average urbanization rate in 28 coastal provinces was 37.6 percent, compared to 30.1 percent in non-coastal provinces. However, this gap is narrowing, with the difference now 6.1 percent, as non- coastal provinces—especially the Red River Delta—undergo rapid urbanization. Figure 3. Comparison of economic growth and urbanization rate between coastal and non- coastal provinces (2010–22) GDP growth (%) Proportion of urban population (%) 42.00 8.00 40.00 38.00 7.00 36.00 6.00 34.00 32.00 5.00 30.00 28.00 4.00 26.00 24.00 3.00 22.00 2.00 20.00 2011 2013 2015 2016 2018 2019 2020 2021 2010 2011 2013 2015 2016 2018 2019 2020 2021 2012 2022 2012 2022 2014 2014 2017 2017 Non-coastal Coastal Overall Non-coastal provinces Coastal provinces Source: World Bank staff estimates based on GSO data. Gross social investment, which captures the total scale of investments—including public, domestic private, and foreign direct investment (FDI)—is generally higher in Viet Nam’s coastal provinces than the national average, despite a slight dip since 2020. The investment-to-GDP ratio in these coastal regions typically surpasses the national average, except the Southeast region. Coastal provinces in the Red River Delta, Mekong Delta and central regions demonstrate particularly high investment-to-GDP ratios (see Figure 4). 24 Boosting Viet Nam’s Sustainable Marine Economy Figure 4. Social investment-GDP nationwide and by region (2016–21) (%) 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Nation-wide Red River Delta Central Southeast Mekong Delta 2016 2017 2018 2019 2020 2021 Source: World Bank staff estimates based on GSO data. While coastal provinces had a lower investment-to-GDP ratio than non-coastal provinces pre- 2014, from 2013 this trend reversed. In 2022, there was a sign of convergence between the two types of provinces (see Figure 5, part (a)). Figure 5. Comparison of investment-GDP ratios between coastal and non-coastal provinces (2010–22) (a) General comparison between the two groups of provinces Investment/GDP (%) 49.00 47.00 45.00 43.00 41.00 39.00 37.00 35.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Non-coastal provinces Coastal provinces Source: World Bank staff estimates based on GSO data. Notably, the gap between coastal and non-coastal provinces in the Red River Delta is gradually narrowing. In contrast, the Southeast region exhibits a growing disparity between coastal and non- coastal provinces, primarily due to a declining investment-to-GDP ratio in coastal provinces. The Southeast region has a relatively low average investment/GDP ratio (27–30 percent), with coastal provinces such as Ba Ria-Vung Tau and Ho Chi Minh City falling even further. Conversely, less developed provinces like Binh Phuoc and Tay Ninh are seeing higher investment rates, while in the Mekong Delta coastal provinces maintain a higher and widening investment-to-GDP ratio than non- coastal provinces. Investment in Viet Nam’s Marine Economy During 2016-22 25 (b) Comparison by economic region (2010–22) (%) 75.00 65.00 55.00 45.00 35.00 25.00 15.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Red-river No-sea Red-river Have sea Southeast No-sea Southeast Have sea Mekong Delta No-sea Mekong Delta Have sea Source: World Bank staff estimates based on GSO data. Coastal provinces’ investment efficiency, as reflected by the Incremental Capital-Output Ratio (ICOR) index, is deteriorating at a faster rate than non-coastal peers. The ICOR measures the amount of investment capital required to generate US$1 of growth, meaning that a higher ICOR indicates lower investment efficiency. Overall, at the national level, ICOR has been rising, particularly during the pandemic, when total social investment dropped sharply and public investment continued to rise. However, it is important to note that the ICOR is a simple metric, and its reliability can be affected by significant fluctuations between provinces. In the central region, coastal provinces tend to have an ICOR above the national average, suggesting poorer investment efficiency. In contrast, the Southeast region has a lower ICOR, highlighting its position as the most investment-efficient area in the country. Despite having a smaller scale of public investment, this region is a hub for private investment and FDI. Table 7. Comparison of ICOR indices across regions and periods Region Province group (coastal/non-coastal) 2011–15 2016–19 2020–22 Non-coastal 6.05 6.11 10.17 Red River Delta Coastal 6.49 7.99 8.22 North Central Coast Coastal 7.54 9.10 15.42 South Central Coast Coastal 8.14 7.07 9.44 Non-coastal 5.27 6.58 10.68 Southeast Coastal 4.15 7.50 6.44 Non-coastal 8.12 7.75 5.52 Mekong Delta Coastal 6.46 8.90 10.69 Non-coastal 6.80 8.12 12.36 National average Coastal 7.90 8.23 12.83 Source: World Bank staff estimates based on GSO data. 26 Boosting Viet Nam’s Sustainable Marine Economy While the share of public investment in coastal provinces is generally lower, private investment and FDI have grown faster than the national average. Across economic sectors, the increase in private investment and FDI has led to a decline in the share of public investment, including State- owned enterprises and State budget investments. Between 2016–22, the proportion of public investment dropped by 5 percentage points, from 30.5 to 25.6 percent. In coastal provinces, this share was even lower than the national average, falling from 27.2 to 22.6 percent. This trend suggests a rapid increase in private investment and FDI in coastal high potential areas, leveraging their strategic advantages (see Figure 6). Figure 6. Proportion of investment by economic sector National Average Coastal Provinces 100 100 90 18.22 18.12 17.93 17.58 16.53 15.81 16.21 90 16.24 12.94 13.96 15.13 13.46 14.47 13.59 80 80 70 70 60 60 51.31 53.69 56.1 57.26 59.36 58.18 56.58 64.1 63.77 64.06 62.46 62.14 63.81 50 58.34 50 40 40 30 30 20 20 30.47 10 28.19 25.97 24.08 26.21 24.83 25.61 10 27.18 22.96 22.27 20.81 24.07 23.38 22.61 0 0 2016 2017 2018 2019 2020 2021 2022 2016 2017 2018 2019 2020 2021 2022 Public Private Foreign Direct Investment (FDI) Source: World Bank staff estimates based on GSO data. The average annual investment growth rate for Viet Nam between 2016–19 was approximately 11.5 percent (at current prices), dropping to 7.2 percent in the subsequent period. While the growth rate of public investment in coastal provinces is generally lower than the national average, there is no significant difference in the growth rates of private investment and FDI compared to the national figures between 2016 and 2019. Notably, private investment grew five-fold faster than State investment. FDI attraction in coastal provinces has not changed faster than the national average (see Table 8). Table 8. Growth rate of total investment (2016–22) (%) Total State budget 2016–19 2020–22 2016–19 2020–22 Nationwide 11.49 7.18 3.08 5.94 Coastal 11.32 3.10 1.84 -0.10 Red River Delta 20.50 10.93 0.92 7.97 Investment in Viet Nam’s Marine Economy During 2016-22 27 Total State budget 2016–19 2020–22 2016–19 2020–22 Central 12.38 6.79 7.20 1.57 Southeast 4.52 -14.26 -2.86 -8.30 Mekong Delta 10.17 9.61 -3.82 -4.71 Rich provinces 12.21 -1.11 1.70 -2.55 Poor provinces 10.24 7.58 1.98 2.17 Private FDI 2016–19 2020–22 2016–19 2020–22 Nationwide 16.37 8.03 10.17 6.14 Coastal 16.02 4.20 8.71 3.56 Red River Delta 26.13 9.10 34.32 20.51 Central 20.69 8.94 -7.05 6.82 Southeast 6.17 -16.81 6.43 -11.91 Mekong Delta 14.33 20.32 36.02 -21.06 Rich provinces 13.92 -3.48 20.12 8.62 Poor provinces 18.73 11.69 -7.30 -7.36 Note: Regional data in table is only for coastal provinces in that region. “Rich” provinces refer to those that are financially self- sufficient and do not require budget subsidies from the central government, while “poor” provinces rely on such financial support. Coastal provinces considered rich include: Ba Ria-Vung Tau, Danang, Haiphong, Ho Chi Minh City, Khanh Hoa, Ninh Binh, Quang Nam, Quang Ninh and Quang Ngai. Source: World Bank staff estimates from based on Viet Nam’s Statistical Yearbook. Coastal provinces which could balance their budgets tended to have a slightly higher investment growth rates, largely driven by FDI, compared to poorer provinces. These more financially self- sufficient provinces included Ba Ria-Vung Tau, Danang, Haiphong, Ho Chi Minh City, Khanh Hoa, Ninh Binh, Quang Nam, Quang Ngai and Quang Ninh. Notably, the growth rate of public investment in better-off provinces is lower than in poorer peers, yet the latter have experienced a substantial increase in domestic private investment with annual growth averaging 18.7 percent pre- and post-implementation of Resolution 36. While growth rates paint a partial picture, the ratio of private investment – including FDI and domestic private investment – to public investment provides a clearer outline of investment attraction in the marine economy. Coastal provinces have generally been more successful at mobilizing private investment pre- and post-Resolution 36. Dynamic regions like the Mekong Delta and Southeast stand out as coastal provinces that have attracted significantly more private investment per dollar (see Figure 7). For example, during 2016–2020 better-off coastal provinces mobilized VND3.97 in private investment for every VND1 of public investment, compared to VND2.73 in poor provinces. 28 Boosting Viet Nam’s Sustainable Marine Economy Figure 7. Proportion of non-State and State budget investment by region (VND) 6.00 4.91 5.00 3.79 3.97 4.00 3.34 3.43 3.26 3.46 2.91 3.28 3.20 3.13 3.00 2.72 2.89 2.97 2.73 2.41 2.00 1.00 0.00 Whole Coastal Red River Central South East Mekong River Rich Poor country provinces Delta Coast Delta provinces provinces 2016-2020 2021-2022 Source: Compiled from provincial statistical yearbooks (GSO). Note: “Rich” provinces refer to those that are financially self-sufficient and do not require budget subsidies from the central government, while “poor” provinces rely on such financial support. Coastal provinces considered rich include: Ba Ria-Vung Tau, Danang, Haiphong, Ho Chi Minh City, Khanh Hoa, Ninh Binh, Quang Nam, Quang Ninh and Quang Ngai. 3.1.2. Public investment in the marine economy Coastal provinces and the marine economy have been key destinations for public investment. In fact, the ratio of public investment capital-to-GDP has increased across all provinces, both pre- and post-Resolution 26, largely due to the sharp decline in GDP during the pandemic. As shown in Figure 7, the allocation of public investment to the marine economy has steadily risen, particularly since Resolution 26. However, in 2020, coastal provinces’ economic growth compared to 2019 was just 1.67 percent and in 2022, their GDP decreased by 0.2 percent, whereas the national average grew by 2.5 percent. Central region coastal provinces generally display a higher investment-to-GDP ratio for the marine economy than other regions. This can be explained by their greater coastal exposure, leading to more infrastructure development projects. In contrast, the Southeast region has a lower public investment-to-GDP ratio for the marine economy due to strong GDP growth driven by other sectors, independent of the marine economy. Similarly, a clear difference between financially self-sufficient and less developed provinces is apparent. The analysis shows that better-off provinces have a much lower public investment-to-GDP ratio than less developed provinces, but this disparity widened during the pandemic due to constrained GDP growth. Investment in Viet Nam’s Marine Economy During 2016-22 29 Figure 8. Public investment-to-GDP ratio in the marine economy during 2016–22 (%) 1.70 1.50 1.30 1.10 0.90 0.70 0.50 0.30 0.10 -0.10 Nation-wide Red River Delta Central Southeast Mekong Delta Rich Poor provinces provinces 2016 2017 2018 2019 2020 2021 2022 Source: World Bank staff estimates based on GSO data. Note: “Rich” provinces refer to those that are financially self-sufficient and do not require budget subsidies from the central government, while “poor” provinces rely on such financial support. Coastal provinces considered rich include: Ba Ria-Vung Tau, Danang, Haiphong, Ho Chi Minh City, Khanh Hoa, Ninh Binh, Quang Nam, Quang Ninh and Quang Ngai. In absolute terms, public investment in the marine economy has risen over the years. This trend, as determined by capital allocation in issued decisions, was more pronounced since the issuance of Resolution 26 in 2020. While investment was primarily concentrated in the Red River Delta and central coastal regions, the Mekong Delta witnessed a decline in public investment, possibly due to a shift towards climate-resilient or transportation infrastructure (see Figure 9). The growth of public investment in coastal provinces post-2020 can be attributed to several roading projects. Notable coastal road projects include those at Nam Dinh province (VND6 trillion), from Nghi Son to Cua Lo (VND4.6 trillion), Thua Thien-Hue province (VND2.4 trillion), and the Lien Chieu port construction project (VND3.4 trillion). Figure 9. Total public investment in marine economy (2016–22) Unit: VND billion (country data in the left axis, regional data in the right axis) 20000.0 32729.2 35000.0 18000.0 25940.5 30000.0 16000.0 14000.0 21250.8 25000.0 12000.0 20000.0 10000.0 15994.1 13559.5 15000.0 8000.0 10144.5 6000.0 9267.2 10000.0 4000.0 5000.0 2000.0 0.0 0.0 2016 2017 2018 2019 2020 2021 2022 National-wide Red River Delta Central Southeast Mekong Delta Source: World Bank staff estimates based on GSO data. 30 Boosting Viet Nam’s Sustainable Marine Economy Table 9. Growth rate of marine economy To underline the scale of increased public public investment (2016–22) investment in the marine economy, it jumped 2016–19 2020–22 by nearly one-fourth between 2021–22. (%/year) (%/year) As per the Medium-Term Public Investment Total 20.31 26.17 Plan (MTPIP) 2021–25, this 24 percent rise in Red River Delta 18.40 -15.18 investment contrasts with 16.4 percent during 2016–19, with the largest growth concentrated Central 19.12 76.01 in central coastal provinces, where investment Southeast 17.31 -46.40 surged by 45.6 percent. In contrast, the Southeast Mekong Delta 26.80 3.90 region including Ho Chi Minh City and Ba Rich provinces 16.28 -27.16 Ria-Vung Tau province saw a sharp decline in Poor provinces 23.18 52.70 marine economy public investment, down by Source: World Bank staff estimates based on GSO data. 46.4 percent, following a 17.31 percent rise in Note: “Rich” provinces refer to those that are financially self- the previous period (Table 9). This can also be sufficient and do not require budget subsidies from the central government, while “poor” provinces rely on such financial understood as due to the significant fluctuations support. Coastal provinces considered rich include: Ba Ria- of projects. Vung Tau, Danang, Haiphong, Ho Chi Minh City, Khanh Hoa, Ninh Binh, Quang Nam, Quang Ninh and Quang Ngai. Infrastructure projects (M8) account for the largest slice (nearly 80 percent) of the public investment pie earmarked for the marine economy (see Figure 10). Such projects include those funded by ODA and under public-private partnerships (PPPs). Investment is also focused on regional and coastal linkages (M7), as well as related to fisheries and aquaculture (M4), with these three project categories representing nearly 90 percent of total public investment in the marine economy. Investment in renewable energy and emerging marine economic sectors remains relatively small. Tourism and marine services projects (M1) receive a modest share of public investment despite their potential. These projects, primarily consisting of PPP initiatives, are destinations for 1.5–3 percent of investment (see Figure 10). New marine economic and renewable energy sectors, critical areas in need of further development to enhance opportunities for marine economic growth, make up less than 2 percent of investment predominantly in the form of ODA and PPP projects. This presents a significant opportunity to mobilize additional ODA and non-state capital for future development. Figure 10. Total investment structure according to investment decisions from 2016–22 100% Marine and coastal infrastructure 90% development (M8) 80% 70% Development of marine areas (M7) 60% Renewable energy and new marine 50% economic sectors (M6) 40% Coastal industry (M5) 30% 20% Aquaculture and fishing (M4) 10% Exploitation of oil and gas and other 0% marine resources and minerals (M3) Total State budget Official Non-State Maritime economy (M2) Development budget Assistance (ODA) Tourism and marine services (M1) Source: World Bank staff estimates based on provincial data. Note: M1-M8 classifications were decided by the World Bank staff based on Resolutions 36 and 26 marine economic sectors (see A.2.). Investment in Viet Nam’s Marine Economy During 2016-22 31 Table 10. Public investment structure in 2016–19 and 2021–22 (according to investment decisions) 2016–19 (%) 2021–22 (%) Tourism and marine services (M1) 3.19 1.41 Maritime economy (M2) 0.42 5.73 Exploitation of oil and gas and other marine resources and minerals (M3) 0.12 0.00 Aquaculture and fishing (M4) 7.90 2.49 Coastal industry (M5) 5.77 2.19 Renewable energy and new marine economic sectors (M6) 0.92 0.19 Development of marine areas (M7) 8.37 1.06 Marine and coastal infrastructure development (M8) 73.31 86.94 Total 100 100 Source: World Bank staff estimates based on data provided by provinces. Note: M1-M8 classifications were decided by the World Bank staff based on Resolutions 36 and 26 marine economic sectors. Figure 11. Capital structure by economic sectors 2016–19 Overall, the sectoral structure and 2020–22 (%) of marine economy public investment has seen limited 2016-2019 change between the two medium- M8, 74% term cycles to date. Notably, M7, 8% there has been a significant M6, 1% Roads, 45% increase in infrastructure projects Bridges and Culverst, 2% (more than 10 percent) and the M5, 6% Lakes-dams, 2% Channel-river, 2% maritime economy group (more M4, 8% Ports, 0% than 5 percent), in contrast to M3, 0% Dikes-embankments, 17% decreased aquaculture and fishing M2, 0% Others, 6% sector investment (see Table 10). M1, 3% Factors such as COVID-19 and 2020-2022 challenges in project approval M8, 87% and implementation may have M7, 1% contributed to the reduction in M6, 0% tourism, aquaculture, and fishing M5, 2% projects. M4, 3% Roads, 74% M3, 0% Bridges and Culverst, 4% Lakes-dams, 0% The government’s focus on M2, 6% marine and coastal infrastructure Channel-river, 1% M1, 1% Ports, 1% development is reflected in this Dikes-embankments, 6% Others, 1% sector’s domination in securing public investment compared to Source: World Bank staff estimates based on data provided by provinces. other sectoral categories. In fact, this group’s share increased from 74 percent during 2016–19 to 87 percent in the following cycle to date, driven by economic development projects such as roads and bridges. For instance, the proportion of transport projects within M8 rose from 45 to 74 percent in the later period (see Figure 11). 32 Boosting Viet Nam’s Sustainable Marine Economy Domestic budgets remain the predominant funding source for marine economic sectors. This is particularly evident in large-scale infrastructure and oil and gas projects, which due to their scale and strategic importance, rely heavily on domestic capital to drive their development. The allocation of domestic funds also reflects the government’s prioritization to maintain and expand key economic infrastructure, critical for energy security and transport connectivity. In contrast, foreign capital plays a crucial role in funding projects within emerging and environmentally-focused sector groups. Primarily ODA-funded, these projects often target specialized areas such as mangrove reforestation, biological and biodiversity conservation. Such initiatives are vital to support Viet Nam’s broader climate resilience and environmental sustainability goals, particularly in regions vulnerable to climate change, such as the Mekong Delta, Ho Chi Minh City and several central provinces. Some notable examples of large-scale, ODA-supported, and environmentally-focused coastal projects are evident. They include mangrove conservation initiatives in the provinces of Kien Giang (VND306 billion), Ca Mau (VND179 billion), and Thai Binh (VND159 billion), alongside afforestation efforts in Bac Lieu (more than VND90 billion). These projects, implemented during 2016–19, demonstrate a strong commitment to protecting critical ecosystems that serve as natural buffers against coastal erosion and storm surges. By leveraging ODA sources, Viet Nam can address pressing environmental challenges while supporting the livelihoods of communities in coastal regions. Reliance on ODA for these environmentally-focused projects between 2016–19 underscores the importance of foreign partnerships in achieving Viet Nam’s Sustainable Development Goals (SDGs). However, it also highlights the need for greater domestic investment in conservation and environmental protection to ensure the long-term sustainability of these efforts. As Viet Nam continues to develop its marine economy, a more balanced distribution of domestic and foreign capital across different sectors will be essential to promoting both economic growth and environmental stewardship. Despite research and technological innovation being essential for the long-term sustainability of marine ecosystems, only one notable science and technology project by private investment focused on biodiversity conservation is evident. While investing in science and technology for biodiversity conservation is key to understanding marine habitats, developing effective conservation methods and fostering sustainable resource management, the limited scope of projects indicates gaps in funding and strategic prioritization. Given intensifying climate change-driven pressures on marine biodiversity, overfishing and coastal development, expanding scientific research capacity is imperative to maintaining an ecological balance and protecting marine biodiversity. In the critical area of coastal and marine-sourced renewable energy, non-state investment dominates over public funding or foreign aid (ODA) (see Table 11). This nascent energy sector has seen significant interest from private companies, especially in offshore wind, solar energy, and other forms of renewable energy that leverage Viet Nam’s coastal resources. The private sector’s involvement in renewable energy is a positive development, as it brings capital as well as technological innovation and efficiency. This trend aligns with global efforts to transition to low-carbon economies, with Viet Nam’s growing renewable energy market attracting substantial international attention. While private enterprises have made strides in renewable energy, there remains a need for better integration between private initiatives and national policy frameworks to ensure meaningful Investment in Viet Nam’s Marine Economy During 2016-22 33 contributions to economic growth and environmental sustainability. Private investment in new energy is likely driven by economic incentives and the potential for high returns, especially given Viet Nam’s rich natural resources and increasing domestic demand for energy. However, the role of government in facilitating this integration—through supportive policies, regulatory frameworks, and possibly co-investment—will be crucial for scaling up these efforts and ensuring a balanced and comprehensive approach to Viet Nam’s energy transition. Further discussions will delve into the dynamics of private investment in this sector and its broader implications for Viet Nam’s marine economic development. Table 11. Investment structure by budget sources (2016–22, according to investment decisions) (%) Total State budget Non- (all Total State sectors) Domestic ODA budget (State budget) Total (all sources) 100 97.53 90.57 6.96 2.47 Tourism and marine services (M1) 100 95.52 92.46 3.06 4.48 Maritime economy (M2) 100 100 100 0.00 0.00 Exploitation of oil and gas and other marine resources and minerals 100 100 10,0 0.00 0.00 (M3) Aquaculture and fishing (M4) 100 98.40 88.56 9.84 1.60 Coastal industry (M5) 100 96.98 96.44 0.54 3.02 Renewable energy and new marine 100 94.32 37.10 57.22 5.68 economic sectors (M6) Development of marine areas (M7) 100 97.55 82.82 14.73 2.45 Marine and coastal infrastructure 100 97.53 91.17 6.35 2.47 development (M8) Source: World Bank staff estimates based on data provided by provinces. Most marine economy public investment projects remain small- to medium-sized. Public investment during the two medium terms (2016–19 and 2021–25) is categorized into three groups—A, B, and C—based on capital size and investment fields, with Group A the largest scale. Data analysis reveals that a significant majority (97 percent) of projects fall into Groups B and C. Out of a total of 1,096 projects across both periods (912 projects during 2016–19), there are 615 projects in Group B and 444 projects in Group C. Only 37 projects belong to Group A, primarily within the infrastructure categories (M8, M7), coastal industries (M5), and maritime economy (M2) (see Table 12). Public investment allocated for large-scale projects has also shown a tendency to increase. During 2016–19, Group A projects accounted for 23.2 percent of total allocated capital, but climbed to 52.11 34 Boosting Viet Nam’s Sustainable Marine Economy percent in the following period, while Group B projects fell from 70.8 to 45.29 percent and Group C projects dropped from 5.8 to 2.58 percent. Group A projects are predominantly focused on marine infrastructure, a trend similarly observed in Groups B and C (see Table 12). The classification of public investment projects in the marine economy as small- to medium-sized underscores both the current limitations and significant growth potential of this sector. This suggests that while there has been initial investment to support marine economic activities, the scale and scope of these projects remains relatively modest, leaving considerable room to expand. Scaling-up investments could unlock larger opportunities, such as enhanced infrastructure, innovation in marine industries, and the ability to leverage the full economic potential of marine resources. It also highlights the need for strategic planning and resource mobilization to transform the marine economy into a key driver of sustainable national growth. Table 12. Investment structure of marine economy projects by sector and project scale (%) Group A Group B Group C 2016-19 2021-25 2016-19 2021-25 2016-19 2021-25 Tourism and marine services (M1) 3.91 2.92 7.09 3.18 Maritime economy (M2) 7.72 0.55 3.73 0.61 0.75 Exploitation of oil and gas and other 0.17 marine resources and minerals (M3) Aquaculture and fishing (M4) 10.17 5.27 11.79 3.81 Coastal industry (M5) 7.31 5.13 4.78 7.35 0.98 Renewable energy and new marine 0.93 0.41 4.36 economic sectors (M6) Development of marine areas (M7) 17.97 5.92 2.33 Marine and coastal infrastructure 74.72 92.28 73.22 80.55 68.80 91.28 development (M8) Total 100 100 100 100 100 100 Source: World Bank staff estimates from data provided by provinces. The slow implementation of public-invested projects is a significant concern, particularly regarding progress relative to planned timelines. The total capital structure allocated to the marine economic sector is illustrated in Figure 12, which closely aligns with the capital allocation plan outlined in investment decisions. Overall, coastal infrastructure projects are increasingly taking up a larger share of total investment. Investment in Viet Nam’s Marine Economy During 2016-22 35 Figure 12. Structure of public investment capital in marine economic sectors (2016–22) 100% Marine and coastal infrastructure 90% development (M8) 80% Development of marine areas (M7) 70% Renewable energy and new marine 60% economic sectors (M6) 50% Coastal industry (M5) 40% Aquaculture and fishing (M4) 30% Exploitation of oil and gas and other 20% marine resources and minerals (M3) 10% Maritime economy (M2) 0% 2016 2017 2018 2019 2020 2021 2022 Tourism and marine services (M1) Source: World Bank staff estimates based on data provided by provinces. In terms of project implementation duration, out of 845 projects with specified completion timelines established by project approval decisions, the average duration was approximately three to five years during 2016–22. Notably, more than one-third of these projects are expected to take more than five years to complete. There is no significant variation in the proportion of projects with differing durations across regions (see Table 13). Analysis of the implementation status of marine economy projects reveals varying degrees of success in meeting scheduled timelines. Approximately 54–76 percent of projects were completed on time or ahead of schedule indicating that while most initiatives are generally well-managed, a significant portion still face challenges. Notably, only around half of projects adhered strictly to their original schedules, highlighting a gap between planning and execution. Conversely, project delays are common, with 20 percent experiencing delays of one to two years, often due to bureaucratic hurdles, insufficient coordination among stakeholders, funding shortfalls, or logistical challenges. The extent of these delays varies by region, with the Southeast standing out as an area of particular concern with 45.7 percent of projects facing delays, significantly higher than the national average (33 percent). This could be attributed to the region’s more complex project portfolios, higher urbanization levels, and potentially more stringent regulatory environments, which may contribute to slower project execution. Regional disparities in project implementation highlight the need for tailored approaches to project management and resource allocation. In areas with higher delay rates, additional measures such as enhanced project oversight, streamlined approval processes or targeted support for project execution may be required to address underlying causes of inefficiency. Improving coordination between local governments, private investors, and other stakeholders will be key to reducing delays and ensuring projects are completed within intended timeframes, ultimately enhancing the overall effectiveness of development initiatives across the country. 36 Boosting Viet Nam’s Sustainable Marine Economy Table 13. Implementation progress of all marine economy projects (2016–22) Red River Mekong Total Central Southeast Delta Delta Total (Projects) 845 169 404 70 202 Proportion by 1-2 years 22.25 26.63 18.56 18.57 27.23 implementation 3-5 years 44.62 51.48 40.84 44.29 46.53 duration (according to investment 6 years+ 33.14 21.89 40.59 37.14 26.24 decisions, %) 2 years or more 4.62 4.73 2.72 7.14 7.43 ahead 1 year ahead 9.70 3.55 6.93 12.86 19.31 Proportion of On time 52.31 68.64 50.25 34.29 49.01 completed projects 1 year behind 12.54 8.88 12.38 21.43 12.87 according to actual implementation 2 years behind 7.34 8.28 7.43 12.86 4.46 duration (%) 3 years behind 4.02 1.18 3.96 5.71 5.94 4 years behind 2.96 1.78 5.20 0.00 0.50 5 years or more 6.51 2.96 11.14 5.71 0.50 behind Source: World Bank staff estimates based on data provided by provinces. The marine and coastal infrastructure group (M8) faces the most significant delays compared to other marine economic sector project categories, highlighting an acute vulnerability to implementation challenges (Figure 13). Several factors contribute to these delays, including the scale and complexity of marine and coastal infrastructure projects, which often require extensive planning, environmental assessments, and coordination among multiple stakeholders. These projects frequently involve construction in challenging and sensitive environments, where weather conditions, environmental regulations, and technical complications can further slow progress. Critically, delayed marine and coastal infrastructure is concerning as it is an enabler of marine economic activities, such as fisheries, tourism, and maritime transport. Without timely completion of ports, coastal roads and sea defenses, the broader marine economy’s growth potential is significantly hindered. Additionally, such delays can exacerbate environmental risks, particularly in areas vulnerable to climate change-driven rising sea levels and extreme weather events. In response, there is scope to enhance project management, risk assessment processes, and ensure better coordination across governmental and private sectors. Reducing delays in infrastructure projects is crucial to unlocking the full potential of Viet Nam’s marine economy. A more efficient project delivery process would not only boost economic activities in coastal areas, but also contribute to greater resilience against environmental threats. Investment in Viet Nam’s Marine Economy During 2016-22 37 Figure 13. Implementation progress of all marine economic sector projects (2016–22) 100% 90% 2 years ahead 80% 1 year ahead 70% On time 60% 50% 1 year behind 40% 2 years behind 30% 3 years behind 20% 10% 4 years behind 0% 5 years behind M1 M2 M3 M4 M5 M6 M7 M8 Total Source: World Bank staff estimates based on data provided by provinces. 3.1.3. Recurrent expenditures for the marine economy Importantly, this PEIR encompassed recurrent expenditures for the marine economy, with a specific focus on economic-cause expenditures for development of the fisheries and aquaculture and tourism sectors. In addition, several activities are classified as “others,” which encompass expenditures for tasks such as proposing projects for meteorological observation, updating the sea and island database, and establishing water protection corridors and coastal protection. Information on recurrent expenditures was provided by 22 provinces (see Table 14). Aquaculture and fisheries In the aquaculture and fisheries sector, expenses cover the operation and repair of patrol and fishery control vessels, inspection activities related to fishing, small repairs and equipment procurement for essential infrastructure like ports and monitoring systems. Investments are also directed towards the assessment and conservation of aquatic breeds, development of sectoral growth strategies, direct support for specific aquaculture models, and organizing industry-related events to promote development. Tourism Tourism-related expenses include marketing and promotional activities to attract visitors, development of policies and strategies for tourism growth, and creation of new tourism products through surveys. Additionally, funds are allocated for preparing communications materials on tourist sites, training tourism officers, organizing tourism-related events, and supporting tourism associations. Table 14. Recurrent expenditure on fisheries and aquaculture and tourism (only for coastal districts, million VND) Province Tourism Aquaculture and fisheries Others Total Ba Ria-Vung Tau 12,368.00 29,477.00 41,845.00 Binh Thuan 100.00 5,706.50 5,806.50 38 Boosting Viet Nam’s Sustainable Marine Economy Province Tourism Aquaculture and fisheries Others Total Binh Dinh 3,857.75 2,319.83 6,177.58 Ben Tre 85.39 38.41 123.80 Ca Mau 4,265.51 13,353.94 17,619.46 Ha Tinh 15,251.00 39,176.21 54,427.21 Haiphong 1,335.00 3,588.91 2,250.00 7,173.91 Khanh Hoa 106,901.00 106,901.00 Kien Giang 4,468.00 54.00 4,522.00 Nam Dinh 13,879.23 13,879.23 Nghe An 215,352.00 720.00 216,072.00 Ninh Binh 3,520.00 3,520.00 Ninh Thuan 1,949.00 4,358.55 6,307.55 Quang Binh 3,000.00 3,000.00 Quang Nam 17,208.00 89,766.00 106,974.00 Quang Tri 1,118.00 4,075.00 162.00 5,355.00 Thanh Hoa 12,691.27 18,336.75 31,028.02 Thai Binh 350.00 3,836.00 4,186.00 Thua Thien-Hue 1,762.00 2,709.00 3,093.00 7,564.00 Tien Giang 72,902.52 72,902.52 Tra Vinh 10,029.00 17,067.00 27,096.00 Danang 4,414.00 3,300.00 7,714.00 Source: World Bank staff estimates based on data provided by provinces. The relationship between marine economy recurrent and investment expenditure for both public and private investments across provinces remains unclear. The correlation between recurrent expenditure and public investment shows a weak correlation coefficient of 0.16, while the correlation with private investment is even lower at 0.07 (Figure 14). This suggests that the allocation and use of recurrent and investment expenditures are largely disconnected, confirming the institutional analysis from Section 4.1, which highlights the separation of these two financial streams. The absence of any notable relationship between recurrent expenditure and attraction of private investment infers recurrent spending does not drive private sector interest or funding in the marine economy. However, it is important to note that these observations are based on data from 2022 alone. A more robust analysis, including time-series data, is needed to draw definitive conclusions about the relationship between recurrent and investment expenditures, especially in terms of impacts on private investment attraction over time. Investment in Viet Nam’s Marine Economy During 2016-22 39 Figure 14. Relationship of recurrent expenditure with public and private investment in 2022 (billion VND) 250,000 1200000 Binh Thuan Nghe An Tien Giang 1000000 200,000 Nghe An Ninh Binh Thai Binh Quang Nam 800000 Quang Nam Hai Phong Quang Tri Hai Phong 150,000 Ca Mau Binh Thuan Ninh Thuan Ninh Thuan Ninh Binh Ben Tre 600000 Da Nang Khanh Hoa Thua Thien 100,000 Hue Kien Giang 400000 Kien Giang Tien Giang Quang Binh Quang Tri 50,000 Ha Tinh BR-VT 200000 Ben Tre Tra Vinh Thanh Hoa Quang Binh Da Nang Ca Mau Nam Dinh BR-VT Thai Binh Binh Dinh Thanh Hoa - 0 - 0 00 00 00 .00 .00 .00 .00 .00 00 0 00 00 00 00 00 00 00 00 00 00 00 00 1,0 2,0 3,0 4,0 5,0 50 10 15 20 Source: World Bank staff estimates based on data provided by provinces. 3.1.4. Status of private investment including FDI Data was taken separately for 2022 and focuses on two sectors: aquaculture and tourism. Some 17 out of 28 provinces sent data on private investment as requested by the PEIR team, as reflected in Table 15. Table 15. Number of private investment marine economy projects in aquaculture and tourism (2022) Real Coastal Wind Aquatic Agri- Aqua- Port Tourism Total estate industry power breeds culture culture Ba Ria - Vung Tau 4 7 1 1 13 Binh Thuan 1 2 3 Ben Tre 1 1 Ca Mau 2 2 Haiphong 1 3 4 Kien Giang 2 1 2 5 Nghe An 6 6 Ninh Binh 1 1 Ninh Thuan 1 1 Quang Binh 1 1 Quang Nam 1 2 3 40 Boosting Viet Nam’s Sustainable Marine Economy Real Coastal Wind Aquatic Agri- Aqua- Port Tourism Total estate industry power breeds culture culture Quang Tri 1 1 2 Soc Trang 5 5 Thanh Hoa 1 20 2 23 Thai Binh 1 1 Tien Giang 3 1 4 Danang 1 1 Total 3 6 1 5 50 2 3 6 76 Source: World Bank staff estimates based on data provided by provinces. Table 16. Average capital of private and FDI Tourism emerges as the leading industry in projects in 2022 (billion VND) attracting private investment, both in terms of Private FDI the number and average capital of projects (See Table 15, and 16). Additionally, development Real estate 399.59 of aquatic breeds is also a common destination Coastal industry 165.00 348.00 for private investment within the fisheries and Port 30.00 aquaculture sector. Conversely, FDI is focused on tourism, coastal industry, and wind power (see Wind power 135.39 Table 16). Tourism 530.00 50.40 Overall, rapidly developing provinces such as Aquatic breeds 463.65 Kien Giang, Nghe An and Thanh Hoa see a Fisheries and higher concentration of private investment 11.03 aquaculture projects due to strategic coastal locations Aquaculture 23.06 and burgeoning economic potential. These provinces, known for favorable industrial and Source: World Bank staff estimates based on data provided by provinces. tourism expansion conditions, have attracted a Note: Since private sector investment expenditures are direct substantial number of projects, with tourism costs related to business and production activities, the significantly outpacing fisheries and aquaculture classification (M1–M8) is not applied in this case. Instead, the in terms of investment. The tourism sector, consulting team used a sectoral classification based on ISIC.” driven by the growing demand for coastal and eco-tourism experiences, has become a primary focus for domestic and foreign investors. FDI enterprises show a strong preference for sectors such as energy, industry and tourism, recognizing their growth potential and profitability. However, the fisheries and aquaculture sector – especially aquaculture and fisheries – has seen comparatively less FDI. This indicates a critical gap in investment, particularly in agricultural industries that could benefit from foreign expertise and capital, such as in breed production, aquaculture technology and development of large-scale seaports for more efficient agricultural exports. By attracting more FDI into fisheries and aquaculture, particularly in innovative and high- tech segments, Viet Nam could enhance its agricultural productivity, supply chain efficiencies Investment in Viet Nam’s Marine Economy During 2016-22 41 and its position as a key player in global markets. Channeling more FDI into infrastructure for large seaports would also boost fisheries and aquaculture and tourism logistics, create synergies across sectors and contribute to more balanced economic growth in these rapidly developing provinces. 3.2. CONCLUSIONS In conclusion, public investment in Viet Nam’s marine economy primarily targets multi-purpose projects, rather than focusing directly on marine economic development. These projects often serve various socio-economic functions, such as infrastructure development and coastal protection, addressing immediate needs like public utility services and disaster preparedness. While this approach contributes to broader national development, it tends to dilute attention from specialized investments that could boost sectors like fisheries, marine tourism, and renewable energy. As a result, the potential for targeted growth in marine industries is left underexplored, limiting overall marine economy progress. A significant portion of public investment is directed at capital-intensive sectors, aligning with the State’s role in developing essential infrastructure. These investments in roads, embankments and reservoirs, amongst others, are crucial for ensuring connectivity and protecting coastal areas. But, they leave other important sectors underfunded, particularly those related to conservation and resource protection. Areas like mangrove reforestation, biodiversity conservation, and marine ecosystem protection rely heavily on foreign capital, especially through sources like ODA. This imbalance highlights the need for greater domestic investment in environmental preservation to ensure long- term sustainability alongside economic development. Public investment has yet to fully realize its pioneering role in exploring new and emerging sectors of the marine economy. Opportunities in areas such as offshore renewable energy, deep-sea aquaculture, and marine biotechnology remain underfunded and underdeveloped. By not investing proactively in these high-potential sectors, Viet Nam is missing the chance to diversify its marine economy and position itself as a leader in innovative marine industries. This conservative investment approach restricts the country’s ability to tap into new sources of growth that could enhance its resilience against economic and environmental challenges. The effectiveness of public investment in fostering regional economic linkages remains limited. Projects commonly focus on building shared infrastructure, such as storm shelters and anchorage areas, typically funded by one province, with neighboring ones benefiting from access but not contributing nor coordinating the project. This lack of collaboration hinders the potential for integrated regional development. There are few, if any, projects with explicitly defined objectives for joint regional cooperation or coordinated investment strategies, which could otherwise drive more cohesive and economically efficient marine development across provinces. Despite significant differences in the economic strengths and potential of Viet Nam’s coastal regions, public investment follows a relatively uniform pattern across provinces. This approach risks undermining the unique advantages of each region, as provinces may pursue similar projects without considering their individual strengths. For example, a province with strong fisheries resources might invest in the same infrastructure projects as a region focused on tourism, leading to inefficient use of resources, and missed opportunities for specialization. Tailoring public investment strategies to the specific characteristics of each region would allow for a more balanced and sustainable development of Viet Nam’s diverse marine economy, preventing a “race to the bottom” and encouraging more strategic, locally adapted growth. 42 Boosting Viet Nam’s Sustainable Marine Economy IV. General Assessment of Mechanism and Policies to Promote Marine Economic Development IV GENERAL ASSESSMENT OF MECHANISM AND POLICIES TO PROMOTE MARINE ECONOMIC DEVELOPMENT General Assessment of Mechanism and Policies to Promote Marine Economic Development 43 Photo credit: © Nguyen Quang Ngoc Tonkin / Shutterstock. 4.1. STRATEGIES, PLANS, AND POLICIES ON MARINE ECONOMIC DEVELOPMENT 4.1.1. Strategic orientation for marine economic development While Viet Nam has prioritized marine economic development, significant challenges remain. Guided by Party and State directives, long-term strategies, medium-term plans, and annual targets are aligned with national resolutions, international commitments and legal frameworks. However, turning this ambitious agenda into actionable and impactful outcomes to unlock the blue economy’s full potential has yet to be realized. Viet Nam’s strategic planning for marine economic development has deep roots. Dating back to the 1991 Strategy for Socio-Economic Stabilization and Development, this focus on the marine economy is not recent with the strategy positioning marine economic development as a pillar of national security and territorial sovereignty. This focus expanded to include industrialization and modernization-focused goals. By the 8th National Party Congress in 1996, priorities had shifted to infrastructure development, marine economic centers, and coastal industrial parks. The evolution continued with adoption of Resolution 09 (2007) and Resolution 36 (2018), which emphasized sustainable marine development, reinforcing Viet Nam’s vision of becoming a strong maritime nation by 2045. Key policies have been introduced to drive marine development. To operationalize its strategic vision, Viet Nam has implemented several policies including Decree No.67 to modernize the fishing fleet and enhance economic development. Similarly, Resolution 26 (2020) provided a five-year roadmap for sustainable marine economic initiatives, while Decision No.892 (2022) outlined plans to establish seven marine economic clusters by 2030. These policies collectively aim to bridge the gap between long-term goals and immediate actions, providing a foundation for progress. Acute gaps between strategic visions and execution have hindered progress. Despite robust frameworks and well-articulated goals, there is a notable disconnect between strategy and implementation in Viet Nam’s marine economic development. Strategic documents commonly lack detailed action plans, timelines and performance indicators required to translate vision into reality. This leaves national and provincial governments without sufficient guidance, resulting in five-year plans that are vague and fail to outline actionable steps. The lack of clear roadmaps complicates efforts to monitor progress, allocate resources effectively and align efforts across regions, ultimately impeding progress. Integration of marine goals into provincial planning varies significantly across the country. While all 28 coastal provinces have developed action plans in line with Resolutions 36 and 26, their quality and depth varies widely. A few provinces, like south-central Ninh Thuan and northern Quang Ninh, have established steering committees and developed detailed strategies tailored to their specific conditions. In contrast, the majority of provinces have issued generalized action programs lacking specific objectives or measurable tasks, leading to patchy progress and disparities in resource allocation, infrastructure development, and policy implementation. Medium-term plans dilute any focus on marine economic priorities. Although the 10-Year Socio- Economic Development Strategy (2021–30) prioritizes the marine economy—setting ambitious goals 44 Boosting Viet Nam’s Sustainable Marine Economy such as coastal provinces to contribute 65–70 percent of GDP by 2030—this focus diminishes in medium-term planning. In the 2021–25 National Five-Year Plan, marine objectives are generalized and often subsumed under broader regional goals. This dilution weakens the prioritization of marine strategies, making it challenging to sustain momentum and track measurable outcomes. Limited budget allocation constrains marine development. The is underlined by the 2021–25 MTPIP embedding resources within broader multi-purpose programs, not specific marine projects. As a result, funding transparency is reduced, and targeted investment in critical areas—such as infrastructure development, industry modernization, and coastal ecosystem protection—is limited. This lack of financial prioritization hampers both national and provincial efforts to advance marine economic goals. Coastal Economic Zones (CEZ) have missed opportunities to prioritize marine-specific industries. Viet Nam’s 18 CEZs have underperformed as catalysts for marine economic growth. Instead of focusing on marine-specific industries, traditional sectors like petrochemicals and general manufacturing have been prioritized. This approach dilutes the potential for synergies between coastal resources and industries, failing to fully leverage Viet Nam’s comparative advantages in sectors like fisheries, renewable energy, and maritime logistics (see Table 17). Weak monitoring and accountability mechanisms impede marine economic development. The absence of a tailored statistical and budgetary framework for marine sectors makes it challenging to track investments and assess progress. Current systems categorize marine-related expenditures within broader budgets for economic, environmental and scientific activities, obscuring their impact. This lack of clarity prevents policymakers from making data-driven decisions to prioritize funding and adjust strategies as needed. Achieving a sustainable marine economy requires strategic reforms. Viet Nam’s ambitious marine economic goals require a step shift in priorities, funding mechanisms, and accountability frameworks. Strengthened alignment between strategy and execution, clearer implementation plans, and targeted investments are essential to unlock the potential of Viet Nam’s coastal resources. Policymakers must prioritize marine-focused sectors – such as renewable energy, fisheries, and eco-tourism – to ensure long-term sustainability and competitiveness in the global marine economy. While Viet Nam has built a strong strategic foundation for marine economic development, it is imperative to address gaps in execution, ensure consistent provincial integration, and overcome resource constraints to realize its vision of a prosperous and sustainable maritime nation. General Assessment of Mechanism and Policies to Promote Marine Economic Development 45 Table 17. Integration of marine economic development goals in coastal province administrative documents Status of developing strategic Level of integration into Socio-economic documents on marine economic Development Plan to 2030 to 2050/ development five-year SEDP 2021–25 Only develop Only develop an Provinces Concretized a separate action plan on the Mentioned into priority strategy implementation only in general Not Both tasks, on marine of strategy on development mentioned solutions, and economic marine economic objectives projects development development Northern sea and coastal area (Quang 0 4/5 1/5 4/5 3/5 1/5 Ninh to Ninh Binh) North Central Coast and Central Coast 0 13/14 1/14 4/14 2/14 6/14 (Thanh Hoa to Binh Thuan) Southeast sea and coastal area (Ba 0 2/2 0/2 1/2 0/2 1/2 Ria-Vung Tau to Ho Chi Minh City) Southwest sea and coastal area (Tien 0 6/7 1/7 3/7 4/7 0/7 Giang, Ca Mau to Kien Giang) Source: Provincial action plans and socio-economic development plans for 2021–25. 4.1.2. Viet Nam’s marine economy: balancing growth and ecosystem value Viet Nam’s current approach to marine economic development remains grounded in a traditional understanding, limiting its ability to explore emerging, high-potential areas to truly evolve into a strong marine economy. As discussed in Section 2.2, the country’s marine economic strategy overlooks the critical and often untapped value of marine and coastal ecosystems. Instead, it primarily focuses on conventional sectors – such as fishing, tourism, and marine transportation – that are easier to monitor due to alignment with sectors in the national accounts system. Measuring the value of these ecosystems is challenging, as even developed nations have not officially quantified the full economic worth of marine and coastal ecosystem services. However, as shown in Figure A.4, there is a reciprocal relationship between marine economic activities and ecosystem services. Marine ecosystems provide intermediate inputs—such as clean water, biodiversity, and natural habitats—that support economic sectors. Conversely, the outcomes of economic development can impact ecosystems, both positively and negatively. 46 Boosting Viet Nam’s Sustainable Marine Economy Viet Nam risks creating conflicts between economic growth objectives and conservation efforts by not emphasizing ecosystem services within its marine economic strategy. This could lead to biodiversity loss and depletion of valuable natural resources, which could undermine long-term sustainability of the marine economy. Furthermore, failing to effectively harness the potential of marine and coastal ecosystems prevents Viet Nam from maximizing their contributions to economic development in a sustainable manner. A more balanced approach, integrating traditional industries and ecosystem services, could unlock greater economic opportunities while preserving the health of marine environments. 4.1.3. Concretizing strategies into implementation plans and policies Principles, criteria, and norms governing public investment allocation must be strategically aligned with priorities outlined in overarching marine sector development plans of each sector, province, and region. This alignment will ensure that investments are not only efficient, but also effectively contribute to long-term marine economy sustainability and growth. An analysis of the implementation status of marine economy projects reveals varying degrees of success in meeting scheduled timelines. Since the landmark adoption of Resolution 36, key steps have been taken to foster marine economic development. However, these programs and action plans formulated by ministries, sectors, and provinces often remain isolated, standalone documents not clearly integrated into medium-term socio-economic development plans or public investment strategies at provincial or sectoral levels. As a result, dedicated budgets for implementation are absent. The primary function of recurrent expenditure is to sustain operations of the State apparatus and uphold social welfare programs. The criteria for recurrent budget allocation are generally based on population and specific socio-economic factors of localities, such as poverty rates or disadvantaged areas. In contrast, public investment expenditure is meant to finance the creation of long-term fixed assets and enhance production capacities, complementing private investment to drive development breakthroughs. Therefore, the principles, criteria, and norms governing public investment allocation must be strategically aligned with the priorities outlined in the overarching development plans of each sector, province, and region. Since these priorities evolve over time, the criteria for allocating public investment must be continually updated and adapted. The push for marine economic development, a key strategic priority under Resolution 36, is not accurately reflected in the public investment allocation process. Despite issuance of the Marine Economic Development Strategy in 2018, the allocation of public investment during 2021–25, as defined by Prime Minister’s Decision No.26, still mirrors the approach used for recurrent expenditures. Public investment is allocated based on criteria such as population, development level, geographical area, and district-level administrative units. Only a minor provision in the allocation system relates to marine areas, whereby each island commune is assigned a modest 0.1 point—akin to criteria used for border areas and security zones (see Table 18). Assessing the impact of Resolution 36 on public marine economic investment remains challenging. For example, in the fisheries sector, most public investment projects from 2021–23 are continuations of prior initiatives, such as infrastructure upgrades for key aquaculture areas, storm shelter improvements for fishing vessels, and fisheries inspection stations. These investments align General Assessment of Mechanism and Policies to Promote Marine Economic Development 47 with longstanding target programs rather than representing a direct shift towards marine economic development goals laid out in Resolution 36. Despite the marine economy encountering choppy waters in its development journey, there are reasons for optimism. Bright spots include projects aimed at leveraging ODA funding, with the World Bank’s Sustainable Fisheries Development Project (SFDP)25 one notable initiative, which builds on the successes of the Coastal Resources for Sustainable Development Project.26 As a phase 2 continuation, SFDP is designed to strengthen the fisheries sector, aligned with goals set out in Resolution 36, which envisions fisheries as a sustainable pillar of the marine economy. This project focuses on enhancing fisheries management sustainability, coastal resilience and promoting eco- friendly aquaculture practices. These efforts reflect the growing commitment of the Government of Viet Nam to integrate environmental considerations with economic growth, addressing the economic potential and long-term sustainability of the fisheries sector. Fisheries is also well placed as one sector where planned investments are in line with Resolution 26’s objectives. Comparing the list of public investment projects at central level managed by the Ministry of Agriculture and Rural Development (MARD), with goals of Resolution 26 reveals initiatives to promote coastal aquaculture, reduce fishing intensity in over-exploited areas, modernize fishery management, enhance safety and post-capture product preservation, and upgrade fishery infrastructure to support logistics services on islands. However, a more comprehensive and strategic allocation mechanism is required to fully realize the ambitions of Viet Nam’s marine economic development strategy. Table 18. Comparison of suitability of public investment projects in fisheries with Resolution 26 (2021–23) Public investment fields/projects Corresponding content in Resolution 26 Expenditure for investment project preparation • Modernize management of fishing vessels Sustainable Fisheries Development Project by • Synchronously upgrade fisheries infrastructure MARD (SFDP) • Promote marine and coastal aquaculture • Improve post-harvest product preservation Upgrade infrastructure of key aquaculture • Synchronously upgrade fisheries infrastructure areas • Promote coastal aquaculture Upgrade and expand storm shelter anchorage • Synchronous upgrade fisheries infrastructure areas for fishing vessels and fishing ports • Improve fishery logistics services Investment and upgrade infrastructure for • Upgrade input services (breeds) development of aquatic breeds. • Promote marine and coastal aquaculture. Expenditure on investment implementation from public development investment budget Upgrade infrastructure of key aquaculture areas • Upgrade infrastructure of key aquaculture areas 25 The project, approved in 2022 and still on-going, aims to enable improved management and increased value from target fisheries by investing in ‘smart’ infrastructure. https://projects.worldbank.org/en/projects-operations/project-detail/P171352 26 The project, from 2012 to 2019, aimed to improve the sustainable management of coastal fisheries in project provinces. https://projects. worldbank.org/en/projects-operations/project-detail/P118979 48 Boosting Viet Nam’s Sustainable Marine Economy Public investment fields/projects Corresponding content in Resolution 26 Concentrated aquaculture facilities in Quang • Concentrated aquaculture facilities in Quang Ninh Ninh Upgrade Ganh Hao fishing port, Tac Cau • Upgrade Ganh Hao fishing port, Tac Cau fishing port phase II fishing port phase II Upgrade and expand storm shelter anchorage • Synchronous upgrade fisheries infrastructure areas for fishing vessels, combined with fishing • Improve fishery logistics services ports Investment in construction of Thai Thuy • Upgrade input services (breeds) concentrated clam seed production area • Promote marine aquaculture Investment and upgrade infrastructure for development of aquatic breeds (National • Not included in Resolution 26/NQ-CP Center for Southern Freshwater Aquatic Breeds) • Modernize management of fishing vessels, Phu Quoc Fishery Surveillance Station ensuring safety of fishers and fishing vessels • Not yet invested as still in investment ODA (MARD CPO) project (SFDP) preparation stage Target program for sustainable fisheries • Synchronous upgrade fisheries infrastructure economic development • Improve fishery logistics services • Modernize management of fishing vessels • Synchronous upgrade fisheries infrastructure ODA for development investment • Promote marine and coastal aquaculture • Improve post-harvest product preservation. Source: Assessment based on list of public investment projects during 2021–23 in the agriculture and rural development sector. Aquaculture development has taken key steps since 2021 underpinned by public investment projects. The focus areas of these MARD-managed initiatives include promoting marine and coastal aquaculture, upgrading fishery infrastructure, and modernizing fishing vessel management. Investments in marine and coastal aquaculture aim to expand practices and enhance seed production, while infrastructure improvements focus on facilities for post-harvest preservation and fisheries logistics. Modernization projects for fishing vessels are aimed at improving safety and efficiency. However, two critical areas remain underfunded: transformation of fishing practices and development of logistics services on offshore islands. This shortfall impacts promotion of sustainable fishing practices and reducing over-exploitation of marine areas. Additionally, the logistics infrastructure required to support sustainable growth on offshore islands, particularly for fisheries and tourism, remains largely neglected. Funding disparities between marine and freshwater fisheries is also significant. Between 2021 and 2023, nearly all public investment—99.92 percent—was allocated to the coastal and marine seafood sector, with only 0.08 percent to freshwater fisheries. This imbalance underscores a longstanding trend General Assessment of Mechanism and Policies to Promote Marine Economic Development 49 that predates Resolution 26, making it difficult to link the resolution directly to current investment priorities (Table 19). Despite progress in marine and coastal aquaculture, gaps remain in promoting sustainable practices and developing essential logistics infrastructure for offshore island communities. Small-scale fishers commonly still rely on resource-intensive methods that deplete marine resources. Meanwhile, critical infrastructure for offshore islands remains underdeveloped, such as transportation, cold storage and supply chains. To address these gaps, a more balanced and strategic investment approach is required, supporting all elements of the marine economy—fisheries, aquaculture, tourism, and logistics. Targeted investments in sustainable technologies, infrastructure, and capacity building are essential to ensure economic and environmental sustainability. Aligning these efforts with Viet Nam’s broader marine economic strategy will foster more inclusive and resilient growth, allowing key sectors to contribute meaningfully to the country’s long-term development goals. Without this integrated approach, vital components of the marine economy risk being overlooked or underfunded. Table 19. Public investment structure between inland freshwater fisheries, coastal and marine seafood (2021–23) Category Investment amount Structure (%) Total of public investment 1,477,339 100 Freshwater fishery/inland public investment projects 1,148 0.08 Coastal and marine fisheries public investment projects 1,476,191 99.92 Source: Calculated from data of the Department of Planning, MARD (2010–20). The fisheries sector in Viet Nam has demonstrated a proactive alignment with investment priorities set forth in Resolutions 36 and 26, underscoring its significant potential within the nation’s broader marine economy. However, it is important to recognize that the prioritizing of the fisheries sector predates the Strategy on Marine Economic Sustainable Development. This suggests that the fisheries sector has long acknowledged its importance and capacity for growth within the marine economy framework. The recognition of the sector’s potential has paved the way for significant investments and policies aimed at bolstering its sustainability and economic contribution. To ensure sustainable fisheries, tackling open-access exploitation is critical to curb overfishing and overcapacity. This demands policy reforms, stronger enforcement through increased funding, alternative livelihood programs, and investments in cold storage and processing infrastructure to minimize post-harvest losses. Additionally, promoting selective fishing methods can help balance productivity with ecosystem health. To ensure substantial progress in line with Resolution 36’s objectives, several critical steps should be taken: Firstly, protection of aquatic resources must be a central focus. This requires stricter regulations and enforcement mechanisms to safeguard aquatic ecosystems from overexploitation. Establishing marine protected areas, promoting sustainable fishing practices, and enforcing fishing limits are essential to maintain the health of marine ecosystems and ensue that resources are available for future generations. 50 Boosting Viet Nam’s Sustainable Marine Economy Reduction of exploitation intensity in vulnerable marine areas is a second necessary step. With overfishing a major concern, strategies must be developed to lessen pressure on these ecosystems. This could involve introduction of fishing quotas, seasonal fishing bans, and the promotion of alternative livelihoods for fishers. Providing alternative sources of income, such as eco-tourism or aquaculture, can help reduce dependence on over-exploited fishing areas and contribute to the sector’s long-term sustainability. Thirdly, offshore aquaculture development is a key component of ensuring the sustainability of Viet Nam’s fisheries sector. Moving aquaculture activities from coastal areas to offshore locations can reduce environmental pressures on fragile coastal ecosystems (see Annex A.4). Offshore fish farming can be more sustainable, utilizing open waters while minimizing impacts on local communities and coastal biodiversity. This shift can realize growth of a more sustainable aquaculture industry, providing high-quality seafood without compromising the environment. To strengthen the aquaculture sector, key priorities include upgrading hatcheries to produce robust fingerlings, enhancing biosecurity to minimize disease risks, and boosting value addition through diversified products and expanded export markets. Securing Hazard Analysis and Critical Control Points (HACCP) certification will further ensure food safety and market competitiveness. These measures are critical for building a more resilient, efficient, and profitable aquaculture system. Significant investment in research and technology to boost the efficiency and sustainability of aquaculture and fisheries is an essential fourth element. Supporting research initiatives focused on breeding, feed development, and farming techniques will enable the sector to adopt more responsible practices. Technological advancements can lead to innovations in sustainable production methods, reducing resource consumption and minimizing negative environmental impacts. Through such innovations, the fisheries sector can improve productivity while preserving marine resources for future generations. Fifthly, capacity building and training for fishers and aquaculture operators is vital. Empowering these stakeholders with knowledge and resources on sustainable practices can facilitate a transition to more environmentally friendly and economically viable methods of fishing and aquaculture. This includes training programs on sustainable fishing, efficient resource use, and best practices for maintaining ecosystem health. By enhancing skills and capacity, Viet Nam can foster a more resilient and sustainable marine economy. In conclusion, by prioritizing these critical measures—protection of aquatic resources, reduction of exploitation intensity, offshore aquaculture development, investment in research and technology, and capacity building—Viet Nam can align its fisheries sector with sustainable development goals outlined in Resolution 36. This holistic approach will not only protect marine ecosystems, but also ensure the long-term viability of the fisheries sector. By balancing environmental preservation with economic growth, Viet Nam can develop its marine economy in a responsible and sustainable manner, contributing to broader national objectives and securing the future of its marine resources. 4.1.4. Conflicts in development goals and territorial space allocation Integrating sustainable practices into Viet Nam’s marine economy remains a significant challenge without policy support. Traditional activities like coastal fishing and aquaculture remain General Assessment of Mechanism and Policies to Promote Marine Economic Development 51 resource-intensive and lack sustainability measures, threatening marine ecosystems and their long- term viability. Continued reliance on these methods undermines efforts to protect marine biodiversity and balance short-term economic growth with environmental conservation. To address this challenge, Viet Nam must adopt a comprehensive approach to marine resource management that ensures economic growth does not harm ecological stability. Sustainability should be embedded in policies, encouraging innovations like eco-friendly aquaculture, sustainable fisheries, and renewable energy development. This shift will not only protect vital marine resources, but also future-proof Viet Nam’s marine economy in alignment with global trends toward green growth and sustainability. A lack of integrated management of marine economic policies is apparent, which fails to address the interconnections between different marine sectors. As economic activities expand, the risk of overexploitation and negative interactions between sectors increases. For example, oil and gas exploration can drive growth in shipping and port operations, but further stress marine ecosystems. Conflicts arise in Viet Nam’s marine economy due to a clash between short-term economic gains and long-term environmental sustainability. Prioritizing economic expansion often leads to decisions that accelerate industries like oil and gas, shipping and coastal construction, which can degrade marine ecosystems, deplete resources, and reduce environmental resilience. This tension between short-term economic gains and long-term sustainability can undermine the health of marine environments, crucial for the marine economy’s future. However, renewable energy offers a more sustainable alternative, as it aligns with environmental goals by providing clean, renewable power with minimal impacts on marine ecosystems. By focusing on renewable energy, Viet Nam can achieve its growth objectives while maintaining an ecological balance, fostering a marine economy that supports both environmental conservation and long-term economic development. In response to these challenges, several recommendations can help stakeholders realize sustainable marine economic development: Developing an integrated policy framework that encompasses all marine economic sectors is essential. This framework should facilitate cooperation among sectors and promote holistic management of marine resources. Implementing an ecosystem-based approach can further emphasize the importance of natural ecosystems in supporting marine economic activities. This approach helps policymakers to understand the trade-offs and synergies between sectors, leading to better-informed decisions. Strengthening regulatory architecture is a crucial second step. Enhancing measures that not only promote economic development, but ensure the protection of marine environments is key. This includes stricter enforcement of environmental regulations and incentives for sustainable practices. Additionally, investing in research and data collection will spotlight the interactions between marine sectors and their environmental impacts. Comprehensive data can inform policy adjustments and facilitate adaptive management strategies. 52 Boosting Viet Nam’s Sustainable Marine Economy Lastly, fostering collaboration among government agencies, private sector stakeholders, and local communities will ensure that all voices are heard in the decision-making process. Engaging stakeholders can lead to more effective and widely accepted policies. Promoting awareness of sustainable practices among marine economy stakeholders through educational initiatives can also equip communities and businesses with the necessary knowledge to adopt more sustainable approaches. By embracing these recommendations, Viet Nam can work towards a sustainable marine economy that balances economic growth with the preservation of marine ecosystems. Such an approach not only protects natural resources, but also ensures the long-term viability of marine industries, contributing to the overall resilience of coastal communities. Table 20. Interactions between marine economic sectors in Viet Nam Environ- Renewable Marine Marine Oil & gas Fisheries ment & energy tourism transport biodiversity Renewable energy NA +2 0 +1 +1 +2 Oil & gas +1 NA 0 0 +1 +2 Fisheries +1 -1 NA -1 -1 +3 Marine tourism +1 +1 +2 NA -1 +3 Marine transport +2 +1 +1 +1 NA +2 Environment & +1 -2 -1 -1 -2 NA biodiversity Note: The score for each cell is interpreted as the impact of the industry in the vertical column on the industry in the horizontal row. It is a composite score that calculates both positive and negative effects (+3 positive, 0 neutral, -3 negative). Direction and values of interaction is determined based on sector experts’ consensus. Source: UNDP (2022).27 Effective solutions for marine and coastal area investments require a nuanced approach that balances current needs with future aspirations, particularly through MSP. This approach should be guided by priorities in Resolution 36, which may evolve over time, necessitating periodic reassessment of the size, location, and management of designated special zones. This flexibility ensures that marine space investments remain aligned with economic and environmental shifts, promoting sustainable ecosystem use. Understanding the varying impacts that marine sectors have on communities and the environment is essential. For instance, while tourism can thrive within marine protected areas (MPAs), excessive visitation may harm the environment, while fishing activities could be impacted by offshore wind farms. Identifying these dynamics allows for policies that either mitigate conflicts or promote synergies between sectors, fostering harmonious coexistence. 27 UNDP. (2022). “Blue Economy Scenarios for Viet Nam.” https://www.undp.org/vietnam/publications/blue-economy-scenarios-viet-nam General Assessment of Mechanism and Policies to Promote Marine Economic Development 53 Innovations in technology and operational improvements offer significant opportunities to enhance productivity across various marine sectors without the need to expand spatial footprints. By focusing on operational efficiency—through better resource management, automation, and smarter technologies—industries such as aquaculture, fisheries, and transport can increase their output while minimizing environmental impacts. For example, advanced aquaculture technologies can improve fish farming practices to reduce waste and resource consumption, while more efficient fishing methods can address overfishing. In transport, innovations like fuel-efficient vessels or digital logistics systems can enhance productivity, while reducing carbon emissions. This focus on efficiency not only maximizes the utilization of existing resources, it also reduces pressure on marine ecosystems, supporting sustainable growth. Comprehensive mapping of current marine space usage is essential to identify potential conflicts and understand demands. This mapping can help pinpoint areas where sectors may overlap or new activities could emerge, leading to competition for space. Furthermore, it enables planners to anticipate future trends – such as expansion in tourism, aquaculture, or offshore energy development – as well as potential for international blue carbon markets, an emerging opportunity for carbon offset initiatives focused on marine ecosystems. This foresight allows for proactive spatial planning that accommodates growth in these sectors, while ensuring protection of critical marine habitats and biodiversity. International models, such as Israel’s Marine Spatial Planning (MSP), provide valuable insights into how to effectively manage marine space. This country’s approach involves assessing sectoral conflicts and synergies, helping to optimize use of marine resources while minimizing negative environmental impacts. By evaluating potential interactions between various marine sectors, this model allows for development of policies that promote cooperation, rather than competition, between industries. As Viet Nam improves its own national MSP, these international lessons will be crucial in crafting practical and context-specific regulations. These regulations will help ensure that different marine sectors are effectively managed and integrated, providing a balanced approach that supports economic development and environmental sustainability. Finally, a critical gap in Viet Nam’s approach is the lack of clarity on trade-offs between economic, social, and environmental sustainability goals. While numerous provinces hope to achieve all objectives simultaneously, this is unrealistic without targeted solutions. A systematic approach that prioritizes specific goals and clarifies trade-offs will help decision-makers navigate the complexities of marine space allocation effectively. 4.1.4.1. Understanding implementation of Resolutions 36 and 26 in provinces The ethos and potential of Resolutions 36 and 26 appear misunderstood at provincial level. During the PEIR research team’s discussions with representatives of surveyed provinces, respondents pointed to the classification of sectors in the resolutions as being too broad and challenging to implement, particularly given limited budget resources. Consequently, provincial departments attempt to distill all content related to the “marine economy” within annual work tasks for incorporation into central government implementation reports on Resolutions 36 and 26. This indicates a misunderstanding of these resolutions, which are intended to provide a comprehensive overview of Viet Nam’s Sustainable Marine Economic Development Strategy and should serve as a guiding framework for provinces. It is essential to recognize there is not a one-size-fits-all marine economic development model. Instead, each 54 Boosting Viet Nam’s Sustainable Marine Economy province must leverage its unique potential, strengths, and strategic development objectives to select specific spearheaded marine economic sectors. To effectively leverage their respective potential, provinces must clearly define trade-offs in development objectives and identify priority ones within their strategies. For example, in provinces where tourism is a key sector, careful consideration must be given to development of sectors that may negatively impact the ecological environment essential for tourism. Analyzing and transparently evaluating these trade-offs will facilitate more informed decision-making and sustainable development practices. Current provincial reporting on implementation of Resolutions 36 and 26 reflect a persistent business-as-usual (BAU) approach, where provinces continue to develop local economies without a focused strategy on marine economic priorities. Instead of synthesizing marine economy information based on localized practices, there is a pressing need for more specific guiding documents from central government. These documents should clarify the concept and significance of the marine economy and provide frameworks for provinces to prioritize marine economic sectors in line with their unique strengths. Tension between economic development and conservation objectives is pronounced in the development strategies of many provinces. The rapid expansion of CEZs has raised significant challenges, particularly concerning marine environmental pollution and biodiversity loss. Central government resolutions emphasize replicating the CEZ model alongside developing robust marine economic centers, while also strengthening national defense and sovereignty over marine areas. These initiatives aim for ocean-based economic sectors to contribute approximately 10 percent to national GDP, with coastal provinces expected to account for 65–70 percent of GDP by 2030. CEZs have attracted significant foreign and domestic investment. This is evidenced by 254 foreign projects worth US$42 billion and 1,079 domestic projects valued at VND805.2 trillion following emphasis of the model up until 2022.28 Around 44,100ha has been leased for investment projects in CEZs, constituting approximately 45 percent of land reserved for industrial production, tourism, and services. While development of CEZs has facilitated an economic and labor structure shift from agriculture to industry and services, investment remains spread thin and lacks anticipated breakthroughs, such as internationally compliant seaports and logistics centers. Further studies highlight four primary conflicts within current CEZ development. They are: (i) discrepancies between CEZ planning requirements based on regional potential and spontaneous local realities, (ii) the need for a coherent inter-regional legal framework versus the current fragmented legal status, (iii) gaps between high expectations for CEZ contributions and State budget limitations and (iv) tensions between investor economic interests, environmental protection and national security.29 Additionally, exploitation of coastal land and resources remains inefficient, with unsustainable practices leading to depletion of non-renewable resources and degradation of vital coastal ecosystems, such as mangroves and coral reefs.30 28 In Resolution 09-NQ/TW (February 9, 2007), of the 4th Central Conference, Session X, on Marine Strategy to 2020 and Resolution 36-NQ/TW (October 22, 2018), of the 8th Central Conference, Session XII, on the Strategy for Sustainable Development of Viet Nam’s Marine Economy to 2030, with a vision to 2045. 29 Bui Ngoc Quynh et al. (2023). “Issues Rising from the current status of Coastal Economic Zone Development in North Central Provinces.” Journal of Financial and Accounting Research No. 238, April 2023. 30 Le Thanh Dong (2022). “Current Status of Institutional Framework for Coastal Economic Zones in Viet Nam and Proposed Solutions.” Financial Journal (tapchitaichinh.vn), April 2022. General Assessment of Mechanism and Policies to Promote Marine Economic Development 55 These challenges also mirrored PEIR consultant team observations during field surveys. For instance, in planning the Thai Binh Coastal Economic Zone, concerns were raised about the negative impacts of economic activities on mangrove nature reserves. Despite legal requirements for environmental impact assessments, they often remain superficial and mainly focused on future forecasts rather than adequately addressing potential environmental impacts once projects become operational. Consequently, regular monitoring and evaluation systems, alongside feasible mitigation strategies, are urgently needed. A critical question arises regarding allocation of extensive land resources for CEZs, potentially leading to wastage, as seen in past industrial cluster planning. This is evidenced by average CEZ occupancy rates of around 40 percent, and in some areas less than 10 percent31. While local communities express a desire to utilize coastal land for aquaculture development, they often face barriers to land allocation, resulting in underutilization and wasted resources. The expansion of marine economic space for traditional activities poses direct threats to the marine environment, biodiversity, and ecosystem services. Overdevelopment of fishing activities, uncontrolled tourism in protected areas, and industrial practices can lead to significant ecological damage, including resource depletion and habitat loss for rare species. In many provinces, short- term economic benefits overshadow the need for strict environmental protections, leading to a lax regulatory environment that favors immediate economic growth over sustainable practices. Conversely, provinces that overly prioritize conservation without identifying pathways to leverage conservation benefits for economic development risk wasting resources and failing to attract necessary investments for environmental protection. This has resulted in hesitance among provinces to establish marine protected areas or Ramsar sites32, fearing that stringent regulations could deter potential investors. Overlapping marine economic development spaces also leads to conflicts within economic objectives. Effective spatial planning is essential, as it serves as the foundation for approving various economic activities. However, current overlaps and conflicts often arise from deficiencies in the planning process, such as localized approaches lacking long-term vision, as well as slow adjustments to plans that fail to align with practical development scenarios. Conflicts between development objectives often manifests in agricultural and rural sectors, which tend to be overshadowed by industrial growth. This imbalance (see Box 1) arises from a prevailing mindset that perceives fisheries and aquaculture as a low value-added sector, primarily aimed at job creation and poverty alleviation for a significant portion of the population. In contrast, provinces are increasingly focusing on attracting investments in higher value-added industries and services. Consequently, this trend leads to a prioritization of sectors – such as energy, manufacturing, trade, and tourism – often utilizing shared infrastructure that caters to multiple, sometimes conflicting, objectives. Sustainable development necessitates adherence to the principle of equitable benefit-sharing among the State, businesses, and community. The local community plays a dual role in this 31 Duong Van Mao (2018). “Vietnam’s Coastal Economic Zones: Enhancing Technological Innovation and Reducing Greenhouse Gas Emissions.” Environmental Journal (tapchimoitruong.vn), March 2018. 32 Ramsar sites are wetlands which are designated to be internationally significant by the Ramsar Convention, also known as “The Convention on Wetlands”. 56 Boosting Viet Nam’s Sustainable Marine Economy dynamic: it is a user and exploiter of marine resources for its livelihoods, while an essential agent in monitoring and protecting these aquatic resources. Therefore, a sustainable marine economic development model must emphasize the active participation of the community. This participatory approach not only empowers local stakeholders, but also fosters a more effective system of resource management, ensuring that development efforts are aligned with both environmental sustainability and community needs. Box 1. Titanium mining or fisheries development? Binh Dinh province, with 2.5 million tons of titanium reserves, is a key player in Viet Nam’s mining sector. Most operations in this South-Central coastal province are concentrated in coastal Phu My and Phu Cat districts, where rapid mining growth between 2009 and 2014 caused severe environmental damage, including depleted groundwater, pollution-related health issues, and destruction of coastal protection forests. Although new mining licenses have been halted, the 2021–30 mineral exploration plan still includes two active titanium mines, potentially restricting other marine activities. The province’s 2030 development plan also earmarks Phu My’s My An commune as a future seaport for aquatic products and fishery logistics. This creates potential conflicts with ongoing mining operations. Other coastal provinces like Ha Tinh and Quang Binh are also planning mining expansions, increasing pressure on local ecosystems. Strong management is essential to balance mining with sustainable coastal development. Source: Field survey in Binh Dinh combined with other collected materials by the PEIR team. 4.1.5. Policy and fiscal gaps hindering breakthrough solutions for marine economic development a. Policy space The allocation of marine space for exploitation and use in Viet Nam is complex, shaped by various regulatory frameworks at national and provincial levels. The Law on Planning requires regional plans to align with national planning, while provincial plans must comply with national and provincial guidelines. Marine spatial planning thus involves managing space across different marine areas to achieve economic, social, and environmental objectives. The MSP for 2021–30, approved by the National Assembly, serves as the framework for this process. The national MSP is holistic and multidisciplinary. It focuses on five key areas: improving policies to resolve space use conflicts, developing marine infrastructure like seaports, promoting marine cultural institutions, controlling waste and restoring ecosystems, and enhancing resource surveys and scientific research. While the MSP offers a foundation for provincial planning, several challenges remain, including the need for updated technical and regulatory guidance from central ministries. This gap has created a “policies waiting for policies” situation, where local marine economic activities remain stalled due to a lack of timely support from central government. For example, General Assessment of Mechanism and Policies to Promote Marine Economic Development 57 Khanh Hoa province, with its ideal conditions for offshore aquaculture, faces delays in implementing high-tech marine farming due to an absence of clear guidance on technology and environmental regulations. Despite interest from companies like Australis Viet Nam Seafood Co., Ltd, which aims to introduce modern aquaculture techniques, the project is pending approval from the Provincial People’s Committee. This highlights the need for coordinated action and timely technical guidance to facilitate marine economic development. Box 2. Businesses want to invest, but are waiting for a policy Khanh Hoa province, a leader in marine aquaculture in Viet Nam, benefits from favorable environmental conditions but still relies on traditional, small-scale farming methods. For example, many existing cages are made from wood and cannot withstand large waves, highlighting the need for a shift to modern, high-tech farming practices. To address this, the Department of Agriculture and Rural Development (DARD) partnered with the Research Institute of Aquaculture III on a pilot project to develop advanced marine aquaculture. The province is actively seeking investment from companies with expertise in industrial farming, such as use of modern raft cages to increase output. A notable player in this transformation is Australis Viet Nam Seafood Co., Ltd., which introduced high-density polyethylene cages and operates an industrial-scale facility that meets international export standards, achieving an annual output of more than 10,000 tons. Despite this progress, the company faces significant challenges, including issues with current marine aquaculture planning. Australis’ lease for marine space, expired in 2023, cannot be renewed due to provincial policies, leaving the company with no allocated sea surfaces and preventing it from securing further investment. While Australis is pursuing expansion in Kien Giang, procedural hurdles have delayed allocation of new water surfaces, impeding growth and investment. Source: Compiled from “Many businesses willing to invest heavily in marine aquaculture - Tuoi Tre Online” (tuoitre. vn) and recorded in discussion with the DARD of Kien Giang province. Meanwhile, countries have specific preferential policies for marine economic sectors. Box 3. Indonesia’s Blue Economy approach Indonesia, as the world’s largest archipelago, is rich in ocean resources and marine biodiversity, with its legal framework key to regulating the Blue Economy. This economy, seen as a driver of inclusive growth, is integrated into Indonesia’s National Long-Term and Medium-Term Development Plans, emphasizing sustainable development and effective ocean management. The Indonesian Ocean Policy (Presidential Decree No.16/2017) identifies the Blue Economy as a core principle, outlining regulations that support ocean-related sectors, including fisheries, maritime business processes, ocean spatial planning, and waste management. 58 Boosting Viet Nam’s Sustainable Marine Economy To further strengthen this framework, Indonesia has introduced various national regulations, covering sea transport, protection of energy and mineral resources, and managing marine tourism. The country has partnered with the United Nations Environment Programme (UNEP) to develop a comprehensive Blue Economy roadmap, which includes initiatives like combating illegal fishing, launching MPAs, and creating marine spatial plans. Additionally, the roadmap incorporates the Indonesia Tourism Development Project, focused on tourism infrastructure, environmental management, and community empowerment. In parallel, Indonesia is working on the Indonesian Blue Economy Index, a tool designed to monitor progress by integrating macroeconomic indicators across Blue Economy sectors, such as marine renewable energy, fisheries, aquaculture, and tourism. This initiative is aligned with the SDGs, ensuring that Indonesia’s Blue Economy evolves in a way that promotes both economic growth and environmental sustainability.33 b. Fiscal space Fiscal space refers to the budgetary capacity of provinces to finance marine economic development initiatives. In Viet Nam, 28 coastal provinces are divided into two groups: nine provinces that can balance their budgets and contribute surplus funds to the central government, and 19 provinces that depend on central government transfers for operational needs. Provinces with balanced budgets often face challenges in prioritizing marine economic growth due to competing demands for limited resources. These provinces, while able to generate additional revenue such as through tourism fees, often hesitate to implement such measures out of concern for potential negative impacts on local industries. For instance, cities like Danang though authorized to increase tourism fees, are reluctant out of fear of deterring visitors, which could harm its economy in the long run. On the other hand, the 19 provinces that rely on central transfers face even greater fiscal constraints. With limited budgetary flexibility, these provinces must prioritize basic operational expenses and adhere to central government policies, leaving little room for targeted investments in marine economic development. The lack of local financial resources further hinders support of innovative or long-term marine economic strategies. Additionally, while regional cooperation could play a vital role in advancing marine development, it remains weak and fragmented. The absence of dedicated coordination institutions for coastal provinces means collaboration relies on informal and often sector-specific agreements, such as memorandums of understanding. These arrangements lack the structural support and long-term vision necessary for meaningful, sustainable partnerships. Historically, the Southwest Steering Committee played a role in managing coastal provinces, but it was dissolved in 2018.34 Since then, coordination of key economic zones has been handled by 33 Government of Indonesia, Bappenas. (2022). “Blue Economy Development Framework for Indonesia’s Economic Transformation.” Jakarta, P.J. Morgan et al. (eds.) (2022). “Blue Economy and Blue Finance: Toward Sustainable Development and Ocean Governance”, Tokyo: ADB Institute. 34 The Southwest Steering Committee was an agency responsible for directing, guiding, and overseeing provinces in the Southwest region under the Communist Party of Viet Nam. It operated under the direct management and supervision of the Politburo. It was established on August 24, 2004, following a decision to assist in implementing Resolution 37-NQ/TW, which outlined the socio-economic development directions and ensures national defense and security in the Mekong Delta region. General Assessment of Mechanism and Policies to Promote Marine Economic Development 59 government-appointed committees. However, emphasis on economic zones often takes precedence over broader regional cooperation, further limiting the potential for integrated marine economic development. Compounding this challenge is the lack of a regional fund, as the State Budget Law restricts provinces from pooling funds for joint projects. As a result, local governments are left to fend for themselves, fostering a localized mindset where provinces focus on attracting investments within their own boundaries, rather than exploring collaborative opportunities that could benefit the entire region. This fragmentation of efforts prevents the realization of a cohesive marine economic strategy and highlights the need for a more integrated approach across provinces. Box 4. Development of Viet Nam’s seaport clusters: a loose link Viet Nam’s master plan for seaport development (2021–30, vision to 2050) focuses on six major port clusters: Haiphong-Quang Ninh, Nghi Son-Dong Hoi, Danang-Quang Nam, Dung Quat- Quang Ngai, Quy Nhon-Van Phong, and Ho Chi Minh City-Cai Mep Thi Vai. These clusters are vital for the country’s socio-economic growth. However, the current level of integration between seaports is limited, with most ports operating independently and in competition. For example, Cai Lan Port only collaborates with Nghe Tinh Port on experience-sharing, and ports in Quang Nam do not cooperate with those in Danang or Quang Ngai. Several factors contribute to this lack of integration: overcapacity, a focus on local interests, and inadequate infrastructure. While Viet Nam has many seaports, the demand for port services is insufficient, leading to competition and underutilization. Numerous provinces have built small ports without strategic planning, resulting in inadequate capacity for larger vessels. Additionally, there is no central coordination mechanism to facilitate port collaboration, while poor connectivity between ports and transport networks further hinders cooperation. Challenges such as land clearance for infrastructure and balancing port functions (cargo, fishing, tourism) complicate effective planning. Source: Viet Nam Academy of Social Sciences (2022b), pp. 87-88 The government has actively issued marine economic development policies, with provinces implementing action plans aligned with the Strategy for Sustainable Marine Economic Development by 2030 with a vision to 2045 (as stated in Resolution 36). However, a gap persists between policy formulation and execution. Central policies are not promptly adjusted to support a sea-focused development strategy, while local development priorities often follow a “business-as- usual” approach, leading to conflicts between growth and conservation, especially in resource-limited coastal areas. Regional cooperation, while recognized, remains weak due to a lack of incentives and mechanisms for provincial collaboration. Additionally, coastal provinces face a fiscal challenge: despite high demand for development investment, budgetary constraints hinder large-scale projects that could drive marine economic growth. To effectively implement the strategy, enhancing private sector participation is crucial as it can play a pivotal role in developing marine industries by responding to market signals and incentives. The State’s role should focus on creating a favorable legal framework to attract investment in step with balancing competing development objectives. 60 Boosting Viet Nam’s Sustainable Marine Economy V. Way Forward V WAY FORWARD Way Forward 61 Photo credit: © Makh / Shutterstock. Viet Nam’s marine economy represents a critical pillar of its national development strategy. The country’s vast maritime resources – including an extensive coastline, rich biodiversity, and a strategic geopolitical position – provide the foundation for economic activities such as fisheries, aquaculture, offshore renewable energy, and tourism. These industries significantly contribute to Viet Nam’s GDP and provide livelihoods for millions, particularly in coastal communities. However, the pressures of climate change, unsustainable practices, and fragmented policy implementation have exposed vulnerabilities in the marine economy. Coastal erosion, declining fish stocks, and marine pollution are eroding natural capital, while outdated infrastructure and regulatory inefficiencies hinder economic growth. Recognizing these challenges, Viet Nam prioritized development of a sustainable marine economy as outlined in Resolution 36. Achieving this vision requires bold, coordinated action to balance economic growth with environmental conservation. This report outlines strategies to enhance public and private investments, foster community engagement, and establish a robust legal and institutional framework for sustainable development of Viet Nam’s marine economy. Public investment is a cornerstone for unlocking private sector participation in the marine economy, particularly in high-potential sectors that require substantial initial funding. Strategic public spending on infrastructure – such as ports, research facilities, and renewable energy grids – reduces risks and creates an enabling environment for private enterprises. For instance, in the offshore wind energy sector, public funding for seabed surveys, regulatory frameworks, and grid connectivity can significantly lower entry barriers, making projects more attractive to investors. Globally, countries like Denmark and Norway have leveraged public procurement policies to catalyze innovation in marine industries. Denmark’s feed-in tariffs for renewable energy projects and Norway’s subsidies for offshore aquaculture technology provide useful models for Viet Nam. However, Viet Nam’s public investment efforts are often constrained by inefficiencies, including overlapping responsibilities among ministries and non-alignment between national and provincial priorities. To enhance the impact of public investment, Viet Nam must reform its PPP frameworks. Clear delineation of roles and responsibilities within PPP projects is essential to ensure accountability. Public investments should also prioritize sustainability by integrating environmental and social impact assessments into project design and funding criteria. Furthermore, enhancing the capacity of provincial authorities to implement national strategies will ensure that public investments translate into tangible benefits at the local level. Additionally, several provinces have initiated models that combine State and enterprise efforts to jointly conduct scientific research on marine ecosystem conservation. This collaboration effectively utilizes provincial scientific and technological budgets, delivering practical impacts. Moreover, it creates opportunities for startups and innovative enterprises to access funding and participate in scientific and technological initiatives, fostering a more dynamic ecosystem for marine economic development (Box 5). 62 Boosting Viet Nam’s Sustainable Marine Economy Box 5. Innovation – bringing coral to life in Nha Trang Wonder World Joint Stock Company is an innovative start-up specializing in scuba diving tourism, marine exploration and entertainment, integrated with marine scientific research. Its mission is to promote marine conservation and educate the public on the importance of coral reef preservation and sustainable development. Through immersive scuba diving programs, Wonder World offers visitors firsthand experiences of coral reef beauty. As a partner in the UNDP-funded GEFS project (2023–25), the company develops community-based tourism in Bich Dam island, Vinh Nguyen ward, Nha Trang City, enhancing local offerings. It also advances public engagement in coral reef protection, leveraging virtual and augmented reality to bring marine ecosystems to life. Wonder World’s technological initiatives focus on researching sustainable underwater materials, adapting to climate change, and monitoring coral health. The company actively contributes to conservation efforts, including seabed clean-ups, ocean plastic waste collection, and coral health monitoring aligned with international standards. Revenue from scuba diving tourism supports its mission, with 65 percent reinvested in sustainable tourism and 35 percent allocated to coral restoration research. Recent collaborations include projects with State agencies, such as implementing artificial reef initiatives under the Khanh Hoa People’s Committee’s 2030 Master Plan for Nha Trang Bay restoration. Despite its achievements, Wonder World faces challenges accessing capital due to limited norms and standards in marine conservation. The absence of a robust legal framework and the technical complexity of biodiversity monitoring present additional barriers. Nonetheless, its partnership model with State agencies demonstrates the potential of integrating ecotourism, scientific research, and conservation for a sustainable marine economy. As a part of this, the Department of Science and Technology of Khanh Hoa province coordinates with enterprises to research and plant artificial corals in Nha Trang Bay. Blended finance offers an innovative solution for addressing funding gaps in the marine economy by leveraging public or philanthropic funds to attract private capital. This approach is particularly effective for sectors – such as aquaculture, marine conservation and offshore renewable energy – which require high upfront investments and face significant market risks. By absorbing early- stage risks, blended finance mechanisms can de-risk investments and mobilize commercial capital for high-impact projects. One successful example of blended finance is Climate Investor One (CI1), a global initiative supported by donor capital to develop renewable energy projects in underserved markets. CI1 operates through a multi-stage model, including a development fund for project preparation, a construction equity fund for financing construction, and a refinancing fund for operational projects. Viet Nam could adopt similar mechanisms to support its marine economy. For instance, a blended finance facility could be established to fund offshore wind projects, with public funds covering initial feasibility studies and infrastructure development, while private investors finance the construction and operation phases. Way Forward 63 Legal reforms are crucial for implementing blended finance solutions in Viet Nam. Amendments to the State Budget Law and related financial regulations should enable creation of hybrid financing structures. Additionally, Viet Nam is encouraged to establish a dedicated marine economy investment fund to coordinate and manage blended finance initiatives. This fund could pool resources from various stakeholders – including government agencies, international donors, and private investors – to support projects aligned with national priorities. Local communities play a vital role in the sustainable management of marine resources. Viet Nam’s coastal communities, particularly those engaged in small-scale fisheries and aquaculture, possess deep knowledge of local ecosystems and are directly affected by resource degradation. Engaging these communities through co-management models will ensure that conservation efforts are effective and equitable. Co-management, which involves shared governance between State agencies and community organizations, has proven successful in many countries. In the Philippines, co-management initiatives for marine protected areas have significantly improved fish stocks and community livelihoods. In Viet Nam, however, implementation of co-management models is hindered by legal ambiguities, limited funding, and inadequate capacity building (Box 6). Box 6. Lessons from community participation in protecting mangrove forests in Thai Binh Thai Binh province, home to 4,283ha of coastal forests—predominantly protection and special-use mangrove forests—has faced significant ecological decline due to aquaculture-driven deforestation since 2002. Recognizing mangrove forests’ vital ecological and economic roles, the province initiated reforestation efforts, notably the Restoration and Sustainable Development of Mangrove Forest Ecosystem Project funded by the Korean Government. Since 2016, this project has targeted four coastal communes—Thuy Xuan and Thuy Hai (Thai Thuy district) and Dong Long and Dong Hoang (Tien Hai district). Local communities, using Korean planting techniques, played a central role in reforestation efforts. Regular monitoring by officers, the Forest Protection Department and local authorities ensured proper implementation through advanced measurement techniques and field inspections. Wages and management funds were distributed through communal authorities, while outreach programs engaged residents through community meetings and organized patrols. Key outcomes: • Planting and protection: The project planted 160ha of mangroves (80ha new and 80ha supplemented) and protected approximately 800ha annually. • Forest expansion: Mangrove forest coverage in Thai Thuy district increased from 2,000ha in 2015 to 2,600ha by 2022. • Ecosystem revival: Enhanced mangrove coverage along sea dike routes mitigated wave and storm damage and revived aquatic biodiversity, boosting income opportunities for coastal residents. 64 Boosting Viet Nam’s Sustainable Marine Economy Even after the project’s conclusion, the community management model continued, funded by a sustainable forest management program. The integration of community awareness campaigns, shared benefits from forest protection, and strong coordination among stakeholders ensured the project’s success. Today, the vibrant mangrove forests in Thai Binh stand as a natural shield against disasters and a testament to sustainable environmental stewardship. Source: Synthesized from “Thai Binh to restore and sustainably develop mangrove ecosystems” (vietnamnet.vn) and discussions with Thai Binh DARD, leaders of Thuy Xuan commune People’s Committee. To address these challenges, Viet Nam must strengthen its legal framework for co-management by defining the roles and responsibilities of all stakeholders. Dedicated funding mechanisms, such as community resource management funds, should be established to support co-management activities. These funds can finance training programs, patrol equipment, and alternative livelihood initiatives, such as community-based ecotourism. Integrating co-management with larger conservation and development projects will also ensure that community efforts are aligned with national strategies. A comprehensive and cohesive legal framework is essential to balance economic growth with environmental conservation in the marine economy. MSP serves as a critical tool for achieving this balance by delineating areas for different uses, such as conservation, tourism, and industrial activities. However, Viet Nam’s MSP efforts are often undermined by fragmented regulations and conflicting mandates among ministries. To strengthen MSP, Viet Nam must adopt a science-based approach that incorporates environmental, economic, and social data into decision-making. International best practices, such as Australia’s Great Barrier Reef Marine Park zoning plan, provide valuable lessons in integrating conservation with sustainable use. Viet Nam is encouraged to establish clear guidelines for MSP implementation at provincial level, ensuring that local plans align with national priorities. In this context, countries commonly undergo a decision-making process to prioritize important sectors based on specific stages of development, a key component of a national MSP. Countries developing a national MSP tend to prioritize environmental conservation and sustainable use of marine resources in planning decisions (Box 7). The scope and intensity of development activities can be delineated through zoning, allowing for identification of areas suitable for multiple uses. In these areas, development of selected industries aligned with key economic sectors or as contributors to the SDGs should be prioritized. Way Forward 65 Box 7. India’s prioritization of sectors in marine economy development strategies The Federation of Indian Chambers of Commerce and Industry spearheaded development of the Blue Economy Vision 2025 report, which provides valuable insights and impetus for advancing the Indian Blue Economy. This report includes a comprehensive review of business opportunities and constraints in India, along with a suggested high-level methodology for assessing the Blue Economy. It emphasizes the necessity for conscious efforts in planning, investment, and sectoral allocation of resources to ensure the Blue Economy’s natural growth. To inject dynamism into selected sectors, the report advocates for identifying priority areas based on the potential and feasibility of the Blue Economy in India. Furthermore, the report highlights that development is contingent upon the evolution of established sectors, enabling them to adopt a low-waste, low-carbon future alongside emerging sectors and ocean-based industries. These emerging sectors are characterized by cutting-edge science and technology, emphasizing a low-carbon and low-impact approach (see Box Table 7). Box Table 7. India’s blue economy: overview of established and emerging sectors Established sectors Emerging sectors • Fisheries • Renewable ocean energy (offshore wind, • Shipping tidal and wave energy, and biofuels) • Ports and maritime logistics • Seabed mining for metals and minerals • Marine coastal tourism and leisure • Marine aquaculture • Conventional minerals exploration and • Marine biotechnology production • Ocean monitoring, control and surveillance, • Marine construction activities and education and research A task force responsible for developing India’s Blue Economy Vision 2025 recommended that India prioritize the following sectors: fisheries and aquaculture, seaport and shipping (including port development), tourism (including island development for tourism), renewable ocean energy and mining (offshore hydrocarbons and seabed minerals). Notably, India’s approach to marine economic development integrates the sustainable management of coastal and marine natural resources. The National Coastal Mission (NCM), initiated under the National Action Plan on Climate Change, aims to improve management of coastal areas in response to climate change threats. The NCM operates as part of the Society of Integrated Coastal Management, which is responsible for implementing ntegrated coastal management. It promotes the blue economy agenda, while emphasizing the importance of conservation and resource sustainability. Currently, the focus is on leveraging the NCM platform to develop state-level integrated coastal management plans and execute ‘no-regret’ coastal investments in states where such plans are already in place. Source: World Bank (2022c). Supporting Resilient Coastal Economies in Viet Nam: Informing the operationalization of Viet Nam’s Marine Strategy with international experiences. 66 Boosting Viet Nam’s Sustainable Marine Economy In Viet Nam, legal reforms should extend beyond MSP to address broader challenges in marine governance. For example, harmonizing fisheries laws with environmental regulations can streamline resource management and reduce conflicts. Establishment of a National Steering Committee for Marine Economic Development, as proposed in Resolution 36, would provide a platform for coordinating policies and resolving inter-agency disputes. Reliable data and monitoring systems are the backbone of effective marine economic planning. Currently, Viet Nam lacks a unified statistical framework for the marine economy, resulting in data gaps on key indicators such as biodiversity, fish stocks, and economic contributions of marine sectors. This hinders policymakers’ ability to assess progress and adapt strategies. Viet Nam should prioritize development of a comprehensive marine economy database that integrates data from multiple sources, including government agencies, research institutions, and private enterprises. Key indicators should include measures of natural capital, ecosystem health and socio-economic impacts, such as employment and income levels in marine sectors. Advanced technologies, such as remote sensing and geographic information systems (GIS), can enhance data collection and analysis to provide real-time insights into marine resource conditions. Collaboration among ministries and international partners is essential for building a robust data system. Viet Nam should also establish a central body responsible for coordinating data collection and dissemination, ensuring consistency and accessibility. Regularly publishing marine economy reports will promote transparency and accountability, while also informing stakeholders of progress toward national goals. The MPI35 will spearhead development of principles, criteria, and norms for allocating targeted public investment transfers between the State and local budgets for the fiscal stability period of 2026–30. This initiative aims to introduce fundamental adjustments to ensure the efficient and equitable distribution of resources. Concurrently, the MPI36 will design a comprehensive system of allocation criteria and norms, reflecting the evolving priorities and functions of public investment. This new framework will be submitted to the National Assembly and government, laying the foundation for a robust and forward-looking fiscal strategy beyond 2030. A key innovation in this process is the integration of ecological-fiscal transfers (EFT)—a mechanism that incorporates conservation costs into sub-national budget allocations. EFTs provide financial incentives for local governments to prioritize sustainable environmental management. Recognizing the critical role ecosystems play in economic stability, several countries have already embedded marine economies into vertical budget transfer formulas. These pioneering examples highlight the potential for Viet Nam to adopt similar approaches, ensuring its resource allocation mechanisms align with sustainability goals, while driving inclusive economic growth (Box 8). 35 Based on Resolution 27/NQ-CP dated on February 7, 2025, and Conclusion 121-KL/TW in 2025 issued by The Central Executive Committee on the summary of Resolution 18-NQ/TW regarding several issues related to continuing the reform and reorganization of the political system, the Ministry of Planning and Investment (MPI) in March merged into Ministry of Finance (MOF). 36 Ibid Way Forward 67 Box 8. Ecological-fiscal transfer mechanism Although adoption remains limited in Asia, interest in EFT is growing. Indonesia, for example, is actively developing an EFT framework, and similar discussions have taken place in Malaysia and the Philippines. India serves as a notable case, having formally modified its devolution formula in 2015 to include forest cover as a criterion for determining the grants-in-aid provided to states. The formula assigns weights to different components, such as area (15 percent), population in 1971 (17.5 percent) and 2011 (10 percent), fiscal capacity and income distance (50 percent), and forest cover (7.5 percent). This addition of forest cover, an environmentally conscious move, results in forest-based revenue transfers of US$120 per hectare annually. EFT holds significant potential for balancing economic and environmental priorities, particularly as countries seek mechanisms that align fiscal policies with the SDGs. Source: GIZ and the General Department of Forestry (2021) Sustainable public procurement can drive innovation and environmental stewardship in the marine economy. By integrating sustainability criteria, such as carbon emissions and resource efficiency into procurement processes, Viet Nam can incentivize businesses to adopt greener practices. For example, Norway’s CO2 emission standards for public ferries have spurred development of electric ferry projects, setting a global benchmark for sustainable procurement. Investment allocation should also prioritize sectors with high potential for sustainable growth, such as offshore renewable energy, aquaculture, and ecotourism. Inter-regional cooperation in infrastructure projects, such as shared ports and marine research centers, can enhance efficiency and reduce costs. Additionally, allocating funds for foundational infrastructure in underdeveloped coastal areas will ensure that all regions benefit from marine economic development. The sustainable development of Viet Nam’s marine economy requires an integrated approach that balances economic, environmental, and social objectives. By leveraging public investment, adopting innovative financing mechanisms, and empowering communities, Viet Nam can unlock the full potential of its marine resources. Strengthened legal frameworks, advanced data systems, and strategic public procurement will further ensure that marine economic activities align with sustainability goals. Developing a comprehensive system of marine economic statistical indicators is crucial for advancing Viet Nam’s marine economy. By consolidating existing data, adding new indicators, and strengthening the reporting system, the government will have the necessary tools to measure and promote the marine economy’s sustainable development. This system will help Viet Nam better harness its marine resources while ensuring environmental sustainability and socio-economic growth. This effort will require coordination across ministries, engagement with the private sector, and integration of international best practices to achieve a fully functional and transparent marine economic database (Box 9). 68 Boosting Viet Nam’s Sustainable Marine Economy Box 9. Indicators to monitor, evaluate and rank countries with a marine economy The Blue Economy Development Index (BEDI) takes a holistic approach to coastal and marine resource use by using social, economic, and environmental indicators to track changes over time at national and international levels. The index supports development of archipelagic and island states, a group of nations whose ongoing development is linked to the health of coastal areas. The Coastal Governance Index 2019 ranks 20 coastal countries around the world on governance that balances private investment interests and social and environmental concerns in coastal areas. The index comprises of 26 indicators across six categories, including “foundational” and “asset” categories”. The foundational categories require sound and distinct institutions (Category 1: policy and institutional capacity), and a business-friendly environment to attract and sustain the private sector in coastal areas (Category 2: business environment for coastal activities). The asset categories include four assets: water quality (Category 3), minerals, energy and shipping (Category 4), land (Category 5), and living resources (Category 6). These resources and their abundance are at the root of competing-use issues, conservation and social concerns. Ocean Health Index (OHI) is a comprehensive framework used to measure ocean health from global to local scales with respect to 220 countries. The underlying principle of this index is that a healthy ocean sustainably delivers a range of benefits to people now and into the future. Ocean benefits delivered to people are called “goals” within the OHI framework and are widely recognized for supporting human well-being and sustainable ocean ecosystems. These include food provision, artisanal fishing opportunities, natural products, carbon storage, coastal protection, livelihoods and economies, tourism and recreation, sense of place, clean waters, and biodiversity. Moving forward, collaboration among government agencies, private enterprises, and local communities will be key to achieving a resilient and inclusive marine economy. Viet Nam must also strengthen international partnerships to access funding, technology, and expertise. With a clear vision and coordinated action, Viet Nam can transform its marine economy into a global model for sustainable growth that benefits both people and the planet. Way Forward 69 KEY RECOMMENDATIONS Short-Term Recommendations (0–2 years) These actions are critical and can be implemented immediately with existing resources and minimal structural changes. 1. Strengthen State and community engagement and co-management models • Establish clear legal frameworks to define roles and responsibilities in co- management efforts. • Provide immediate funding to community organizations for conservation and alternative livelihoods, such as ecotourism and sustainable aquaculture. • Deliver capacity-building programs for local communities, focusing on resource management, governance, and sustainable economic practices. 2. Integrate sustainability into public procurement • Mandate environmental and social impact criteria in all marine economy projects involving public procurement. • Use sustainability standards, such as carbon emission reductions, to incentivize green innovations in sectors like shipping and tourism. 3. Initiate data integration for marine economic planning • Develop a unified statistical framework for marine economic data, leveraging existing technologies like Geographic Information Systems (GIS) and remote sensing. • Launch pilot projects to monitor key indicators such as biodiversity, fish stocks, and economic contributions from marine industries. 4. Enhance Public-Private Partnerships (PPPs) • Clearly delineate roles in PPPs to improve accountability and transparency of marine economy projects. • Pilot new PPP models in key sectors, such as aquaculture and offshore wind, focused on reducing risks for private investors. 5. Reform budget allocation processes • Revise criteria for public investment allocation to prioritize high-impact marine sectors and underdeveloped coastal areas. • Provide targeted funding for essential infrastructure, such as ports and aquaculture facilities, to lower entry barriers for private enterprises. 70 Boosting Viet Nam’s Sustainable Marine Economy KEY RECOMMENDATIONS Medium-Term Recommendations (2–5 years) These recommended actions require moderate structural adjustments and additional stakeholder coordination, but are crucial for achieving sustained progress. 1. Expand blended finance mechanisms • Establish a national blended finance facility focused on offshore renewable energy, aquaculture, and large-scale conservation projects. • Facilitate legal reforms, including amendments to the State Budget Law, to enable hybrid financing structures. • Develop a budget index system for tracking marine-related expenditures and ensure transparency in financial flows. 2. Refine Marine Spatial Planning (MSP) • Implement a comprehensive MSP framework that integrates conservation, economic, and community objectives. • Designate zones for specific activities – including conservation, tourism, and industrial development – to reduce conflicts and maximize resource use. • Provide provinces with technical support to align local MSP with national priorities. 3. Promote research and innovation • Invest in research centers focused on sustainable marine technologies, such as renewable energy systems and aquaculture innovations. • Establish partnerships with international institutions to access advanced technologies and expertise. 4. Strengthen international collaboration • Engage with global initiatives like Climate Investor One (CI1) to co-develop renewable energy projects in underserved regions. • Seek bilateral and multilateral funding to support Viet Nam’s transition to a sustainable marine economy. 5. Improve governance and coordination • Operationalize the existing National Steering Committee for Marine Economic Development to streamline decision-making and resolve any inter-agency disputes. • Enhance the capacity of provincial authorities to effectively implement and monitor marine economic initiatives. Way Forward 71 KEY RECOMMENDATIONS Long-Term Recommendations (5–10 years) These initiatives are transformational and require substantial investments, international partnerships, and systemic changes. 1. Establish comprehensive marine economy data systems • Build a centralized marine economy database incorporating real-time data on environmental health, socio-economic impacts, and industrial performance. • Integrate ocean accounting systems into national economic planning, reflecting the value of marine natural capital. 2. Develop inter-regional infrastructure for marine sectors • Implement large-scale infrastructure projects – such as shared ports, marine research hubs, and monitoring systems – that benefit multiple provinces. • Enhance resilience of coastal infrastructure to mitigate the impacts of climate change, including sea level rises and storm surges. 3. Foster ecosystem-based management • Adopt ecosystem-based approaches to integrate conservation and development goals across all marine sectors. • Scale-up ecological fiscal transfers (EFT) to incentivize local governments in biodiversity protection and restoration efforts. 4. Scale-up renewable energy and mariculture • Expand offshore wind capacity through public-private collaborations and continued support for early-stage technologies. • Enhance offshore mariculture infrastructure with government-supported sustainable practices and technology to boost Viet Nam’s production capacity, while minimizing ecological impacts. 5. 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(2021), Decision No. 185 promulgating operational regulations of the Steering Committee for coordination to implement the strategy for sustainable development of Viet Nam’s marine economy to 2030, with a vision to 2045. Prime Minister of Viet Nam. (2010). Decision No. 373/QĐ-TTg by the Prime Minister on the approval of the project promoting management of sustainable development and protection of the sea and Islands Viet Nam. Prime Minister of Viet Nam. (2018). Decision No. 27/2018/QĐ-TTg on Viet Nam’s standard industrial classification of economic activities. Prime Minister of Viet Nam. (2020). Decision No. 26/2020/QĐ-TTg by the Prime Minister on implementation of several articles of Resolution No. 973/2020/UBTVQH14 regulating principles, criteria, and norms of distribution of public investment capital for 2021-25. Prime Minister of Viet Nam. (2021a). Directive No. 31/CT-TTg on renewing and strengthening implementation of the strategy for sustainable development of Viet Nam’s marine economy through 2030, with a vision to 2045. Prime Minister of Viet Nam. (2021b). Decision No. 30/QĐ-TTg on principles, criteria and norms for allocation of recurrent expenditure estimates in 2022. Prime Minister of Viet Nam. (2022). Decision 892/QĐ-TTg approving the project on development of marine economic clusters in association with building strong marine economic centers to 2030 in Viet Nam. Prime Minister of Viet Nam. (2023a). Decision No. 1619/QĐ-TTg approving the planning of Binh Dinh province for 2021-30, with a vision to 2050. Prime Minister of Viet Nam. (2023b). Decision No. 866/QĐ-TTg on approval for planning for exploration, extraction, processing and use of minerals for 2021-30, with a vision to 2050. 76 Boosting Viet Nam’s Sustainable Marine Economy Quang Ninh’s Executive Committee of the Provincial Party. (2022). Implementation results of Action Program No. 27-CTr/TU (March 27, 2019) of implementation of Resolution No. 36-NQ/TW of the 12th Party Central Committee on the strategy for sustainable development of Viet Nam’s marine economy to 2030, with a vision to 2045. Rochelle Turner & Evelyne Freiermuth. (2017). “Travel & Tourism - Economic Impact 2017 Viet Nam, World Travel & Tourism Council.” Technion. (2015). “The Israel Marine Plan.” https://msp israel.net.technion.ac.il/files/2015/12/ MSP_plan.compressed.pdf The Ocean Panel. (2022). “Opportunities for Transforming Coastal and Marine Tourism Towards Sustainability, Regeneration, and Resilience.” Tuoi Tre News. (2016, January 4). Formosa ranked first in pollution incidents in 2016. https:// tuoitre.vn/formosa-dung-dau-cac-vu-gay-o-nhiem-nam-2016-1351267.htm UN. (2017). The Ocean Conference Factsheet Package. https://www.un.org/sustainabledevelopment/ wp-content/uploads/2017/05/Ocean-fact-sheet-package.pdf UNDP. (2022). “Blue Economy Scenarios for Viet Nam.” https://www.undp.org/Viet Nam/ publications/blue-economy-scenarios-viet-nam UNWTO. 2021. “The Economic Contribution of Tourism and the Impact of COVID-19.” Madrid: UNWTO. https://www.e-unwto.org/doi/epdf/10.18111/9789284423200 VIFEP. (2021). “A summary on the Fisheries Development Strategy to 2030, vision to 2045.” Viet Nam Academy of Social Sciences. (2022a). “Economic Linkages among Coastal Provinces of Viet Nam: Current Circumstances and Solutions.” A key ministerial-level summary report and program on: Social sciences and humanities in marine economic development and national defense. Viet Nam Academy of Social Sciences. (2022b). Sustainable Development of Viet Nam’s Coastal Free Economic Zones (KKTVB in Vietnamese) in the new context. Ministry-level scientific research topic in 2022. Viet Nam Academy of Social Sciences. (2022c). “Implementation of Viet Nam’s Marine Spatial Planning: Influencing Factors and Suggestions.” A summary report of the academy-level scientific research topics. Viet Nam Administration of Seas and Islands (VASI). (December, 2024). Some initial results and evaluations from managers on implementing economic and social goals, basic investigations at the conference of 28 coastal provinces and cities. https://vasi.gov.vn/Pages/mot-so-ket-qua-va-danh- gia-buoc-dau-tu-cac-nha-qua-8e1a.aspx VietnamNet. (2020, September 3). Vietnam among top 3 countries in number of oil spills. https:// vietnamnet.vn/en/vietnam-among-top-3-countries-in-number-of-oil-spills-604232.html Whisnant & Vandeweerd. (2019). “Investing in the New Blue Economy: The Changing Role of International Development Organizations in Catalyzing Private Sector Investment in Support of References 77 Regional Strategic Action Programmes for the Sustainable Development of Coasts and Oceans.” Journal of Ocean and Coastal Economics: Vol. 6: Iss. 1, Article 8. World Bank. (2013). “Fish to 2030: Prospects for Fisheries and Aquaculture, Agriculture and Environmental Services.” Discussion Paper 03, World Bank, Washington, DC, http://documents. worldbank.org/curated/en/2013/12/18882045/fish-2030-prospectsfisheries-aquaculture World Bank. (2019). Forest Country Note – Viet Nam, Washington, DC. World Bank. (2021a). “Banking for Protected Areas.” Washington, DC. World Bank. (2021b). “Oceans for Prosperity: Reforms for a Blue Economy in Indonesia.” Washington, DC. World Bank. (2021c). “The Blue Public Expenditure Review: Guidance Notes.” Washington, DC. World Bank. (2022a). “Accelerating Clean, Green, and Climate-Resilient Growth in Viet Nam: A Country Environmental Analysis.” Washington, DC: World Bank. https://openknowledge. worldbank.org/handle/10986/37704 World Bank. (2022b). “Marine Spatial Planning Framework for Viet Nam.” Washington, DC. World Bank. (2022c). “Supporting Resilient Coastal Economies in Viet Nam: Informing the Operationalization of Viet Nam’s Marine Strategy with International Experiences.” Washington, DC. World Bank. (2022d). “Vietnam: Plastic Pollution Diagnostic.” Washington, DC. 78 Boosting Viet Nam’s Sustainable Marine Economy ANNEX A.1. INSTITUTIONS, MECHANISMS, AND POLICIES FOR THE DEVELOPMENT OF VIET NAM’S MARINE ECONOMY This section evaluates the institutional framework and policies governing marine economic development in Viet Nam. It begins with an overview of the institutional framework regulating public expenditure management, including allocations for marine economic activities, and then analyzes specific mechanisms and policies aimed at promoting marine economic development. A.1.1. Institutional Framework of Public Expenditure Management for the Marine Economy in Viet Nam Public expenditures for the marine economy fall under the same institutional framework governing all public sector activities, primarily guided by two key pieces of legislation: the State Budget Law of 2015 and the Public Investment Law of 2019. A.1.1.1. Budgetary Decentralization and Equalization Arrangements Viet Nam’s administrative structure comprises central, provincial, district, and commune levels, with the latter three collectively referred to as “local authorities”. These levels correspond to four State budget tiers. The central budget represents the first tier, while the combination of the other three is known as the subnational budget. The State budget management system in Viet Nam operates as an integrated system, often described as the “Matryoshka doll model” (see Figure A.1). Each budget tier is assigned specific revenue sources and expenditure responsibilities to fulfill its designated functions. Local government revenues consist of entitlement revenues and transfers from higher levels of government. The latter includes balancing and targeted transfers. • Balancing Budget Transfer: This equalizing transfer from higher to lower government tiers ensures that local authorities can meet their obligations to provide essential services at minimal cost. Currently, nine out of 28 coastal provinces contribute to the central budget, while the others receive balancing transfers. • Targeted Transfer: This financial support is designed to help implement new policy initiatives introduced by the upper government tier during specific fiscal stability periods. Both types of transfers adhere to transparent formulas based on established allocation criteria and norms for recurrent and capital budgets, typically spanning five years. The criteria for transferring funds from the central to subnational budgets are determined by a resolution from the National Assembly’s Standing Committee. Annex 79 Figure A.1 Simplified diagram showing the integrated budget system in Viet Nam State budget Central Ministries Subordinate budget and sectors units Local budget Provincial- Provincial departments Subordinate (provincial) level budget units and sectors District District- District level Subordinate budget level budget divisions units NOTE Commune Relations among State budget levels budget Relations with budgeting units A.1.1.2. Budgeting Process Viet Nam employs a dual budgeting system, where the planning, allocation, and management of recurrent and capital budgets are handled separately. Two distinct government agencies are responsible for overseeing these expenditures: 6. Planning and Investment Agencies: At the central level, the MPI manages capital expenditure (public investment expenditures). At the provincial level, the DPI fulfills this role, while the Bureau of Planning and Finance oversees capital spending at the district level. 7. Finance Agencies: The MOF manages the recurrent budget at the central level, while provincial- level oversight is provided by the DOF. At the district level, the Bureau of Planning and Finance consolidates both recurrent and capital expenditures into an integrated budget for each government tier. At the district level, the same agency manages both recurrent and capital budgets. However, their technical functions remain distinct. The budget preparation process begins in May and concludes in December of the current year, as illustrated in Figure A.2. 80 Boosting Viet Nam’s Sustainable Marine Economy Figure A.2 Schematic representation of budget preparation process in Viet Nam BUDGET PREPARATION GUIDING STAGE BUDGET APPROVAL STAGE AND REVIEW STAGE National Assembly National Assembly Standing Committee Resolution Central level PM’s Directive Government PM’s Decision National Plan and Line Ministries’ plans Approved Line MPI’s and MOF’s Budget and budgets Guiding Circulars Line Ministries Ministries’ budget May June July August September November 15 December 31 Provincial Provincial Line Provincial Line Provincial Approved Provincial Provincial SEDP and Guidelines Departments Departments’ Plans People’s Council Line Departments’ annual budget plan and budgets Resolution budget Subnational level District District Spending District Spending District Approved District Guidelines Units District SEDP and Units’ Plans and People’s Council Spending Units’ annual budget plan budgets Resolution budgets Commune plan and Commune Approved Commune Commune level annual budget People’s Council Resolution budgets NOTE Direct supervision Technical guidance Annex 81 In principle, the budget cycle is governed by the State Budget Law, which stipulates that the budget preparation process must be completed in time for the draft budget plan to be submitted to the National Assembly for approval by November 15. Once the national budget—including central and subnational budgets—is approved by the National Assembly, the Prime Minister issues an appropriation decision for the central budget, specifying allocations for each ministry and central agency, by November 20. Similarly, by December 10, the provincial People’s Council (or provincial assembly) approves the subnational budget and allocates provincial-level budget envelopes to local agencies. This process continues down through lower government tiers, reaching the commune level. By December 31, budget appropriations must be finalized across all government tiers to ensure that all spending units can execute their allocated budgets starting on January 1, the first day of the fiscal year. A.1.1.3. Public Investment Management Process The capital budget is governed by the Public Investment Law (2019). The public investment management process can be summarized in three stages, as illustrated in Figure A.3. Figure A.3 Public Investment Management Process in Viet Nam STAGE 1: STAGE 2: STAGE 3: INVESTMENT INVESTMENT OPERATION PREPARATION IMPLEMENTATION Identification Report on proposal Organization consideration for investment for exploita- and approval policied tion and of investment Preparation for operation of a policy of a investment program or program or project project Pre-F/S Report Preparation, appraisal, approval of Implementation Completion medium-term public investment plan of investment and impact evaluation of a program or project Preparation, appraisal, approval of investment of a F/S report program or a project Acceptance, hand over a End and program or closure of a project for program or Preparation, appraisal, approval of exploitation project annual public investment plan and use 82 Boosting Viet Nam’s Sustainable Marine Economy Stage 1: Investment Preparation This stage involves a two-step process. The first step is the decision-making over investment policy proposals. Before each five-year cycle, investment owners must prepare investment policy proposals, akin to project concept notes in international practice but with much more detailed information, especially regarding estimated total project costs. These proposals are submitted to the competent authority, which may establish an appraisal panel to review them. The panel, led by the MPI or DPI, assesses project affordability and the feasibility of funding sources. Based on the panel’s recommendations, the competent authority can approve the investment policy proposals, a necessary condition for the projects to be included in the MTPIP—a shortlist of projects likely to receive funding over the next five years. The total costs of all projects in the MTPIP must not exceed the five-year funding ceiling set by supervisory agencies. The second step involves making investment decisions. Annually, based on projected budget availability, planning agencies select a bundle of projects from the MTPIP to fund feasibility studies. These studies undergo review by another appraisal panel or a delegated agency. Once the feasibility studies are approved, the competent authority makes investment decisions, and the approved projects receive funding for implementation. Stage 2: Investment Implementation This stage begins with a bidding process to select contractors. During implementation, agencies monitor and supervise projects to ensure they are completed on schedule, within the approved budget, according to design specifications, and achieve their expected objectives. Upon completion, project outputs are handed over to end-users. Stage 3: Operation In this stage, newly-created assets are utilized to generate expected benefits. Securing operation and maintenance costs is crucial, and ex-post evaluations are conducted to assess whether projects achieve their intended impacts and provide value for money. Insights into the Institutional Framework The institutional framework of public expenditure management in Viet Nam exhibits several key characteristics: • Dependence on Upper-Level Appropriations: The integrated budget system results in lower budget levels being highly dependent on the appropriation decisions of higher levels. While expenditure assignments are decentralized, budget revenue collection remains concentrated in the hands of the National Assembly, limiting local governments’ ability to generate their own revenues. Most poorer provinces, as net recipients, rely heavily on budget transfers from the central government based on the budget equalization mechanism described earlier. • Disconnection Between Recurrent and Capital Budgets: The dual budget system creates a disconnect between the allocation and use of recurrent and capital budgets. While capital expenditures are proposed, approved, and implemented on a project-by-project basis in the MTPIP, recurrent expenditures are appropriated based on annual budget availability and primarily follow an incremental approach. Consequently, increases in fixed asset endowment from completed public investment projects do not lead to corresponding increases in recurrent budgets, resulting in significant shortages for operation and maintenance. Annex 83 A.2. VIET NAM’S MARINE ECONOMY: CHARTING A PATH TO SUSTAINABLE GROWTH The concept of marine economic sectors is vital, as approximately 40 percent of the world’s population resides near coastal areas, and more than three billion people rely on the oceans for their livelihoods. Additionally, 80 percent of global trade is facilitated by sea routes, underscoring the economic importance of oceans, seas, and coastal areas in promoting food security and alleviating poverty. In recent years, the term “Blue Economy” has gained traction, particularly in organizations such as the EU, OECD, UN and the World Bank, which use it to describe the intersection of sustainability, economics, and the ocean. The Blue Economy refers to the sustainable use of ocean resources for economic growth, improved livelihoods, and environmental health, though its exact definition varies across institutions. For instance, the OECD frames the ocean as the next major economic frontier, emphasizing its potential for wealth generation, employment, and innovation. In its 2016 report on the marine economy (OECD, 2016), the OECD provided a comprehensive framework for classifying marine economic activities (see Figure A.4). However, it also acknowledged that any definition of the ocean economy is incomplete without including non- quantifiable natural resources and non-market goods and services provided by the marine environment. Figure A.4 Marine economy classification Ocean economy Intermediate inputs Ocean-based Marine ecosystems industries Impacts Market flows Physical capital stock Non-market flows Natural and services ocean-based industries and services capital assets The OECD defines the marine economy as encompassing both the “total economic activities of ocean-based industries” and the “assets, goods, and services provided by marine ecosystems.” This comprehensive understanding divides the marine economy into two key components: (1) marine economic sectors and (2) marine ecosystems. Unlike many conventional views that concentrate solely on economic sectors, the OECD’s broader approach emphasizes the inclusion of marine ecosystems as an essential aspect. Within the first component, the OECD (2016) further categorizes marine economic sectors into two subgroups: (a) traditional sectors, which consist of 11 established industries, and (b) emerging sectors, comprising nine rapidly developing industries (see Table A.1). This classification highlights both the established and innovative areas of economic activity tied to the oceans. 84 Boosting Viet Nam’s Sustainable Marine Economy Table A.1 Marine economic sectors according to OECD classification Traditional Industries Emerging Industries (1) Fishing (1) Aquaculture (2) Oil and gas extraction in deep and very deep (2) Seafood processing waters (3) Maritime (3) Offshore wind energy (4) Port (4) Ocean renewable energy (5) Ship building and repairs (5) Sea and seabed mining (6) Offshore oil and gas extraction (6) Maritime safety and surveillance (7) Ocean construction and processing (7) Marine biotechnology (8) Marine tourism (8) High-tech marine products and services (9) Business services (9) Others (10) Education, Research and Development (R&D) (11) Dredging Source: OECD (2016). Component 2 pertains to marine ecosystems, encompassing a variety of environments such as oceans, wetlands, tidal shelves, estuaries, lagoons, mangroves, coral reefs, and water columns, including deep-sea and seabed areas (Kaiser and Roumasset, 2002, cited in OECD 2016). These ecosystems offer intermediary services that are crucial for supporting the marine economic sector. The OECD has categorized these marine and coastal ecosystems into four distinct groups: • Support: functions that maintain the conditions for life within ecosystems. • Regulation: services that regulate natural processes, including climate and water quality. • Provision: goods and resources provided by the ecosystem, such as fish and other seafood. • Culture: non-material benefits that contribute to the cultural, aesthetic, and recreational value of marine environments (see Table A.2). This classification underscores the vital roles that marine ecosystems play in sustaining economic activities and promoting ecological health. Table A.2 Marine and coastal ecosystem services Ecosystem Services Definition Example Ecosystem functions support Photosynthesis, nutrient cycle, soil, Support and enable the maintenance and sediment and sand formation provision of other services Water regulation, disaster and weather Natural regulation of ecosystem Regulation regulation, carbon sequestration and processes and natural cycles coastline stabilization Annex 85 Ecosystem Services Definition Example Raw materials (e.g., seabed sediments), food production (e.g., fishing and aquaculture), energy (e.g., offshore Provision Raw materials, food and energy wind, ocean energy, offshore oil and gas) and genetic resources (e.g., supply of biological feedstock) Benefits related to experiencing Tourism, entertainment, spiritual values, Culture natural environments education and aesthetics Source: De Groot, Wilson and Boumans (2002) cited in OECD 5 (2016:49). The sectoral scope of the ocean economy varies considerably by country. The number of categories chosen can range from six, as in the case of the United States, to 33 in the case of Japan. Some industries may be excluded from the ocean economy in one country, but not in another. Moreover, there are significant differences among countries in the delineation of classifications and categories used.37 Another approach to classifying Component 1, as proposed by the Ministry of Natural Resources and Environment (MONRE), divides the marine economic sectors into two distinct groups: • Pure Marine Economy: This group includes industries that are inherently tied to the sea and its resources. These sectors are directly reliant on marine resources, meaning that their economic activities could not occur without access to the ocean. They have a direct geographical and resource-based connection to marine environments. • Coastal to Marine Economic Sector: This group encompasses industries that support or are connected to pure marine economic activities, though they do not depend directly on the sea. These ocean-related sectors may rely on marine resources or activities but can operate both on land and in marine environments, providing support, services, or associations with marine economic activities. Despite this categorization, practical applications often reveal “gray” areas where classification can become ambiguous. For instance, determining the appropriate classification for renewable energy development from wind power on islands can be challenging. Consequently, to establish development targets for pure marine sectors, a general guideline is essential to ensure consistency in classification and reporting. In Viet Nam, the classification of marine economic sectors is outlined in Resolutions 36 and 26 (Table A.3). Table A.3 Marine economic sectors following the classification in Resolutions 36 and 26 Resolution 36 Resolution 26 (M1-M8) (1) Tourism and marine services (1) Tourism and marine services (2) Maritime economy (2) Maritime economy (3) Exploitation of oil and gas and other (3) Exploitation of oil and gas and other marine marine resources and minerals resources and minerals 37 OECD. (2016). “The Ocean Economy in 2030.” 86 Boosting Viet Nam’s Sustainable Marine Economy Resolution 36 Resolution 26 (M1-M8) (4) Aquaculture and fishing (4) Aquaculture and fishing (5) Coastal industry (5) Coastal Industry (6) Renewable energy and new marine (6) Renewable energy and new marine economic sectors economic sectors (7) Development of marine areas (8) Coastal infrastructure development Source: Resolutions 36 and 26. Comparing the classifications of marine economic sectors in Viet Nam with those of the OECD, several evaluations can be made: Overall similarity: The classifications outlined in Resolution 26 are largely aligned with those in Resolution 36, with the addition of two new subsectors: the development of marine areas and the development of coastal infrastructure. The inclusion of these subsectors aims to facilitate the monitoring of investment projects with regional linkages (M7) and multi-objective projects (M8). This is particularly important for infrastructure that meets both marine economic goals and the specific objectives of other industries, such as agriculture and transportation. Furthermore, this report employs the Resolution 26 classification for inland activities primarily occurring in coastal regions that utilize marine resources. Focus on Component 1: Viet Nam’s marine economic sectors predominantly fall under Component 1 of the OECD classification. Some activities within M6 relate to marine and coastal ecosystem services, such as developing economic sectors based on marine biodiversity resources (e.g., marine biodiversity, marine medicinal herbs, seaweed, and algae farming and processing). However, the focus is narrower than in the OECD framework, primarily emphasizing the supply function of marine and coastal ecosystems without a comprehensive approach. Traditional versus emerging sectors: Resolution 26 primarily targets traditional economic sectors, while emerging sectors are integrated only to a limited extent. For instance: M1 (Tourism and Marine Services) includes education, research and development, and marine biotechnology. M2 (Maritime Economy) encompasses maritime transport, port operations, shipbuilding and repairs, maritime safety, and monitoring, as well as high-tech marine products and services. M3 (Exploitation of Oil, Gas, and Marine Minerals) focuses on deep-water oil and gas exploitation. M4 (Aquaculture and Fishing) includes fishing and aquaculture. M5 (Coastal Industry) pertains to seafood processing. M6 (Renewable Energy and New Marine Economic Sectors) incorporates offshore wind energy and ocean renewable energy initiatives. Annex 87 Notably, essential activities heavily funded by the public investment budget, such as coastal flood prevention, are excluded from Viet Nam’s marine economic classification. Local context considerations: Some specific activities that reflect Viet Nam’s unique local context are not addressed in the OECD classification. For instance, the OECD report emphasizes premium services in the tourism sector, such as marine sports, recreational fishing, aquariums, and excursions to underwater cultural habitats. In contrast, Viet Nam’s Marine Development Strategy recognizes community-based tourism as a crucial avenue for promoting sustainable tourism and sharing its benefits with local communities. This strategy also highlights the need to transition fishers from traditional fishing roles to aquaculture or other non-fishing occupations. Although Resolution 36 aims for marine economic sectors to contribute approximately 10 percent of the country’s GDP by 2030, it lacks a clear definition of what constitutes marine economic sectors. The content of both Resolutions 36 and 26 does not adequately differentiate between pure marine activities and coastal activities, complicating efforts to separate these two industry groups. Viet Nam’s current classification primarily emphasizes the traditional marine economic sectors of Component 1, with emerging sectors only mentioned at a limited level and often integrated into traditional activities. This classification has been tailored to reflect the domestic landscape of marine economic development. While it facilitates the collection of information and quantification of current investments in existing sectors, it does not provide guidance for ministries, sectors, and provinces to invest in future economic sectors that align with international best practices and effectively leverage the significant potential of the marine economy for high-value sectors. Based on the classifications, data and methodology to quantify the contributions of ocean economic sectors were identified as the summary of Table A.4. Table A.4 Chosen methodology and data sources to estimate contributions of each covered ocean economic sector Ocean Approach to VSIC 2018 No. economic calculate value Details (2-digit) sectors added 1 Marine Fishing and Total 1. Data source: Total compensation aquaculture and aquaculture (03) compensation of employees in acting enterprises by exploitation of employees kinds of economic activity: fishing in acting and aquaculture. enterprises by kinds of 2. Measurement: Value added of economic fishing and aquaculture to ocean activity economy. 2 Exploitation Extraction of crude Value added 1. Data source: Value added of of crude oil, petroleum and mining and quarrying industry gaseous or natural gas (06) from ADB’s Input-Output table. liquefied natural Total compensation for employees gas in acting enterprises by kinds of economic activity: extraction of 88 Boosting Viet Nam’s Sustainable Marine Economy Ocean Approach to VSIC 2018 No. economic calculate value Details (2-digit) sectors added crude oil and natural gas; mining and quarrying. Total compensation of employees in mining and quarrying from official statistics. 2. Measurement: Value added of extraction of crude oil and petroleum. 3 Seafood Manufacture of food Total 1. Data source: Total compensation and aquatic products (10) compensation of employees in acting enterprises products of employees by kinds of economic activity: processed and in acting manufacture of food products. preserved enterprises Revenue data: Net revenue of the by kinds of food processing industry (VIRAC, economic 2023). activity 2. Measurement: Value added of seafood products and processing. The seafood-related share was determined by applying a proxy based on revenue. Specifically, according to VIRAC research 2023, processing and preserving seafood accounts for more than 50 percent of total net revenue of the food processing industry. Multiply the total compensation of employees in the manufacture of food products sector by the share of 50 percent seafood processing to estimate the economic contribution of seafood processing. 4 Fuel oil and Manufacture of Value added 1. Data source: Value added at basic gasoline, coke and refined price of coke, refined petroleum, and petroleum petroleum products nuclear fuel in ADB Input-Output processing (19) table for Viet Nam. products of all 2. Measurement: Value added of kinds manufacture of sea-related minerals and products. 5 Manufacture of Manufacture of Total 1. Data source: Total compensation ships and boats other transport compensation of employees in acting enterprises equipment (30) of employees in by kinds of economic activity. Repair, maintenance acting enterprises Manufacture of other transport and installation by kinds of equipment and repair and installation of machinery and economic of machinery and equipment. equipment (33) activity Annex 89 Ocean Approach to VSIC 2018 No. economic calculate value Details (2-digit) sectors added 5 2. Measurement: Value added of manufacture of ship/boats. Based on share of ship/boat manufacturing within the manufacture of other transport equipment sector based on ratio of employees in ship/boat enterprises to those in other transport equipment manufacturing (average ratio result from 2010 to 2013 since data from 2014 to 2020 is not available) as a proxy. The inclusion of repair and installation of machinery and equipment. 6 Sea freight Water transport (50) Both value 1. Data source: Warehousing and and maritime Warehousing and added and support activities for transportation. transportation support activities for compensation Value added of water transportation transportation (52) from ADB’s Input-Output table. 2. Measurement: Value Added of Marine transportation. 3. Assumption: Maritime transport made up 53.4 percent of total cargo turnover in 2022 (GSO). 7 Offshore wind No code Value added 1. Data source: Value added at basic price of offshore wind retrieved from the World Bank Offshore Wind Roadmap report. 2. Measurement: Value added of offshore wind. 8 Travel and Passenger transport: Both value 1. Data source: Pure marine share of tourism (pure Land transport, added and total tourism GDP from UNDP marine) transport via compensation and VASI’s report (2022) on Blue railways, via pipeline. Economy scenarios for Viet Nam. Water transport, Data in this report was collected Air transport, from coastal provinces, calculations Warehousing and conducted by UNDP. World Bank support activities does not guarantee its results. for transportation, 2. Measurement: Value added of Postal and courier marine tourism. Use results of pure activities (49, 50, 51, marine share of total tourism GDP 52) as estimation for value added of marine tourism.38 38 VASI and UNDP. (2022). “Blue Economy Scenarios for Viet Nam” (Hanoi: Youth Publishing House), 161. 90 Boosting Viet Nam’s Sustainable Marine Economy Ocean Approach to VSIC 2018 No. economic calculate value Details (2-digit) sectors added 8 Accommodation, Apply consistently across all years food and beverage except 2020. For 2020, use revenue service activities (55, of travel and tourism market in Viet 56) Nam in 2020 (revenue of Viet Nam’s Administrative and travel and tourism market from supporting activities: Statista) multiply by percentage of Travel agency, tour GDP of pure marine part in tourism operator and related GDP in 2019, also calculated in activities (79) UNDP report. Art, entertainment and recreational activities: Creative, art and entertainment activities. Libraries, archives, museums and other cultural activities. Lottery activities, gambling and betting activities. Sports activities and amusement and recreation activities (90-93) A.3. ROLE OF AQUACULTURE AND TOURISM IN MARINE ECONOMIC DEVELOPMENT A.3.1. Contribution of aquaculture to Viet Nam’s marine economic development “Fishing and Aquaculture” sector (based on VSIC 2018) encompasses two primary activities: marine aquaculture and capture fisheries. While marine aquaculture currently contributes a small share—less than 1 percent—to the overall marine economic value, it is experiencing significant growth in absolute terms. According to the OECD’s assessment, the global growth rate for marine aquaculture is around 4 percent annually. However, this growth rate is projected to decline to approximately 2 percent per year towards 2030. Despite this slowdown in growth, marine aquaculture is set to play a crucial role in food production. By the end of the projection period, it is expected to account for 62 percent of the global supply of food fish intended for direct human consumption. This highlights the increasing importance of marine aquaculture in meeting global food security needs, even as the growth rate stabilizes.39 39 World Bank. (2013). “Fish to 2030: Prospects for Fisheries and Aquaculture”, Agriculture and Environmental Services Discussion Paper 03, World Bank, Washington, DC. http://documents.worldbank.org/curated/en/2013/12/18882045/fish-2030-prospectsfisheries- aquaculture. Annex 91 Capture fisheries make up about 1 percent of the marine economy across all countries.40 Growth in total global production of capture fisheries has been flat since the mid-1990s, hovering consistently around 80 million tons for marine fish. This rate of capture, however, is not considered sustainable. According to the Food and Agriculture Organization (FAO) stock assessments, there has been a notable decline in the proportion of assessed marine fish stocks exploited within biologically sustainable levels. In 1974, approximately 90 percent of these stocks were considered sustainably exploited. However, by 2021, this figure had decreased to 62.3 percent.41 During the same period, the proportion of over- exploited stocks increased significantly, rising from around 10 percent in 1974 to 37.7 percent in 2021. Additionally, fully fished stocks accounted for 50.5 percent of the total assessed stocks, while under- fished stocks represented just under 11.8 percent in 2021. These trends indicate growing concerns regarding the sustainability of marine fisheries and the urgent need for effective management practices to preserve fish stocks and marine ecosystems.42 Against this backdrop, the latest projections by the FAO and OECD up to 2024 indicate that the current plateau in total capture fisheries production is likely to persist for at least the next decade. This stagnation reflects ongoing challenges in sustainably managing fish stocks, addressing overfishing, and adapting to changing environmental conditions. As a result, it underscores the need for enhanced management strategies and policies aimed at promoting sustainable practices within the fishing industry to ensure the long-term viability of marine resources.43 In addition, there is the challenge of illegal, unreported, and unregulated (IUU) fishing, which is estimated to have reached a global annual value of EUR10–20 billion. This compares with the estimated annual EUR55–60 billion of legally conducted fishing.44 There is currently no clear solution to IUU fishing in sight, but it has reached such a scale that it is thought it could lead to the uncontained depletion of fish stocks. In the past decade, Viet Nam’s fisheries sector—encompassing capture fisheries, coastal brackish water aquaculture, and marine aquaculture—has demonstrated a positive trend in output and export turnover. By 2024, national seafood production increased by 23 percent, of which aquaculture comprised of 58 percent and fishing output accounted for 42 percent.45 Seafood export turnover also reached a record of more than US$10 billion which accounted for 16 percent of total export turnover of agricultural sector.46 The sector’s contribution to GDP has also been significant, with GDP at current prices rising from VND68.91 trillion in 2010 to VND166.76 trillion in 2019, while GDP at comparative prices increased to VND79.27 trillion. This sector contributes approximately 72–89 percent of the overall GDP of the fisheries sector, 15–20 percent of GDP of agriculture, forestry, and fisheries, and about 2.5–3.2 percent of national GDP. Over the last decade, the average annual growth rate of Viet Nam’s seafood industry’s GDP at comparative prices was 4.5 percent, slightly below the overall fisheries sector’s growth rate of 40 OECD. (2016). “The Ocean Economy in 2030.” Paris: OECD Publishing. 41 FAO. (2024). “The State of World Fisheries and Aquaculture.” Food and Agriculture Organization, Rome, https://openknowledge. fao.org/server/api/core/bitstreams/66538eba-9c85-4504-8438-c1cf0a0a3903/content/sofia/2024/status-of-fishery-resources. html#:~:text=These%20analyses%20indicate%20that%20the,assessed%20stocks%20monitored%20by%20FAO. 42 Ibid 43 OECD and FAO. (2015). “Agricultural Outlook 2015.” OECD Publishing, Paris. http://dx.doi.org/10.1787/agr_outlook-2015-en 44 OECD. (2016). “The Ocean Economy in 2030.” Paris: OECD Publishing. 45 VASEP. (2024). Fisheries Profile. https://seafood.vasep.com.vn/why-buy-seafood/fishery-profile 46 VASEP. (2024). “Seafood exports reach 10 billion USD”. https://www.mard.gov.vn/en/Pages/seafood-exports-reach-10-billion-usd. aspx 92 Boosting Viet Nam’s Sustainable Marine Economy 5.1 percent per year but higher than for agriculture, forestry, and fisheries (2.8 percent). This growth rate is also about half that of the national GDP growth rate of 6.3 percent (GSO, 2022).47 The gross national income (GNI) of the seafood industry has shown a similar upward trend. This is evidenced by an increase of 10.32 percent at current prices and 4.52 percent at comparative prices over the past decade, reaching VND165.09 trillion and VND101.53 trillion respectively in 2019. This industry contributes approximately 2.8–3.5 percent of national GNI (UNDP, 2022). In terms of employment, the seafood industry generated around 2.3 million jobs in 2019, both direct and indirect. The average GNI per worker in the seafood sector was VND71.44 million per year at current prices and VND43.93 million at comparative prices (UNDP, 2022). During 2010– 11, the GNI per fisheries worker was comparable to the national average, but subsequent years saw a decline. This is attributed to slower scientific and technological innovation in the seafood sector, particularly in marine aquaculture and fishing. Looking ahead to 2030, projections suggest an annual growth rate of only 1.3 percent for the fisheries sector. Key challenges that need to be addressed include containing illegal capture fisheries, limiting catches of species that are being unsustainably exploited, and managing the environmental impacts of aquaculture, such as preventing the expansion of aquaculture by clearing mangroves. A.3.2. Contribution of tourism in development of Viet Nam’s marine economy Tourism represents a significant proportion of the global economy, supporting the livelihoods of millions of people in addition to being one of the fastest-growing economic sectors in the world.48 The World Travel and Tourism Council (WWTC) estimated that in 2019 the total economic impacts of global travel and tourism (direct, indirect and induced impacts) was 10.4 percent of the world’s GDP and accounted for approximately 330 million, or one-in-10, jobs worldwide.49 The World Trade Organization (WTO) characterizes tourism-related economic activities as the second largest productive sector. Coastal and marine tourism make up a significant proportion of all global tourism, with 183 countries having coastlines and marine environments with associated domestic and international tourism.50,51 In 2017, approximately 50 per cent of all international tourists travelled to coastal areas.52 However, the share of marine tourism in value terms is unclear. The OECD study suggests it may be 10 percent.53 Coastal and marine based tourism was estimated to constitute 26 percent of the value 47 GSO. (2023). “Socio-economic situation in the fourth quarter and 2022”. Retrieved from https://www.gso.gov.vn/en/data-and- statistics/2023/01/socio-economic-situation-in-the-fourth-quarter-and-2022/ 48 UNWTO. (2021). “The Economic Contribution of Tourism and the Impact of COVID-19.” Madrid: UNWTO. https://www.e- unwto.org/doi/epdf/10.18111/9789284423200 49 WTTC. (2021). “Global Economic Impact & Trends 2021.” UK: WTTC. https://wttc.org/Portals/0/Documents/Reports/2021/ Global%20Economic%20Impact%20and%20Trends%202021.pdf?ver=2021-07-01-114957-177 50 Cicin-Sain, B. (2016). “Submission from the International Coastal and Ocean Organization (Secretariat of the Global Ocean Forum) on the Road Map for Global Climate Action.” Global Ocean Forum. https://unfccc.int/sites/default/files/647.pdf. 51 Cicin-Sain, B., M. Balgos, J. Appiott, K. Wowk, and G. Hamon. (2011). “Oceans at Rio+20: How Well Are We Doing in Meeting the Commitments from the 1992 Earth Summit and the 2002 World Summit on Sustainable Development? Summary for Decision Makers.” Newark, DE: Global Ocean Forum. 52 UN. (2017). “The Ocean Conference Factsheet Package.” https://www.un.org/sustainabledevelopment/wp-content/uploads/2017/05/ Ocean-fact-sheet-package.pdf. 53 OECD. (2016). “The Ocean Economy in 2030.” Paris: OECD Publishing. Annex 93 generated by ocean-based industries by 2030.54 Based on various data points, it is estimated that at least 50 percent of all tourism is coastal and marine-related. Tourism’s direct contributions to GDP were estimated by the United Nations World Tourism Organization (UNWTO) in 2021. Covering the period 2015–19, for 31, 25 and 33 countries it was estimated at 10–50, 5–10 and 2–5 percent, respectively.55 Viet Nam was in the second group with an estimated contribution of 9.2 percent.56 Countries in the top group included Croatia and Macao (China), while nations at similar levels as Viet Nam included Jamaica, Mauritius, Mexico, Portugal and the Philippines. The Ocean Panel (2022) estimates that coastal and marine tourism constitutes approximately 50 percent of all global tourism, equal to US$4.6 trillion or 5.2 percent of global GDP.57 Coastal and marine-based tourism is estimated to comprise 26 percent of value generated by ocean- based industries by 2030.58 Viet Nam’s natural capital assets, including its coastal forest assets, are a major driver for the industry’s growth. In 2016, around two million people visited the country’s national parks and National Nature Reserves (NNRs). The ecotourism industry is expected to continue to grow as the number of visitors to national parks and NNRs was 178 percent higher than the equivalent figure in 2015.59 Growth of the coastal and marine tourism sector brings new socio-economic opportunities, such as increased standards of living, more employment and training opportunities, diversification for local communities and the sociocultural benefits associated with interactions between people from differing cultural backgrounds. The tourism sector’s unrestricted growth in Viet Nam has led to several negative consequences, with overtourism becoming an increasingly concerning phenomenon. This occurs when certain destinations experience excessive tourist inflows, resulting in detrimental effects on the local environment and community. One of the most significant impacts is the strain on natural resources and habitats. The influx of tourists can lead to habitat loss, increased pollution and higher solid waste generation, which places enormous pressure on local ecosystems. Additionally, the increased demand for water and energy can exacerbate resource depletion, affecting the sustainability of local communities. The socio-cultural implications are equally concerning. High tourist volumes can contribute to community displacement and the dilution of local cultures, as well as degradation of cultural heritage sites. This can create a disconnect between residents and their traditional ways of life, further exacerbating cultural erosion. Moreover, while tourism can generate substantial revenue for a destination, this financial benefit does not always reach local communities. In many cases, the economic gains from tourism are not reinvested into the local area, leaving communities to bear the costs of increased visitation without receiving necessary funding for rehabilitation or regeneration efforts. 54 Ibid 55 UNWTO. (2021). “The Economic Contribution of Tourism and the Impact of COVID-19.” Madrid: UNWTO. https://www.e- unwto.org/doi/epdf/10.18111/9789284423200 56 This figure is calculated from a different method used by the OECD and included in Table 2, which gives a different figure for Viet Nam. However, the relative values between countries from UNWTO are a good reference. 57 The Ocean Panel (2022). “Opportunities for transforming coastal and marine tourism towards sustainability, regeneration, and resilience.” 58 OECD. (2016). “The Ocean Economy in 2030.” Paris: OECD Publishing. 59 WB. (2019). “Forest Country Note – Viet Nam.” World Bank, Washington, DC. 94 Boosting Viet Nam’s Sustainable Marine Economy The global impact of tourism cannot be overlooked either. Projections indicate that CO2 emissions from the tourism sector could rise by 25 percent by 2030 compared to 2016 levels. This increase poses significant challenges for global climate targets and highlights the need for sustainable tourism practices that balance economic benefits with environmental and social considerations. To address these issues, it is essential for stakeholders to implement sustainable tourism strategies that prioritize environmental protection, community well-being, and equitable distribution of tourism revenue.60 Responsible Travel, an NGO, claims that 98 destinations in 63 countries are experiencing overtourism, including Cambodia, parts of Malaysia and Thailand.61 A.4. MARINE AQUACULTURE – MARINE ECONOMIC DEVELOPMENT TOWARDS MODERNIZATION IN AGRICULTURAL DEVELOPMENT62 A.4.1. Benefits and challenges for marine aquaculture Mariculture, a type of aquaculture conducted entirely at sea—from stocking to harvests—holds significant potential to boost seafood production and drive economic growth. Unlike traditional coastal aquaculture – which faces challenges from competing uses in highly utilized, ecologically sensitive areas – offshore mariculture presents a sustainable alternative. The use of submersible cages allows for fish farming in previously unsuitable offshore areas, overcoming risks posed by strong waves, storms, and hurricanes. Expanding offshore aquaculture not only opens up new production zones, but also alleviates pressure on wild fisheries, promoting more sustainable practices. Countries like China and Norway are leading the way, pioneering large-scale submersible cage technology for offshore fish farming. Table A.5 outlines the distinct advantages of offshore aquaculture over other marine farming approaches. Table A.5 Definitions and examples of major producer countries of coastal, off-coast and offshore farming Coastal farming Off-coast farming Offshore farming • 500m to 3km from • <500m from shore • >3km from shore shore Physical • <10m water depth • >50m water depth • 10m to 50m water setting • Within sight of shore • On continental shelf depth users • Not visible from shore • Usually within sight • Waves <1m • Waves <3m to 4m • Waves up to 5m • Local winds • Localized winds • Ocean winds • Local currents • Localized currents • Ocean swell Exposure • Strong tidal currents • Weak tidal currents • No tidal currents • Sheltered • Somewhat sheltered • Exposed • 100% accessibility • >90% accessibility • >80% accessibility 60 Lenzen, M., Y.Y. Sun, F. Faturay, Y.P. Ting, A. Geschke, and A. Malik. (2018). “The Carbon Footprint Of Global Tourism.” Nature Climate Change 8(6): 522-528. 61 https://www.responsibletravel.com/copy/overtourism-map 62 Viet Nam’s policies classify aquaculture as part of its agricultural development goals, where agriculture in the context encompasses three key sectors: agriculture, forestry, and fisheries Annex 95 Coastal farming Off-coast farming Offshore farming • Outside coastal baseline Legal • Within coastal baseline • Within coastal baseline • National/international definitions • National waters • National waters waters Examples Chile, Norway, U.S. (Hawaii), Spain of major China, Chile, Norway Mediterranean (Canaries) producers Note: Accessibility <100% refers to limitations in access to the farm due to weather conditions. Source: Holmer (2010)63 Developing offshore mariculture requires addressing several critical factors, with infrastructure and engineering feasibility being paramount. While all successful mariculture—whether nearshore or offshore, for fish, mollusks or marine plants—requires clean water and shore-based support services, the main challenge offshore lies in designing equipment that can withstand powerful storm-driven waves and currents while ensuring a safe working platform. Despite differences in cultivation methods, offshore aquaculture faces common engineering challenges, such as anchoring systems and operational stability, which demand high levels of technical sophistication. Key considerations include: • Heavy-duty moorings for deep water farms • ffshore containment systems for aquatic crops • Sea-going workboats with cranes and fish pumps • Offshore feed storage and distribution systems • Automation of husbandry tasks • Remote monitoring and control technologies • Scaling-up farm size to achieve economies of scale. Beyond technical constraints, important issues such as species selection, stock health, predator control, feed availability, and workforce training must be addressed. Environmental concerns, in particular, pose a significant challenge to offshore aquaculture. In the United States, campaigns rooted in environmental fears have delayed industry development. As a result, strong planning, governance, regulatory enforcement, and sustainable practices are essential for successful offshore farming. Table A.6 outlines potential environmental risks and strategies to mitigate them through sound management. 63 Holmer. (2010). “Environmental issues of fish farming in offshore waters: perspectives, concerns and research needs. Aquaculture Environment Interactions.” Vol. 1: 57–70. 96 Boosting Viet Nam’s Sustainable Marine Economy Table A.6 Potential environmental risks of offshore aquaculture and ways to reduce risks for good management Overall risk Aquaculture for well- Environmental types Risk reduced by: planned Available analytical tools risk affected offshore aquaculture Benthic impact Fed, unfed Choosing sites with Low Aquaculture modeling high current and/or software, such as Depomod, deeper water AquaModel, and the FARM Avoiding sensitive model benthic habitats Disease All Reducing connectivity Moderate Oceanographic models, such outbreaks between farms growing as Regional Ocean Modeling similar species Systems (ROMS), species Locating farms away distribution mapping from habitat of native populations Reducing density of farms Water column Fed Locating farms in Low Aquaculture modeling pollution environments with high software, such as Depomod, natural productivity and AquaModel and low levels of existing nutrient pollution Using multitrophic farming techniques Reducing density of farms Marine All Locating farms away Low risk of Spatial analysis of wildfire mammal from marine mammal entanglement, movement patterns interactions haul outs, migration moderate routes, and important risk of foraging grounds behavioral change Food and Unfed and Locating farms in Low Ecopath modelling. nutrient autotrophic areas with high natural depletion in the productivity water column Reducing density of farms. Source: Gentry et al. (2016)64 64 Gentry, R. R., Lester, S. E., Kappel, C. V., White, C., Bell, T. W., Stevens, J. and Gaines, S. D. (2017). “Offshore aquaculture: Spatial planning principles for sustainable development. Ecology and Evolution.” 7: 733–743. doi: 10.1002/ece3.2637 Annex 97 Internationally, offshore aquaculture has remained limited primarily to small-scale pilot operations cultivating high-value, carnivorous species, due to the significant capital costs and high risk-to-return ratios. Offshore environments pose a range of operational challenges—such as deep water, strong currents, intense waves, and storms—that have driven the development of innovative design approaches. However, government regulations have often hindered the commercial expansion of offshore aquaculture, particularly in the United States and European Union, where public concerns about its environmental impact, potential ecological harm, and competition for marine resources have sparked significant controversy.65 In Viet Nam, marine aquaculture is emerging as a key strategy to develop the marine economy and reduce pressure on coastal fishing and aquaculture. The benefits of marine farming are significant, particularly in leveraging Viet Nam’s vast marine resources. Despite having more than 1 million square kilometers of territorial waters, marine aquaculture currently utilizes only about 20 percent of the available area. The potential for expansion is considerable, including opportunities in closed bays, coastal tidal flats, islands and the open sea. Viet Nam’s total potential marine aquaculture area is 244,190ha, with 153,300ha (62 percent) in coastal tidal flats, 79,790ha (33 percent) in bays and coastal areas, and 11,100ha (5 percent) in open sea farming.66 Marine aquaculture in Viet Nam is diversifying across regions, leveraging local strengths to cultivate specific species. From the north to south, 28 coastal provinces and cities are engaged in marine aquaculture, with key provinces in the north (Haiphong, Nam Dinh, Quang Ninh and Thai Binh), central region (Khanh Hoa, Nghe An, Phu Yen and Thanh Hoa) and the south (Ba Ria-Vung Tau, Ben Tre, Ca Mau, Kien Giang and Tien Giang). Each area specializes in certain species: clams and oysters thrive in Quang Ninh, lobsters in Phu Yen and Khanh Hoa, sea fish in Haiphong, Quang Ninh, Khanh Hoa and Kien Giang and seaweed in northern, north-central, and south-central regions. Aquaculture is also divided by farming zones: coastal areas and islands within 3 nautical miles, zones from 3–6 nautical miles, and offshore areas beyond 6 nautical miles, allowing for the creation of diverse raw material sources tailored to each region. Offshore aquaculture offers numerous advantages, particularly in reducing environmental pollution, ecosystem degradation, and conflicts with other economic activities—such as overfishing. According to the MARD, as of 2021, there were 6,506 aquaculture establishments (244,402 cages and rafts) within 3 nautical miles, 914 establishments (4,299 cages) between 3–6 nautical miles, and 27 establishments (137 cages) in offshore zones beyond 6 nautical miles, mainly concentrated in Ca Mau. While nearshore aquaculture still dominates, it faces significant risks, including disease outbreaks, environmental pollution, and competition with other maritime activities. Offshore aquaculture, on the other hand, benefits from cleaner, deeper waters and reduced conflicts over marine space. However, offshore aquaculture also presents considerable challenges. Operations must withstand strong waves, winds, fast currents and deep waters, requiring advanced technology, significant capital, and experienced farmers. Given these demands, offshore aquaculture is more suitable for businesses with strong financial and technological capabilities, rather than individual households. 65 Naylor, R.L., Hardy, R.W., Buschmann, A.H. et al. (2021). “A 20-year Retrospective Review of Global Aquaculture.” Nature 591, 551–563. https://doi.org/10.1038/s41586-021-03308-6 66 MARD. (2021). “Explanation of the Project on Developing Marine Aquaculture in Viet Nam to 2030 with a vision to 2045.” 98 Boosting Viet Nam’s Sustainable Marine Economy Viet Nam’s policy of “increasing aquaculture, reducing exploitation” supports sustainable fisheries and helps reduce the pressure of overfishing, contributing to a “transparent, responsible, and sustainable” industry aligned with international standards. However, this shift may result in job losses for fishermen and onshore logistics workers. To address this, workforce restructuring, industry reorganization, and specialized training will be critical for building a professional labor force suited to the evolving fisheries value chain. In summary, the development of marine aquaculture is a crucial direction for the transformation of Viet Nam’s fisheries sector, but it requires close coordination of policies and mechanisms across various ministries and sectors to ensure successful implementation. A.4.2. Current status of marine aquaculture in Viet Nam and policy barriers A.4.2.1. Results achieved According to the Department of Fisheries (MARD), Viet Nam’s marine aquaculture has seen significant progress in recent years: • Expansion of Farming Areas and Exports: From 2010 to 2019, marine aquaculture areas grew by an average of 23.3 percent per year, while output increased by 16 percent annually, reaching 256,479 ha and 670,000 tons in 2019. Key export markets such as the EU, U.S., and Japan maintain a stable share of output and value. Additionally, demand for fresh marine products in markets like China, Hong Kong SAR (China), and Taiwan (China) continues to rise. • Logistics and Breeding: Support logistics for marine aquaculture has developed steadily, with 445 breeding establishments nationwide. These include 55 facilities producing 550 million marine fish fingerlings and 390 producing 45 billion krill species (mussels, oysters, clams). While domestic breeding resources largely meet demand, some species still rely on natural or imported sources. The number of enterprises engaged in processing has also increased, with 764 industrial-scale facilities in 2019, many meeting food safety standards for demanding markets. • Scientific and Technological Advancements: Significant contributions have been made through scientific research and fishery promotion programs. These include initiatives for breeding development, technology transfers and promotion of high-value species like crocodiles, oysters, groupers, snappers, crabs, and lobsters. Training programs have focused on free-range farming techniques and disease prevention, while new technical documents and radio broadcasts have disseminated the latest advances to hatcheries and farmers. Annex 99 Box A.1 Making Quang Ninh a strong province in marine aquaculture development67 Quang Ninh province is taking key steps forward to promote sustainable marine aquaculture while protecting natural resources, ecosystems and fostering sustainable tourism. According to the Quang Ninh Agricultural Promotion Center, the province aims to expand marine aquaculture to 9,280ha, producing around 94,000 tons annually by 2030, with an average growth rate of 9.6 percent per year between 2025 and 2030, and a production value exceeding VND8,000 billion. By 2045, marine aquaculture is expected to contribute 80 percent of the province’s total aquaculture output, becoming a key pillar of its fisheries sector. To achieve these goals, Quang Ninh plans to industrialize marine aquaculture, adopting high-tech solutions and restructuring areas for optimal species selection. Efforts will focus on improving farming processes to enhance product value and meet international market demands. The province is committed to promoting industrial-scale marine aquaculture that adheres to food safety and quality certifications like ASC, GlobalGAP, and VietGAP, ensuring traceability that aligns with import market regulations. In addition, Quang Ninh will diversify its farmed species, prioritizing the cultivation of high-value aquatic breeds and developing domestic breed supply to meet demand. The province also plans to strengthen its presence in key markets such as ASEAN, China, Japan and Taiwan (China), while exploring new markets with strong potential, including in Africa, Eastern Europe, the Middle East, South America, and Republic of Korea. Quang Ninh also aims to reorganize seafood processing activities along the value chain, driving rapid and sustainable improvements in processing and trade. A.4.2.2. Challenges in marine aquaculture development Marine aquaculture in Viet Nam remains largely small-scale and uncoordinated, driven by individual fishing households without formal planning. Most aquaculture activities are concentrated in coastal areas, leading to overcrowding and the breakdown of spatial plans. This unplanned expansion has caused aquaculture locations to overlap with tourism and industrial development projects, creating conflicts that hinder sustainable growth. Technological advancements in marine aquaculture are also lagging. The equipment and cage systems currently in use are outdated and ill-equipped to handle extreme weather conditions. Moreover, many promising fish species lack standardized farming processes, while there has been insufficient research and testing to optimize their potential. Infrastructure supporting marine aquaculture is fragmented and underdeveloped. Systems for breeding and feeding marine species are small in scale, with a significant portion of breeds still being imported, leading to unstable supply chains. Additionally, most feed comes from coastal extraction, which depletes aquatic resources, causes environmental pollution, and increases the risk of disease 67 Rural Economics Journal. (2023). “To get Rich from the Sea - Lesson 3: Good Practices.” (kinhtenongthon.vn) 100 Boosting Viet Nam’s Sustainable Marine Economy outbreaks. Investment in critical infrastructure has been slow and uncoordinated, such as buoy systems, berths, and equipment for marine farms. Market access is another major challenge for the sector. Most marine aquaculture products are exported under quota systems, while domestic processing factories are not significantly involved in the value chain. The future will bring even more stringent global market requirements for hygiene, product quality, and certification, posing new hurdles for Viet Nam’s marine aquaculture industry. Finally, the industry struggles with a lack of capital and the absence of large, leading enterprises that can drive innovation and growth. Additionally, the scientific and technical skills of many workers involved in marine farming remain limited, further constraining the sector’s potential for modernization and expansion. A.4.2.3. Problems with institutions and policies The workshop “Marine Aquaculture: Transforming from Traditional to Industrialized,” held by the Ministry of Agriculture and Rural Development (MARD) and Binh Dinh province on February 14, 2024, brought together representatives from various sectors. Several institutional issues were discussed. Firstly, there is a lack of planning and clarity in allocating marine areas. The marine spatial plan remains unapproved, making it difficult for provinces to develop sea-use plans essential for assigning marine areas to individuals and organizations. Although Decree No. 11/2021/ND-CP regulates the allocation of sea areas based on distance from the shore (districts managing less than 3 nautical miles, provinces from 3–6 nautical miles, and the MONRE beyond 6 nautical miles), challenges persist. Local governments often allocate marine areas without clear coordinates or boundaries, leading to uncontrolled expansion by individual households, which discourages larger businesses from investing. Meanwhile, licensing for offshore farming, overseen by the MARD, remains a lengthy and complicated process. Secondly, there are significant procedural challenges in certifying eligibility and licensing marine aquaculture activities. Decree No. 26/2019/ND-CP stipulates that individuals and organizations must provide land-use certificates or marine area allocation decisions to obtain aquaculture licenses. However, most existing facilities lack these documents, making compliance difficult. Although the government had planned to simplify these regulations, implementation has been delayed. Additionally, the EIA requirement for each household is seen as overly burdensome, particularly for low-impact species like seaweed. The Fisheries Law limits marine area allocations for aquaculture to 30 years (with extensions not exceeding 50 years), which is insufficient for offshore farms using modern, expensive equipment designed to last longer. A third challenge is the lack of standards and regulations specific to industrial marine aquaculture. Modern aquaculture requires advanced technologies, but there are no clear regulations on technical standards for breeds, feeds, farming processes, and equipment. Businesses also lack policies on insurance for workers and protection against natural disasters, further hindering professional development in the sector. The quality of human resources for marine aquaculture also remains a key concern. Industrial aquaculture demands new skills in marine farming techniques and machinery operation, areas where Annex 101 many traditional farmers are lacking. Additionally, the shift to aquaculture from fishing means surplus labor, particularly from fishing vessels and onshore logistics, will need alternative employment, requiring careful planning and support for career transitions. Furthermore, large enterprises must play a critical role in leading the transformation to industrial-scale marine aquaculture. Small-scale, spontaneous farming makes it difficult to establish organized value chains. Large businesses, such as Australis Viet Nam Seafood Co and Viet Australia Group, require a stable legal framework and supportive government policies to form these chains. In conclusion, marine aquaculture holds great potential to harness marine resources, create sustainable livelihoods and reduce environmental impacts, while contributing to national defense by securing marine territories. However, significant institutional and policy barriers remain. Overcoming these challenges swiftly will be crucial for realizing Viet Nam’s strategy for sustainable marine economic development in the agricultural sector. A.4.3. Developing a marine aquaculture model linked with the aquatic value chain A.4.3.1. Rationale While development of marine aquaculture models is still subject to considerable debate, international experiences indicate that when combined with effective risk control and prevention measures, marine aquaculture can be a viable pathway. It has the potential to transform marine economic aquaculture into a commodity-focused, modernized, and highly productive sector that is competitive on the international stage. To achieve this, it is essential to rearrange exploitation and aquaculture activities, gradually decreasing reliance on traditional fishing methods while shifting toward industrial aquaculture. In Viet Nam, coastal aquaculture is widespread, with many households converting agricultural land for this purpose due to favorable natural conditions. However, this rapid and uncoordinated expansion of aquacultural practices has resulted in declining effectiveness, as the lack of linkages and cooperation has increased risks. Uncontrolled water sources, inadequate feed management, and improper use of livestock protection products have led to disease outbreaks, unstable incomes, and inconsistent product quality, often failing to meet the rigorous standards of discerning and high-value markets. A solution to these challenges lies in transitioning to nearshore and offshore aquaculture in suitable areas, aligning marine economic development with national defense and the safeguarding of sea and island sovereignty. Offshore aquaculture, however, demands significant investments and advanced technologies beyond the capabilities of small-scale fisher households. Therefore, the leadership of large enterprises is crucial in establishing effective fishery value chains. These enterprises can ensure the synchronization of breeds, feeds, and farming technologies while overseeing the farming processes. They may also employ fishers to manage marine farms or enter contracts with local households to purchase their produce. It is vital for fishers to organize into cooperative groups or cooperatives, which can enhance their bargaining power and lower transaction costs when engaging with larger businesses. The development of value chains in marine aquaculture presents an opportunity for shared 102 Boosting Viet Nam’s Sustainable Marine Economy benefits derived from marine resource exploitation between businesses and fishing households. This approach aligns with the overarching goals of the Decision 255 (2021) approving the Plan on restructuring of agriculture in the 2021-2025 period, which focuses on: (i) strengthening linkages along the value chain led by prominent enterprises, (ii) fostering robust agricultural cooperatives based on genuine cooperation needs among households and (iii) promoting commodity agriculture with high added value. Through these strategies, marine aquaculture can evolve into a sustainable and productive sector, ultimately benefiting both local communities and the national economy. A.4.3.2. Recommendations To effectively develop the marine aquaculture model, it is essential to involve various ministries and departments, each with specific tasks and responsibilities: Tasks of Ministry of Agriculture and Rural Development (MARD)68 1. Establishing Policies: Develop specific policies for marine aquaculture, including standards and regulations for marine farming establishments and cage/raft farming techniques. This will provide provinces with a solid legal framework for management. 2. Facilitating Marine Area Assignments: Collaborate with the MONRE other relevant ministries to remove barriers for large enterprises seeking marine area assignments and water surface leases. This will enable them to establish marine farms and access investment credit. 3. Amending Decree 26: Revise Decree 26, which guides implementation of the Fisheries Law, to facilitate registration of caged aquaculture species, issue farming establishment codes, and streamline procedural requirements. 4. Linking Marine Aquaculture with Other Sectors: Develop mechanisms that connect marine aquaculture with other economic sectors at the national level, promoting mutual growth. This includes organizing offshore marine aquaculture in alignment with national defense and security measures, thus ensuring that marine economic development also protects sea and island sovereignty. 5. Updating Fisheries Policies: Research and propose amendments to Decree 67, focusing on policies that support marine aquaculture and align with the trend of reducing capture fisheries, while increasing aquaculture. This includes financial support for aquaculture households regarding credit, seed stocks, feed, and enhancing technical capacity. 6. Guidance on co-management: Provide guidelines for implementing co-management groups to protect aquatic resources, including reviewing and regulating specific co-management practices. Task of Ministry of Natural Resources and Environment (MONRE)69 1. Streamlining Environmental Procedures: Guide removal of obstacles related to environmental protection procedures for aquaculture activities, facilitating the licensing of marine aquaculture 68 Based on Resolution 27/NQ-CP dated on February 7, 2025, and Conclusion 121-KL/TW in 2025 issued by The Central Executive Committee on the summary of Resolution 18-NQ/TW regarding several issues related to continuing the reform and reorganization of the political system, the Ministry of Agriculture and Rural Development merged with Ministry of Natural Resources and Environment (MONRE) to form into Ministry of Agriculture and Environment. Recommendations for both ministries can be combined for the new ministry. 69 Ibid Annex 103 for individuals and households. Actively implement the Prime Minister’s Decision No. 2177 to simplify relevant procedural regulations. Tasks of Ministry of Planning and Investment (MPI)70 1. Amending Public-Private Partnership Law: Consider revising this law and associated decrees to encourage private investment in the fisheries sector. 2. Engaging Insurance Companies: Encourage the involvement of insurance firms to create insurance products for accident coverage for workers in aquaculture raft cages and vessels, as well as natural disaster risk insurance for marine aquaculture species. Tasks of Provincial Authorities 1. Enhancing Ecosystem Capacity: Develop policies that strengthen the capacity and connectivity among key stakeholders in the aquaculture value chain, including local management authorities, aquaculture households, cooperatives, enterprises, and NGOs providing technical assistance. 2. Facilitating Cooperative Efforts: Clearly define the roles and responsibilities of local authorities in collaboration with businesses to establish and develop value chains. Support the formation of cooperatives and ensure adherence to cooperation agreements between businesses and households. 3. Attracting Non-State Actors: Create an environment conducive to participation of non-State actors, such as NGOs for technical support and leading enterprises for investment, and facilitate access to international certification. By addressing these tasks collaboratively, Viet Nam can effectively enhance the marine aquaculture sector, ensuring its sustainability and productivity while supporting the livelihoods of local communities. A.5. DEVELOPMENT OF MARINE ECOTOURISM A.5.1. Benefits and challenges of the development of marine ecotourism According to the World Conservation Alliance (Brandon, 1996), ecotourism is defined as an environmentally responsible travel experience to relatively intact natural areas. This allows visitors to enjoy and appreciate nature while enhancing conservation efforts, limiting negative impacts, and providing positive socio-economic benefits to indigenous communities. While ecotourism is indeed a form of nature-based tourism, it aims for a broader vision that aligns with the principles of sustainable development. This means that ecotourism goes beyond merely exploiting natural resources to meet human needs. It encompasses education, conservation, and the protection of both natural and cultural values, while ensuring that local communities’ interests are prioritized for sustainable development. 70 Based on Resolution 27/NQ-CP dated on February 7, 2025, and Conclusion 121-KL/TW in 2025 issued by The Central Executive Committee on the summary of Resolution 18-NQ/TW regarding several issues related to continuing the reform and reorganization of the political system, the Ministry of Planning and Investment (MPI) in March merged into Ministry of Finance (MOF). Recommendations for both ministries can be combined for the new ministry. 104 Boosting Viet Nam’s Sustainable Marine Economy Coastal and marine tourism, in particular, heavily rely on the health of coastal and marine ecosystems to attract visitors. However, ongoing depletion and degradation of these natural assets pose significant risks to the sustainability and viability of the industry, as well as to the local communities that depend on it. This situation is further complicated by the seasonal nature of coastal and marine tourism, especially in island regions, which can lead to job insecurity, low wages, and increased workloads for local residents, ultimately affecting their well-being and access to essential resources. Moreover, the economic benefits derived from tourism are often inequitably distributed. Large foreign companies and tour operators tend to receive a disproportionate share of profits, while local communities may see minimal returns on their resources and efforts. When examining the true socio-economic impacts, it becomes evident that the costs associated with attracting and retaining mass tourism often outweigh the benefits, raising concerns about the long-term sustainability of the tourism model and the livelihoods of those who depend on it. Overall, fostering a sustainable approach to ecotourism and ensuring equitable distribution of benefits are crucial for protecting coastal and marine ecosystems and supporting local communities.71 Ecotourism is rapidly gaining traction across various responsible tourism markets, presenting a compelling alternative to traditional tourism. In 2016, marine ecotourism was valued at approximately US$50 billion, catering to around 120 million tourists. This form of tourism is characterized as a low-impact, high-value option, which means it minimizes harm to marine ecosystems while maximizing economic benefits. As such, marine ecotourism can serve as a powerful economic incentive for conservation efforts, encouraging the protection of marine environments while providing travelers with unique and meaningful experiences. This approach not only supports local economies but also fosters a deeper appreciation for marine biodiversity and the importance of sustainable practices.72 Travelers who engage in pro-environmental behavior and demonstrate a commitment to caring for local communities tend to spend more than regular tourists. Marine ecotourism, in particular, incorporates several essential elements that enhance its sustainability and positive impacts. A core principle of marine ecotourism is the emphasis on sustainable management practices. This involves careful planning and regulation of tourism activities to ensure they do not harm marine ecosystems, while allowing for responsible enjoyment of natural resources. By prioritizing sustainable management, marine ecotourism can help mitigate the adverse effects of tourism on fragile coastal and marine environments. Educating tourists about the natural marine environment and importance of its conservation is another critical aspect of marine ecotourism. By raising awareness about marine biodiversity, ecosystems and conservation challenges, travelers are more likely to appreciate and advocate for the protection of these vital resources. This educational component fosters a deeper understanding and respect for the marine environment, encouraging tourists to become active participants in conservation efforts. 71 The Ocean Panel (2022). “Opportunities for Transforming Coastal and Marine Tourism Towards Sustainability, Regeneration, and Resilience.” 72 Milne S, Thorburn E, Rosin C, Deuchar, C. (2021). “Developing Marine Ecotourism for a Sustainable Blue Economy: a Literature Review.” Annex 105 Marine ecotourism is also designed to provide tangible benefits to local communities and the environment. This includes creating jobs, supporting local economies and contributing to conservation efforts, ensuring that the local population shares in the economic advantages of tourism. By involving local communities in marine ecotourism initiatives, the approach helps to foster sustainable development, while enhancing the livelihoods of those who depend on marine resources. Finally, promoting the conservation of specific species or habitats is a fundamental goal of marine ecotourism. By fostering a connection between tourists and the marine environment, ecotourism initiatives encourage visitors to actively participate in conservation efforts, enhancing the protection of vulnerable species and habitats. Together, these elements create a framework for marine ecotourism that not only provides enriching experiences for travelers, but also promotes the sustainability and resilience of marine ecosystems and local communities.73 The development and implementation of ecotourism do not hinge on the availability of modern accommodations, or the glamour associated with extravagant facilities. Instead, ecotourism emphasizes simplicity and authenticity, prioritizing the preservation of natural environments, local art, culture, and customs. This approach maintains the integrity of the landscape and cultural heritage of host communities, allowing travelers to experience destinations in their true form. By focusing on authenticity, ecotourism not only enhances the visitor experience but also plays a vital role in education. Travelers are encouraged to learn about the ecosystems they visit, the importance of conservation, and the cultural significance of local practices. This educational aspect fosters a deeper understanding of environmental issues and the interconnectedness of human and natural systems. Additionally, ecotourism generates funds for environmental conservation initiatives, ensuring that the benefits of tourism are reinvested into the preservation of natural resources. This financial support can be crucial for maintaining the health of ecosystems, protecting wildlife habitats, and supporting conservation projects that might otherwise lack funding. Furthermore, ecotourism directly contributes to the economic development and empowerment of local communities. By creating job opportunities and fostering local entrepreneurship, ecotourism helps improve living standards while ensuring that communities benefit from the presence of visitors. This economic support can enhance community resilience and sustainability. Ultimately, ecotourism fosters respect for diverse cultures and nature, promoting a sense of responsibility among travelers. By emphasizing the value of authentic experiences and the importance of conservation, ecotourism encourages a more sustainable approach to tourism that benefits both people and the environment.74 A list of common marine ecotourism activities are presented in Table A.7. 73 Garrod, B. (2003). “Marine Ecotourism in New Zealand: an Overview of the Industry and its Management.” p.17-37. In Garrod., C & Wilson., C. Marine Ecotourism Issues and Experiences. Channel View publications: Clevedon. 74 Arismayanti. (2019). “Development Strategy of Ecotourism Marine Sustainable in Indonesia. ASEAN Journal on Hospitality and Tourism.” Vol. 15, pp. 118–138. 106 Boosting Viet Nam’s Sustainable Marine Economy Table A.7 Marine ecotourism activities Marine Environment Ecotourism activities Considerations for development Estuaries and • Bird watching and • Can finance protection of mangroves and mangrove forests recreational fishing support the enforcement of laws to restrict (coast) ecosystem destruction. Ocean (on the water) • Sea-kayaking • Non-polluting, environmentally sound activity • Marine mammal where marine mammals seem to be more observation curious than anything, yet must be managed • Swimming well. • Sailing • Marine mammal observation can support conservation however the effects that increased boat traffic have on marine mammals such as interrupting sleep. Regulations are required – feeding has shown to have detrimental impacts. • Economic benefits, popular high levels of visitor satisfaction getting close to nature, behavior of mammals and interrupting natural cycles is a risk that needs to be managed. • Low impact mostly non-motorized way to view marine mammals. Often linked to snorkeling activity. Source: Adapted from Milne (2021).75 In summary, marine ecotourism is a complex endeavor that necessitates a holistic approach to its planning and management. To achieve successful outcomes, marine ecotourism must be integrated into ecosystem-based management frameworks that consider the needs of local communities alongside those of non-human entities. This inclusive approach ensures that local needs are prioritized by planners, who should develop appropriate policy instruments and indicators based on community development requirements. Furthermore, when formulating marine ecotourism policies, it is essential to view operators as more than just stakeholders. They should be actively involved in shaping policy and disseminating best practices. By engaging operators in the decision-making process, policies can be more effectively tailored to address the realities of marine ecotourism, ensuring they align with conservation goals and community aspirations. This collaborative effort fosters sustainable development, enabling marine ecotourism to thrive while benefiting local communities and the environment.76 Lessons from international experiences on developing tourism based on natural assets and protected areas that can be applied to marine ecotourism in Viet Nam center on three principles as follows:77 75 Milne S, Thorburn E, Rosin C, Deuchar, C. (2021). “Developing Marine Ecotourism for a Sustainable Blue Economy: a Literature Review.” 76 Ibid. 77 WB. (2021). “Banking on Protected Areas - Promoting Sustainable Protected area Tourism to Benefit Local Economies.” Annex 107 1. Protect the Assets: Formalize Areas to be Protected To safeguard valuable natural assets, it is essential to formalize their protected status through robust laws or institutional efforts, such as certifications. This formalization does not have to entirely restrict access to economic activities. Rather, it may involve regulated resource use that allows for the recovery and dispersion of exploited wild stocks under formal protection. Additionally, formalization empowers governments to elevate environmental standards and mitigate the negative impacts of tourism. A demonstrated commitment to conservation can also attract private sector investments in tourism services. Increase Public Investment in Protected Area Management Governments are encouraged to utilize financial instruments, such as public budgets and innovative mechanisms, to engage private sector resources. This can include conservation trust funds, carbon finance, conservation bonds, and collaborative public-private management partnerships, all aimed at enhancing the management of protected areas. Build Capacity of Marine Area Managers Effective management is crucial for delivering the benefits of protected areas. It is vital to address the underlying factors contributing to poor management performance. Successful protected areas are overseen by qualified managers who understand the relevant laws, policies, and business needs of tourism operators and commercial entities. For instance, managing commercial visitor services requires skills that extend beyond traditional wildlife management, highlighting the necessity of capacity-building initiatives. Monitor Visitors and Impacts To justify public spending and facilitate planning, it is important for governments and conservation agencies to routinely assess the impacts of tourism in protected areas. Regular surveys can capture visitor numbers, tourist spending, and seasonal variations in tourism behavior. This information is instrumental in shaping policies, improving tourist services, assisting local communities, refining tourism business models, and demonstrating the economic returns from investing in protected areas. 2. Grow and Diversify the Business: Diversify Tourism Offerings In many countries, visitor concentration at popular sites underscores the importance of expanding the number of protected area sites. Priority sites should be selected based on factors, such as road access, security, biodiversity, landscape attractions, and local stakeholder interest in tourism. By creating an expanded network of marine areas, negative impacts can be diluted through phased tourism development. Sites can be evaluated against desirability and feasibility criteria to identify optimal opportunities for private sector involvement and community benefits. 108 Boosting Viet Nam’s Sustainable Marine Economy Develop Concessions Policies Concessions policies can enhance site operations by managing and financing infrastructure while providing services such as accommodation, food, merchandise, recreational activities, rental equipment, and transportation. Outsourcing tourism development may involve leases, management contracts and licensing arrangements, which should specify key terms and conditions for business operations, including duration, type of operation, environmental conditions, and access fees. Effective concessions programs must incorporate strong law enforcement, public support for proposed commercial activities, evident economic benefits, stakeholder inputs in concession operations, and legal frameworks supporting implementing agencies. 3. Share the benefits Formalize Benefit Sharing Residents and neighbors of ecotourism sites are critical stakeholders, and equitable benefit- sharing among communities—encompassing poor and non-poor households—is essential for maintaining the integrity of protected areas. Policies should ensure that benefits are distributed fairly, prioritizing the inclusion of disadvantaged groups. Advocated benefit-sharing approaches include direct and indirect employment opportunities, revenue-sharing mechanisms from protected area authorities and tourism businesses, sustainable utilization of natural resources, and shared decision-making and capacity-building initiatives. Strengthen Income Multipliers Governments should facilitate community participation in the ecotourism economy by providing entrepreneurship training, skills development, credit services, and logistical support. Additionally, governments should promote business diversification and local procurement to enhance linkages within local economies, minimize leakages and increase economic multipliers. Mitigate and Compensate for Human-Nature Conflict Addressing human-nature conflicts is vital for securing support for conservation from local communities, who are both beneficiaries and allies. Timely and transparent compensation payouts are crucial for managing relationships. Assessing losses to neighboring communities, such as fishery losses or natural capital depreciation, is necessary along with implementing local management strategies—such as seasonal fencing and livestock corralling—to mitigate losses and foster positive relations with site neighbors. Case Study: Gijón, Spain A notable example of commitment to ecotourism is Gijón, a city and municipality in northwestern Spain. Gijón has developed a comprehensive sustainable tourism plan and achieved biosphere certification, reflecting its good practices and contributions toward the 17 SDGs outlined in the UN 2030 Agenda. This plan includes efficient management measures by accommodation providers, a commitment to social development, and personalized service. Catering companies are encouraged to incorporate ecological and local food into their offerings. Moreover, the entire tourism sector promotes cultural activities aimed at raising awareness of care of marine Annex 109 and terrestrial environments. In the maritime context, the plan addresses visitor flow controls, repairs to coastal structures, and initiatives to raise awareness of marine ecosystems, successfully alleviating the impacts on these areas, particularly during peak tourist seasons coinciding with summer.78 A.5.2. Current status of marine ecotourism development in Viet Nam and policy barriers A.5.2.1. Results achieved The growth of domestic and international sea and island tourism has played a significant role in the recovery of Viet Nam’s tourism industry. According to the Viet Nam National Administration of Tourism, international tourists to Viet Nam’s islands between 2015 and 2019 experienced a remarkable annual growth rate of 23 percent. By 2019, more than 1.5 million visitors travelled to the islands, with popular destinations including Cat Ba and Phu Quoc, as well as lesser-known spots like Con Dao, Cu Lao Cham, Ly Son and Van Don. The northern sea primarily attracts tourists from ASEAN, China, Germany, Japan, Republic of Korea, and the Netherlands, while the central region is favored by visitors from Europe, Japan, Lao PDR and Republic of Korea. The southern sea, in contrast, sees most European visitors, particularly from France, Italy and the United Kingdom. Domestic tourism in Viet Nam has also seen substantial growth, with a similar 23 percent annual increase during the same period, culminating in approximately 9.5 million domestic tourists to the islands in 2019. Notably, 80–90 percent of these domestic visitors flocked to Cat Ba and Phu Quoc islands. The post-COVID recovery in 2022 was spectacular, with coastal provinces experiencing a surge in visitors. Ho Chi Minh City welcomed 35.2 million domestic tourists—1.6 times higher than in 2019—while Nghe An and Thanh Hoa reported increases of 21.2 and 15.9 percent, respectively. Revenue from travel tourism has also shown growth, driven by visitors seeking high-end resorts, adventure tourism, nature exploration, cultural experiences, and community tourism. Total revenue from tourists to coastal islands rose sharply, achieving an impressive growth rate of 63.37 percent per year from 2015 to 2019. By 2022, tourism revenue in coastal provinces reached VND24.2 trillion, representing 73 percent of the revenue generated in 2019 and accounting for 68.2 percent of nationwide travel tourism revenue. Provinces with notable increases in tourism revenue include Ho Chi Minh City, with VND17.7 trillion (50 percent of national total), Danang at VND2.3 trillion (6.4 percent), Khanh Hoa at VND1.4 trillion (3.9 percent), and Quang Ninh at VND608.5 billion (1.7 percent). This trend underscores the importance of sustainable development in the coastal and island tourism sector, highlighting the need for policies that balance growth with environmental conservation and community welfare. Currently, there are no separate statistics on marine ecotourism in Viet Nam. Most data refers to development of marine ecotourism in protected areas (national parks 78 Losada. (2022). “Planning: Innovation in Sustainable Ocean Planning to Incentivize a Shift to Sustainable Coastal and Marine Tourism.” https://oceanpanel.org/perspective/patricio-azcarate-diaz-de-losada-planning-innovation-in-sustainable-ocean-planning-to- incentivize-a-shift-to-sustainable-ocean-tourism/ 110 Boosting Viet Nam’s Sustainable Marine Economy and inland special-use forests and have not been dissected for MPAs or mangroves)79 or development of marine and island tourism in general (unseparated data on ecotourism).80 However, according to a general assessment, sea and island tourism has made significant contributions to provincial revenue and created jobs for many workers, including directly in the tourism industry and indirectly in other social sectors. Figure A.5 Travel tourism revenue of coastal provinces compared to nationwide 50 44.7 40 33.1 35.5 30.4 30 24.2 Nation-wide 18.9 21.8 20 15 16.5 Coastal provinces 10.7 9 10 5.2 0 Unit: VND trillion 2012 2015 2019 2020 2021 2022 Source: GSO, socio-economic status of coastal provinces during 2011–22. Regional linkages in marine tourism development have become increasingly prominent among coastal provinces in Viet Nam. In 2019, a significant partnership was established between Ninh Binh, Quang Ninh and Thanh Hoa provinces to enhance tourism development from 2019 to 2023. This cooperation aims to leverage and promote the values of world cultural and natural heritage sites while integrating spiritual and cultural tourism with ecotourism and resort experiences. By creating diverse tourism product packages, this collaboration seeks to extend tourist stays and provide opportunities for visitors to enjoy a wide array of tourism experiences across each province. In the central region, the establishment of a regional council has facilitated further collaboration among provinces, enabling them to capitalize on collective advantages in marine tourism development. The north-central sub-region – which includes Ha Tinh, Nghe An and Thanh Hoa provinces – has witnessed significant advancements, particularly in transport infrastructure. This region has actively sought investments from large corporations, such as FLC and Vingroup, to develop marine tourism, golf courses, and resort complexes in popular destinations like Cua Lo, Sam Son and Thien Cam. These regional linkages are essential for promoting sustainable marine tourism, enhancing the overall tourist experience, and ensuring economic benefits of tourism are shared across local communities while preserving the natural and cultural heritage of coastal areas. A.5.2.2. Challenges of development of marine ecotourism The assessment by the Tourism Development Research Institute (2021) highlights several key limitations facing marine ecotourism activities in Viet Nam. 79 See the report on the survey and assessment of the status and impact of tourism activities on wildlife conservation under the project “Research and assess the current status and proposal for integrating biodiversity and endangered species conservation in tourism activities” or the Institute for Tourism Development Research (2022) report “Overview of Ecotourism, Assessment of the Current Status of Ecotourism in Viet Nam and Proposing Solutions and Pilot Activities”. 80 See Institute for Tourism Development Research (2020), summary report of the project “Developing marine, island and coastal tourism to 2020”. Annex 111 Firstly, there is a distinction between mass tourism and genuine ecotourism. Tourism in Viet Nam’s natural areas often remains characterized by high visitor numbers and low-cost offerings, which detracts from authentic ecotourism experiences. This massive influx can lead to significant negative impacts on both the natural and cultural environments, particularly in sensitive areas. Secondly, the scale of ecological activities is generally small and fragmented. Investment in ecotourism development is relatively low and primarily relies on support from international organizations focused on conservation and enhancing community participation in select protected areas. This lack of robust investment limits the potential for growth and development in the sector. Another limitation is the presence of spontaneous tourism activities in many marine protected areas. These areas often lack specific attractive products or defined target markets, leading to insufficient investment in promoting and developing technology for ecotourism. As a result, these offerings are less appealing and profitable. Additionally, there is a significant gap in professional market research, which results in an undefined target market for ecotourism products. The absence of a coherent strategy for ecotourism development hampers effective planning and zoning, leading to sub-optimal development efforts. Finally, the participation of local communities in tourism services remains minimal. Some community tourism models lack strong connections with MPA management boards or mangrove national park authorities. Limited awareness among locals about tourism opportunities and inequitable benefit-sharing arrangements often leads to competition for tourists and excessive tourism activities, jeopardizing the ecological environment. Addressing these limitations is crucial for promoting sustainable marine ecotourism in Viet Nam, ensuring that it contributes positively to conservation efforts, enhances local community livelihoods, and protects natural and cultural heritage. A.5.2.3. Institutional and policy issues Tourism development policies in Viet Nam are intricately linked to various industries and sectors, leading to overlapping regulations and slow implementation that hinders overall progress. A significant issue is incomplete and inconsistent mechanisms, policies, and laws governing the sea and islands. The current tourism sector lacks a valid framework, as the Master Plan for Viet Nam’s tourism development up to 2020 has expired, and the subsequent plan for 2021–30 with a vision for 2045 has yet to be approved. This absence of a legal basis complicates the establishment of effective tourism development policies at the provincial level. Additionally, there is no strategic orientation for biodiversity conservation that incorporates the growth of ecotourism, resulting in confusion among national parks and MPAs when attempting to formulate ecotourism development projects aimed at attracting business participation. Furthermore, principles and viewpoints regarding the integration of ecotourism development with conservation efforts remain ambiguous within existing mechanisms and policies. This lack of clarity leaves provinces and protected area management boards uncertain about how to attract investments in MPAs. There is a pressing need for cohesive mechanisms and policies that facilitate the development of master investment programs and projects focused on developing buffer zones and promoting ecotourism across the country. 112 Boosting Viet Nam’s Sustainable Marine Economy Another significant challenge is the absence of detailed regulations and guidelines concerning the leasing of forest environments for ecotourism development in protected areas. This regulatory gap not only causes confusion among protected area management entities, but also creates loopholes that allow tourism companies to exploit mass tourism under the guise of ecotourism. For instance, Decision No. 104 has lapsed, issued by MARD regarding the management of protected areas in national parks and MPAs. Meanwhile, guidelines within the Forestry Law and Decree No. 156 from the government are not sufficiently detailed to enable effective management of ecotourism activities in these areas. Addressing these regulatory shortcomings is essential for fostering a sustainable and responsible ecotourism sector that benefits both the environment and local communities. Box A.2 Leasing forests for ecotourism development - obstacles to be removed81 Provincial wetland nature reserve management boards face challenges due to strict regulations in Decree No. 156 and overlapping legal frameworks. For example, forest leasing for ecotourism requires construction permits, but forest land is not considered suitable for construction under the Law on Construction. Without land use right certificates, businesses must partner with forest owners, adding administrative complexity. Securing funding is also difficult since investors lack collateral, and the 30-year forest lease period is seen as too short for long-term investment. Decree No. 156 further limits construction to specific non-forest areas, with strict environmental conditions. Proposed amendments tighten regulations, restricting construction to eco-friendly materials and small-scale projects. This forces a shift toward high-end sustainable ecotourism focused on fewer, but higher-paying visitors to ensure profitability and minimize environmental impacts. In many provinces, tourism development remains focused on affordable services aimed at attracting large numbers of visitors. While this strategy brings in volume, it often overlooks high-paying tourists who value the unique ecosystem services provided by marine and mangrove environments. This mass-market approach puts significant pressure on protected areas and misses the potential for non-traditional revenue streams tied to ecosystem services beyond conventional tourism. According to a 2021 survey by the Tourism Development Research Institute, ecotourism offerings across MPAs and mangroves are highly similar, centering on traditional activities like sightseeing, scuba diving, and homestays. However, experiences from other countries demonstrate that innovative models—such as scientific research tours, cultural heritage tourism, and high-end nature retreats— can attract more affluent visitors interested in sustainable, conservation-focused tourism. Furthermore, international examples showcase the potential for MPAs to generate revenue through unique offerings such as permits for special events, concessions for high-profile activities, and rental services that engage tourists with conservation efforts (forest animal care programs). To implement these innovative models in Viet Nam, clear and specific guidelines from key ministries, (including MARD, MONRE, and Ministry of Culture, Sports and Tourism82) are essential to manage ecotourism, while preserving biodiversity. 81 Adapted from Thu Phuong (2023), “Renting Forests for Tourism: Open Doors are still Difficult to Enter.” The LEADER. 82 Following the government restructuring in 2025, Ministry of Agriculture and Rural Development and MONRE merged into the Ministry of Agriculture and Environment. Annex 113 The approval process for new tourism products is another significant obstacle. Complex licensing procedures involve multiple ministries and levels of government, such as the People’s Committees and Departments of Transport and Tourism. For example, water sports and entertainment activities require water surface rental licenses, vehicle registration, and operational permits, which can be slow and inefficient due to poor coordination between agencies. This bureaucratic complexity discourages investment in innovative and high-value tourism projects. Community participation in ecotourism also faces challenges. In regions lacking resources for high-end tourism, small-scale community-based tourism offers a viable alternative that combines cultural experiences with nature. However, these initiatives are often unstructured, temporary, and limited in scale, primarily because they operate on agricultural or forest land where converting land use is difficult. To succeed, community-based ecotourism needs ongoing support from government agencies, NGOs, and private sector partners to build management capacity, integrate into national programs, and link with high-end tourism sectors. By doing so, these models can create sustainable livelihoods for local people while enhancing marine conservation efforts. Marine ecotourism holds significant promise as a sustainable approach to sea and island tourism, balancing economic development with the conservation of natural resources. However, its success depends on strict adherence to international ecotourism principles, innovative product development, streamlined regulatory processes, and stronger community involvement to ensure long- term environental and financial sustainability (see Box A.3). Box A.3 Principles of ecotourism according to the guidelines of the United Nations Environment Programme (UNEP)83 1. Minimize the negative impacts on nature and culture that can damage a destination. 2. Educate the traveler on the importance of conservation. 3. Stress the importance of responsible business, which works cooperatively with local authority and people to meet local needs and deliver conservation benefits. 4. Direct revenues to the conservation and management of natural and protected areas. 5. Emphasize the need for regional tourism zoning and for visitor management plans designed for either regions or natural areas slated to become eco-destinations. 6. Emphasize the use of environmental and social baseline studies, as well as long-term monitoring programs, to assess and minimize impacts. 7. Strive to maximize economic benefit for the host country, local businesses and communities, particularly people living in and adjacent to natural and protected areas. 8. Seek to ensure that tourism development does not exceed the social and environmental limits of acceptable change as determined by researchers in cooperation with local residents. 9. Rely on infrastructure developed in harmony with the environment, minimizing use of fossil fuels, conserving local plants and wildlife, and blending with the natural and cultural environment. 83 UNEP. (2002). “Ecotourism: Principles, Practices and Policies for Sustainability.” p.14, Ecotourism_ Principles, Practices and Policies for Sustainability-2002518.pdf (unep.org) 114 Boosting Viet Nam’s Sustainable Marine Economy A.5.3. Building the symbiotic model of community-based tourism development A survey of tourism development models reveals two distinct trends in the use of marine resources. In key tourism areas, high-end resort tourism dominates with luxury hotels and resorts occupying prime beachfront locations or areas near protected zones. In contrast, areas with smaller- scale tourism potential, often characterized by scenic beauty but less commercially viable marine resources, have seen the rise of spontaneous community tourism models, such as homestays. However, these models bring with them significant conflicts. In the high-end resort model, large businesses benefit from prime marine locations, but seldom share their economic gains with local communities in any systematic way. Although some companies engage in corporate social responsibility activities, these are typically limited to charitable efforts and depend entirely on business willingness. While these resorts create jobs and income for locals, they also place heavy pressure on the environment, disrupt fishing grounds, threaten traditional livelihoods, and gradually erode local cultural values. On the other hand, the spontaneous community tourism model lacks proper management, leading to potential safety and quality concerns. Without oversight, issues like food safety, inadequate service, and overexploitation of resources can tarnish a region’s reputation. Moreover, competition among community groups often triggers a “race to the bottom,” further degrading both the environment and local standards of hospitality. A promising solution to these challenges is the symbiotic tourism model, where high-end resorts collaborate with community-based tourism initiatives to create mutually beneficial arrangements. This approach is already being tested in places like Nhon Ly commune, Quy Nhon city (Binh Dinh province), where high-end tourism integrates community participation, and in the Dat Mui cultural village in Ca Mau province, where a co-management model links fishing and aquaculture with community tourism, while promoting resource protection. By fostering this symbiotic model, the disadvantages of resort and community tourism can be overcome, paving the way for a more sustainable approach to coastal tourism development that benefits the environment and local communities. Box A.4 Co-management model in protecting aquatic resources combined with community tourism development in Nhon Ly commune, Quy Nhon city, Binh Dinh province84 Nhon Ly commune, located 22km from Quy Nhon city, sits within the Nhon Hoi Economic Zone and features a 29km coastline. Once a pure fishing village, the commune began transforming in 2018 when it participated in the UNDP-GEF-SPG Coral Reef Conservation project in Hon Kho Nhon Hai. Building on this success, Nhon Ly joined another project in 2019 aimed at empowering local communities to manage and protect coral reefs in Quy Nhon 84 Ngo Anh Tuan and Dao Viet Long (2021), Binh Dinh Department of Tourism (2022): Community tourism development project in Ly Luong village, Nhon Ly commune, Bai Xep area, Ghenh Rang ward, Quy Nhon city until 2025, direct interview with community organizations in Nhon Ly commune. Annex 115 Bay. This initiative, implemented across four communes, established one of the country’s first co-management models under the new Fisheries Law. The commune soon formalized this co-management structure, assigning local community organizations to protect the Bai Dua beach area, including a strictly protected coral reef zone. Boundaries were marked, buoys were installed, and teams were formed to guard the reefs. Public awareness efforts have been effective, with surveys in 2021 showing coral coverage as high as 62.5 percent for hard corals and 13 percent for soft corals. This initiative has successfully preserved the local ecosystem, which in turn attracts more tourists. Leveraging its natural beauty and cultural heritage, Nhon Ly has combined this conservation model with community tourism, offering homestays, fishing experiences, local cuisine, and marine ecotourism. The model has seen rapid growth, with tourist numbers increasing from 225,000 in 2016 to 329,000 in 2018. Community tourism, driven by local identity, has provided sustainable livelihoods and increased awareness about the value of coral reefs. However, challenges remain. A 2021 WWF report highlights that community organizations in Nhon Ly still operate passively, and coordination between the government and stakeholders is weak. Moreover, tensions are emerging between conservation efforts and tourism activities, as community organizations shift focus from coral protection to tourism. Conflicts between fishermen and tourism operators are also intensifying. Nhon Ly’s experience offers valuable lessons on balancing co-management, resource conservation, and community livelihood development. The success of co-management hinges on improving local livelihoods, ensuring that both environmental protection and economic growth are achieved in harmony. The symbiotic model between high-end resort tourism and community-based tourism presents a range of mutual benefits. High-end resorts can enrich their services by incorporating local cultural experiences preserved by the community, while the community can attract high-income tourists to continue using local services. By sharing benefits, both parties are motivated to protect local natural resources. Luxury resort operators can contribute to conservation and the community, recognizing that resource preservation secures their livelihoods, becomes more actively engaged in conservation efforts. This model also fosters a value chain in tourism, with leading businesses guiding and partnering with the community to extend the range of tourism services. To implement this successfully in Viet Nam, several conditions must be met: • Policy and Investment: National standards and criteria are needed to classify and manage provinces with potential for community tourism. Investment strategies should focus on areas that promise high socio-economic returns, ensuring resources are directed where they can have the greatest impact. • Local Authority Role: Authorities should act as intermediaries between businesses and communities, facilitating partnerships and coordination. High-end resorts should be 116 Boosting Viet Nam’s Sustainable Marine Economy encouraged to adopt corporate responsibility practices that go beyond compensation, such as involving the local community in building and offering tourism products, treating community tourism as part of their service offerings. • Sustainable Resource Management: Conservation plans must involve all stakeholders to ensure the sustainable use of marine resources, safeguarding them for future tourism while balancing the needs of local communities. • Community Organization and Cooperation: Community tourism must be based on cooperative principles, assigning households different roles in providing tourism services to avoid competition. Harmonizing the interests of community tourism providers and local fishers is key, as both groups rely on shared marine resources for their livelihoods. • Business Support: Tourism businesses should assist community organizations in operating professionally, offering training, promotion, and quality oversight to meet the expectations of high-end tourists. • Livelihood Diversification: In areas that cannot support large-scale tourism, relying solely on community tourism is insufficient. Livelihood diversification, including aquaculture and forest protection initiatives, can provide year-round income and stability, ensuring sustainable development for the community beyond the tourist season. This model not only supports sustainable tourism but also aligns the interests of businesses and communities for the long-term protection of natural resources and economic well-being of local populations. Box A.5 Ca Mau develops ecotourism from the advantages of local forests and seas85 The “Dat Mui Cultural Tourism Village” pilot model, in Ca Mau province’s Ngoc Hien district, was approved by the MARD Minister on April 6, 2023. Situated in Con Mui hamlet within the Dat Mui Tourist Area, this village sits near Viet Nam’s southernmost point and is surrounded by a vibrant mangrove ecosystem. With an investment of 4-5 billion per site, the district currently features nine community tourism locations, including seven in the Dat Mui Cultural Tourism Village. Local households offer ecotourism experiences such as crab trapping, shrimp catching, and scenic river tours by boat or canoe. Visitors also have the chance to engage with the area’s cultural heritage, enjoying unique features like doorless homes and traditional music. This combination makes it a top tourist destination, particularly on weekends. In partnership with Mui Ca Mau National Park, the district has created 20km travel routes that allow visitors to explore the forests and scenic spots, even participating in tree planting activities. Tourism has proven to be 10 times more profitable than shrimp farming, with workers earning an average of 50-60 million per month compared to just VND5-6 million from shrimp farming. To enhance Dat Mui into a five-star “One commune, one product (OCOP)” product, the provincial government has launched a project covering 400ha, with a budget of nearly VND20 85 Seminar with the People’s Committees of Ngoc Hien district and Dat Mui commune. Annex 117 billion allocated for infrastructure improvements. Despite its achievements, the community faces several challenges. Tourism households remain disorganized and compete for visitors without coordination. Many residents live within the core protection forest area, restricting their ability to expand tourism operations due to strict conservation regulations. Limited access to capital for upgrading tourism offerings and the risk of environmental degradation from over-tourism, such as riverbank erosion caused by increased canoe traffic, also pose significant threats. Local authorities are cautiously considering expansion proposals to mitigate these challenges. The model of livelihood diversification combined with community tourism development holds significant potential for growth, but it also presents various risks. To ensure the sustainable implementation of this model, several key conditions must be met: • Clear and Specific Guidelines: Detailed standards and conditions for implementing each model of community tourism are essential. Emphasis should be placed on the “community” aspect, ensuring that tourism development serves the broader interests of the community rather than individuals. Additionally, the “ecological” aspect must be a core principle, ensuring that tourism activities do not harm natural ecosystems. This requires careful oversight from government bodies, protected area management boards, and environmental NGOs. • Community-Centric Development: The benefits of tourism must be shared transparently and equitably within the tourism community and with surrounding communities. Development should prioritize collective community interests, ensuring open and democratic participation in decision-making processes. • Capacity Building and Legal Empowerment: Training programs should focus on improving tourism management skills and ecological protection practices. Encouraging the formation of cooperatives or legally recognized community-based organizations can help strengthen accountability and collective responsibility, offering a more structured approach than traditional informal community groups. • Coordinated Multisectoral Collaboration: Successful community tourism requires close collaboration of various stakeholders, including local communities, commune authorities, agricultural and tourism management bodies, law enforcement, environmental agencies, and NGOs. This cooperation is necessary to create a conducive environment for tourism management, environmental protection, and tourist attractions. • State Investment in Infrastructure: Government support is critical for developing essential infrastructure, such as roads, bridges and communication systems, in selected community tourism sites. These investments lay the foundation for the sustainable development of tourism and ensures accessibility. • Supportive Policies for Traditional Livelihoods and Ecotourism: Policies that support the integration of tourism with traditional livelihoods are crucial, such as resettling communities into buffer zones for ecotourism development, providing access to preferential credit, and offering technical assistance. These policies should be harmonized with national target programs and sub-projects to promote sustainable community-based tourism. By addressing these conditions, the model can achieve long-term sustainability, benefiting both communities and the environment. 118 Boosting Viet Nam’s Sustainable Marine Economy