Vietnam secures US$100 million loan from ADB to modernize irrigation system

Agriculture plays a significant part in Vietnam’s economy, contributing 18.3% of the country’s gross domestic product and 44% of the labor force from 2008–2016.

Illustrative photo.

The Asian Development Bank (ADB) has approved over US$100 million in financing eight modernized irrigation systems in five drought-affected provinces of Vietnam, which will improve agricultural productivity, especially that of  high-value crops such as coffee, peppers, grapes, dragon fruits, and mangoes, stated the bank in a statement. 

ADB’s support for the upgraded irrigation systems, which will supply water on-demand through pressurized pipe systems, also covers policy measures to help the provinces of Binh Thuan, Dak Lak, Dak Nong, Khanh Hoa, and Ninh Thuan improve irrigation management services, including the operations and maintenance of irrigation infrastructure.

It will also support the development of improved groundwater and water productivity assessments, as well as micro-irrigation systems based on the type of crops and farmer demand.

“Modernized irrigation systems maximizing the potential of Vietnam’s agricultural sector are crucial to the country’s goal of pursuing inclusive and sustainable growth,” said ADB Senior Natural Resources Economist Sanath Ranawana. “The project’s focus on climate resilience, particularly by providing water on-demand to farmers, will help smallholder farmers increase crop yield and boost their incomes.”

Agriculture plays a significant part in Vietnam’s economy, contributing 18.3% of the country’s gross domestic product and employing 44% of the labor force from 2008–2016. However, despite having one of the best irrigation coverage in Southeast Asia, covering about 50% of the country’s arable land area, more than half of Vietnam’s irrigation systems remain under capacity due to outdated infrastructure. This affects the productivity of farmers in drought-affected provinces in Vietnam, especially given the effects of climate change.

ADB’s assistance is composed of a US$100 million concessional loan and a US$300,000 grant from the Climate Change Fund, established in May 2008 to facilitate greater investments in ADB’s developing member countries to effectively tackle climate change

ADB will also administer another US$750,000 grant from the Netherlands Trust Fund under the Water Financing Partnership Facility, which was established in November 2006 to improve access to water resources among people living in the project area. The grant will support the development of water resource assessments and a water allocation framework, water productivity assessments, and a crop water monitoring platform.