The European Union (EU) and the U.S. Agency for International Development (USAID) have announced a plan of up to $1 billion in development aid for Vietnam to improve state governance, healthcare, social welfare, and agent orange/dioxin treatment between 2014 and 2020, the two organizations said last week.

The EU said last Wednesday that it will supply funding worth 400 million euros ($550 million) from now until 2020, up 100 euros (nearly $140 million) compared to the 2007-2013 period. 

David O'Sullivan, Chief Operating Officer of the European External Action Service, said that the EU will continue expanding development aid to Vietnam even in the context that the European economy has yet to fully recover and it has had to reduce assistance to many other countries.

USAID, meanwhile, announced Tuesday last week that it will arrange a budget of at least $344 million for the implementation of three objectives in many areas in Vietnam from 2014 to 2018.

As planned, it will allocate $86 million to strengthen state governance for sustainable growth, with many activities to be conducted to support trade and competitiveness, capacity building, and improve higher education.

USAID will also earmark an estimated $239 million to better the capacity of state and private agencies and the local community in protecting and improving the healthcare and social welfare systems.

Support activities will include: the prevention and treatment of avian influenza and HIV/AIDS; assisting people with disabilities; helping to empower women; and the mitigation of climate change.

Another $19 million is expected to be spent on promoting the Vietnam - U.S. partnership through the settlement of the heritage of the two nations, with concentration on agent orange/dioxin treatment at Da Nang Airport, located in the central city of Da Nang, and environmental assessment for future agent orange/dioxin detoxification at Bien Hoa Airport in the southern province of Dong Nai.

The funding for the three objectives may rise to $450 million if more finances can be arranged, Joakim Parker, USAID mission director in Vietnam, said.

Regarding the integration of Vietnam’s economy after the realization of the Trans-Pacific Partnership agreement, Parker said as TPP is an important opportunity, especially for a developing economy like Vietnam, USAID support will enable Vietnam to grasp opportunities via the agreement.

USAID funding will be channeled into various economic sectors to help Vietnam brace up as the country will face a number of challenges in the implementation of reforms to fulfill commitments following the TPP agreement, he said.

The support can focus on reforms related to the adoption of customs procedures to make them faster and smoother, Parker added, noting that it will also help Vietnam avoid the middle-income trap as the country has gained middle-income status recently.