Việt Nam joins the Southeast Asia Disaster Risk Insurance Facility

Flooding in downtown Hà Nội after a torrential downpour in August 2021. — VNA/VNS Photo Trần Việt

The Ministry of Finance, acting under Government authority, has signed a Memorandum of Understanding (MoU) to become the eighth member of the Southeast Asia Disaster Risk Insurance Facility (SEADRIF).

The facility is a regional platform for countries in ASEAN, and China, Japan and Korea (ASEAN+3) to work together to strengthen financial resilience against climate and disaster risks in the region.

By joining SEADRIF, Việt Nam will have access to regional and international technical and financial solutions to increase financial protection for the country and its population in the face of disaster and climate shocks.

Nguyễn Đức Chí, Vice Minister of Finance of the Socialist Republic of Việt Nam and representative of Việt Nam in the SEADRIF Council of Members, said: “The Government of Việt Nam recognised the growing challenge from disaster and climate risks on the country’s socio-economic development.

"Strengthening financial preparedness for disaster response and recovery has been among the Government’s priorities in safeguarding the country’s development gains and the well-being of our people.

"Participating in regional and international cooperation mechanisms such as SEADRIF will help Việt Nam strengthen its capacity and ability to respond to disaster impacts with new financial instruments.

“At the same time, Việt Nam will play its role as an active and responsible member, together with ASEAN+3 members and development partners, in joint efforts to respond to global and regional disaster risks."

SEADRIF, the first of its kind in Asia, was established in December 2018 with support from the World Bank and endorsement by the ASEAN+3 Finance Ministers and Central Bank Governors.

As a SEADRIF member, Việt Nam will be able to jointly design and develop, together with other countries, products and services that address the country’s challenge in disaster risk financing.

Masato Kanda, Vice Minister of Finance for International Affairs, Japan Ministry of Finance, as the Co-Chair of the SEADRIF Council of Members, said: “We welcome the addition of Việt Nam as the eighth member of SEADRIF at a critical time when all SEADRIF member countries are stepping up financial preparedness measures to manage the impact of increasing climate and disaster risks.

"We look forward to working closely with Việt Nam as it responds to these risks by utilising the suite of services and products provided by SEADRIF and plays its part in building a more resilient ASEAN region.”

SEADRIF allows member countries to receive technical support in the areas of protection of government budget, financial protection of public assets, risk modelling and risk management, local insurance markets development, technology, and financial product innovation.

Việt Nam can also leverage SEADRIF to access international financial markets with greater economy of scale thanks to risk pooling with other member countries and potential financial support from development partners.

Carolyn Turk, World Bank Country Director for Việt Nam, added: “The World Bank, together with development partners, has been providing technical, financial and convening support to Việt Nam to build the country’s capacity to manage the impacts of climate and disaster shocks.

"Việt Nam’s accession into SEADRIF is an important step to improve the country’s fiscal and financial resilience against disaster and climate risk, which is becoming more important than ever as the country is heading towards a post-COVID-19 green and resilient recovery.”

With a coastline of more than 3,200km, Việt Nam is vulnerable to multiple natural hazards, most notably tropical cyclones, floods, droughts.

These disasters have caused significant damage to communities and disrupted critical operations of the economy. The Government of Việt Nam has put in place a range of financial mechanisms for disaster response and recovery including budgetary, non-budgetary and market-based instruments.

However, Việt Nam needs more effective tools, especially financial ones in order to cope with the increasing impacts of climate change.