The money is 'practical support' to help Vietnam reduce poverty, said Deputy Minister Nguyen Trong Dam of the Ministry of Labour, Invalids and Social Affairs (MOLISA).

It will fund the second phase of a project that began in 2006. The project has two main components.

The first, Dung said, will train government staff in several of Vietnam's poorest districts 'to analyze their district's situation. What is their potential? What are their weak points? What kinds of trees they should grow, and what animals should they raise?'

The second component will help Vietnam develop its national social security system, including health and unemployment insurance, said Sophie Anders, a consultant at GTZ.

GTZ gave Vietnam 2.8 million dollars beginning in 2006 for the first phase of the project.

German aid to Vietnam is rising despite the global economic crisis. Germany pledged 117 million euros (147 million dollars) in development aid to Vietnam in 2008 and 2009.

Germany and Vietnam have strong bilateral relations stemming in part from the relationship between Hanoi and the former Communist East Germany. Germany is Vietnam's largest trading partner in Europe, with 4 billion dollars in bilateral trade in 2008.

Deutsche Presse Agentur - June 3, 2009