Vietnam is able to spend 10 per cent of aggregate official development assistance (ODA) in four years and it has only six months to use the remaining 90 per cent. The World Bank has warned against sluggish pace of ODA-funded road safety project.
Unfeasible projects
The road safety project is one of 10 ODA-funded projects blacklisted by the World Bank (WB). Particularly, the Ministry of Agriculture and Rural Development holds four projects, the Ministry of Transport governs two projects, and the Ministry of Construction, the Ministry of Information and Communication, Hanoi and Ho Chi Minh City conduct one each. These 10 projects are funded US$1.096 billion of ODA capital. Although above half of project time has elapsed, capital disbursement mostly stands at 15-30 per cent.
The road safety project administered by the Ministry of Transport is still seeking main consultants although the project time has nearly completed. Problematically, the project management board is involved in six ministries. Four depute ministers of health, education; public security and transport are members of the board.
The Ministry of Transport also conducts an ODA-funded US$207.7 million project but it was able to disburse US$2 million in two months. This project is aimed to develop traffic infrastructure in the Mekong Delta region.
A representative from the Ministry of Transport explained that the coordinating apparatus was too cumbersome, citing it consisted of 15 investors, including 13 provinces, the Road Department and Waterway Department. Each decision needs approvals from both departments where procedures are not always smooth. When the project was started, inflation escalated and prices soared. Participating sides passively responded to the new context.
It is very difficult to coordinate a project which has participation of many ministries, central branches and provinces/cities from the north to the south. The Ministry of Planning and Investment proposed simpler apparatus but with deeper working professionalism.
Arguably, each project has its own reasons for the tardiness. But, the most common and easy-to-see reason is the limited capability of investors.
Mr Nguyen The Dung, a specialist at WB, the common point of these 10 projects is time-consuming in creating project management units, citing a project usually needed two years. After the commercial agreement was signed, this project management unit was formed and the project was kicked off. Meanwhile, according to the law, a project management unit can be established within 10 days dating from the approval of prefeasibility report.
ODA-funded projects to be restructured
With 10 out of 42 projects listed in the supervisory system of the WB, the slow disbursement of ODA capital in Vietnam has been put on red alarm.
The worst subsequence is the opportunity to receive concessional loans from the international community will be narrower. Meanwhile, ODA-funded projects focused on tackling basic difficulties in Vietnam such as improving infrastructure and mitigating environmental pollution.
For instance, a project to grow over 66,000 hectares of forests administered by the Ministry of Agriculture and Rural Development failed to miss the target as it took two first years to proceed bidding processes.
Even, ODA capital will be withdrawn when the project time completes. This year, many projects will be “completed” with only 1-10 per cent of capital disbursed.
At present, the average ODA capital disbursement in Vietnam is only 12-13 per cent a year of the total funding while the average percentage in the region is 20-22 per cent.
To deal with the lateness, the WB and the Ministry of Planning and Investment have considered measures to restructure ODA-funded projects. On average, it will take six months to restructure ODA-funded projects.
At a recent meeting with the Ministry of Planning and Investment on 10 “reminded” projects, Mrs Victoria Kwakwa, WB Country Director in Vietnam, emphasised that if a province failed to disburse ODA capital as planned, it would not be allocated more ODA capital. Unnecessary components will be eliminated.
The allotment of ODA capital needs to base on ODA usage history. With such disbursement tardiness, the increase of ODA capital would be difficulty, Mrs Victoria Kwakwa noted, because Vietnam would have to compete with other nations to get the official development assistance capital.
However, she asserted that remaining ODA capital will be reallocated to projects within the territory of Vietnam.
The Ministry of Planning and Investment named units with ODA disbursement of less than 40 per cent: The Ministry of Transport (38 per cent), the Ministry of Health (27.9 per cent), Da Nang City (6.66 per cent), Can Tho City (11.6 per cent) and Hanoi City (36 per cent).
The Ministry of Transport conducted 38 ODA-funded projects but 27 of them disbursed 20 per cent of capital targeted for this year and six spent 20-40 per cent.
Worst ODA capital disbursement is seen in southern coastal corridor project (0.03 per cent), Nhat Tan Bridge (0.96 per cent), Cai Mep Thi Vai Port (2.57 per cent), and new Hanoi - Thai Nguyen Road (7.15 per cent).
Hanoi City is administered 19 important ODA-funded projects. In 2009, the city has to spend VND631 billion but the disbursement only meet 36 per cent of the full-year target in the first four months.
Particularly, ODA capital for building infrastructure for Bac Thanh Long - Van Tri urban zone was disbursed only 5 per cent of the total, IT and communication development project (1 per cent), Korea - Hanoi vocational training college project (10 per cent) and Hanoi urban traffic development project (12 per cent).
The Ministry of Planning and Investment said infrastructure projects are usually prioritised to get reciprocal capital which is sourced from the Vietnamese side. The Ministry of Transport usually asks for large amounts of reciprocal capital but it cannot spend all. Meanwhile, investment capital for other projects is not enough. The sluggish disbursement affects the general balance of budgets and industry development planning.
The Ministry of Planning and Investment blamed disbursement lateness on regime, irrational investment and construction policies, limited abilities of administering authorities and contractors, and unsuitable allotment of reciprocal capital.
Deputy Minister of Planning and Investment Cao Viet Sinh affirmed that the Government would not let any important projects lack reciprocal capital. The Ministry of Planning and Investment will give most supports for ministries and localities with quick ODA capital disbursement.
Next June, the Ministry of Planning and Investment will work with sponsors to promote ODA capital disbursement. It will meet with the World Bank first. This year, Vietnam is expected to disburse US$2.5 billion worth of ODA capital.
As of June 2009, the World Bank pledged to grant US$5.1 billion of ODA for Vietnam but as much as US$3.8 billion has not disbursed. (VNN)
Vietnamese
