Tuesday,  Sep 25, 2018,08:45 (GMT+7) 0 0
Vietnam urged to streamline procedures in ODA management
Nhan Tam
Tuesday,  Mar 6, 2018,23:11 (GMT+7)

Vietnam urged to streamline procedures in ODA management

Nhan Tam

DANANG – Vietnam has signed agreements to borrow more than US$80 billion in official development assistance (ODA) loans since 1993 but only US$56.7 billion has been disbursed as complicated and overlapping procedures have hindered ODA projects, heard an international seminar in Danang on March 5.

Meanwhile, between 2011 and 2016, Vietnam signed ODA agreements for more than US$33.8 billion and disbursed nearly US$27 billion, shows data at the seminar on “ODA loan management and use in Vietnam in the 2011-2016 period.” The event was organized by a supervision delegation of the National Assembly (NA) Standing Committee.

Local and foreign experts at the seminar pointed out shortcomings in the management and use of ODA loans, especially in policies and legal procedures, resulting in the lamentable implementation of ODA projects.

Nguyen Van Hieu, Deputy Minister of Planning and Investment, said the current way of ODA management is no longer suitable to the Vietnamese Law on Public Investment and policies of international donors as Vietnam has become a middle-income country.

Ha Hai An, deputy director of the International Cooperation Department of the State Bank of Vietnam, pointed the finger at limitations on ODA loan-related regulations. In 2011-2016, the country issued and amended such regulations but they remain overlapping, hindering the implementation of projects.

For example, in accordance with the 2013 Constitution, international agreements will be considered and approved by the State President instead of the Government. As such, one more step is added in the ODA approval process, thus prolonging the time required for negotiations and agreement signing.

In addition, the 2014 Law on Public Investment consisting of new regulations on investment decision jurisdiction leads to contradictions in the implementation of projects in the 2011-2016 period.

Christian Haas, country director of German Development Bank (KfW), cited an example for projects financed by KfW in Vietnam, especially a project to build the second metro line in HCMC. KfW decided to lend 240 million euros (US$295 million) into the project in 2014 and was proposed to offer an additional 200 million euros last year.

However, the project is being carried out at a snail’s pace, so Christian Haas said the capital supplementation should be approved by the NA in its session in May to avoid lengthening the process that will cause the construction cost to swell.

At the seminar, experts proposed issuing the law on ODA capital management and appointing an agency to manage such capital so that the capital will be used effectively.

Given overlapping and complicated procedures, Dinh Son Hung, former deputy director of the HCMC Institute for Development Studies, suggested Vietnam should fine-tune regulations and mechanisms to promote the disbursement of ODA capital.

Le Quang Thuan, head of the International Finance Committee of the Department of Financial Policies and Strategies under the Ministry of Finance, agreed with Hung’s proposal that the legal system be quickly completed to ensure the transparency of using ODA loans.

Nguyen Van Hao, deputy director of the State Accounting Department of the State Treasury, suggested appointing an agency to manage ODA loans in line with the Law on Public Debt Management.

The seminar was also attended by representatives of six international organizations offering ODA loans for Vietnam, namely the WB, the Asian Development Bank, the Japan International Cooperation Agency, Export-Import Bank of Korea, the French Development Agency, and KfW.

ADB country director for Vietnam Eric Sidgwick said donors are monitoring the use of ODA loans in Vietnam and would stop providing loans if projects are ineffective or lag behind schedule, adding that the six international institutions expected Vietnam to remove obstacles to carry out projects effectively to attract more investments.

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