Nhat Tan Bridge, one of major infrastructure projects using the official development assistance (ODA) loans. (Source: VNA)
Vietnam 's many achievements in socio-economic development over the past 30 years of doi moi (renewal) owed much to 20 years as recipients of significant Official Development Assistance (ODA).
Deputy Prime Minister Vu Van Ninh said at an international symposium, Attracting and Utilizing ODA in Vietnam – A 20-year Review, held in the central city of Da Nang on August 7.
He thanked donors and organisations for their ODA support for Vietnam.
" Vietnam has turned from a poor country into a low middle-income country with an annual growth of 7 percent. We reduced poor households by 50 percent. We integrated deeper into the world economy and trade, partly thanks to ODA," Ninh said.
"ODA loans played a very important role in the country's socio-economic development; it accounts for 10 percent of our total development fund, focusing on key industries such as transport, energy, health, education and environment," he added.
He, however, admitted that Vietnam has demonstrated poor absorption capacity of ODA funds, low disbursement and ineffective use of ODA.
" Vietnam has changed policy and mechanisms to increase the effectiveness of ODA, but administrative procedures [initial processing of ODA projects] have been complicated and not harmonious," the Deputy PM said.
Chairman of the Central Commission for Economic Affairs Vuong Dinh Hue said that of the total 89.5 billion USD of ODA committed to Vietnam between 1993 and 2014, only 73.68 billion USD was signed over, and only 73 percent (53.89 billion USD) was disbursed.
"Inappropriate designs for a number of ODA projects, fragmented allocation of ODA funds and ineffective use of ODA loans resulted in slow disbursement," Hue told the symposium.
He said Vietnam would no longer receive preferential ODA loans from the World Bank, Japan 's JICA, Asia Development Bank and other international finance organisations starting in 2016. Now that Vietnam is a low middle-income country, it will face stricter conditions on raising development funds.
"We should change our policies to boost the effective use of ODA to control public debts as well as rearrange ODA project beneficiaries," he added.
Chairman of the Bank for Investment and Development Vietnam (BIDV) Tran Bac Ha said BIDV is the biggest ODA-assignee bank in Vietnam .
He said the Government gave the bank a total of 15 billion USD in ODA funds to assign to 200 projects and programmes.
BIDV was the assignee for three rural development financial awards worth 548 million USD from the World Bank.
Ha said these funds aided rural development by providing loans to 600,000 poor households and creating 410,000 new jobs in rural areas.
Acting Country Portfolio & Operations Manager of the World Bank Nguyen Duy Son said Vietnam had seen a boom in ODA between 2005 and 2015, which brought in 50 billion USD instead of 23 billion USD for the 1993-2004 period.
" Vietnam drastically improved its capacity to raise and manage ODA loans. The structure of ODA agreements also changed in recent decades. Projects for transport and energy accounted for 57 percent of total ODA loans," he explained.
Son gave some advice for the future of ODA in Vietnam .
"It's very important that the government decides what ODA will be used for. Positive designs and decisions from the Government, ministries and local authorities will result in successful projects," he told the conference.
"It needs changing mindsets, new ideas, new ways of doing and progressive institutions. Vietnam should increase close cooperation with multilateral partners and bilateral parties in seeking loans," he suggested.
He stressed that Vietnam should get rid of administrative procedures needed to install ODA activities since it has served as a big obstruction to the successful use of the funds.
He pointed to the case of a World Bank project that took 10 months to start.
Son said that the effective use of ODA would be even more important now that Vietnam would receive less ODA loans.
"The Government should design ODA programmes that fit with its development goals and require cooperation between the Government and ODA donors," he proffered.
Economic expert Vo Dai Luoc from the Vietnam Social Science Academy said the Government should build up strict supervision of and inspection into ODA projects to limit corruption.
He said transparency in management of ODA projects must improve because most grassroots authorities still think of ODA as a Government loan.
At the symposium, BIDV signed Memorandums of Understanding (MoU) with Cathay United Bank and ANZ on developing comprehensive cooperation in ODA management.
Following the MoU with Cathay United Bank, the Taiwan commercial bank agreed to loan the bank 105 million USD.-VNA
