ODA funds remain key in Vietnam’s socio-economic development: Deputy PM

The Vietnamese Government gives priority to attracting official development assistance (ODA) funds for socio-economic development, considering it an essential part of any mid-term public investment plan.

Deputy Prime Minister Pham Binh Minh and delegates. Photo: Nhat Bac

Deputy Prime Minister Pham Binh Minh stressed the view in a meeting with six international development banks on September 30, including the World Bank (WB), the Asian Development Bank (ADB), Japan International Cooperation Agency (JICA), Export-Import Bank of Korea (KEXIM), French Development Agency (AFD), and German Development Bank (KfW).

“The Government is at the final stage of drafting a new decree in replacement of decree No.56 related to ODA management,” Minh said, adding opinions from six banks at the meeting would be taken into consideration in finalizing the decree.

According to Minh, a number of laws stipulating the use of ODA, including the Law on Public Investment and the Procurement Law, are subject to revision.

“The Government aims to not only simplify the procurement process but also ensure efficiency in the use of ODA,” Minh said, in return, Vietnam calls for six banks to consider harmonizing their respective process with local legislation.

For the 2021-2025 period, Minh noted the Government is devising a portfolio of priority projects to be financed by the ODA funds, expecting development banks to provide the funding in line with Vietnam’s objectives.

Overview of the meeting. Photo: VNA

At the meeting, Deputy Minister of Planning and Investment Tran Quoc Phuong said the disbursement of foreign funds in the first nine months was estimated at VND6.54 trillion ($287.6 million), or 12.69% of the plan.

Phuong explained the modest disbursement rate was due to the complicated process of work permit issuance for foreign experts that normally takes more than two months; slow project execution process due to the Covid-19 situation; quarantine period for foreign experts; or project owners facing difficulties in importing equipment and materials for ODA projects.

Phuong also pointed out the complicated procedures stipulated in Decree No.56 in extending ODA-financed investment projects, not to mention slow progress in the site clearance or approval from various government agencies.

World Bank Country Director to Vietnam Carolyn Turk said as Vietnam moves to the higher-income country group, the country should focus more on large-scale and complicated projects. However, the current portfolio of ODA projects still consists of small-scale projects or those with the same functions in different provinces/cities.

Turk cited an example that in other countries when dealing with challenges on water resources, they would have a national program on this specific issue. Vietnam, however, has different water purification projects in different localities.

These projects are isolated and therefore fail to provide stronger results beyond these provinces or cities.

Turk said small projects could only solve small problems and a large one would have greater economic impacts, expecting her hope for WB to work with the Government in major projects with high spillover effects.