State set to decentralise ODA

The Ministry of Planning and Investment has submitted a draft decree that, if approved, will mean that the government will focus more on general macro-level supervision, and investigation.
“The revised decree [amendment to Decree 17/2001] is expected to be issued this month,”said Ho Quang Minh, head of MPI’s Foreign Economic Relations Department.
Under the amendment, local authorities will bear full responsibility for the management and use of ODA capital during the entire lifespan of projects assigned.
The MPI would only ratify key national ODA-funded projects for the National Assembly or central government’s approval while still listing ODA investment portfolios to call for funding.
Ayumi Konishi, Asian Development Bank in Vietnam country director, one of biggest ODA providers to Vietnam, said that the revision of Decree 17 was long overdue, adding that the bank welcomed the new direction in making ODA management more effective through decentralisation and the delegation of responsibilities.
“All these initiatives are important and necessary to improve the efficiency and effectiveness of the implementation of development assistance in Vietnam. So the upcoming revision of Decree 17 is another important building block to improve the delivery of development assistance on the ground,” said Konishi.
On the issue of project management units (PMUs) in the revised degree, two models are being considered. In one model, the PMU will be able to act as an independent investor representative for only one project. Otherwise, the PMU might manage several projects and operate under the three-level system in which the “authority” decides on the “investor” who runs the project, and then the “investor” hires or sets up a “PMU”.
The new decree would also allow existing effective PMUs to continue operation, but in line with new regulations.
Minh, however rejected the news that local governments or ODA-funded project investors under the revised degree may be able to hire domestic or foreign PMUs to replace their current inefficient units.
“They can hire domestic or foreign investment consulting firms, not PMUs, to ensure project efficiency,” Minh told Vietnam Investment Review.
Minh added that the MPI is seeking advisors and ideas from relevant government bodies and international donors to complete PMU-related regulations, which are to be issued simultaneously with the revised decree.
Currently, most ODA-funded project investors execute their responsibility through a PMU. Once the project is completed, the PMU is dissolved, meaning there is no body to take responsibility in controlling project maintenance works during the warranty period.
Vietnam currently has around 15,000 PMUs operating nationwide.
The ODA management in Vietnam has been criticised for its lack of efficiency, especially after the recent discovery of the allegedly massive corruption, gambling and abuse of power within the Transport Ministry’s PMU18, involving top ministerial officials. The changes to the decree have largely been in response to this public backlash.
The MPI’s Foreign Economic Relations Department, last week, held seminars on ‘aid effectiveness’, guiding and giving local authorities tools to effectively use and manage ODA funds.
The seminars also called upon the government to strengthen its leadership role in coordinating aid at all levels.
Late last year, international donors pledged a record amount of $3.8 billion in ODA to Vietnam. An equivalent to 50 per cent of the pledge was disbursed in the first nine months of this year.
During 1995-2005, Vietnam received total ODA pledges worth $32.6bn from 50 bilateral and multilateral donors, of which $15.9bn has been disbursed.
Japan, the ADB, and World Bank are currently the biggest ODA lenders to Vietnam.



No. 783/October 16-22, 2006