ODA progress must return to the track

Some key schemes, such as metro lines, have faced complexities with contracts, photo Le Toan

At the regular government meeting and online conference with cities and provinces last week, Prime Minister Pham Minh Chinh emphasised the importance of speeding up projects that involve official development assistance (ODA) to raise performance of public investment disbursement and contribute to socioeconomic development.

“Ministries must revise and supplement regulations on management and use of ODA and concessional loans provided by foreign donors to simplify procedures and accelerate disbursement,” the PM said.

Minister of Finance Ho Duc Phoc noted that some ODA disbursement had been an unsolvable issue over recent years. “Donors claim a lot of disbursement is impossible because of the Law on Public Investment. All relevant authorities are frustrated with rules regarding ODA. They often ask to return this capital because it is too complex to spend it,” he said.

According to the Ministry of Planning and Investment (MPI), the total ODA and concessional loans that Vietnam signed for the 2021-2023 period was about $3.35 billion.

In recent years, ODA disbursement has reported a feeble performance. In 2024, the foreign capital target is around $833 million, but the disbursement rate as of February 29 was estimated at just 1.42 per cent.

For the 2023 plan of $1.2 billion, the disbursement rate reached just over half. In 2022, the rate was even lower, at about 26 per cent.

In the Mekong Delta city of Can Tho, three ODA projects have proved too challenging to implement. For the Can Tho City Oncology Hospital project, started in 2017, it is estimated that just over 20 per cent of the contract has been fulfilled. The reason for the slow progress of relates to issues in the commercial contract signed between the Hungarian contractor and the project owner, Can Tho City Department of Health.

Meanwhile, the Can Tho river embankment project boasted a loan from the French Development Agency worth almost $20 million. All four bidding packages kicked off, but the completion volume ended up at just 72.8 per cent. Project progress has not met requirements due to insufficient site handover for construction implementation, and the ODA funding deadline became overdue.

For the Tran Hoang Na bridge project, which started construction in 2020, about 80 per cent has been completed. However, there remain problems with disbursement of the main contractor to subcontractors, who have not promptly met the cash flow to speed up progress.

Ho Chi Minh City is implementing six ODA-related projects with investment of about $4.9 billion, with the majority coming from ODA itself. These projects have also encountered difficulties. Slow disbursement of metro line 1 relates to price adjustment of project contracts, and has not been resolved because the Ministry of Construction has not yet issued a price index for metro projects.

Similarly, in one Ho Chi Minh City water environment project, disbursement of phase 2 of the canal was delayed due to rising costs of machines, equipment, and personnel due to unforeseen obstacles.

The MPI pointed out various reasons why ODA disbursement has been slow going, which included problems in negotiating and signing loan agreements; differences in policies, processes, and procedures between Vietnam and donors; quality and deadlines; and obstacles in delivering plans in bidding, site clearance, and arrangement of counterpart funds.

In particular, the differences in processes between Vietnam and donors has been raised many times, but it has not been resolved although the MPI has made great efforts to discuss the issues with development partners, especially the six banks providing the largest amount of ODA capital to Vietnam.

“Slow disbursement of such capital not only affects progress, but also wastes an important resource, while we still have to pay loan interest, leading to poor efficiency of capital. It even leads to funds being withdrawn by donors, project funds increasing, or ventures eventually being cancelled,” Minister of Planning and Investment Nguyen Chi Dung said.

After the economy grew 5.66 per cent in the first quarter of 2024, the MPI has proposed two updated growth scenarios for the year. Under which, economic growth will be 6 per cent in the first scenario and 6.5 per cent in the second.

“If the global and national situation does not get worse, and we can issue some more supporting policies on fiscal and monetary areas, as well as amend legal documents to unlock resources for development, including ODA, we can reach the higher growth scenario,” Minister Dung said.

Phan Van Mai Chairman Ho Chi Minh City People’s Committee In the second quarter, Ho Chi Minh City will focus on boosting the driving forces of investment, consumption, and exports. The city will prioritise the disbursement of public investment capital, aiming to disburse an average of $333 million per month. Additionally, efforts will be made to resolve investment obstacles, particularly in real estate projects. Hence, the city requests the government to promptly issue a decree on decentralising state management for the city. It is scheduled that the minister of home affairs will have a working session with Ho Chi Minh City on this matter imminently, so I propose the need for various opinions and content between different ministries and the city. I also suggest that the central government boldly decentralise power to the city and include any new content, if available, in the decree on decentralisation of state management. Secondly, I propose that the PM promptly approve the direction for the Ho Chi Minh City-Moc Bai expressway project. If approved in the first half of April, we will have approval of the international transshipment port project in Can Gio, as there are differing opinions. Cao Tuong Huy Chairman Quang Ninh People’s Committee Quang Ninh province has put forward three proposals. Firstly, on April 1, the province collaborated with the Ministry of Agriculture and Rural Development to organise a conference on sustainable development of marine aquaculture. There, investors expressed interest in pouring funding into sea projects, and proposed that when doing so, they only need to seek opinions from relevant ministries, without requiring provincial approval, in order to streamline administrative procedures. Secondly, in March, the province held a conference to review the 10-year operation of the Quang Ninh Centre for Public Administration Services and submitted a recommendation to the Ministry of Home Affairs to maintain the current model of the province and supplement it with a remote electronic administrative procedure resolution team to enhance work efficiency. Lastly, Quang Ninh has submitted a formal report proposing the establishment of a bilateral border gate at Hoanh Mo between the province and China, so I hope a resolution will soon be offered to promote economic development and friendship relations, thereby facilitating the opening of the border gate. Nguyen Duc Trung Chairman Nghe An People’s Committee Nghe An province is very proactive in implementing tasks related to national key projects. Firstly, the North-South expressway project of Dien Chau-Bai Vot has almost completed all procedures related to land clearance, ensuring the progress of construction implementation and will be inaugurated on April 30. Secondly, the 500kV line 3 project has two component projects. The province is currently focusing on implementing a pilot resolution on special mechanisms, hoping that the prime minister will pay attention to creating conditions for the province to soon complete procedures to submit to the National Assembly.

JICA sign $290 million ODA agreement for Ben Thanh-Suoi Tien Urban Railway The Japan International Cooperation Agency (JICA) signed a loan agreement with the Vietnamese government in Hanoi on December 29 to provide an official development assistance (ODA) loan of approximately $290 million for Line1 of the Ho Chi Minh City Urban Railway project.

ODA continues to play vital role Vietnam is cooperating with Japan on new schemes of official development assistance. Sugano Yuichi, chief representative at the Japan International Cooperation Agency (JICA) in Vietnam, spoke with VIR’s Thanh Dat about how these ties will be implemented in 2024 and beyond.

South Korea to boost ODA to Vietnam by 50 per cent this year Overseas development assistance (ODA) funds from South Korea to Vietnam are expected to hit more than $52 million in 2024, an increase of 50 per cent on year.