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Vietnam Business » Vietnam Investment News » ODA Disbursement in Quicker Progress

ODA Disbursement in Quicker Progress

Minister of Planning and Investment Vo Hong Phuc says that ODA is not only a condition to stimulate economic growth, expediting ODA disbursement will be a step to prepare for the infrastructure system, medicine, education and training sectors and the overall society. “If Vietnam is able to allocate one certain unit of capital from the state budget for counterpart fund, we will get an amount of four or five times larger than that disbursed since the capital ratio is 20:80," states Mr Phuc.

ODA disbursement rate in the first six months of the year reaches US$1.27 billion. In June only, ODA projects "absorb" a further amount of US$550 million, 3.8 times higher than the average rate for the first five months of the year. Having completed 67 percent of the year's plan and increased by 9 percent against 2008, ODA becomes a bright point in the picture of capital sources disbursement of Vietnam in the first half of 2009. Many bright points in attracting ODA In 2009, Vietnam sets a target of disbursing US$1.9 billion, consisting of US$1.6 billion in loan and US$300 million in non-refundable aid. According to the assessment of the Ministry of Planning and Investment (MOIT), Ho Chi Minh City is the city with the highest rate of ODA disbursement. Only after six months, this locality has completed and exceeded its year plan of ODA disbursement for 2009 (18 percent). Hanoi also gets 57 percent of its year plan achieved. The Ministry of Transport and the Ministry of Agriculture and Rural Development trail after by having their year plans achieved at the rate of approximately 50 percent and over 44 percent, respectively. The MOIT believes that with the influence of the government's policy to stimulate demand during recent time, ministries and localities have simplified ODA disbursement procedures via promulgating internal regulations on using this source of capital. Especially, the government's ODA working group closely coordinates with the group of six large donors through monthly meetings to hand work over to the next shift. Thanks to this, problems of each specific project have been dealt with gradually. Which solution to higher effectiveness of ODA? Currently, the committed ODA by the WB and ADB only which is waiting to be disbursed is about US$7.2 billion (US$3.7 billion of which belongs to the WB, and the remaining amount of US$3.5 billion belongs to ADB). This amount is equivalent to the value of Vietnamese government's packages to stimulate economic growth. “The problem here is not that we don't have money, but we are causing difficulty for ourselves by laying by our money," Japanese ambassador in Vietnam, Mr Sakaba Mitsuo tells the press.   Vietnam plans to disburse US$1.5-1.6 billion annually. For 2009, Minister Vo Hong Phuc believes that Vietnam's ODA disbursement up to this moment is fairly good and higher than that of previous years. However, Mr Phuc admits a fact that compared to requests of donors, Vietnam's disbursement rate is still low.   As usual, the standard disbursement rate of projects sponsored by the WB is over 20 percent. Meanwhile, this rate in Vietnam is much lower, ranging between 11 and 15 percent only.   “Not being able to get ODA disbursed will lessen the effectiveness of donored capital and raise the cost of projects. It will be more difficult to have new ODA source as well," ADB Country Director for Vietnam, Mr Ayumi Konishi says. Also according to Mr Koshini, it takes two years for a project to get implemented since it is announced to get sponsored.   The disbursement rate even gets slower due to power decentralization mechanism. When a project gets implemented in reality, it continues to be hindered by delays in site clearance, let alone limited capacity of officials in many project management units.   “Who will pay for the long time awaiting for the project to come into operation while the final objective - benefits for the people - is delayed," says Mr Konishi.   Sharing this opinion with Mr Konishi, Minister Vo Hong Phuc emphasises that the slow disbursement is not the problem of any single side. Both sides have to make efforts in simplifying procedures and to match with those of each other.   From the side of the Government, Vietnam will improve its procedures. Currently, Vietnam aims at concentrating on large projects, especially projects related to transportation and irrigation. The government also makes endeavours in reducing procedures for basic construction, conducting site clearance work and submitting a decree on site clearance. The head of the MOIT also wishes that donors pay more attention to their procedures, including bidding, selecting and verifying projects.

Vietnam Business And Financial News Network. Source [vcci]

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