Focusing on Public Investment Restructuring for More Efficient ODA Use

It said this was a high level for three reasons. Firstly, in 2010, we received US$7.9 billion but it consisted of a “bailout” package from the World Bank (WB) while we did not get that one. Secondly, Vietnam has entered the group of middle-income developing countries and the priority of development partners will be reduced to focus on poorer countries. Thirdly, many European countries and developed countries are in debt crisis caused by huge budget deficits.

 

Results of this meeting also showed that Vietnam has so far regularly received great support from international financial institutions, led by the WB and Asian Development Bank (ADB).

 

These institutions continued placing trust in Vietnam and granting support to it. Remarkably, Japan, notwithstanding tremendous difficulties caused by the earthquake and tsunami, pledged to maintain its assistance, actually higher, at US$1.9 billion in 2012.

 

In the context that Vietnam is desperately in need of resources for investment restructuring, SOE restructuring, and bank restructuring, this is actually a tremendous support.

 

One major objective the Government has outlined for 2012 and subsequent years is public investment restructuring.

 

While total social investment keeps rising in the midst of spiralling inflation and growing public debt, Vietnam is advised to reduce public investment and create a new channel to facilitate private sector involvement.

 

Private sector and foreign investors will be allowed to take on projects that they can bring in better efficiency and benefits. The State will use its capital to do two things: First, counterpart funds for private projects; and second, investment for non-refundable projects (mainly socioeconomic infrastructure in remote areas).

 

The Government’s Directive 1792 on strengthening management of State capital and government bonds in 2012 also includes tightening requirements on investment capital usage. This ODA capital will be disbursed on very specific projects and users (local and central agencies) must use this funding efficiently.

 

With this tightening, ODA becomes a resource for large projects. Thus, the pace of disbursement in 2012 will be definitely speedier than in 2011.

 

In reality, Vietnam disbursed some US$2.941 billion in 2010. This was an effort but international donors considered it slow progress. In the first 11 months of 2011, disbursement value reached US$3.2 billion and expected at US$3.65 billion for the year, nearly 10 percent higher than in 2010.

 

Every penny of ODA fund becomes very precious now because of declining State investment. We need more than VND500 trillion to complete unfinished works decided to be invested in 2011 by Resolution 881 of the 12^th National Assembly and Decision 184 of the Government. Meanwhile, we can mobilise only VND180 trillion. So, our task will be using ODA better. We are obliged to use this source of capital more efficiently.

 

The Government assigned the Ministry of Planning and Investment to build a Resolution on building medium-term investment plans rather than annualised allocations as now in the first quarter of 2012. We will allocate the capital source for three years and will then look to five years.

 

The Government will advocate publicising State resources and ODA capital that localities, ministries and agencies get to allocate.

 

I believe that positive policies to be enacted in the coming time will be the commitment of the Vietnamese Government.

 

As soon as Vietnam becomes a middle-income developing country, it will face more difficulty in attracting ODA.

 

I think the decisive matter is not how much we get, but how we use that capital in the most effective and accurate manner and at the highest pace. Then, international donors will readily assist Vietnam.