Japan is the largest bilateral donor of Vietnam. To use Japan’s ODA loans in the most effective way, as well as deepen the strategic partnership between the two countries, the Ministry of Planning and Investment (MPI) in collaboration with the Department of International Cooperation, Japanese Foreign Ministry recently held a workshop in Hanoi on "ODA Policy Dialogue and Dialogue on ODA – Japan’s loans for Vietnam fiscal year of 2013."
Wide-spread effects of ODA
According to the MPI, Vietnam’s economy situation in the first 10 months of 2013 has significantly improved; the macro-economy has been on the right tract. However, the economy is still facing many obstacles such as slow speed of recovery and many internal challenges. Macroeconomic performance, though has gradually improved, has not really developed sustainably, threatening the return of inflation. Production and business activities of the majority of enterprises, especially small and medium enterprises have faced numerous difficulties such as in mobilisation and access to capital. Demand and purchasing power are not really satisfactory. The life of the majority of the population in the areas affected by natural disasters has not much improved.
According to the MPI, Vietnam’s economy situation in the first 10 months of 2013 has significantly improved; the macro-economy has been on the right tract. However, the economy is still facing many obstacles such as slow speed of recovery and many internal challenges. Macroeconomic performance, though has gradually improved, has not really developed sustainably, threatening the return of inflation. Production and business activities of the majority of enterprises, especially small and medium enterprises have faced numerous difficulties such as in mobilisation and access to capital. Demand and purchasing power are not really satisfactory. The life of the majority of the population in the areas affected by natural disasters has not much improved.
According to Mr Hoang Viet Khang, Director of the Department of Foreign Economic Relations, MPI, in the past 20 years, donors have pledged to provide Vietnam with US$78.195 billion of ODA, in which they have signed formal agreements on US$58.463 billion. Meanwhile, with US$37.597 billion disbursed, many programmes and projects using ODA capital have been put into use, creating a foundation for growth and socio-economic development of Vietnam, helping ease hunger and poverty. It is easy to see that during the last a long time, the ODA has crept into almost every field of infrastructure and social life in Vietnam. And the Government of Vietnam has also demonstrated to the donor community that Vietnam has used effectively this valuable loan to foster economic growth and improve people's lives as committed to donors.
Disbursement not as expected
As a leading donor for Vietnam, Japan said that Vietnam has used ODA for the right purpose and brought high efficiency of the loans. Accordingly, Japan's ODA supports Vietnam primarily in the development of critical infrastructure systems such as roads, bridges and ports. Although the amount of capital committed and signed tends to increase gradually over the years, ODA disbursement has not been as quickly as expected. This has reduced spillover effects of this important source of capital to socio-economic development.
In addition, this dialogue is an opportunity for the Government of Japan to show their views on policies related ODA loans for Vietnam. Specifically, Japan recommended that Vietnam need to overcome irrational issues and linked from the stage of mobilisation to the stage of paying debt; build public investment programs on the basis of the review of the national programmes and major programmes/projects as a basis for the mobilisation and allocation of appropriate funding, take advantage of ODA loans, preferential loans at a reasonable rate, further harmonize procedures for loans or grants. Vietnam also should strengthen supervision and risk management of public debt. First, it needs to research, develop and implement risk settlement plans, building plans, frameworks, and institutions to convert debt into aid or investment, debt purchase, debt swaps. It should actively prepare for reserved fund in case of risk. It is recommended to continue to update and enhance transparency and information about the public debt through the construction of information system monitoring, supervise and evaluate sustainable public debt, reform of administrative procedures, modernize and improve the efficiency of debt management agencies.
The specific projects which are being implemented from the ODA such as construction project of O Mon Thermal Power Plant, Construction Project of Long Thanh International airport, railway construction project in the area of urban Hanoi are also taken into consideration in order to have the best possible option. In addition, the experts were also consulted about the payments to the contractors and ensure budgetary payments, avoiding delays and cancellation in a number of projects using Japan’s ODA. And especially Vietnam also builds a best scenario for the proposed projects using Japanese ODA loans during fiscal 2013.
Anh Phuong
Vietnamese
