Attracting More ODA to Avoid “Middle Income Trap”

Some delegates suggested that official development assistance (ODA) is still necessary in the development process of Vietnam. However, according to Mr Hoang Viet Khang, Director of Foreign Economic Relations Department, Ministry of Planning and Investment, in this new context Vietnam should take into account changes in development policy, it considerably will impact the economy development of Vietnam. Particularly, many bilateral donors will switch from official development assistance to direct assistance of partnership. As the result, ODA grants and ODA loans will decrease, while less preferential loans tend to increase. Besides, task assignment and complementarities among development partners based on comparative advantages will be accelerated. Grants, commerce and investment will have tighter connection, and more social organisations will be attracted in development programme. In the background of diminishing international aid and less concessional loans, private sector will have more chance to take part in developing infrastructure by PPP (Public - private partnership) form. ODA and concessional loans will be gradually shifted to primary supports for social development targets like: preventing and fighting against HIV/AIDS, green development or response to climate change.

 

Mr Tomoyuki Kimura, Country Director of Asian Development Bank in Vietnam said that donors, as well as development partners will continue to support Vietnam’s development targets in the following years. However, the Vietnam’s Government still needs some significant changes like: efforts to create more reliable, trustful and open environment so that relations between the Government and donors will become closer; necessary changes in agenda and development policy dialogue contents in national and sectoral level, tightening aids with development effectiveness. Furthermore, in order to attract engagement of private enterprises in development programme, private enterprises need to be offered more favourable conditions to approach ODA loans and less concessional loans like: relending, engagement in project implementation and infrastructure investment by PPP, based on the sharing interests and risk among the State and private sector. ODA management and disbursement must be seriously clear and transparent in accountability by enhancing supervise and assessment activities in ODA loans and concessional loans project phases.

 

According to World Bank (WB)’s representative, in the difficult global economy context, US$20 billion for Vietnam still remains undisbursed. Therefore, donors desire Vietnam to have better and smarter exploitation of received grants, and more tightened cooperation among the Government and donors.

 

Some experts advise that Vietnam should need more improvement and streamline of ODA management procedures. They also hope the Government to maintain its support to reduce poverty, narrow social gaps and geographical distance, prevent aid decrease in some social sectors like: health, education, etc. Moreover, Vietnam should reallocate labour force, cooperate with donors, share experiences, transfer technologies and support financial resources to maximize ODA efficiency. On the other hand, Vietnam should diversify other financial resources besides ODA.