Vietnam Sees Low ODA Disbursement in 1993-2004

Vietnam Sees Low ODA Disbursement in 1993-2004

The Vietnamese government has announced a low disbursement rate of official development assistance (ODA) capital of only around 48.8 per cent in the 1993-2004 period, according to the Ministry of Planning & Investment (MPI).

Over the past 11 years, international donors pledged huge amounts of ODA totaling nearly $29 billion (15-20 per cent was non-refundable aid) for the country via 12 Consultative Group (CG) meetings, of which around US$20 billion has been concretized via agreements. However, only US$14.139 billion (over US$12 billion in loans) was put into use, equaling to around 50 per cent of foreign direct investment (FDI) in the period.

In 2004, foreign donors pledged US$2.834 billion in assistance to Vietnam (US$2.5 billion in 2003) with US$2.25 billion signed and the disbursement amount was US$1.65 billion (US$250 million of grant in aid), up 16 per cent on-year and equaling to the highest figure Vietnam realised in 2000.

The Japanese government, the WB, and the Asian Development Bank (ADB) accounted for 80 per cent of the total US$1.4 billion disbursed ODA capital in 2004.

In order to meet the targets set for the 2001-2005 period of disbursing US$9 billion ODA capital, the communist country has to put into use US$2.878 billion in 2005, or 83.7 per cent of the total US$3.44 billion that was pledged by international donors for Vietnam.

According to experts, with an annual economic growth of around 7 per cent, Vietnam needs around US$1.8 billion of ODA capital to maintain sustainable development, however, the yearly average ODA inflow stood at only US$1.1 billion in the 1993-2003 period.

The Vietnamese government has recently announced that the country targeted total development investment in 2006-2010 to equal 37-38 per cent of the country’s GDP with 35-40 per cent funds from overseas sources (mainly ODA and FDI inflows).

It expected to obtain total ODA in the period of US$14-15 billion including US$6-7 billion worth of pledged ODA transferred from the 2001-2005 period.

ODA capital, in the coming time, will be used in some major projects such as construction of metro in Ho Chi Minh City and elevated railway in Hanoi.

Foreign donors at the 12^th meeting urged Vietnam to accelerate the process of reforms (especially legal reform and state-owned enterprise reform including state-run banks), raise transparency, fight against corruption and red tape, boost poverty reduction at a rapid pace and make full use of its potential.

According to recent survey conducted by the Transparency International, Vietnam ranked 102^nd of 146 nations in term of corruption, which is hampering foreign investors from doing their business in the developing country.

Regarding to details of donors' commitments for Vietnam in 2005, about US$2.14 billion was pledged by individual nations, with US$100 million coming from international non-governmental organizations and another US$1.2 billion from multilateral institutions like the WB.

Japan remains the top single donor for Vietnam with total pledge of US$902 million in the year, followed by France with US$444 million.

• (Investment)