Construction Sector Facing Difficulties in ODA Disbursement

Construction Sector Facing Difficulties in ODA Disbursement

According to Tong Van Nga, deputy minister of construction, so far the Ministry of Construction has received and managed around 50 projects with loans and technical assistance from international organisations and foreign countries. Value of these official development assistance (ODA) projects has reached tens of millions of US dollars. However, the implementation of most ODA projects is slower than the target set by signed agreement. Some projects have seen their implementation two years later than was originally planned. This is because the implementation of projects still faces complicated procedures via many intermediary agencies. This has hampered the implementation of projects and discouraged donors.

Donors discouraged

Dr Pham Ngoc Thai, director of the Management Board of Urban Infrastructure Development Project under the Ministry of Construction, said that even though the State and authorised agencies have made great efforts, the implementation of ODA projects remained slow. This has caused losses and deteriorated donors' trust. This is one reason why the disbursement of ODA projects in Vietnam is lower than the fair level. Many water supply projects could not pay loans as planned because of low water selling prices and their capacity being lower than expected. In particular, projects on technical assistance, capability building and training, which use non-refundable aid capital, are yet to gain results as high as expected. These projects often end with the exit of project consultants.

Documents on the implementation of projects stipulate that the priority of legal effectiveness should be signed loan agreements. If there is any document of Vietnam different from the regulations of donors, the implementation of projects will follow donors' regulations. In fact, developers of projects have to observe both Vietnamese and donor's regulations. Therefore, a lack of uniqueness of documents has hampered the implementation of projects. Donors say that Vietnam's policies lack flexibility.

Now, the Vietnamese Government is perfecting its mechanism on ODA management, creating more favourable conditions for the implementation of ODA projects. Nguyen Thanh Do, deputy head of the External Finance Department of the Ministry of Finance, said that the implementation of ODA projects still faces many difficulties in environment and water supply. The management and implementation of projects lack close co-operation among authorised agencies at all levels. As a result, there is a waste of materials. Also, many projects have been effective enough as committed with donors because of a lack of synchronous investment. For example, a concentration of investment in water plants without investment in pipelines has caused losses.

How to use ODA capital effectively?

Talking about measures to attract ODA capital, Dr Do Tu Lan, director of the Management Board of Investment, Exploration and Relation Project under the Ministry of Construction, said that the Ministry of Construction should allow the establishment of a board on project preparation, which could recruit qualified cadres to act as the focal point in ODA attraction and seek Vietnamese and foreign partners. After projects are approved, the ministry would consider and assign the implementation of projects to suitable authorised agencies. Also, to avoid donors' discouragement, procedures for project implementation should be simplified. At the same time, there should be policies to attract qualified cadres. The Government and donors should review the implementation of completed projects to assess the effectiveness of projects and withdraw experience and lessons, and review the issue of loan payment.

Nguyen Sinh Hy, director of the Department of International Co-operation under the Ministry of Construction, said that apart from the issuance of the Regulations on mobilising and using ODA capital, the Ministry of Construction should promote co-operation in information sharing with agencies and localities. This will help improve the effectiveness of the use of ODA capital.

• Kim Phuong