Lao Cai Water Supply One Member Co., Ltd: Efficient Use of Japanese ODA

12:21:15 PM | 12/3/2014

Japan is the leading economic partner, the first G7 country (7 developed wealthiest countries) which recognized the market economy status, the largest ODA (Official Development Assistance) donor, the top investor and the third largest trade partner of Vietnam. In recent years, Lao Cai has implemented many ODA projects efficiently. Vietnam Business Forum interviewed Mr Ngo Thanh Phuong, Director cum President of Lao Cai Water Supply One Member Co., Ltd. about the implementation of projects that use ODA in Lao Cai. Duc Binh reports.
Thanks to the financial support of the Japanese JICA, Lao Cai Water Supply One Member Co., Ltd has conducted the reconstruction and upgrading the water supply system in Pho Lu Town, Bao Thang District. How has the company developed and promoted capital?
The Water Supply One Member Company received investment to implement the project of reconstructing and increasing the capacity of the water supply system in Pho Lu town - Bao Thang district from 5,000m3/person/night to 1,200m3/person/night up with the total investment amount up to VND32,157 million (of which 72.3 percent of JICA’s grant and 27.7 percent of counterpart funding). Since receiving the support of JICA, the company has implemented projects and promoted capital efficiently, especially always made sure to use capital with proper purposes and disbursed promptly as schedule.
 We managed and supervised the implementation of the project closely and regularly in accordance with Vietnam laws and treaties agreed by donors so we always stick to the implementation schedule and ensure construction quality. As of February 31, 2013, VND23.18 billion of the total amount of JICA capital had been disbursed. The projects completed on schedule to meet the need of using clean water of the people, entities and agencies in town and surrounding areas. Adequate water supply has greatly improved the quality of people's lives which contributed in construction and economic development of Bao Thang District in particular and Lao Cai in general. Accordingly, the project has upgraded the water quality to meet clean water requirements comply with standards of the Ministry of Health, created more jobs, increased revenue for the company and improved the lives for workers.
In fact, the effectiveness of many key projects funded by ODA is rather low. How can the Government solve this problem?
In my opinion, the main reason is the design of a number of programmes and projects which did not stick to actual needs in localities. For example, regarding poverty reduction (using multiple sources of funding), sponsors applied different models leading to a waste of local and donor resources. Moreover, after handing over the project to local authorities, the local authorities were incompetent in management and lacked financial resources to sustain the operation of the project that led to the inefficiency of project. The investors did not take adequate attention to identify preferential investment items and the ownership role in the process of project preparation, monitoring, evaluation has not been carried seriously. The investors did not ensure adequately counterpart funds for the project along with the extended implementation progress led to the increase of investment costs.
Besides, the project management lacks professionalism. Professional qualification of managers is limited. Staff in the project management board is unstable, that causes the pluralism. Project management training is not often. Corruption of some officials in projects funded by ODA also resulted in ineffective investment and quality. Currently, the system of legal documents related to ODA, especially in the field of construction investment is asynchronous, inconsistent and incompatible with the international practices that have a significant impact on the performance and disbursement of projects. Differences in procedures between Vietnam and donors also cause difficulties in the implementation process.
I think to solve these problems the Prime Minister should issue mechanisms and policies to enhance management capacity, use ODA capital properly and train managers. Plus, the Government should executive the monitoring and evaluation framework of ODA projects for timely adjustments to limit the slow disbursement and make plan for the next project. The completion of policies and institutions should be done to ensure strict implementation of Decree No. 38/2013/ND - CP in order to simplify processes and procedures and facilitate the implementation of investment projects. There is also need to amend and supplement the legal documents in terms of construction laws, bidding laws and regulations in using ODA.