Workers at the construction site of an elevated section of the Metro Line No. 1 project, which uses official development assistance loans from the Japanese government

The meeting was attended by representatives of the National Steering Committee for ODA and Preferential Loans and six development banks: the World Bank (WB), the Asian Development Bank (ADB), the Japan International Cooperation Agency, the Export-Import Bank of Korea, French Development Agency AFD and Germany's KfW Development Bank.

Speaking at the meeting, Norio Saito, ADB deputy country director in Vietnam, said that the ODA loans pledged by the six banks have dropped but are still important to Vietnam.

After the financial crisis in 2008, the pledged amount increased to US$32.8 billion in 2013 but fell to US$28.9 billion last year.

Saito said that the ODA loan amounts that have yet to be disbursed are equivalent to 7% of Vietnam’s gross domestic product (GDP).

The disbursement rate plunged from 23.1% in 2014 to 11.2% last year, much lower than the average rate of the six banks. The average rates of ADB and WB in 2018 were 21% and 20.2%, respectively.

The slow disbursement has resulted in the slow progress in the execution of ODA-funded projects, raising their investment costs, reducing investment effectiveness and negatively affecting the country’s GDP growth.

In addition, the project’s quality may be affected, and contractors may quit their jobs.

Further, infrastructure projects will be completed late, affecting local residents’ and private enterprises’ confidence in the Government’s ability to manage projects, Saito added.

For his part, Deputy Prime Minister Pham Binh Minh said the slow disbursement of ODA and preferential loans, pointing out that the revised Public Investment Law, passed by the National Assembly, sets out regulations on the disbursement of public investment, giving more autonomy to lower-level agencies to ease the disbursement.

Moreover, the Government will assign the Ministry of Planning and Investment to prepare draft decrees replacing the Government’s Decrees 46 and 132 on the management and use of ODA and other preferential loans from foreign investors.

Thuy Dung

ODA projects employ foreign consultants at high costs

Official development assistance (ODA)-funded projects have been found to employ foreign consulting firms at high costs, noted a report from the State Audit of Vietnam (SAV).  

No Japan newly-committed ODA projects for Vietnam in 2018

No new credit from Japan was committed for Vietnam in fiscal year 2018 due to Vietnamese policies on public debt limits and delay in administrative procedures.