Viet Nam's many achievements in socio-economic development over the past 30 years of doi moi (renewal) owed much to 20 years as recipients of significant Official Development Assistance (ODA).
Deputy Prime Minister Vu Van Ninh said at an international symposium, Attracting and Utilizing ODA in Viet Nam – A 20-year Review, held in the central city yesterday.
He thanked donors and organisations for their ODA support of Viet Nam.
"Viet Nam has turned from a poor country into a low middle-income country with an annual growth of seven per cent. We reduced poor households by 50 per cent. We integrated deeper into the world economy and trade, partly due to ODA," Ninh said.
"ODA [loans] played a very important role in the country's socio-economic development; it accounts for 10 per cent of our total development fund, focusing on key industries such as transport, energy, health, education and environment," he said.
He, however, admitted that Viet Nam has demonstrated poor absorption capacity of ODA funds, low disbursement and ineffective use of ODA.
"Viet Nam has changed policy and mechanisms to increase the effectiveness of ODA, but administrative procedures [initial processing of ODA projects] have been complicated and not harmonious," the Deputy PM said.
Chairman of the Central Commission for Economic Affairs, Vuong Dinh Hue, said that, of the total US$89.5 billion of ODA committed to Viet Nam between 1993 and 2014, only $73.68 billion was signed over, and only 73 per cent ($53.89 billion) was disbursed.
"Inappropriate designs for a number of ODA projects, fragmented allocation of ODA funds and ineffective use of ODA loans resulted in slow disbursement," Hue told the symposium.
He said Viet Nam would no longer receive preferential ODA loans from the World Bank, Japan's JICA, Asia Development Bank and other international finance organisations starting in 2016. Now that Viet Nam is a low middle-income country, it would face stricter conditions on raising development funds.
"We should change our policies to boost the effective use of ODA to control public debts as well as rearrange ODA project beneficiaries," he added.
Chairman of the Bank for Investment and Development Viet Nam (BIDV), Tran Bac Ha, said BIDV is the biggest ODA-assignee bank in Viet Nam.
He said the Government gave the bank a total of $15 billion in ODA funds to assign to 200 projects and programmes.
BIDV was the assignee for three rural development financial awards worth $548 million from the World Bank.
Ha said these funds aided rural development by providing loans to 600,000 poor households and creating 410,000 new jobs in rural areas.
Acting Country Portfolio & Operations Manager of the World Bank, Nguyen Duy Son, said Viet Nam had seen a boom in ODA between 2005 and 2015, which brought in $50 billion instead of the $23 billion for the 1993-2004 period.
"Viet Nam drastically improved its capacity to raise and manage ODA loans. The structure of ODA agreements also changed in recent decades. Projects for transport and energy accounted for 57 per cent of total ODA loans," he explained.
Son gave some advice for the future of ODA in Viet Nam.
"It's very important that the government decides what ODA will be used for. Positive designs and decisions from the Government, ministries and local authorities will result in successful projects," Son told the conference.
"It needs changing mindsets, new ideas, new ways of doing and progressive institutions. Viet Nam should increase close co-operation with multilateral partners and bilateral parties in seeking loans," he suggested.
He stressed that Viet Nam should get rid of administrative procedures needed to install ODA activities since it has served as a big obstruction to the successful use of the funds.
He pointed to the case of a World Bank project that took 10 months to start.
Son said that the effective use of ODA would be even more important now that Viet Nam would receive less ODA loans.
"The Government should design ODA programmes that fit with its development goals and require co-operation between the Government and ODA donors," he proffered.
Economic expert Vo Dai Luoc from the Viet Nam Social Science Academy said the Government should build up strict supervision of and inspection into ODA projects to limit corruption.
He said transparency in management of ODA projects must improve because most grassroots authorities still think of ODA as a Government loan.
At the symposium, BIDV signed Memorandums of Understanding (MoU) with Cathay United Bank and ANZ on developing comprehensive co-operation in ODA management.
Following the MoU with Cathay United Bank, the Taiwan commercial bank agreed to loan the bank $105 million.
