Deputy Minister of Planning and Investment Trần Quốc Phương . Photo courtesy of the MPI

Deputy Minister of Planning and Investment Trần Quốc Phương talks to the Government Portal about the recent efforts by the Government to address obstacles in order to step up disbursement of official development assistance loans.

The Government and the Prime Minister have directed many solutions to solve difficulties for ODA projects, trying to boost the disbursement of public investment capital. Could you tell us the latest results on the disbursement of ODA projects?

In recent years, ministries, central agencies and localities have strictly followed the direction of the Government and the Prime Minister regarding this matter. The Government has determined that the disbursement of investment capital, especially disbursement of ODA and foreign preferential loans, is a key political task and has drastically implemented solutions to remove difficulties and problems to achieve the target of 100 per cent disbursement of the plan assigned in 2020. So far, the disbursement rate has improved over recent months, up from 20.79 per cent in August to 28.73 per cent in September and 30.15 per cent in October.

According to the Ministry of Finance, the rate of foreign capital disbursement allocated from the central budget as of October 31, 2020 was estimated at 30.15 per cent of the plan assigned. This disbursement rate is higher than the same period last year in both amount and the percentage.

There are still many difficulties, especially those involving site clearance and negotiation of procedures between the country and donors. But given the characteristic of ODA capital disbursement, which often takes place in the last months of the year due to the completion of bidding procedures and awarding of contracts, I think that the disbursement this year will be very positive.

Could you please clarify the difficulties and problems in ODA disbursement? And what issues will the delay in disbursement cause?

Disbursement delays in the past are due to a number of reasons.

Specifically, the effects of the COVID-19 pandemic must be taken into account. As we all know, because most of the activities of ODA projects and preferential loans are associated with foreign donors, the implementation progress of these projects is heavily affected by the epidemic.

We are also having difficulties in transferring machines and equipment to Việt Nam as well as mobilising foreign experts, workers, contractors and supervision consultants.

We also encounter problems in the implementation of newly issued legal documents or new policies, which require projects to make adjustments and changes such as changes in project design and the amount of investment capital. This also affects the progress of project implementation.

Another reason is the differences in processes and procedures between Việt Nam and donors, especially in bidding, compensation, land clearance and resettlement. Many activities in the project implementation process must wait for approval from sponsors.

Another reason is that the investment preparation and project design do not meet the requirements. Due to poor project preparation, many projects have to be re-designed or the expenses increase. The design quality of some projects has not met the actual requirements and is not suitable for specific conditions, so during the implementation of the project, it must be modified and adjusted many times.

Ministries, central agencies and localities have not given priority to adequately and promptly allocate reciprocal capital for ODA projects, leading to difficulties in site clearance. The lack of reciprocal capital to pay VAT (value added tax) for the contractor also has a significant impact on the disbursement of many projects.

Procedures for monitoring expenditure, disbursement and capital withdrawal are prolonged. The process of capital withdrawal currently takes quite a long time, requiring the involvement of provincial State Treasury, the Ministry of Finance and the donor's approval, leading to a low disbursement rate. According to the report of the Project Management Unit, a withdrawal application with sufficient documents would take two to three months to complete.  

Another reason is the improper organisation and implementation of a number of projects, especially investment preparation, appraisal, approval, contractor selection and contract signing. The capacity of staff in ODA management is still limited, especially in procurement, bidding and financial management, and foreign languages. The ability to exchange and negotiate directly with donors is also limited.

The delay in disbursement will cause problems such as late completion and putting into use of projects, affecting investment efficiency. With some donors Việt Nam will have to pay a commitment fee for the loan portions that have not been disbursed. The delay in disbursement in the 2016 - 2020 period will put pressure on the state budget in the medium term, partly affecting Việt Nam's reputation with donors.

In addition to the delayed projects, many projects have also been implemented effectively in recent times. Can you tell us some good examples of ODA disbursement efforts in Việt Nam?

According to data of the Ministry of Finance, it is estimated that as of October 31, 2020, some localities with good disbursement rate include Tây Ninh (91.74 per cent), Bình Định (73.26 per cent), Cao Bằng (62.58 per cent), Hà Nam (61.64 per cent), Bắc Kạn (60.66 per cent), Lai Châu (60.61 per cent), Khánh Hoà (53.89 per cent), Hải Phòng (52.71 per cent).

This shows that the will and determination of local leaders who tried to seek solutions to promptly remove difficulties and problems are very important in speeding up real progress of ODA disbursement.

What solutions does the Ministry of Planning and Investment propose to remove difficulties for ODA projects and promote disbursement of public investment capital in the future?

In order to speed up the implementation and disbursement progress of ODA programs and projects and foreign preferential loans in 2020 and the following years, it is necessary to immediately implement the following solutions.

All related sides need to have stronger commitment and more drastic efforts to remove obstacles: ministries and sector need to completely address problems of major investment projects, focusing on accelerating disbursement of investment projects with potential disbursement, projects that have basically completed investment procedures and bidding.

The Government should issue specific policies to allow entry with experts and consultants under the same conditions as applicable to short-term entry specialists; to facilitate the import of supplies and equipment of ODA projects to minimise the impact of the COVID-19 pandemic on the implementation of projects.

The Government needs to solve problems in institutions and policies, strengthen coordination mechanism between agencies in parallel with administrative reform.

The quality of project preparation and design should be improved and avoid adjusting investment policies during the implementation process.

Ministries, central agencies and localities shall strictly exercise the priority allocation of reciprocal capital for ODA programs and projects, urgently urge investors to complete settlement procedures, and coordinate with the Ministry of Finance. The State Treasury will urgently review and settle payment dossiers.

It's also necessary to improve the organisation and implementation capacity of managing agencies, investors and project management boards, while ensuring that project management staff are competent of the job.