Strategy To Use Official Development Assistance ( Oda) In Near Future In Vietnam.pdf

ScanGate document UPPSALA UNIVERSITÉT & VỈNU UN1VERSITY OF ECONOMICS & BDSỈNRSS *** UPPSALA UN1VERSITET MASTER THESIS OF MPPM Strategy to use Official Development Assistance (ODA) in near íuture in Vi[.]

UPPSALA UNIVERSITÉT &

VỈNU UN1VERSITY OF ECONOMICS & BDSỈNRSS

Hanoi, lanuary - 2015

I also thank my colleges and friends in Ministry of Planning and Investment, State Bank o f Vietnam and other govemmental agencies who provided precious documents and iníbrmation during my redaction.

Pỉnally, I specially thank my family who alvvays supported me in this hard master program

Title: Strategy to use Official Development Assistance ( O DA ) in near future in Vietnam

Level: Final assignm ent for M aster Program in Public Managem ent

Author: Ho Anh Tai

Supervisors: Dr Sven-Erik Svărd and Dr Nguyen Manh H ung

Date w hen the thesis is presented: 2014 - 12

Aim:

The aim o f this thesis is to study the strategy to use Offĩcial Development Assistance (O D A ) in near tuture in Vietnam, especially in attraction, management and utilization o f O D A and concessional loans ot' donors in Vietnam T he thesis starts by an overview on ODA and concessional loans’ attraction, m anagem ent and utilization in Vietnam Then thesis continues by describing a State o f art o f O D A m anagem ent in different countries in the vvorld, in order to draw a large scale o f experiences not only successful but also un-successful (yet), in order to fínd out some lessons for Vietnam In the next section, after analyzing O D A attraction, management and utili/ation model and its actual situation in Vietnam, the thesis tries to make a comparison o f aid effectiveness between Vietnam and other countries The last section o f the thesis draws the recent strategy and orientation in ODA attraction, managcment and utilization o f the Vietnamese governm ent and then, based on the theory acquired đuring the M aster program , the author tries to propose some recommendations for change in Vietnani in terms o f ODA attraction, management and utilization in the tuture

following some speciílc hypothesis The data is collecteil trom <official sources

in different countries In Vietnam, the data is collected IVom the Government otTiee, Ministry o f Planning and ínvestment, State Bank o f Vietnam and other agencies Expected G D P growth o f Vietnam in near tuture is chosen in two scenarios: 5% and 9% grovvth, based on studies o f Development partners such

as The World Bank For recom m endations for change, man> proposals are already available but some are found out by the author, following personal experiences and observations R ecom m endations proposed in the thesis are based on theoretical knovvleđge from the Master program and the mind-map method, according to the tìve steps o f O DA management model in Vietnam

Result & Conclusions:

The relevant results o f the thesis are: systemization o f ODA management model and actual situation in Vietnam; description and comparison o f ODA managem ent effectiveness betvveen Vietnam and other countries; proposition o f speciíìc recom m endations in parallels with govem m ent's orientation in terms

o f ODA attraction, m anagem ent and utilization in the future

The thesis concludes that in the past tvventy years, ODA attraction, managem ent and utilization have been practiced in good way and helped Vietnam achieve many successes in its development way However, with new challenges when Vietnam has becom e a lovv middle income country, its strategy has to adapt to new requirements and management standards Based on that, some recom m endations in terms of: orientation; creating prọịect documents; administrative procedures; m anaging and implementing prọịects;

m o n ito rin g and e v a lu a tin g prọịect will need to be applied in order to improve ODA m anagem ent effectiveness in Vietnam

Suggestions for future research:

In the restricted context o f this thesis, beyond achieved results, other purposes have not been protbundly studied First, international experiences and model have not been closely analyzed, some conclusions are still generalist Then, effectiveness comparison was basic and didn’t allow comparing

recommendations vvere proposed to improve each step in actual management model, not to change the model itself in Vietnam

So, the thesis can be subject for lìiture researches toy analyzing international ODA management models and compare to Vietnannese model in order to tìnd out or draw an effective ODA management model Tlnen, based on this optimal model, the research wi 11 propose recommendations to change ODA management model in Vietnam.

Contribution of the thesis:

Contributions o f the thesis: Systematizing ODA attraction, management and utilization model in Vietnam; reviexving widely intemational experiences

in ODA attraction, management and utilization; proposing a comparison o f ODA management eíTectiveness using GDP grovvth pertormance; proposing recommendations for change in order to improve ODA attraction, management and utilization, in parallel with the governm ent's orientation

Key words: Vietnam, ODA, management, concessional loans,effectiveness, recommendations for change

Table o f contents

A cknowledgem ents

A bstract

Table o f contents

A bhreviations

Tables and íìgures

Chapter I: Theoretical basics on the subject

1.1 Overvievv on the th e s is

1.1.1 Necessity to study the s u b je c t

1.1.2 Research question

1.1.3 Research m e th o d

1.2 Overvievv o f ODA and concessional lo a n s

1.2.1 Deíìnition o f ODA and concessional ioans

1.2.2 Forms o f O D A

1.2.3 Characteristics o f O D A

1.3 Attraction, management and utilization o f O D A

1.3.1 Obịectives and req u irem cn ts

1.3.2 Management o t '( ) í ) A

Chapter II: International experiences in ODA management

2.1 Philippines

2.2 M alaysia

2.3 C h in a

2.4 Experiences from other countries

2.5 Lessons for V ietnam

Chapter III: Current status o f ODA management in Vietnam 3.1 Overvievv o f ODA management in V ietnam

3.1.1 Process o f ODA managem ent in V ie tn a m

3.1.2 R e s u lto fO D A m a n a g e m e n t

3.2 State o f ODA management at p re s e n t

3.2.1 Procedures o fO D A m a n ag em en t

1

2 .5

7

8

9

9

9

10

1 1

12

12

13 13 14 14 15 18 18

20

11

23 25 26 26 26 27 28 28

3.2.2 Achievements on ODA m anagem ent 30

3.2.3 Shortcomings and existing limitations 30

3.2.4 Changes in co-operation and development relationship 34

Chapter IV: Comparison o f aid effectiveness 36

4.1 Comparison method 36

4.2 GDP growth stages to industrialization 37

4.3 Comparison o f GDP grovvth at the tìrst development period 38

4.4 Comparison o f GDP groxvth at the next deveỉopment period 39

Chapter V: Recommendations for change in V ietnam 42

5.1 Vietnam’s orientation in ODA m anagem ent 42

5.1.1 Orientations for íund-based u s e 42

5.1.2 Orientations for donor-based u s e 42

5.1.3 Orientations for ODA use in priority a re a s 43

5.1.4 Solutions to improve etììciency o f ODA management 43

5.2 Recommendations for changes 45

5.2.1 Changes in ODA management o rie n ta tio n 45

5.2.2 Changes in creating project docum ents 45

5.2.3 Changes in administrative p ro c e d u re s 46

5.2.4 Changes in implementing pro jects 46

5.2.5 Changes in monitoring and evaluating p ro je c t 47

Conclussions 48

Reterences 49

Abbreviation s

Tables and íigures

Tables

Table 1: O D A loans and grants to the Philippines on yearly hasis 19

Table 2: Poreign debt o f M alaysia as a share o f G D P 20

Figures Figure 1: O D A com m itm ent, conclusion and disbursement, 1993 — 2 0 1 2 27

Pigure 2: Process o f m anagem ent and use o f O D A in Vietnam 29

Figure 3: Stages to Industrialization 38

Figure 4: G D P per capita in 25 lìrst years o f development period 39

Pigure 5: C3DP per capita in next 25 years o f development period 40

Chapter I: Theoretical hasics on thc subject

1.1 O vcrview on the thesis

1.1.1 Necessity to study the subject

Since the start o f Doi Moi (Renovation) process in 1986, Vietnam has experienced rapid socio-economic development The country is no longer

am ong the underdeveloped countries o f the world and has moved onto the ranks o f middle-income countries Recent economic growth has continuously enhanced better living standards and quality o f life for Vietnamese people along with political and diplomatic relations, intemational trade and investment In this remarkable transition, Official Development Assistance (O DA ) Capital and other preíerential loans from donors have played a very

signiíìcant role

From 1993 through 2013, Vietnam has received pledges o f more than us$

78 billion o f ODA Capital and other preferential loans from international

d onors1 These toreign funds to Vietnam have become and continue to be as one o f the most vital resources in order to prom ote the socio-economic development and welfare o f Vietnam, especially in the field o f poverty reduction, agriculture and rural development, po\ver energy, infrastructure improvement

Over the twenty years, there has been a rapid evolution and diversiíìcation

o f ODA modalities Furlhermore, Vietnam now a middle income country2, hence, it is natural that partnerships and íìnancing sources are changing As the international practice, a developing country reaching the middle income level is not tìirther provided vvith high concessional ODA Furthermore, besides achieved results, ODA íunding mobilization, managem ent and utilization still witnessed some constraints and drawbacks such as: shortage o f harmonization and consistency betvveen ODA and domestic investment plans; un-qualified project doeum ent without specific targets; unclear project management procedures and instructions; delays o f compensation and resettlement and lack

o f counterpart funds; poor monitoring and evaluation methods

1 Sources from The W orld Bank.

2 GDP per capita of Vietnam in 2011 was 1.260 us$.

It’s time for Vietnam to take active approaches, initiatives and make maximum use o f all tìnaneing resources available.

This paper wi 11 provide a thorough overvievv on mobilization and usage o f ODA Capital and other preíerential loans in Vietnam by (i) analyzing the outstanding impacts o f ODA implementation; (ii) identiíying existing issues and situations; (iii) proposing a range o f concrete solutions to the effectiveness

o f ODA utilization

1.1.2 Research questỉon

From the above discussion, it can be seen that the research objectives vvill

be encapsulated into two core research problems as follows:

a What achievements have been accomplished and experiences have been Iearnt in Vietnam utilizing and managiniỉ ODA in the past t\venty years?

b What are intemational practices and recommendations for changes in Vietnam to attracting, utilizing and managing ODA Capital and other concessional loans from intemational donors most efficiently?

Then, the research question o f this thesis is fonnalized as follows:

“Strategy to use Official Development Assistance (ODA) in ncar future in Vietnam”.

In order to respond to above research question, this paper vvill concentrate 1'urther on following issues:

- Reviewing current institutional and legal environment vvhich the Vietnamese Government alvvays attaches importance to and makes every effort

to effectively use the official development assistance;

- Studying and applying best practices from international experience and expertise on ODA utilization in the achievement o f social and economic results;

- Evaluating the effectiveness o f using ODA in Vietnam at macro and micro levels;

- Improving policies, mechanisms and modals for the m anagem ent and execution o f ODA projects in Vietnam;

- Analyzing actual strategy to use ODA in Vietnam and developing recommendations to improve ODA management in Vietnam in the Corning years

- Correlation/Regression Analysis: this method will analyze and evaluate the content o f published studies, researches and the delivery o f ODA prọịects

so as to implement the theoretical framework o f this research Purthermore, correlation analysis wi 11 incorporate the social and economic achievements o f Vietnam through the utilization o f ODA resources, and identify problems in the

O DA management at the macro- and micro-levels in Vietnam From this, the research tenđs to deploy mechanisms, guiding prineiples and recommendations aiming to improve utilization elììciency and prevent negative in ODA prọịects and preíerential loans from donors

- Comparison method: Based on above data analysis, the report tends to place the Vietnamese govemment's mobilization and use o f ODA Capital and foreign preíerential loans in line with other international realities and practices Successtul international practices will be explored to reílect the fact tliat contribution o f ODA to GDP growth tends to increase gradually over the years and generally Hence, this method also links the ịoint impact betvveen effectiveness o f ODA utilization to GDP grovvth By a good compare and contrast, these practice guidelines can enhance the government in their ongoing efforts to strengthen the capacity o f local systems and improve aid management

in the short and medium term This is the core method used in this thesis

- Mind-map method: is used to classiíy information in the thesis This method is one o f the most important methods used in the thesis which allows clariíying ideas and \villing to clearly structuralize iníbrmation and recommendations in the thesis