Luận văn thạc sĩ Quản lý công: Attracting and using ODA in agriculture, rural areas in Vietnam. Case study of Hoa Binh province

SUMMARY THESISTOPIC: Attracting and using ODA in agriculture, rural areas in Viet Nam, case study of Hoa Binh province Level: Master Thesis on Program of Public Management Authors: Nguye

UINIVERSITET

ATTRACTING AND USING ODA IN

AGRICULTURE, RURAL AREAS IN VIET NAM,

CASE STUDY OF HOA BINH PROVINCE

Nguyen Trung Thanh

Nguyen Thi NgaHoang Thi Ha GiangSupervisor: Dr Lars Torsten ErikssonLocal Supervisor: Dr Nguyen Tien Dung

Class: MPPM - INTAKE 4-Group 11

Hanoi, March — 2012

The authors would like to express our sincere thanks to Committee on Ethnic Minority

Affairs, Ambassador of Ireland in Viet Nam and Ireland’s Project Management Board for

their help in creating best conditions for us to parti ate in the joint Master Program of

Public Management with Uppsala University for year 2011 - 2012 We would like to expressour gratitude to University of Economics and Business — Hanoi National University and

Uppsala University - Sweden who have provided us a highly applicable program, introducing

a new and attractive studying and researching approach, creating conditions for us to develop

our ideas in learning and working The authors would also like to express our heart-felt

thanks to the two respectable professors: Dr Nguyễn Tiến Dũng and Dr Lars Torsten

Eriksson who have devotedly instructed us to complete this thesis We would also like to

thank all our collegues and classmates of MPPM intake 04B and families who havecontributed valuable ideas, encouraged us to complete this thesis and unforgettable program!

Hanoi, March 2012

THE AUTHORSNguyen Trung Thanh

Nguyen Thi Nga

Hoang Thi Ha Giang

Qe é '

Master Program of Public Management MPPM ~ intake 4B

SUMMARY THESIS

TOPIC: Attracting and using ODA in agriculture, rural areas in Viet Nam, case study

of Hoa Binh province

Level: Master Thesis on Program of Public Management

Authors: Nguyen Trung Thanh

Nguyen Thi Nga

Hoang Thi Ha Giang

Instructor : Lars Torsten Eriksson

Dr Nguyen Tien Dung

Date of completion: 31 Mar 2012

I Purpose:

Official Development Assistance (ODA) is the official grants, including grant aid and

concessional loan by governments, financial institutions and international organizations for

the Government of Vietnam to support socio- economic development, hunger elimination and

poverty reduction in Vietnam

Vietnam has gone through 18 years of receiving ODA, ODA for agriculture, ruraldevelopment has played a particularly important role in the social and economic development

in Vietnam over time Especially in rural areas, rural livelihoods have improved significantly,

particularly in remote areas, ethnic minority areas Typically, Hoa Binh province with 107

difficult communes and 73 extremely difficult communes There are six ethnic groups living

together, of which Muong ethnic group accounts for 60%, Kinh 30%, the rest are Thai, Tay, Dao and H'mong ethnic groups In period of 2006 - 2010 Hoa Binh province had a total of 33 ODA programs and projects which added about 11% for a total investment of society, playing an important role to promote the province's economic growth in general, agricultural

and rural development and poverty reduction in particular

To achieve long-term development goals by 2020, Vietnam will continue to mobilize and use all resources for development, in which ODA continues to play an important role In the

context that the global economic crisis changes complicatedly, how to mobilize and attractODA in Vietnam? How to use ODA effectively to support the development of agriculture,rural and poverty reduction in Vietnam? To correctly assess the situation and have solutions

to answer the above questions, it is necessary to study the problem in specific conditions, we

2

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Master Program of Public Management MPPM - intake 4B

choose the topic: “Attracting and using ODA in agriculture, rural in Viet Nam, with a

case study of Hoa Binh province"

II The methodology of the research: The Thesis uses the research methods such asdialectical materialism methods, statistical methods general analysis methods, reviewcomparison ‘ase study method to compare These methods are combined in the entirethesis

ILL Result and conclusion: Apart from the introduction and conclusion, the main content ofthe thesis is divided into four chapters:

Chapter 1: The basics of official development assistance (ODA)

In this chapter, the thesis is focused on research to unravel the basic theory on ODA: Theconcept, characteristics and classification of ODA; factors affecting to attraction and use ofODA in the field of agricultural and rural development in Vietnam in the recent years; therole of ODA for rural development in Vietnam Dialectical materialist method used in thischapter for research on ODA issu in an objective, comprehensive and placed in the context

of specific development of the economy of Vietnam

Chapter 2: The attraction and use of ODA for agriculture and rural development in

recent years.

From the basic theory of ODA in Chapter 1, through the using of the dialectical materialist

method, and statistical methods for meta-analysis method to analyze the information and data

in multiple dimensions, the thesis has been reseached in depth the actual situation to attract

and use ODA for agriculture and rural development in Vietnam during the period from 1993

to 2011, from which to draw the positive impact analysis due institutions and causes

Chapter 3: The attraction and use of ODA in Hoa Binh province, the case study projectfor Strengthening the Cooperative and the project on Capacity Building for

Community Forest Management for Hoa Binh province.

On the basis of ODA issues in agriculture and rural development from Chapter 2, the thesishas used the statistical methods, analysis and synthesis method to compare two projects in thesame province to put into the same legal framework conditions, geographical conditions,administration but there is a successful project (Strengthening project Cooperatives in HoaBinh province) and a less successful project ( Capacity Building project in community forest

management in Hoa Binh province) from which to draw lessons learned, recommendations

Master Program of Public Management MPPM ~ intake 4B

and proposals for the work of attracting and using ODA in agricultural sector in Vietnam in

the near future

Chapter 4: Some recommendations on the policy and suggestions

The Policies on attracting and using ODA can be come into pratice its depend on institutionalmanagement and use of this fund, as well as human capacity at all levels related tomanagement and using of ODA An institutional system management and use of ODA havebeen developed in parallel with the staff and managers professionally of projects it is

certainly basis to ensure the management and using of ODA efficiency and long term We

hope that the solution mentioned in the thesis will help to complete mechanisms and policies

for ODA management in agriculture and rural development in the future of Vietnam

IV

IV Suggestions for Future Researc

Within the limited scope and time, thesis studied in depth only ODA in agriculture and rural

development in Vietnam especial two of projects in Hoa Binh Province According to us, weneeded to study on overall of ODA as a whole in various fields and research on many

different regional areas to have a more comprehensive so lution to improve policies for

attracting and using ODA in Vietnam synchronously and effectively./

V Contribution of the the: Continuing attracting and using ODA effectively in theagricultural sector and rural areas, and continually updating and innovating ODAmanagement is an inevitable trendWe hope that the analysis in thesis and specific case studies

would help the readers have general ideas about attracting and using ODA in the agricultural

sector in Vietnam It is anticipated that ODA for agriculture and rural areas of Vietnam in the near future will remain, even increase in quantity compared with that in the previous period.

However, the structure and aid policies are predicted to have certain changes to better suit thenew situation that is changing daily and hourly in the region and around the world

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Master Program of Public Management MPPM ~ intake 4B

3 Object and Scope of study

4 The scientific meaning of the research

5 The methodology of the research

6 The structure of the research

CHAPTER I

The basics of official development assistance (ODA)

The basics of ODA

1.1 The coneept and origin of ODA

1.2 Characteristics of ODA

1.3 ODA classification b :

2 The factors affecting the attr action and use © of ODA i in Vietnam in recent years.

2.1 Factors from donors ai

Factors affecting ODA from receiving countries

1.3 The role of ODA to agriculture and rural development i in Vietnam

1.3.1 ODA contributes to hunger elimination and poverty reduction

1.3.2 ODA radically changes the rural infrastructure for production and life

1.3.3 ODA helps to improve management capacity and expertise in the Agricultur:

1.3.4 ODA is an important driving force for developing internal resources in the country

1.3.5 ODA creates premises and infrastructure to attract foreign direct investment (FDI)

2.1 Attraction and use of ODA for the sub-sectors of agriculture and rural development,

hunger elimination and poverty reduction in the past years.

2.1.1 Attraction and use of ODA by donors emaggeeracar

2.1.2 Attraction and use of ODA by region

2.2 The effects of ODA in the development of agricultural and rural sectors in the last

years 23

2.2.1 The positive effects 23

2.2.1.1 The share of ODA in total investment in agriculture and rural development is growing ee) 2.2.1.2 ODA for agriculture, rural areas, implementation 0ENGIRRI elimination and poverty reduction

strategies of the Government 24

22.1.3 ODA supports the development and adjustment “Of strategies and policies to develop

agriculture management 24

1.4 ODA and rural infrastructure (including fresh water and rural sanitation) 24

1.5 ODA and sustainable development of agriculture, rural areas, especially | in the prevention of

natural disasters, epidemics, environmental protection mm

22.16 ODA and the development of agricultural science and technology as the basis for the

development of efficient, sustainable and high technology agriculture , 2.2.2 Limitations in attracting, managing and using ODA for agriculture oo]

2.2.2.1 Lack of an overall, ompreheasive and long term orientation in attracting and using ODA in

agriculture mm

2.2.2.2 The management and use documents of ODA in Vietnam are not consistent

3 The preparation, appraisal and approval of programs and projects take long time

2.4 Limitation during the bidding organization, especially consultancy recruitment ,

3.2.2.5 Limited financial management and difficulties in mobilizing reciprocal funds in agricultural

projects.

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Master Program of Public Management MPPM ~ intake 4B

2.2.6 No professional staff in management and implementation of ODA projects 28

7 The organizational structure for managemenveoordination and implementation of ODA projects is still insufficient : 28 3.2.2.8 The monitoring and evaluation of projects is limited n : 29

9 General settlement of completed projects is slow amr 30

CHAPTER IIL

The Attraction and use of ODA in Hoa Binh province, case study of the project of

strengthening the ability of cooperatives, and the project on Capacity Building for

Community Forest Management and lessons for attracting and using ODA seed]

The attraction and use of ODA in Hoa Binh Province

Achievements

3,2: Case study of the project on Strengthening capability for Cooperatives in Hoa Binh

prov vince.

3.2.1 General introduction about the projec

3.2.2 The results of the project

3.2.2.1 In agriculture

3.2.2.2 In Trade in Services:

3.2.2.3 In industry and small scale handicraft industry area

3.2.2.4 In credit area

3.2.3 Some problems in implementation of project

3.3 Case study of the project on Capacity Building for Community Forest Management

in Hoa Binh province 88)

3.3.1, General introduction about the projec 38

3.3.3 Some problems during project implementation 40

3.4 Some lessons learned from 02 case studies in Hoa Binh Province 41

3.4.1 Proper awareness of ODA: i đi

3.4.2 Strong commitment, close direction, and broa participation of local people in “attracting and

Some recommendations on policies and propositions 1`

4.1 Some recommendations on policies in attracting and using ODA in agriculture and

tural areas in Vietnam in upcoming years

4.1.1 Continuing the mobilization, management ‘and implementation of ODA flows with preferential

interest rates and starting ODA mobilization with less favorable interest rates for agriculture and rural development in association with poverty reduction oo

4.1.2 Selection of prioritized programs and projects by sub-sectors in ecological regions

4.1.3 Perfecting institutions, mechanisms and organs managing the implementation of projects in

agriculture and rural areas

4.1.4 Strictly following all the phases in the cycle of programs anid projects

4.2 Propositions to relevant units

1 The Government and Ministries

2 The Ministry of Agriculture and Rural Development

3 Projects’ local participant:

4, Donors

CONCLUSION

BIBLIOGRAPHY

Annex |

The methodology of the research

Master Program of Public Management MPPM ~ intake 4B

Canadian International Development Agency

‘alia Agency for International Development

The Comprehensive Poverty Reduction and Growth StrategiesCentral Project Management Unit

Strategies and national programsDanish International Development AgencyEuropean Union

Food and Agriculture OrganizationInternational Fund for Agricultural Development

The International Labour Organization

Japan Bank for International CooperationJapan International CooperationAgencyNew Zealand Agency for International DevelopmentOfficial Development Assistance

Organization of Petroleum Exporting CountriesProject Preparation for Technical Assistance

The State Bank of Viet Nam

The Swedish for International Development AgencyTechnical Assistance

Master Program of Public Management MPPM ~ intake 4B

1 The essentiality of the Thesis

Officijal Development Assistance (ODA) is the official grants including grant aid and

concessional loan by governments, financial institutions and international organizations for

the Government of Vietnam to support socio- economic development, hunger elimination and

poverty reduction in Vietnam

Vietnam has gone through 18 years of receiving ODA since having resumed formal relations with the international donors in November 1993 Currently, Vietnam has 51 bilateral donors and multilateral donors, of which are 28 bilateral and 23 multilateral donors In the period 1993-2011, ODA which has been signed in the international treaties reached 50.44 billion USD, of which over 8 billion USD is for agriculture and rural development ODA for

agriculture, rural development has played a particularly important role in the social andeconomic development, hunger elimination and poverty reduction in Vietnam over time,ensuring the continuous growth for that industry and always at high level Especially in rural

an rural livelihoods have improved significantly, particularly in remote areas, ethnicminority areas Typically, Hoa Binh province with 107 difficult communes and 73 extremelydifficult communes There are six ethnic groups living together, of which Muong ethnicgroup accounts for 60%, Kinh 30%, the rest are Thai, Tay, Dao and H'mong ethnic groups In

period of 2006 - 2010 Hoa Binh province had a total of 33 ODA programs and projects which added about 11% for a total investment of society, playing an important role to promote the

province's economic growth in general, agricultural and rural development and povertyreduction in particular,

To achieve long-term development goals by 2020, Vietnam will continue to mobilize and useall resources for development, in which ODA continues to play an important role In the

context that the global economic crisis changes complicatedly, how to mobilize and attract

ODA in Vietnam? How to use ODA effectively to support the development of agriculture,rural and poverty reduction in Vietnam? To correctly assess the situation and have solutions

to answer the above questions, it is necessary to study the problem in specific conditions, wechoose the topic: “Attracting and using ODA in agriculture, rural in Viet Nam with a

case study of Hoa Binh province"

Master Program of Public Management MPPM - intake 4B

2 Research purposes

The Thesis focuses on research to clarify the basic theories about ODA the attraction and use

of ODA in agricultural sector in Vietnam and the 02 cas studies of the project

“Strengthening the Cooperation for Hoa Binh Commune” and the from which to draw lessonslearned recommendations and proposals for the attraction and use of ODA in the agriculturalsector in Vietnam in the near future

3 Object and Scope of study

The research object of the thesis is attracting and using ODA in Vietnam in the fields of

agriculture, in the case of Hoa Binh province The range of research topic is limited to theperiod since the resumption of official financing development cooperation with Vietnamfrom 1993 to date

4 The scientific meaning of the research

The thesis focuses on analysis of the ODA attraction and use in agriculture in Vietnam inrecent years, a case study in Hoa Binh province, from that recognizing the advantages and

limitations of the ODA management system in the agricultural sector in Vietnam in order to

draw the lessons learned, recommendations and proposals to increase the efficient use of thiscapital in the future

5 The methodology of the research

The research group collected.data about attraction and use ODA in agriculture and rural

development in Vietnam in general and in Hoa Binh province in particular, from sources such

as professional reports of the Ministry of Agriculture and Rural Development and theMinistry of Planning and Investment, Department of Planning and Investment of Hoa Binh

province, and from specific programs and ODA projects Then synthesize, analyze, compare this data for the studied thesis.

The group selected Hoa Binh province to study because this is a poor province with manydifficult natural conditions and economic - social difficulties Hoa Binh is also a provincewhich has received much capital of Official Development Assistance (ODA) for agricultureand rural development in recent years, and thus provide practical examples about attractionand using ODA which the group can collect data for the studied thesis

The group uses method of "Comparative case study”: explore typical cases of different categories in order to compare and find differences between the cases of these different

categories Usually comparative case study uses both qualitative and quantitative comparison

This is a very popular method used in education, sociology, administration, law, economics and medicine The basic objective of this method is to understand the studied case by closely

and comprehensively monitoring the selected case for a substantial period of

natural environment The typical study results allow researchers give explanations why things

happen as has happened and through which identify important issues which need to be

further studied extensively in the future

The group used this method to study and compare study 02 c; ses of proj cts using capital ofoffic in the same time duration of| development assistance (ODA) in Hoa Binh province,deployment, the same conditions of legal framework, and in the same geographical and

administrative conditions However, there is a successful project that is the Project for Strengthening Capacity of Cooperative in Hoa Binh province, and a less successful project that is Project for Strengthening Capacity of forest management in community in Hoa Binh Comparing the two cases helps clarify the issues raised for the management and use of ODA

in Vietnam today as well as in the case of Hoa Binh province In addition, the fact that the

group of authors has a good knowledge about Hoa Binh province and ability to access reports

and other documents related to ODA in the province also created many advantages for

authors in the process of thesis implementation (Ref: Annex 1)

6 The structure of the research

Apart from the introduction and conclusion, the main content of the th s divided into fourchapters:

Chapter 1: The basics of official development assistance (ODA)

In this chapter, the thesis is focused on research to unravel the basic theory on ODA: Theconcept, characteristics and classification of ODA; factors affecting to attraction and use ofODA in the field of agricultural and rural development in Vietnam in the recent years; therole of ODA for rural development in Vietnam Dialectical materialist method used in thischapter for research on ODA issues in an objective, comprehensive and placed in the context

of specific development of the economy of Vietnam

Chapter 2: The attraction and use of ODA for agriculture and rural development in recent

years.

From the basic theory of ODA in Chapter [, through the using of the dialectical materialist method, andstatistical methods for meta-analysis method to analyze the information and data in multiple dimensions,the thesis has been reseached in depth the actual situation to attract and use ODA for agriculture andrural development in Vietnam during the period from 1993 to 2011, from which to draw the positiveimpact analysis due institutions and causes

Chapter 3: The attraction and use of ODA in Hoa Binh province, the case study project for

Strengthening the Cooperative and the project on Capacity Building for Community ForestManagement for Hoa Binh province

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Master Program of Public Management MPPM - intake 4B

On the basis of ODA issues in agriculture and rural development from Chapter 2, the thesishas used the statistical methods, analysis and synthesis method to compare two projects in thesame province to put into the same legal framework conditions geographical conditions,

administration but there is a successful project (Strengthening project Cooperatives in Hoa

Binh province) and a less successful project ( Cap ity Building project in community forestmanagement in Hoa Binh province) from which to draw lessons learned, recommendationsand proposals for the work of attracting and using ODA in agricultural sector in Vietnam inthe near future

Chapter 4: Some recommendations on the policy and suggestions

The Policies on attracting and using ODA can be come into practice its depend oninstitutional management and use of this fund, as well as human capacity at all levels related

to management and using of ODA An institutional system management and use of ODAhave been developed in parallel with the staff and managers professionally of projects, it iscertainly basis to ensure the management and using of ODA efficiency and long term Wehope that the solution mentioned in the thesis will help to complete mechanisms and policiesfor ODA management in agriculture and rural development in the future of Vietnam

Here are the detailed contents of the chapters

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n of Public Man: nt MPPM ~ intake 4B,

The basics of official development ance (ODA)

1.1 The basics of ODA

1.1.1 The concept and 0:

Official Development Assistance (ODA) as defined by the World Bank (WB) is "The grant

or concessional loans disbursed (after deduction of repayment) issued by official agencies of

the countries of the Organization of Economic Cooperation and Development (OECD), somecountries and multilateral organizations such as the World Bank for development purposes.Military aid is not included in this concept"

In the above concept, ODA includes non-refundable grants, preferential loans by official agencies of governments and international organizations to provide poor countries and developing countries for the development of economic and social interests of these countries The word "oft al" is used in this concept to distinguish grants to poor countries anddeveloping countries of private organizations such as corporations and enterprises The

phrase "for the purpose of development" is used to distinguish ODA with temporary grants to

help overcome natural disasters, epidemics, environmental, or humanitarian aid, and military

‘ance These aids are not counted as ODA

The number of donor countries is increasing day by day; especially some countries that previously received ODA now have become the world leading donor countries such as Japan Besides, there are countries that received ODA on a large scale, now have become fair

income countries and currently no need for large-scale ODA, such as Thailand

Compared to the previous decades, the world's total ODA has increased from about 90 billion

USD in 2005 to about 140 billion USD in 2010, but the need for ODA of poor countries

continue to increase so that supports will reach the Millennium Development Goals (MDGs)

1.1.2 Characteristics of ODA

Firstly, ODA capital is preferential

The ODA has "non-refundable element", this is the distinction between aid and commercialloan: s "Non-refundable element" is determined basing on loans time, the grace period (onlypaying interest without payments of principal) and the comparison between aid interest rates

with commercial credit interest rates The preference here is set in comparison with

commercial credit in international practice

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‘nt MPPM ~ intake 4B

Master Program of Public Manas

ODA's preference is also reflected that it is reserved for only developing countries and slow

¢ conditions fordevelopment ones, for development goals There are two most bai

developing countries and slow development ones to receive ODA:

Secondly, ODA capital is binding

ODA can bind (partially bind or not bind) receiving country in terms of location, andspending method In addition, each aid-providing country has other binding and sometimes.these constraints are very close toward receiving ones For example Japanese regulates thatJapanese ODA capital (including non-refundable and refundable aid) was made in Yen

ODA capital has preferential factor for receiving countries and benefits for host countries

Thirdly, ODA capital may result in debt burden

On adoption and using ODA capital, thanks to preferential characteristic, debt burden does

not appear Some countries may not use ODA efficiently; i.e creating temporary growth, but

after a time, falling into debt and are unable to pay debts The problem is that ODA capital isnot for direct investment for production, especially for export while debt paying relies heavily

on exports to earn foreign currency Therefore, when policymakers use ODA, they must

coordinate with all kinds of capital to enhance economic strength export ability

1.1.3 ODA classification

Based on different criteria, there are different ODA classifications

* On providing form, ODA includes

- Non-refundable ODA: The ODA-providing that is non-refundable to the donor;

- Preferential loan ODA: a loan with favorable terms of interest rates, grace period and

repayment period, ensuring "non-refundable element" (also known as "support component")with at least 35% for loans with binding and 25% for loans without binding;

- Mixed ODA loans: are non-refundable grants or preferential loans which are providedsimultaneously with the trade credits, but overall there is "non-refundable element" with at

least 35% for loans with binding and 25% for loans without binding

* On the purpose of using, ODA includes:

- Basic supports: are the resources provided to the investment of building economicinfrastructure and social environment These are usually preferential loans

ment MPPM ~ intake 4B, Master Program of Public Man

- Technical support: are the method resources for knowledge transfer technology capacitybuilding basic research or pre-investment research, institutional development and humanresources This kind of support is mainly non-refundable aid.

* On the conditions, ODA includes:

- ODA that is not binding receiving countries: the use of funding sources is not bound byusing sources or using purpose

- ODA that is binding receiving countries: (ODA is only used for certain fields or someparticular projects)

- ODA that can partly bind: partly bound, the rest does not suffer any strings attached

* On the mode of supply, ODA is divided into

- Project support: is the form of ODA provided to perform particular projects It may be

fundamental or technical support, may be gratuitous or preferential loans

- Industry support: is a form of ODA provided to support planning development,comprehensive development plan of an industry, or some specific areas of the industry

- Programs support: is ODA for general purposes with a specific time without having

correctly identified how it will be used

- Budget support: is ODA in which ODA grants are not associated with one or severalspecific project but to be directly transferred into the State budget and is managed and used in

accordance with procedures of the State budget

* According to the donor, ODA is divided into:

- Bilateral ODA: is ODA of a government funding directly for another government

- Multilateral ODA: is ODA of many governments that co-funded, often done throughinternational organizations (WB, IMF, ADB )

1.2 The factors affecting the attraction and use of ODA in Vietnam in recent years

1.2.1 Factors from donors

The first factor governing the management of ODA is the strategic goal of providing ODA of

donors In each period, based on strategic objectives, the donor determines which region and

country to concentrate on and by which method If the strategic goal of providing ODA ofdonor countries changes, it will affect receiving countries in both structure and managementmechanisms and policies of ODA capital sources

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Master Program of Public Management MPPM - intake 4B

The second is the economic and political situation as well as unexpected changes may occur

in the donor When there are unusual fluctuations, policies and regulations on ODA

management may also change based on the assessment of ODA made in the past time of each

donor

The third is international atmosphere and the development of economic and politics relations between the donor and the recipient If the atmosphere and the relationship is positive, it will facilitate the maintaining and expanding ODA as well as the harmonization between the two

sides and vice versa

For example Japan is the great donor for Vietnam in general and Hanoi in particular The

objective of the Government of Japan is to provide ODA for Vietnam to support development efforts of | Vietnam, to support in the growth increase and enhance international

competitiveness through increasing economic transfer following market oriented, investment

environment improvement and economic and social infrastructure development, through

which, addressing the needs of society and humanity In particular, the Japanese government

supports institutional development as institutions is the basis for the increased growth,

improved living and social conditions

The scale of the assistance of Japanese government is determined based on mechanisms that maintain policy dialogue with the government of Vietnam, on that basis, together discussing aid for each individual field in a medium-term plan Japan also focuses on effective support

through cooperation, the participation of multiple stakeholders such as donors,

non-governmental organizations, local authorities This allows to mobilize experience and

expertise, human resources of Japanese organizations

1.2.2 Factors affecting ODA from receiving countries

The factors of the recipient are also diverse First of all, it is the stability of political institutions Practice has shown that, stable political institutions will facilitate the attraction and good management of ODA.

Secondly, the macroeconomic stability in each stage of economic development, especially fiscal policy, taxation, the level of opening of the economy also have significant impact on the management If these policies are stable and reasonable in the long term, it will contribute

to better management of ODA and vice versa, will affect the management of this fund.

Other factors such as level of economic development in general, especially the level of

institutional development of the economic system, the conditions related to management

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Master Program of Public Management MPPM ~ intake 4B

capacity of staff or economic growth over time Perceptions of leaders, managers and people

on ODA that first of all are sectors levels localities institutions benefiting directly alsoserv s the factors that influen lot to the management of ODA-financed of the recipient.

A management institutional system and use of ODA which has been developed in parallelwith the staff of project managers who are trained and professional is certain basis to ensurethe management and use of ODA effectively, and in long-term view this is one of the

Government's responsibilities to contribute to improve the management of public investmentfunds

1.3 The role of ODA to agriculture and rural development in Vietnam

1.3.1 ODA contributes to hunger elimination and poverty reduction

Evaluation of the United Nations and big international financial institutions agree thatVietnam has reached great achievements in hunger elimination and poverty reduction efforts.Rural livelihood has been improved and poverty rates decrea

1993 to around 10% in 2011

ed significantly from 58.1% in

1.3.2 ODA radically changes the rural infrastructure for production and life

In recent years, there have been more than 50 ODA investment projects for the development

of rural infrastructure, particularly from the areas of construction of irrigation reservoirs,

canals, dikes strengthened to clean water supply and hygienic rural environment theimpact of ODA projects is on supporting domestic investment in flood control,

deacidification, alkaline wash, expanding rice area in the Mekong River Delta, It isdifficult to visualize changes in production and life in rural areas in all three regions: the Red

River Delta, the Mekong Delta and the Central provinces without ODA projects in the pasttime

1.3.3 ODA helps to improve management capacity and expertise in the Agriculture

There have been more than 300 technical assistance projects, with hundreds of millions ofdollars, hundreds of turns of international experts and thousands of personnel to Vietnam towork or study in countries with advanced science and technology in agriculture That supporthas made an important contribution to raising the sector capacity of technical capacity andmanagement, raising awareness of officials from state management to business management,

scientific research and application the development of science and technology It is

international supports in the development and implementation of Forestry strategy,Mitigation strategies, Rural development strategy In 2004, at an outbreak of bird flu it was

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Master Program of Public Management MPPM ~ intake 4B

hard to find a laboratory that could diagnose the flu virus HSN1, now thanks to internationalassistance agriculture not only minim virus diagnostic time but is also capable ofthorough analysis of genetic structure thereby tracking the transformation of the virus andhaving timely warning if there are risks of pandemic influenza due to mutation of the virus

1.3.4 ODA is an important driving force for developing internal resources in the country

Experience from various programs projects supporting irrigation development programs aswell as projects supporting forestry and rural development in general shows that in ODAareas the mobilization of other funding sources, particularly local resource mobilization,including the private sector and people's participation is often very effective

1.3.5 ODA creates premises and infrastructure to attract foreign direct investment (FDI)

It can be said that ODA has been increasingly closely and served the overall socio-economic

development of long and short term of the industry International funding has been activesupport for the revision and editing policy, strategy development construction and improvingprofessional competence and professional staff as well as scientific capacity technicalmachinery equipment and people for scientific research to directly support agriculturalinfrastructure and rural development, improving production capacity, contributing to increaseincome and reduce poverty for farmers

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Master Program of Public Management MPPM ~ intake 4B

CHAPTER II

Attraction and use of ODA for agriculture and rural development in the past years

2.1 Attraction and use of ODA for the sub-sectors of agriculture and rural

development, hunger elimination and poverty reduction in the past years

In the sectors and priority areas of ODA, Agriculture and Rural Development programs with

ODA projects signed in recent years has reached a total value of approximately 8.1 billion USD, of which there are many projects of large scale such as Raising the quality of agricultural products and development of biogas program Breeding competition and food

safety, the program of Poverty reduction support credit (PRSC) and Emergency assistance to

stimulate economic demand, Finance support for the second development policy, Supports for 135 program, phase II; Supports the implementation of poverty reduction programs V (program cluster) - Subprogram 2, Poverty reduction project in the northern mountainous provinces, Rural infrastructure development project based on rural community Livelihoods development projects in the Central, Rural water supply program, Rural roads and rural

electrification, Irrigation program in Mekong river delta and many rural development projects

in combination with other poverty alleviation, have contributed to support agriculturaldevelopment and become an important step in improving people's living areas, remote areas,

ethnic minorities especially in access to public services in the areas of health care and

OForestry H Agriculture [] IrrigationO General Agriculture Development i Seafood

(source: The Ministry of Agricultural & Rural Development)

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Master Program of Public Management MPPM ~ intake 4B.

ODA attraction in agriculture and rural development in the past years as above we find thateach sub-sector ODA fund is uneven, mainly focuses on irrigation _ field,agriculture Fisheries sector does not receive much attention of donors.

Table 1 The rate of capital mobilization in Agriculture sector and rural areas over theperiod during 1993-2011

(source: The Ministry of Agricultural & Rural Development)

ODA mobilization rate in the agricultural sector in recent years has gradually increased The

2001-2005 period reached the highest proportion, 37%, with 2.3 times compared to the

previous period 1993-1995 The mobilization of the forestry sub-sectors was of high

proportion in the period 1995 - 2000, accounting for 36% and then gradually decreased to30% and 16% Agriculture sub-sector increased over the period from 11%, 26%, 27% and37% Irrigation sub-sector had small density in 1995-2000, then rose rapidly in the period

2001-2005 Sub-sector Rural development and Fisheries has the trend in the opposite

direction, while the Fisheries sub-sector raised more capital in the period before 1993-1995,accounting for 40%, then decreased gradually and reached 2% between 2005 -2011, the Ruraldevelopment sub-sector, the period before 1993 to 1995 did not mobilize capital, it startedfrom the 1995-2000 period and steadily increased in the later stages

2.1.1 Attraction and use of ODA by donors

In recent years, Vietnam, represented by the Ministry of Agriculture and Rural Development

has attracted active negotiations and signed with 41 foreign donors aiding to the agriculturalsector of Vietnam For bilateral, it’s primarily funded by non-refundable Non-government

organizations is also largely funded by non-refundable, but with small scale For the majormultilateral, funding is through loans

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Master Program of Public Management MPPM - intake 4B

Funds mobilized for agriculture and rural development includes loans and non-refundable.Capital of the World Bank, ADB and ADF loans is mostly with preferential interest rates(ADB accounts for 98.4% WB accounts for 88.5%, AFD accounts for 97.8%): non-refundable capital of these banks is of low percentage and through technical assistance (TA)for research, setting the premise for proposed loan projects construction The capital of theJapanese government is mainly non-refundable capital, accounting for 64.7% Other donorssuch as DANIDA, Ausaid, EU UN organizations, WFP, RNE, SIDA accounts for 100%non-refundable.

Table 2: Some main donors that supported agriculture field during the period 1993 —

Master Program of Public Management MPPM ~ intake 4B

(source: The Ministry of Agricultural & Rural Development)

2.1.2 Attraction and use of ODA by region

Vietnam is divided into seven agricultural economic regions, due to particularity in

mobilization and capital using of the northern mountainous areas, the region is split into theNortheast and Northwest regions, namely: (I) the Northeast Region; (II) the Northwest, (III)the Red River Delta, (IV) the North Central Coast, (V) the South Central Coast, (VI) theCentral Highlands; (VII) the South East, (VIII) the Mekong river Delta

fang I

8%

jing II 11%

‘ing IV]

26% |

(source: The Ministry of Agricultural & Rural Development)

Figure 2 The structure of ODA funding for agriculture and rural areas by region

1993-2011 period

a) The Northern Mountainous area

During 1993-2011 the rate of ODA mobilization of the Northeast accounted for 16% (rankingthe second in rate compared to other regions) and the Northwest was at 8% During this

period, there have been many projects in the region, under the sponsorship of the ADB (Rural infrastructure sector, t and tea development, forestry sector and watershed forest management, Material forests at Hoa Binh province, Support for the training of forest post- projects period in Bac Giang-Lang Son, Lang Son phase III, Forestry Development in Son

La, Hoa Binh ), of EU (Integrated Rural Development Cao Bang - Bac Can - Son La - Lai

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Master Program of Public M ent MPPM - intake 413

Chau pro-poor development in the North ) and other donors, typically the project

represents a technical support in increasing cooperatives capacity in Hoa Binh province The

programs and projects that are consistent with strategic and development priorities of theGovernment and major contribute to environmental protection, poverty reduction more than

production development

b) In the North coast and South Central coast

In the period 1993 - 2011 the percentage of ODA mobilization of the North Central Coast region accounted for 25% of the total agricultural sector (the highest rate compared to other

regions), South Central Coast accounts for 15 % North Coast and South Central Coast arethe investment priorities of ADB and WB During this period, there have been many projects

in the region, under the sponsorship of ADB (rural infrastructure sector, Integrated rural development in the Central, Central water resources, Fruit trees and tea development, Driving

away Central floods together with the TA ), of WB (Agriculture rehabilitation, Agriculturediversification, Disaster risk management, Emergency repairs of avian influenza, Avian andpandemic influenza prevention, together with the TA ) of DANIDA (support programs inAgriculture, Fisheries, Water, Construction of coastal mangrove forests monitoring system ofQuang Ninh - Quang Nam), of JIBIC and JICA (Phan Thiet and Phan Ri irrigation, planting

protection forests in the Central, improving rural livelihoods in Nam Dan district, raising the

capacity to adapt to natural disasters in the Central region) and of many other donors Projectsconsistent with regional development strategies contribute to the development of agriculture,fisheries, infrastructure (particularly irrigation and rural-roads), natural disaster epidemicsprotection, environmental protection hunger elimination and poverty reduction

c) The Red River Delta and Mekong River Delta

In recent years, the percentage of ODA mobilization of the Mekong River Delta is 14% andthe Red Rivi Delta is 11% of the total mobilized capital for agriculture and rural areas.

During this period many projects were financed by ADB (Irrigation restoration and floodcontrol, Irrigation in the Red River Delta region, Poverty reduction in the irrigation system ofthe Red River basin, rural infrastructure sector, development of tea and fruit trees), WB(Disaster risk reduction, Mekong river delta water resources, infrastructure improvement andhygiene upgrade and rural health of the Red River Delta), JIBIC and JICA (the development

of forest plantation technique on alkaline soil in Mekong River Delta, supporting poorfarmers in Ca Mau), DANIDA (the program supports the Agriculture, Fisheries, Watersector), EU organizations and other donors The project on the region's development strategy

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Master Program of Public Management MPPM ~ intake 4B

contributes to development of agriculture, rural areas especially commodities for domesticconsumption and export.

d) The Central Highlands and the South East

Over the last period the proportion of ODA mobilization of the Central Highlands and the

South East was the same and reached 5% (the lowest compared with other regions) During

this period, many projects were financed by ADB (Material forests in Gia Lai, forestdevelopment to improve livelihoods in the Central Highlands, Phuoc Hoa Water resources,Rural infrastructure sector, forest development for life improvement in the Highlands-ADB2.), WB (Dau Tieng Irrigation, agricultural recovery, agricultural diversification), JIBICand JICA ( Exploitation of groundwater in 3 provinces of Gia Lai Kon Tum, Dae Lac,

ground water development for the Central Highlands), DANIDA EU institutions, other

donor: The projects on the region's development strategy, contributing to the development of

forestry, agriculture and rural development, creating products and goods for domestic

consumption and export, hunger elimination and poverty reduction, especially for minoritycommunities

In summary: In the period 1993-2011, the Agriculture, Rural attracted numerous donors,

rich in type, with a large volume of ODA (8.1 billion USD) The non-refundable capital ismainly from the bilateral donors, international organizations and non-governmental

organization, while loans is mainly from the multilateral donors through loans, of whichADB and WB, AFD, JICA and KWF are the main donors to Vietnam Programs and projects

are done on most parts of the country and in accordance with the agricultural developmentstrategy of the country and each region, contributing to agriculture and rural development,

hunger elimination and poverty reduction, prevention of natural disasters and epidemics and

environmental protection It is necessary to properly assess the impact, limitations andlessons learned about the process of mobilization, management and implementation ofprograms and projects from ODA resources, agriculture and rural development in the lasttime, on that basis, to identify problems and find appropriate solutions to meet the new

situation

2.2 The effects of ODA in the development of agricultural and rural sectors in the last

years

2.2.1 The posi e effects

2.2.1.1 The share of ODA in total investment in agriculture and rural development isgrowing

ODA for agriculture and rural development accounts for about 13.5% of the total investment

capital in the development of the State and about 50% of the total investment capital in

agriculture ODA plays a particularly important role in significant contribution to the

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development of agriculture and rural development, ensuring continuous growth rate of the

industry and is always of high level

2.2.1.2 ODA for agriculture, rural areas, implementation of hunger elimination and

poverty reduction strategies of the Government

ODA for agriculture, rural has made a particularly important contribution in the cause of socio-economic development, hunger elimination and poverty reduction in Vietnam recently.

Especially in rural areas people's lives have been improved dramatically, especially in

remote areas, ethnic minority`s areas Many projects have created conditions for people with capital and knowledge to develop production, create jobs, increase incomes Evaluation of the

United Nations and other big international financial institutions agree that Vietnam has madegreat achievements in hunger elimination and poverty reduction efforts Rural life is

improved; the poverty rate in Vietnam fell from 60% in 1993 to 17.4% in 2006, thanks to the

huge contribution of ODA investment for agriculture and rural development

2.2.1.3 ODA supports the development and adjustment of strategies and policies todevelop agriculture management

From 1993 to date, with non-small number of technical lance projects, capacity building,

many officials have been training and retraining Many legal documents: laws, ordinances,decrees, new policies in the agricultural sector have been developed by international donors,

including international experts playing an important role as Plant varieties Ordinance,

Domestic animals Ordinance, Animal health Ordinance, Fisheries Law, Law on Protectionand Development of Forests, Law on Water Resources A number of sector development

strategies are also built with the important support of the Technical Asssistance projects as:

Development Strategy for Forests and strategies on disaster risk management Theseachievements are partly supported by ODA projects especially projects financed byDenmark, Germany, Sweden

2.2.1.4 ODA and rural infrastructure (including fresh water and rural sanitation)

ODA has been invested in irrigation, rural transportation to the poor areas, poor community,

in rural electric systems, schools, health stations Particularly for rural water, the proportion

of rural population using clean water increased from 40% in 1998 to 62% in 2005, in whichODA capital accounted for 18.2% of total capital investment for water supply and sanitation

in rural areas

Master Program of Public Management MPPM - intake 4B

2.2.1.5 ODA and sustainable development of agriculture, rural areas, especially in the

prevention of natural sters, epidemics, environmental protection

Every year, the agriculture and rural development has to deal with natural disasters such asepidemics in cattle and crops, especially in the last 3 years it has to invest more domestic andoverseas resources into poultry flu prevention, typhoon ODA has contributed directly and

in time to support business and technology funding for disease control and prevention of

disaster reduction, and environmental protection for the industry and for the country

2.2.1.6 ODA and the development of agricultural science and technology as the basis

for the development of efficient, sustainable and high technology agriculture

ODA has contributed to support staffs in the agriculture sector to receive modern science andtechnology advanced management experience, enhancing research potentials and newtechnologies transfer Through ODA projects, research facilities are improved, manyscientists have been trained, qualified staff of science and technology was raised to masteradvanced technologies, good varieties have been studied and quickly put into applications

2.2.2 Limitations in attracting, managing and using ODA for agriculture

2.2.2.1 Lack of an overall, comprehensive and long term orientation in attracting andusing ODA in agriculture

In the process of mobilizing, attracting and using ODA capital, it is necessary to have anoverall, comprehensive and long term orientation in attracting and using ODA as a basis forspecifying the guidelines and policies of the Minister, Ministry of Agriculture and RuralDevelopment is the agency which is appointed by the Government to general manage theagricultural sector of the country

2.2.2.2 The management and use documents of ODA in Vietnam are not consistent

Ministry of Agriculture and Rural Development issued Decision No 45/2004/QD-BNN on

September 30", 2004 on the Regulation on management and use of foreign aid in Agriculture

and rural development The regulation has clearly stated principles to attract, manage and use,

the process of ODA management, attraction, and mobilization and also highlighted theresponsibility of each unit in the process of attracting and using ODA However, is hasneither specified the tasks of leading agency that manages the management inspection andassessment, implementation and effectiveness of programs and ODA projects, nor pointedout which State management agency will be standing as the leading agency to handle arisingproblems related to multiple units This limitation leads to the fact that the monitoring,

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Master Program of Public Management MPPM ~ intake 4B

evaluating inspecting the management and implementation of projects ODA programs havenot been done synchronously and standard.

2.2.2.3 The preparation, appraisal and approval of programs and projects take longtime

According to research by the World Bank the World Bank's standard: since the time WBapproved the project to signing the Agreement (30 days) and takes effect (120 days), butactually in Vietnam, this time is average of 228 days Ministry of Agriculture and RuralDevelopment assigns to the Project Management Board of Agriculture, Forestry, WaterResources or other departments under the professional coordination of the Department ofInternational Cooperation and coordination with international and domestic consultants to

form projects Similar to other Ministries in the country, Ministry of Agriculture and Rural Development also faces many difficulties in the formation of the project Except for

emergency project, the time since the implementation of project preparation technicalassistance (PPTA) until the loan agreement is signed is average of 2-3 years; there areprojects of over 3 years (mangrove plantation project, livestock competition and food safetyproject ) This delay does not match the speed of socio-economic development in generaland the agriculture and rural areas sector in particular Many project parameters, norms andinstitutions calculated to manage the project implementation are no longer appropriate,

resulting in adjustment which changes project objectives, affecting project schedule, causing economic damage, particularly in terms of credit commitments of Vietnam bearing the

commitment fee

The cause of this delay is due to the implementation of the project, the capacity of PPTAdirector, bad advice quality, coordination among agencies appointed to implement PPTAwith donors, consultants, relevant ministries and localities involved in the project is notharmonious, with multi steps of review and approval of the donors and the Government(steps in the formation of ADB project is presented in Appendix 6) One of the causes of the

delay affecting the preparation and formulation of projects is the selection of consultants for PPTA made by donors (in recent times the selection of consultants, donors is by consultation

with the Ministry of Agriculture and Rural Development), then the sponsor managesconsulting operations and management, settlement of all expenses including capital funded tothe project, which results in the lack of cohesion between consultants and partners,sometimes non-cooperation occurs

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Master Program of Public Management MPPM ~ intake 4B

However, preparation, appraisal and approval of projects programs of the Ministry of

Agriculture and Rural Development does not always last long, for example: the project toimprove the quality and safety of agricultural products and development of biogas program,ADB loan worth 110 million USD, by overcoming the above reasons, the time from PPTAdeployed to signing Agreement took only 15 months (from 3/2008 to 6/2009) This is the firstproject in which Vietnam is always ahead of time compared to the ADB This means that the

Ministry of Agriculture and Rural Development is fully capable to form the project in time

and beyond prescribed time by the donor, as long as the Ministry changes the organizationand implementation methods

2.2.2.4 Limitation during the bidding organization, especially consultancy recruitment

Tendering and procurement are difficult and complex issues For a project, usually construction items, equipment investment advisory take up a large proportion of total funds

of the project these items must be conducted through bidding, and so if the process of

preparing bidding documents, bid evaluation and bid contract negotiations process is slow,the project disbursement and implementation is slow, as a result

Restrictions on construction bidding and equipment procurement, selection of consultants for

ODA projects under the Ministry of Agriculture and Rural Development are: (i) long-lasting

evaluation proc ss and approval of the bidding results, (ii) delay in the consultantsrecruitment, especially international consultancy (the package on the selection of consultantsusually lasts 1-2 years and over 30% of the agricultural projects has slower bidding time thanspecified in the project design),

requirements set out in the project, especially international consultants because it has to spend

the quality of counseling in most cases does not meet the

time learning about circumstances and conditions of Vietnam and it meets difficulty in

adapting to local culture therefore, international consultants is limited to going to the site

prescribed do not keep up with the market, so it is difficult

for the project to recruit good consultants for the project work, (iv) the quality of the biddingdocuments and the quality of engineering standards records is not high; (v) bidding capacity

For domestic consultants, norms

and bidding planning capability is limited (vi) the ability of contractors and contractormanagement capability is not high; (vii) management and use of consultant has not beenappropriate and effective

2.2.2.5 Limited financial management and difficulties in mobi ig reciprocal funds in

agricultural projects

Financial management is a critical stage in the process of implementing the project It

particularly affects the proper and efficient use of funds under the current regulations of the

State and the regulation of donors and the disbursement schedule The main limitations in

financial management in the programs of ODA-funded projects at the Ministry of Agriculture

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Master Program of Public Management MPPM ~ intake 4B

and Rural Development are: (i) the lack of linkage between planning and budgeting,budgeting system is not updated, (ii) inadequate accounting software/reliable and standard

reporting, (iii) not to report and conduct project financial analysis in a timely manner, (iv)lack of internal control system between the Ministries, particularly lack of internal auditfunction to support the management monitoring process, (v) delays in the disbursement

process.

A persistent problem for years, affecting the implementation of programs and projects ofAgriculture and rural is how to mobilize adequate and timely reciprocal funds for programsand projects Lacking of reciprocal funds will affect the project that has taken effect and willaffect the approved annual capital disbursement planning In a few cases, the investor must

find ways to use reserves to offset the reciprocal capital The annual reciprocal capital for fundamental construction capital is often less than the allocation plan/cost estimate

requirements This results in the lack of available capital for use when needed In someprovinces participating in the project, although the project has been allocated reciprocal fund,when the project needs to pay, the local treasury is not available to pay cash to the contractor

2.2.2.6 No professional staff in management and implementation of ODA projects

Under current regulations on decentralized mai agement of ODA projects, the projectmanagement board is responsible for managing the allocated funds, bidding implementation

to select contractor to provide consultancy services, building installation, equipmentprocurement, test workload completion and payment to the contractor So, the capacity and

management level of project manager, as well as professional and technical qualifications of

project staffs plays a very important role in the use of ODA Currently, Vietnam does nothave any university faculties specializing in project management training for projectmanagers and staff in various positions in project management board

2.2.2.7 The organizational structure for management/coordination and implementation

of ODA projects is still insufficient

Ministry of Agriculture and Rural Development has set up three project managements:

Agriculture, Forestry Water Resources (referred to as CPO) CPO was established from the

characteristics of agriculture, rural areas and the actual situation of the Ministry of

Agriculture and Rural Development to help the management and implementation ofprograms/ projects with ODA Each CPO has many projects, each project forms the centralproject management and each participating province establishes the provincial project

management CPO is an economic unit, having its own mark and accounts, but it is not the

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Master Program of Public Management MPPM ~ intake 4B

unit in the Decree No.86/2003/ND-CP dated 07/18/2003 and Decree 01/2008/ND - CP of theGovernment regulating functions, duties, powers and organizational structure of Ministry ofAgriculture and Rural Development ablishment model of three CPO of Ministry ofAgriculture and Rural Development is unlike other ministries in the country, not included in

the regulations of Decree No 131/2006/ND-CP dated 11/9/2006 of the Government on

management and use of official development assistance (ODA)

Basi ‘ally the CPO has an important contribution in the implementation of programs andprojects using ODA capital of the Ministry, getting the eager participation of the localfarmers involved in the project area However, CPO activity is still inadequate, in particular:(i) Under Decree 131/CP and regulations of donors, the organizational structure of the projectincluding project management project owners, sub-projects owners This raises the question

of many donors "whether the CPO should exist or not?" and "if exists, the functions andduties of the CPO is whether management or coordination," "what is the CPO position in thesystem diagram of the Ministry of Agriculture and Rural Development?" "What isrelationship between CPO and other departments and centers under the Ministry?" (ii) How

to add the responsibilities the State management department with the responsibility of theCPO on qualit timeliness implement the project? (iii) The division and the right for theCPO to what extent is appropriate to ensure its autonomy, quick project implementation, at

the same time ensuring the provisions of the State and the statutes of donors, especiallysuitable to the capacity of the CPO

2.2.2.8 The monitoring and evaluation of projects is limited

To address timely problems arising during project implementation, it is necessary to developsystems to monitor project performance Currently, there is no system to collect informationabout the status of project implementation, therefore, unable to early identify problems in the

implementation pro in order to have timely scheme: Similarly, there is no monitoringsystem of the projects implementation of the ministries and departments Under currentregulations, the progress report is not regularly update and the monitoring information is notused to support decision-making process

The remarkable problem is that the development and implementation of the project plan hasnot been paid adequate attention Thus, the quality of project implementation plan is not highand not be able to update and monitor the plan periodically In addition, the project design

usually sets development goals that are not realistic, feasible, affecting the performance of the

contract and expected disbursements

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Master Program of Public Management MPPM = intake 4B

Problems also remain in the quality of the project staffs especially the project managers.procurement staff and monitor and evaluate staff; in the lack of close collaboration amongconcerning parties in the implementation of special projects for assigned projects.Responsibilities of project management, the role and the responsibility of the independentaudit body have not been addressed adequately

2.2.2.9 General settlement of completed projects is slow

The finalization of sub-project, proceeding to the general settlement of the entire project must

be conducted promptly after the project ends, to put into use On that basis deploying the next

task, which is to assess the project completion and evaluation of project operation But in

fact the settlement of the completed projects in the Ministry of Agriculture and RuralDevelopment has been slow This mainly exists in CPO In CPO, Water Resources has threeprojects that ended, two of which ended in 2001 and one in 2003 but the general settlementhas not been completed Agriculture in CPO has one project ended in 2004, one project ended

in 2006, one project ended in 2007 but the total settlement has not yet completed The reason

is that (i) the project is implemented in many provinces, settlement procedures in theprovinces are slow, (ii) the review and payment of the financial system, and State Treasury atlevels for the project is very slow; (iii) The settlement process requires large volumes ofdocuments

30Qe

Master Program of Public Management MPPM ~ intake 4B,

CHAPTER IIL

The Attraction and use of ODA in Hoa Binh province, case study of the project of

strengthening the ability of cooperatives, and the project on Capacity Building forCommunity Forest Management and lessons for attracting and using ODA

3.1.The attraction and use of ODA in Hoa Binh Province

General introduction about Hoa Binh Province: Hoa Binh is a mountainous province, a gateway to the North - West and its center is 76 km away from Hanoi The province has a total area of 4596 km2, including 10 districts and 1 city with 210 communes and towns of

which 107 communes are poor and 73 communes are extremely poor By 2009 the population

in Hoa Binh Province was 778,274 with six ethnic groups living together, of which Muongpeople accounted for 60%, Kinh people constituted 30%, and the rest were Thai, Tay, Daoand H'mong peoples

In recent years, Hoa Binh Province has made some significant achievements such as

economic growth rate averaging 12%, average income per capita per year of 14.1 million,food production at over 7 thousand tons per year, total export value of 43.6 million dollarsper year, total state revenue of 787.8 billion per year, rate of poor households in the province

decreasing to 14% (according to old standards); rate of child malnutrition at 24.3% and 80%

of rural households using hygienic water, 95% of households using national grid; doctorsnumbering 6.63 thousand people

3.1.1.The situation of attracting and using ODA in Hoa Binh Province

To perform the socio-economic development tasks, recently Hoa Binh Province hassucceeded in attracting and mobilizing the ODA flows, creating the best conditions for theODA projects, which have contributed to the socio-economic development and povertyreduction in Hoa Binh Province, especially in remote and poor areas

Projects using ODA flows ‘have been contributing to socio-economic development,improving living standards for people in Hoa Binh province particularly for those in remoteareas and ethnics groups

Over the past few years, Hoa Binh province have called 33 ODA programs and projects, 2 of

which are in negotiation for signing The total value of ODA programs and projects isroughly 115 million USD (of which 96 million USD is loan and 19 million USD is non-refundable aid) So far a total amount of disbursement has reached approximately 55 millionUSD

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Master Program of Public Management MPPM - intake 4B

OF33 projects, 12 ODA projects are for agriculture and poverty reduction with a total amount

of about 60 million USD (40 million of which is loan and 20 million is non-refundable aid)

Most of the programs and projects implemented in Hoa Binh province are in accordance withtheir approved content as well as their commitments to donors Programs and projectsfocusing on essential ar eas such as transpo rt, agriculture, rural areas, electricity, health,education and some capability development projects such as renovating planning methodsand capability strengthening projects for Hoa Binh Province’s cooperatives are typical

improved the quality of nurses and doctors in the province Besides, the infrastructure and

equipment w s upgraded through such projects as upgrading health care service, preventive medical care support, reproductive healthcare, HIV/AIDS prevention and control

Infrastructure such as roads, electricity, irrigation, water sanitation has been improved

significantly, the most typical.of which are poverty reduction project, program 135, Rural

Energy Project (80% of rural households use hygienic water, 95% of households use the

national grid) These projects have had a significantly huge impact on the lives of peopleespecially those living in remote areas

Also, JICA has provided technological support for hospitals in Hoa Binh province Hospitalshave been invested in a synchronous way in both infrastructure and modern equipment,which enable them to handle such difficult cases as brain surgery, heart wounds, chest

wounds, blood extraction, complicated bone fracture cases People in Hoa Binh province, especially the poor and those living in remote areas, have been provided with high quality healthcare service, which has contributed to the reduction of the overload in central hospitals.

High School and Secondary School systems in Hoa Binh province have also been gradually developed, and provided with good equipment creating better conditions for students to study and improving the quality of education (15 high schools and 10 secondary schools were

built by means of ADB fund)

Master Program of Public Management MPPM ~ intake 4B,

There are also a number of other projects on reforestation, forest conservation plantingthousands of hectares of forest in Hoa Binh province, projects on strengthening capability forcooperatives in Hoa Binh province which have recovered a series of activities for

cooperatives in the province

Case study of the project on Strengthening capab for Cooperatives in Hoa Binh

province

3.2.1 General introduction about the project

In 2009 there are 130 cooperatives in Hoa Binh province including 22 agricultural cooperatives 93 service cooperatives, 13 industrial and _ handicraft cooperatives

and two credit cooperatives However, at that time, economic development is uneven amongdifferent areas in the province Cooperatives have not created a breakthrough for economicdevelopment The roots of the above limitations mainly lies in the fact that the ability and

management skills of many cooperatives are still weak, the labor force is not well trained,

which leads to their weakness in production and busines management.

On the other hand, policies encouraging the development of cooperatives have a number of

limitations such as taking a long time to come into effect, being not in accordancewith reality, not creating a driving force to overcome the difficulties and obstacles in order to

motivate/encourage the development of a variety of types of cooperatives; The state organ managing cooperatives has not been adequately paid attention to, and some state policies issued to improve the efficiency of collective economy has not been made clear to members and employees inthe cooperatives Activities of | cooperatives alliance ¡in the province are still limited due to lack of expertised staff and poor infrastructure Cooperatives in Hoa Binh Province participate in a variety of sectors, 50 of which have registered tax codes whereas the rest have not made the tax code registration as regulated

or have operated in a formalistic way (have made business registration but have not done anybusiness activities and not paid taxes)

In that situation, Hoa Binh province has developed "Technical assistance project to

strengthen the capability of cooperatives in Hoa Binh province," asking for the Japanese

government’s non-refundable aid with the amount of 1,000 000 USD

The objective of the project is training and and improving the management ability

of cooperatives’ managers and employees to strengthen the capability of agricultural

cooperatives in the province The project aims to promote the building ofa new model of

Master Progiam of Public Ma ent MPPM - intake 4B

cooperatives in a new craas well as enhance the coordinaion betweencooperatives Besides, the project also targets at improving the capability of managers andmembers in the cooperatives.

Activities involved in the project include:

- Organizing 02 training courseson management for Chairman / Deputy Chairman ofprovincial Coopseratives with 15 students per class: 02 programs to study the advanced

cooperative model in Japan for about 40 cooperative officials;two training courses on information technology for cooperative staff with 15 students per

Workshop on guidelines for tr: ining agricultural cooperatives for 50 students;workshop on training for 200 students divided into 10 classes to use agricultural machinery

- Giving out manuals to cooperative members, providing legal documents about cooperatives,supplying documents on the regulaionsand the rights ofthe members

of agricultural cooperatives for members and distributing manuals on organizing Congress

in agricultural Cooperatives: Guidelineson the organizaionand operalion ofthe Board andthe Audit Committee in agricultural Cooperatives; organizing training onaccounting for the cooperative staff

3.2.2 The results of the project

The Project of Capacity Building on cooperatives in Hoa Binh province have succeededmore than any of the donors, local government and the people expect, after 3 years of theproject, has achieved some results as follows:

In management terms: Cooperatives are strengthened and improved, making fundamentalchanges in the ownership, management methods, distribution and financial accounting in

accordance with current strict regulations of the state, focusing on methods of using lump sum and contract for services in phases in order to promote the ownership of cooperative

members, increase productivity, income and accumulation

Recently the collective economy in the province has made a positive development, both inquantity and quality Many new models have appeared and operated effectively, the number

of cooperatives has increased in both quality and quantity By the end of 2011, the province

has had nearly 238 co-operatives, increasing by 100 units compared to 2010

Co-operatives took serious care of building plan for the development of collective economy and making it close to reality Training courses for managers and members have attracted the attention of co-operatives in the province Thanks to the course, the student highly appreciate

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Master Program of Public Management MPPM ~ intake 4B

teaching methods and course content which are practical and can be applied tocooperative management in reality Additionally, they expect to have further opportunity inthe future to participate in advanced cou training programs, and more talks with invitedspeakers or experts in the field of co-operative to exchange information:

Training — cours initially has — enabled cooperative staffin the province to gainsome basic skills in managing and operating co-operatives, implementing and building plans

and product development strategies: improve skills in producing agricultural products and

collecting, synthesizing and publicising market information for cooperative members As aresult, 95% of managers have been trained in management skills.97% of the co-operatives are given cooperative manuals, legal documents on co-operatives guidelines on

organizing and operating cooperatives are givento members 95% of accountants are

provided with training

In economic terms: Activities of the cooperatives vary and are effective, activelysupporting the development of household economy, bringing high proportion of productionand business value in economic structure of agriculture in the local area Collective economyincreasingly asserted its role, position and contribution to therural infrastructure (concreting canals, irrigation, inland transportation ), applying

technology such as seeds and fertilizers into intensive production and agriculture

motivation activities The collective economy sector and villages

have contributed significantly to the stability of social security,poverty reduction, creating

jobs for the workforce, ensuring the benefits of households and cooperative members

Agricultural cooperatives have not only improved the quality of services but also expandedits business Non-agricultural cooperatives have focused on investment, expansion, businesssector transformation to catch up with the new situation and integration trend Trends

in cooperation between cooperatives and other organizations such as villages

or enterprises continue to expand and bring about high efficiency, typically as cooperation between village cooperatives and Training Centres in providing training in handicraft skills,

product consumption, application of science and technology advance There are and moreand more new cooperative models to meet the actual needs of life such as: market

cooperatives, environment cooperatives , handicraft cooperatives, forest planting cooperatives, waste collection cooperatives, fertilizer production cooperatives, water supply cooperatives, food processing cooperatives, livestock insurance cooperatives The efficiency

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Master Program of Public Management MPPM - intake 4B

of performance of cooperatives is increasingly enhanced While the number of good

cooperatives in 2006 was 3.1%, that by the end of 2011 had reached over 30%,

In addition, in many parts of the province cooperatives have greatly fulfill the role of

"cooperation" to promote the development of household economy by providing the essential

servic s for members such as irrigation, electricity power management

and distribution organizing seed and livestock production material supply, agricultural extension, soil preparation plant protection agricultural product consumption A number of

cooperatives has initially developed new serviceslike waste collection andmanagement, fertilizer production pure water supply, market management, food

processing, livestock insurance (cow) These cooperatives has also shown its role as a

typical nuclear in contributing to the development of villages and communes in accordancewith cultural standards

‘Total revenue cooperatives gained in 2011 reached 88.533million VND, average revenue per

cooperative stood at 1500 million VND, contributing 4692 million VND to the state budgetwhich accounted for 0.4% of province’s total revenue; 95% of cooperatives implementedaccounting and financial statements according to regulations

In social terms: There have been over 80% of cooperatives implementing social

insurance regimes for the management staff since 2003; some cooperatives implement health

insurance and voluntary insurance regimes for members and employees who regularly

work in cooperatives, creating conditions for them to take annual and study typicalpatterns in and outside the province Many cooperatives also implement regimes to look afterthose who made contribution to the national revolution, the elderly, the lonely (in addition to

regulations of the State)

So far, cooperativeshas created 7140 jobs for the laborforce with 30 for eachcooperative The average income of cooperative members and employees of cooperatives isabout 1,200,000 VND per capita per month, in particularly enabling 100 poor households to

have stable income in recent years

According practical results from the collective economy of Hoa Binh province in recentyears it can be confirmed that collective economy with a core of cooperatives have

significantly contributed to the development of productive forces, making productivity be

released, enabling the potential sources for production such as capital, land, labor,technology to be increasingly exploited and used reasonably and efficiently; is a bridgefor the development and exchange of goods between industry and agriculture, urban and rural

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Master Program of Public Management MPPM ~ intake 4B

areas promoting the labor distribution of the society Reality shows that where the

collective economy is developed agriculture - farmers and rural area are closelylinked social security was guaranteed, workers’ living standards are improved

.l, In agriculture

Increasing from 22to 44, agricultural cooperativesrepresentan important role inguiding, applying techonology into production, restructuring plant and animal farming,

developing rural industries contributing to poverty reducon.Some agricultural

cooperatives have extended their operating areas such as pure

water supply, aquaculture nature tourism, growing flowers and plants creating morejobs and raising incomes for cooperative members

3.2.2.3 In industry and small seale handicraft industry area

Increasing {rom 13 to 38, cooperatives are mainly engaged in production of building materials, quarrying, sand, gravel, and mechanical, bamboo knitting They in general have established

stable production, have many customers and do business efficiently

3.2.3 Some problems in implementation of project

Overall, the project of strengthening the ability of cooperatives in Hoa Binh province quite

successful, but the cooperative economy in Hoa Binh Province has not been developed in accordance with theits inherent potentials Still, many cooperatives lack of staff enthusiasm

and ability stick with cooperatives Up to one third of the communes in the province do nothave cooperatives, many poor areas extremely need cooperatives but are unable to developcooperatives

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Most cooperatives are operating in small scale with poor infrastructure, old facilities, out ofdate technology insufficient capital poor product and service quality limited market.

Income for cooperative membet and employees is still low and not attractive enough to motivate them to make positive contribution to the development of cooperatives The ability

to mobilize within cooperatives for reinvestment is still limited

3.3 Case study of the project on Capacity Building for Community Forest Management

in Hoa Binh province

3.1 General introduction about the project:

The necessity of the project: Hoa Binh is a mountainous province with total forest area of196,049 ha, of which: Natural forest is 146,844 ha; planted forest is 49,205 ha In order tosustainably and effectively protect and develop such large area of forest, close coordination

between the government and the community is essential, particularly because this province

has a large population of ethnic minority people whose lives are closely associated withforests Recognizing the importance of the forests, Hoa Binh Province had developed theCapacity Building for Community Forest Management in Hoa Binh province during 3 yearsfrom 2009 to 2011 and called for grant aid from Japanese Government

Objective of the project: Capacity of poor communities living on forest resources in Hoa

Binh Province is strengthened in order for them to sustainably manage the allocated forestswith a fair share of costs and interests

Acti s involved in the project include: Organizing training courses on sustainablecommunity forest management; Workshops on forest planting; organizing forestry forum;organizing the propagating on the roles and functions of forests; training on the rights andobligations of forests; forming the forest protection teams; organizing study tours to learnfrom sustainable forest management models; training on forest planting, caring, andprotecting, and fire preventing and fighting skills; training on arboretum development skills;

providing legal documents related to the forest protection activities, etc

Expected outcomes of the project: The communities in the districts carry out participatoryforest management; Local governments and mass organizations assist the communities toparticipate in the management and protection of forests; forest forums with the participation

of all stakeholders in the districts are established, maintained, and bring about benefits for the

egMaster Program of Public Management MPPM ~ intake 4B

poor: household living standards are improved thanks to forest-related income generating

activities.

3.3.2 Some early project achievements

Regarding protective forests managed by Commune PCs: the project coordinated with

forests to the communities Inlocal governments to assign the planting and protection of

order to achieve this objective the project assisted in the establishment of forest managementand protection teams and the development of operation regulations and plans then the localgovernments recognized the teams and approved the teams’ operation regulations and plans

Upon establishment, the participation of all the households in the hamlets should be

mobilized with priority for poor households with little forest area to carry out forest patroland protection

Regarding productive fores allocated to households: the project assisted local people inthe development of sĩ tainable forest management plans In order to achieve this objective,the project had organized training, and then assisted the households to develop the plans for

sustainable forest management and protection The plans for sustainable forest management

were developed for periods of 7 to 10 years, based on the potential of each forest lot, desireand capacity of each household When participating in and implementing the plans forsustainable forest management, the households received better priority in terms of theprovision of seedlings

Organizing forestry forums: with the purpose of creating a common environment forpeople, officers, local governments, relevant stakeholders and social organizations interested

in forest management, protection, usage and development to exchange opinions, shareexperiences, and propose ideas to build forestry development projects

During the implementation of the project, hamlet-level forums were organized at all thehamlets, 02 at commune levels and 01 at district levels Topics of the forums depended oneach forum, but comprised of issues attracting interests of the communities and local people

Capacity building for community forest management: Regarding this issue, the projectfocused on some major following areas:

(i) Improving awareness of forest management and protection, focusing on the

propagation of the roles and functions of forests, training on the rights and obligations of

forests, training on state management responsibilities regarding forests and forest land.

Master Program of Public Mai nt MPPM ~ intake 4B.