Luận văn thạc sĩ commune investment ownership decentralization in program 135 some policy recommendations for the period 2012 2015

There are, however, matters of concern between expectatian and actual results, which need impravement in terms of policy, mechanism as well as directing and organizing implementation

UPSALA UNIVERSITY &

LNIVERSITY OF ECONOMICS AND BUSE UPPSALA

UNIVERSITET

MASTER THESIS OF MPPM

COMMUNE INVESTMENT OWNERSHIP DECENTRALIZATION

IN PROGRAM 135 SOME POLICY RECOMMENDATIONS

FOR THE PERIOD 2012-2015

Nguyen Van Tan

Ngo Minh Duong

Supervisors: PRD Dung Khúc Anh

PRD Sven-Evik Svdrd

MPPM - INTAKE 4, Group 8B

HANOL, MARCH - 2012

hereby declare that the master thesis “Commune investnent ownership decentralization in

Program 135 — some policy recommendations for period 2612-2015” is our own research

It has never been published or submitted for any prize, diploma or certificate grunt by any orgunization, Besides, we have made the best effort to have the most exact references to

sources of documents, data to be used in this research

Research team representative

Team leader

Vo Van Buy

ACKNOWLEDGEMENT

During the research and completion of this thesis, the authors have received valuable

enouragement and assistance fram individuals and ather groups

First of all, we would like to express our gratitude to PhD Dang Khac Anh, Vice Dein of the Politics Department, under the Academy of Public Management {Ho Chi Minh Naional Academy of Politics and Public Management) and PhD Sven-brik Sward (Uppsala

(Unversity, Sweden) whu had provided us with whole-hearted instruction and assistance for

thicompletion of this thesis:

Qur sincere thanks also goes to the teachers and Rectorate Board of the University of Eenomics and Business (Vietnam National University, Hanoi), Uppsala University

(Sveden), the leaders of the Center for International Training and Education, the leaders of

theComminee for Ethnic Affairs, Department of Ethnic Policies, the Project Management

Un: of the Project to Improve Planning and Implementation Quality of Poverty Reduction Poly for Peuple in Ethnie Minorities and Mountainous Areas (Committee for Ethnic

); and the Ireland Embassy in Hanoi who have facilitated end created favorable

conlitions for our studies and research

During the research, we also received valuable suppurt and fecdback from the

‘Coumittee for Ethnic Minority Affairs of Kontum province and Thai Nguyen province; the

IPro:ct Management Units of of Pian International, FMV, CECL, JICA, East Meets West JFoudation, and other NGOs for completion of this research; our special thanks te these

iagecies and organizations

Last but not feast, we would like to thank our families, friends and colleagues whose

siupprt and encontagement have always been with us throughout our study and research

ABSTRACT

D

roccnL years It was clearly metlected im the Program 135-1] and became one of the key

tralization and empowerment have been taking shape strongly i0 Vietiam in

principles of the Program, aiming to reach the target that 100% communes would become investment owners by 2010 There are, however, matters of concern between expectatian

and actual results, which need impravement in terms of policy, mechanism as well as

directing and organizing implementation

The objective of this thesis is to understand the suitability level and eftecliveness of the commune investment ownership (CIO) decentralization model in the Program 135-Il:

ta analyze the opportunities and challenges in order to propose suitedle policy

recommendations for the period 2012-2015 to continue fostering the activeness,

crewtiveness, ownership and accountability of commune authorities; and to improve

transparency and leverage local participation in programs/projects

This is a qualitative research, using a questionnaire with 60 short open questions co taterview officers at provincial, district, commune and village levels wha had experienced

Managing, directing and organizing implementation of Program 135-IT in two provinces

including Thai Nguyen and Kon Tum The result of the interviews was used as the primary

data resource for the research Other secondary data comes from desk review, ussessinent

reports of Program 135, documents collected from publish works, journals, press and

internet On such foundation, we used SWOT analysis ta clarify the research issue

Based on the primary and secondary data sources, the team identified

challenges faced by commune authorities when CIO decentralization was made in Progr2m

135-II, which were: complexity of administrative procedures, insufficiency of guideline

documents, limited capacity of commune officers, barriers in terms of geographical

conditions and languages, difference in culture, tradition and hahit, ete Furthermore, a

challenge being districis authority unwilling to decentralize investment ownership 16

communes was an interesting finding

Combining theories in decentralization, empowerment and the analysis of collected

field data set a scientific foundation for the team to propose some recommendations ww

bewter implement CIO decentralization in Programyprojeet activities in the period 2012+

2018, which include: i amend and supplement regulations in an appropriate and timely

manner: to iraprove commune staff capacity: 10 strengthen participatory plaaning and

communication: to classify and develop suitable roadmups: and to foster support from

provincial and district level to commune authorities especially in the stage of checking and

supervising the decentralization implementation of commune investment ownership

Due to the small sample of the survey in Thai Nguyen and Kon Tum, and given the limited time and scope of the thesis, the authors do not aspire to come up with absolute and

comprehensive change We only wish to provide additional information about the implementation of CIO decentratization, identify impact factors and challenges faced by commune authorities when taking up investment ownership Furthermore the authors

wouid like to propose a more in-depth research as to why district authorities were unwilling lo decentralize communes to become investment owners to have a satisfying answer, as well as appropriate intervention measures to mitigate this barrier

We believe the information provided in this thesis is a trustable source for policy

makers and managers at central, provincial, and district levels, especially tor CEMA and

the Department of Ethnic Policy, where the team members are working, with a view 10

better support improvement and ensuring the enforcement of decentralization for

communes to become investment owners of programs and projects in the period 20!2-

2015.

CHAPTER I OVERALL ISSUES IN COMMUNE INVESTMENT OWNERSIHP

DECENTRALIZATION IN PROGRAM 135 - PHASE IL

1 Overview of Program 135 ~ phase IL

1.1 Background of the Program

Objective and Role of the Program

2.6 Investment owner at commune level in Programme 135-117

2.7, Decentrulization of communes as investment owners in Programme 135-L

3 Factors affecting the quality of decentralization of commune investment ownership in

Program 135 - phase I

3.1 Legal environment:

3.2 Culture, custom and tradition factors:

3.3 Commune siaff and community capacity:

3.4 Support from higher authority to commune implementors:

4 Status of commune investment ownership decentralization

CHAPTER IL IMPLEMENTATION OF COMMUNE INVESTMENT OWNERSHIP

DECENTRALIZATION IN PROGRAM 135 - PHASE IL

1 Overview of the two surveyed provinces

1.1 Thai Nguyen:

12 Kon Tum

3.Survey resultìn Thai Nguyen and Kon Tum

3 Review of CIO decentralization in the two provin

CHAPTER IU] SOME POLICY RECCOMMENDATIONS FOR THE PERIOD 2012-

1.2 Difficutties in implementing CIO decentralization 43

2 Policy recommendations for period 201-2015:

CONCLUSION

RE?EREXCE

vantages and challenges far coramune investment awnership decentralization

Committee for Ethnic Minority Affairs

Commune Investment Ownership

Commune People’s Committee

Department for International Development (UK)

District People’s Commitece Foundation for Microprojects in Viet Nam

Deutsche Gesellschaft fur Technische

Zusammenarbeit

(German Agency for Technical Cooperation)

Japan International Cooperation Agency

Ministry of Planning and Investment

Project Management Unit

United Nations Development Programme

Table 2: Result of CLO decentralization implementation in the period 2006-2010 26

Table 3: Communes as investment owners by component by 2010 28

Table 4: Number of officers consulted at different levels 3i

LIST OF FIGURES

Figure 2: Communes that need to assess their investment ownership capacity 40

Figure 4: The role of district authorities in CIO decentralization 25

| Figue 5: The role of provincial authorities in CIO decentralization 26

Figure 6: Participation level of communes as investment owners 28

| Figure 7: Difference in perspective on commune inycstment ownership 32

Figure 8: SWOT Analysis of delegated investment ownership to cammunes a4

INTRODUCTION

1 The necessity of the research topic

LJ, Rationale for the topic selection

Decentralization is a major concem in the reform process in Vietnam [t has also been

a major focus for policy makers and practitioners in Vietnam in the past 25 years Thanks to

such reform, Vietnam has shifted its economy from a centrally-planned to a market-based

one The structure of a multi-sector, multi-ownership type economy was formed and has gradually become more comprehensive in the reform process At the same time,

decentralization to local authorities following suitable roadmaps in many sectors was

pushed forward to maximize local innovation, ownership und accountability

Decentralization in the economic sector was reflected by empowering local authorities to

make strategic decisions on their economic development and structures based on national

strategies and masterplans, investment projects, resource mobilization and the rights and

responsibilities in state and local budget management

In light of decentralization of project investment ownership, a very good policy to

mention is the P:gram 135 - phase [I (pi35-II} Commune ownership centralization was

made a principle in the Decision No 07/2006/QD-TTg dated 10/01/2006 and the objective for commune investment ownership (CIO) was included in the implementation roadmap framework for P135-II, according to Decision No 74/2007/QD-UBDT dated 13/3/2007 by

the Committee for Ethnic Minority Affairs (CEMA)

When the program was started in 2009, program district authorities received state

funding to implement projects in communes facing extreme hardship At that time, the

principles for ownership decentralization and streamlined investment procedures were

raised and highlighted in the process of organizing the program implementation However,

by the end of the first phase (1999-2005), the number of communes actually having

investment ownership was very limited Only 28 provinces decentralized investment ownership to 442 communes, equaling 18%] of the total expected number Highlighted constraints included unclear and undetermined decentralization, strong holding of the right

to distribute funding, and unwillingness to make information public, which, as a result,

reduced the role of Commune People’s Committees (CPC's) and put communes at passive

Fosition in the Program implementation process

"Pl35 7-year cmplemeniaiion review repr: 1996-2005

In 2006, when Program 135 was in its 2" phase of implementation, commune

investment ownership was put in more focus, in which decentralization policies management capacity, local participation and the program's poverty reduction impact were strengthened Thus, the commune authorities were fully decentralized to manage investment

projects funded by Program 135 One of the key guiding principles of the program is “to

implement clear democracy and transparency, to strengthen local decentralization and to

maximize local ownership of those who directly participate in the program’ Given the

spirit, the CIO decentralization objective was included in the Program roadmap framework

It was expected that by the end of phase Il Program provinces would have decentralized

investment ownership of all projects to all Program communes ic 100% of Program

communes would be investment owners by the end of 2010 (Figure 1)

Figure 1: CIO decentralization roadmap framework

However, the implementation of this objective, in fact, did not meet the roadmap

timeline (only 1591 communes was assigned as investment owners, accounting for 90% of

the total program communes) Statistics in some provinces show that 15 out of 20

imfrastructure projects were owned by district authorities, instead of communes

A.dditionally, it is important to deal with issues arising from actual commune investment ownership decentralization For instance, some communes, despite being decentralized as imvestment owners, only performed their role symbolically They did not fully implement their task as real investment owners, since a lot of work was actuaily carried out by district authorities, even though they had enough capacity to become owners when being reviewed

for decentralization’

sion No, 07 2006'QD-TTg dated 10/01 2006 by the Prime Minister approving the Program 135-U1

(CEMA: P135-I1 review report, 122010

So what is the cause? What factors affecting commune ownership decentralization?

Given the same policy, why the task was performed well in same pravinces but not in others? Is it because the decentralization mechanism was not sufficient or the communes did aot have enough capacity to become investment owners? Or was it due to benefit conflict that district authurities did not want to decentralize to cummmunes? What are the chailenges for communes to be investment owners? Given the ubove questions, the research team has

selected the research tupic “Commune investment ownership decentralization in Program

135 - some policy recommendations for the perlad 2012 — 2015” as the thesis topic for our

Master Degree in Public Management

1.2 The suitability of the research topic

2.2.1 the suitability of the research with the current irends

Given the background that the Government is making a lot of effort to foster

administrative reform towards a democratic, transparent, solid, professional, efficient, and

effective administration, decentralization is an important issue attracting a lot of attention

Vietnam is focusing on completing policies for decentralization from central to local level to

enipower local av:therities to maximize their activeness and creativeness, at the seme time,

foster democracy and attract local participation in public management from grassroot level

The conduct of this research on decentralization is in fine with the current tend to bring

about effective public management and enhance administrative service quality, which would

better serve the rights and benefits of local people Additionally, the research also studied solutions to fuster decentralization of commune investment ownership in Program 135, contributing to enhancing the efficiency and effectiveness of the Program, while sustainably

eradicate hunger and reduce poverty ~ an important objective for development in Vietnam 1.2.2 The suitability of the research with the area of work of the research team:

Alll three team members of the research team are working at CEMA They have been directly involved in management and organization of Prugram 13S implementation Hence, this research is closely attached to their daily tasks The result of the research will be applied directly into the work of the authors to meet the CIO objective of Program 135 in the period

omes” in 2000 by the Central Insttute for beonomic Management (CIEM) funded by UNDP The research mainly raised thcorctical and practical issuss rcgarding

decentralization, in general, and decentralizalion in economic management in particular

Uhe Proposal on Central and Local State Management by the Ministry of Planning and

Investment (MPI} (2005) mentioned decentralization issues in planning and investment According to the Proposal, the decentralization concept is divided into two types: financial

decentralization and market decentralization, hence, excluding works in which the state does

not necessarily get involved The important result of the proposal was the toundation for

arnending many related documents in planning and investment

In 2007, a research on commune investment ownership was conducted by Dao Huy K-hue and Dang Minh Ngoc, with the support of the Embassy of Finland in Vietnam The research was based on surveys conducted in Dien Bien and Gia Lai provinces Its main fincus, however, was on key indicators to identify communes to become investment owners amd to propose the roadmap and framework tor Program 135-I] In 2009, intemational

domors, in collaboration with CEMA, also produced a small thematic report on commune

and Bae

in-vesiment ownership in Tra iu provinces P135-II annual review reports and P135-I overall review report also assessed decentralization situation bul information

‘Wias quite simple and not in-depth

Additionally, there were other projects, funded by UNDP, GTZ, SDC, JICA, Plan

International, and Oxfarm, etc to support provinces in their planning reform effort These projects helped to reform the content of the socio-ecanomic development plans at commune

lewel to fit the assigned tasks and capacity of commune authorities

However, there is no study so far that thoroughly looks into challages faced by commune authorities when taking up investment ownership Hence, this research will be an important contribution, providing scientific reference to management units to increase the efffectiveness of commune investment ownership decentralization in Program 135 in the period 2012-2015

3⁄5 Specific objectives

+ To review decentralization activities for communes ta be investment owners af

programs and projects under P 135-11

- To analyze and review the suitability and effectiveness of the current commune investment ownership madel for P135-II and other models funded by NGOs, national or local programs, including the collaboration mechanism among stakchalders within P135 and among madels

- To provide recommendations regarding policies and mechanism for communes to

take an active role in becoming investment owners in the Program 135 for the period 2012-

2015

4 Scope and subject of the study

The subject of the research study is decentralization of investment ownership of

programs and projects under P135-II to communes

‘The scope of the research covers two provinces including Thai Nguyen and Kon Tum

In each province, the research team selected 3 commmnes for survey, including one, *” which, investment ownership decentralization was performed well; one, in which, it was not performed well; and one commune under a program funded by another organization In particular, in Thai Nguyen, the (eam surveyed 2 communes implementing P135-1l and one implementing the program funded by Plan In Kontum, in addition to 2 communes under P1331, the team also studied communes which implemented programs funded by organizations like Plan International, FMV, CECI, JICA and East meets West

5 Research methodology

In addition to desk study, the team also uscd field survey and expert call to collect data

for the study

Secondary data: This includes annual P135 implementation reports, P135-II overall

review reports, the manual on invesiment ownership model implementation, related legal

documents, ansual progress reports by donors on P135-Il, and some review repurts on

community ownership by international organizations and NGOs (at central level) At local

level, the team studied PI34-II review reports at provincial, district and commune levels, and guideline decuments for P135 implementation including decisions and regulations by

Provincial People’s Cammite (PPC) and Provincial Peaple's Council, as well as guidetine

documents for direction and claritieation

il

Methods to collect secondary data:

We preparcd a list of 60 short questions and intervicwed staff at different

cial district, commune, and village/houschold level) to review

udminiswrative levels (provi

issues relating to CIO decentralization in order to understand the awareness of staff at

different levels with regard to decentralization; then, to identify challenges faced by

communes in the CIO model of Program 135,

Focus group interview and discussion

Pravineial level: Leaders of P135 Steering Committee (STC) fincluding the Vice head

of the Standing Committee — the Head of Provincial CEM and experts in provincial CEM)

District level: Leaders of District People’s Committee (DPC), Headivice head of P135 Management Unit; Leaders of the Infrastructure Economic Department, Agriculture and Rurual Development Department, Planning and Finance Mepartment, Treasury, District People’s Council, and Project Management Units (PMU) of projects funded by international

NGOs in the districts

Commune and village level: Leaders of Commune People’s Committees (CPCs);

village leaders, experts in the Commune/Village Development Boards, Supervisory Board, Commune People’s Council, staff and representatives of departments and mass associations

in: the conumunes and villages facing extreme hardship, and some households as well

On such foundation, we used SWOT analysis to clarify the research issue,

6 Thesis structure:

Im addition to the Introduction and Conclusion parts, the thesis is divided into 3

chapters including:

- Chapter I: Overall issues in commune investment ownership decentralization in

Program 135 phase II

- Chapter I: Actual implementation of the CIO model in Program 135-II {through actual research in Thai Nguyen and Kon Tum provinces)

- Chapter [I]: Some policy recommendations for the period 2012-2013,

CH4PTERI

OVERALL ISSUES iN COMMUNE INVESTMENT OWNERSHIP

DECENTRALIZATION IN PROGRAM 135 ~ PHASE II

1 Overview of Program 135 - phase II:

1.1, Background of the Program

In 1998, the Program for sacio-sconomic development in communes facing extreme

hardship in mountainous and rural arcas (aka Program 135} was implemented according to Decision No 135/1998/QD-TTg dated 31/7/1998 by the Prime Minister After 7 years of

implememution, the program has achieved many important results, such as: 36% of

communes facing hardship had enough basic infrastructure works; the area, productivity and

Production of food crops increased considerably, many crops stcucture shifting models were

implememed; and the quality of on-site labor resources was improved However, since the rural and mountainous arcas in the Program have difficult natural cowditions low starting

point, and limited investment resources, there were still many constraints, including:

inability to create a shift in crops and livestock structure; insufficient basic infrastructure ta

supprort production and livelihor 4; and limited grassroot and community staff capacity,

which made it difficult for rmanagement and organization of implementation of ethnic

poilicies*

To continue to support communes and villages facing extreme hardship, and to gradually reduce the gap between mountainous and delta areas, the Prime Minister issued decision No 07/2006/QB-TTg on 10/1/2006 approving the Program for Socio-Economic

Development in communes facing hardship in rural and mountainous areas in the period 20006-2010 (aka Program 135-II),

1.2, Objective and Role of the Program

The objective of the Program is to create a rapid shift in agricultural production and eccmamic structure towards markel-based production; to sustainably improve and enhance the material and spiritual livelihood of ethnic communities in communes and villages facing extreme hardship, and to reduce the development gap among ethnics and among regions natiiomwide, The Program strived to erase hunger and reduce household poverty fevel to less than 30%, and to have over 70% households having average income per capital of over

VNiD 3.5 million by 2010

S-1 7 year implementation review repert (1999-2003),

13

The Program has the follawing objectives (i) Te support production development and economic restructuring to enhance the production techincal level of ethnic communities; (2)

Tao develop essential infrastructure in communes and villages facing extreme hardship: (3)

To train grassroot staft, enehance their adminsitrative and economic management capacity

and ts provide training to enhance community capacity, (4) To provide support services,

improve and enhance local livelihood, and to provide legal aid to enhance ‘egal awareness The four objectives above were implemented through three projects (Infrastructure Development, Capacity Building and Production Support) and one Support Policy to

Enhance Livelihood,

4.3 Program Beneficiaries

Beneficiaries of the program included communes facing c; 1¢ hardship border

communes, communes in former war-shelter zones and villages £

communes in region II Communes facing extreme hardship were identified according to criteria stipulated in the Decision No 393/2005/QD-UBDT dated 29/4/2005 by MA, Criteria to define communes facing extreme hardship includes: the commune has over 13

villages facing extreme hardship (a village facing extreme hardship is one that sctisties 3

criteria: difficult living and social conditions, autdated production conditions, end weak

infrastructure conditions), its poverty rate is over 55%; it has insufficient infrastructure, limited social conditions, outdated production conditions (which is heavily ceil-sufticieat);

and its residential area is in rural location

The program covered 1,848 communes and 3,274 villages faciny extreme hardship under 369 districts of 50 pragram provinces The detail over the years is as follows:

Table 1: Communes in Program 135-{}

~_ | Central budget funding | ọ do: 30139 3081 31383

+ | Locat budget funding a} oi 134 | 134 142

‘Source: PLIS-Il 5 year implemnetation review report, December 2079)

14

2 Decentralization of investment ownership in Program 135- Il

2.1, Decentralization?

Recently, there are some different opinions regarding to the definition of

“cacetitralization” (Reichard & Borgonovi, 2007), varying across countries (Steffensen & Tiollegaard, 2000: Pollitt, 2005), languages (Quedraogo, 2003), general contexts (Conyers, 1684), fields of research and specific scholars and studies." (Dubois and Fattore 2009) Accarding to some authors, decentralization is decentralization of power between central

tion refers to the division into different levels, classes®

and local level’, Decentraliz

Decemralization includes the transfer of management power ta lower-levels to bring

impleinentation closer tu peuple and practical situation At the same time, reducing

workload of the higher levels in directly dealing with single task/issues The

decentralization must clearly attach the responsibility and rights and ensure the consistence from central level to focal level’, There is also other opinion that decentralization may be

led inte iwo directions: horizontal direction as division based on the ditterence of works

within a level; vertical direction as division by structure of works between different levels’

t

There is opinion argued is necessary to distinguish “decentralization” from

other definitions that are close to it as “division of tasks", “division of hierarcy" "division of

hierarchy will be mare suitable””,

Therefore, the understanding of decentralization until now is still not commonly

shared despite it is widely used

Nguyen Cun Viết ~ Upinions an administrative reform, Scienufic magazine - Fietnam National Cniversity, Hanoi, 1997, No 4.Pg 32

* Vietnamese Dictionary - Nguyen Niu ¥ (Editors, Culture aad Information Publishing Howse 1999

* Addmitustratiun Dictionary To Tự Hà Editors - NXB Labor and Soctal Publishing House 2003

" Prof Doun Trong Truven - General Adminstration, The National Political Publishing House, Hanoi 195"

gg 744

“Truong Dav Cink - Conerat ard Lovat Management Decentralication - Same theoretical and practivad

assues, Legal dy, 2962, No 3 pg 2405

15

From haguistic perspective "level" is understood as ranh in a system igrading by

upper or lower qualification)!” As a result, management decentralization could be

urderstoud as giving part of management authority to lower-level, defining tasks and

pewers for each level!’ As the result, there are two aspects need to be noticed, including

tanster of power to lower-level and defining the authority of each such level.In Vietnam,

desing on the division of administrative units — territory, there it formed different authority

level, eg Central levei provincial ievel, district level and communal level

Decemralization of State management, thus, firstly is understood as decentralization

berweer central level and provincial level at the same time, it alse refers to the

decentralization hetween different local authority levels

According to the Communist Party’s Document, decentralization is conducted in

direction of “more specific decentralization to localities while closely combining sector

management and territory management on the basis of the principle “the centre! auhority practices centralized management in some focused and vertical domains/areas defined/determined from practical requirements” With other sectors/areas, the centre will

partly manage, other parts will decentralize to lower level management in the localities

owers,

Following such spirit, the decentralization is now being understood as transfer tasks 5

from the State management bodies from higher-level to lower-level in order to meei the general objective of increasing management effectiveness””

ars!

Transferring of tasks, powers will only be possible when the autho:

responsibility of the levels responsible for transferring and the receiving levels are clearly

defined Therefore, the definition of decentralization itself should comprises the determination and division of power to each level, or in other words, determination ¢?

decentralization is the prerequisite for transferring of tasks power (or the adjusimeit of workload, authority in accordance with capacity and practical conditions of each authority

level)

Based on such argument, Decentralization of State management, in its broadest

meaning is the type of transferring power and responsibility in implementation of public

service from Central level to local levels or to assign this task to private sector for impicmentation The detinition of decentralization is now used in many different situations,

" Vieinamese Dictionary — institute of Lingussties, Vietnam Lexicography Centre Da Nang Publishing Hosse, i995, ng 129

"' Vieinamese Dicuonar:, pg “d4

© Afmesiry af Home Affairs Scheme on Cemeal and Local State Management Decentradvation, Hater

32091 pet

16

circumstances in the society hough there are still many arguments on definition of

decentralization but many countries, experts agreed on some forms of decentralization as follows (Sharma, 2006):

2.4L Administrative decentralization:

Administrative decentralization is the division of power for implementation of public tasks to (he state agencies at all levels Thus, through the progress of administrative

decentralization, the planning, management and part of fund for infrastructure development

and supply of public service will be transferred from Central level to administrative

agencies at lower local levels Administrative decentralization 1s divided into 03 groups:

2.1.1.1 Deconcentration of powers: Deconcentration of powers is the division of the

tights to make decision and the responsibility to the Centre's regional representative office

in each region This is the lowest type of administrative decentralization (some experts ever

claimed that this is not a form of decentralization because this transfer only imernelly

happens within the Central level)

2.1.1.2 Authorivation: Autharivation is the form of administrative decentralization in

which the Central authorities transfer decision making rights and management

responsibilities to local agencies while the centre authority still take responsible for suck

đetcisions

2.1.1.3 Delegatio

Delegation is the highest form in administrative decentralization

Byr this form, al! powers in making decisions, funding and management will be transferred

to independent bodies at local level by the Central authorities,

2.1.2 Fiscal decentratization:

Fiscal decentralization is important component in every method of decentralization

Each decentralized unit will only implement independently decentralized tasks when it has the: necessary finanvial resources and when they have the rights to make decision on using

of financial resources for the implementation of assigned tasks

2.1.3, Market deceniratization

In add:tion to above forms, there is also economic decentralization form (market

decentralization form this definition is completely different from State management

decentralizatian on economy) This definition is used when the State transfers some of its fumetions from public sector to private sector, as the result, some tasks will nat he

imyplemented hy the State agencies and they will be transferred ta private economic sectors

cocperalive, associations and non-governmental organizations This fortn is divided into 2

gronups:

7

3.1.3.1 Privatisation: Transfer the supply of a number of public produets and services

Íram the State to the private sector

3.132 Reducing regulations: reducing the administrative obstacles, facilitating

pnvate entities to join the marker

2.2, Functions of Decentralization:

Decentralization

+ breaks the rigid political power structure;

~ supports people’s participation and formulates a democratic structure in the society;

~ promotes people's integration with the State administrative apparatus;

- protects minority groups:

~ improves efficiency of State performance of its tasks and assignments;

~ improves sustainability efficiency and equity in the use of cconomic resources;

2.3, Consequences of Decentralization:

In a study by Tulia Falleti (2004) on decentralization and its impacts, 1t was confirmed

that decentralization pravides enhanced power to lacal authorities However, in a more in-

depth study on the consequences of decentralization in a number of countries, the degree of

importance of the (c!lc+wv-up changes of the process varies substantially To justify these

changes, the author puts forth a decentralization theory and states that the different

decentralization procedures (financial, administrative and political) are the decisive drives for these chages and help balance the power among the different level of authorites The

theory was verified in the four largest Latin American countries among the selected

countries (Colombia, Brazil, Mexico and Argentina), with focus on the cases of Colombia and Argentina The results of such verification show that decentralization in Argentina

failed to enhance power of its gavemmors and mayors Conversely, the results were positive

in Colombia, where governors and mayors’ power was enhanced substantially

The Worid Bank 2010 Viet Nam Development Report reveals that the country’s decentralization process bears numerous constraints, detects and corollaries These are

localism, discipline, indifference, or intentional break or violation of decentralization limits,

disregard of the country or other localities’ interests: poor and inadequate accountability:

untied control and oversivht of post-decentralizatian

18

2.4 Should Viet Nam continue exercising decentralization?

As delined and analyzed ewrlier, decentralization reduces central goverment’s time on making numerous decisions, which can be resolved or made by the local governments and it tan focus more on major and strategic issues, Decentralization relieves bureaucracy and tulk of the central administrative apparatus, and empowers local governments to make them more active, innovative and accountable, and more efficient in dealing business requests trum people and firms thanks to their better knowledge of the local conditions

Decentralization, however, does not mean delegating the work beyond the central

government's affordity to the local guvenunents, or fuli autonomy trom central government

to the local governments’ free hands Decentralization is not dividing or cutting the national governance process into fragements, but must be placed in a consistent and scientific system

with clear corridors for locat innovations based on sound knowledge of the local conditions

and the governments” capecity

Moreover decentralization must $c associated with monitoring and oversight of the local governments’ accountability performance to the people to ensure they perform the

delegated tasks within their delegated power and scope The afore-mentioned negative

corollaries of decentralization are not inevitable but rather the consequences of poor

knowledge of the lacal governments’ capacity, and shortfall of regular oversight and

monitoring of their performance

It is stated in the World Bank 2010 Vier Nam Development Report that decentralization and accountability are the two interrelated aspects of a modern institution

and the most significant reforms of Viet Nam over the past two decades Therefore, it is no

doubt that decentralization is irreversible The issue is how to improve the process and

ensure that the required conditions are available to make the process a success as discussed earlier This is one of the biggest challenges in institutional reform for dynamic and stable national development

2.5, Investment owner?

Is an organization, individual who owns capital or act on behalf of the owner or

capital borrower and directly manage and use the capital for investment activities

2.6, davestment owner at commune level in Programme 135-11?

is the management and end user agency of the project, which the Chairman of

commune People’s Committee ot higher-level People’s Committee decided to become

investment owner of projects beiong to the socio-economic development programme

19

2.7, Decentralization of communes as investment owners in Programme 135-1:

Is the delegation of a number of rights lo manage and to make decision on becoming own: of the investment und the projects under the Programme 135 in order to improve the

proativencss, publicity, dernucracy from communal level, and to promote the participation

of prople in monitoring the implementation of Programme

3 Fietors affecting the quality of decentralization of commune investment ownership

in Pogram 135 — phase II

3.4 Legal environment:

The Decree No 08/2004/NQ-CP dated 30/6/2004 of the Government on state

Mangement decentralization, and the Direction of the Prime Minister for ClO

deceitralization in Program 135 in the Decision No 07/2006/QD-TTg dated 1041/2006

appmving Program 135 - phase IT set the foundation for CEMA‘s detuilized Decree

01/207/TT-UBDT dated 4/6/2007 to guide provinces to implement commune investment ownership decentralization

Decree 01/2007/T1-LIBDY specifies that communes need to identify their capacity to

become investment c~-ncrs (figure 3), the works and projects they would owr (figure 4) and the iecentralization roadmap for them to own these projects Provinces and district authurities, based on the decentralization roadmap, directly managed these projects so as by

201C 100% communes in irtogram 135 would become investment owners For communes

whore capacity is nat sufficient cnough ta become investment owners, it is encouraged that

extemal experts are hired to support them to manage implementation of the projects which

they are uncapable of implementing on their own,

Figure 2: Communes that need to assess their investment ownership capacity

Communes that needs to identify their capacity to become investment owners in Program 135-IL include:

villages facing extreme hardship

~ Communes facing extreme

‘The foregoing Ligure shows that there are four types uf communes subject to capacity

assessment to become investinent owners These communes will self-evaiuate their own

<apucily (ic technical capacity, existing expertise and strengthened capacity via waining for

Chairman/Vice-chairman of CPC, Commune Accountant, related commune technica! staff,

and Commune Supervisory Board) Accordingly, the district authority classified communes

into 3 grades to assign specific works and projects

- Grade I cornmunes are those which were investment owners in phase 1 and those which satisfy with the following criteria: investment owners graduated from high school or

higher, Accountant graduated from college or vocational training with experience in

accounting, Professional staff have been tained for at least 03 months and the members of supervising board have been trained or have supervising experience Grade I communes will

bbe assigned to act us investment owners in the project with development investment fund

- Grade TT communes: are the communes which have acted as investment owners in

the other programmes rather than Programme 135-II and communes that meet the following criteria: the investment owner graduated from high school or higher education levels, the

accountam graduated from vocational training with experience in accounting, the technical

staff have been trained for at least 03 months and the supervisors have been trained or have supervising experience Grade {I communes are assigned to be investment owner of the

projects with simple technical design, und the total invested capital less than VND 500

million

+ Grade IIT communes are the communes that arc excluded from the two above grades

Grade III communes are assigned to be investment owner of the projects with small scale

and simple technical design

Figure 3: Works and projects owned by communes

Investment prujecis at the rommame

Infrastructure projects svth sal lscale and smn tecmuca ceauipeenss

To those communes qualified to become investment owners, the types of their investment ownership are divided by types of work and projects in the Program as shown in Figure 3

The Commune Investment Ownership Manual (Commiliee for Fthnic 4 ffairs, 3/2009)

was developed to provide guidance on the rights, tasks and responsibilities of investment owners, as well as the procedures for implementation of projects/components under the

Programme [35-TI The main procedures include:

- Conduct participatory planning: organize planning workshops to assign planning

tasks; conduct village mectings to collect villagers’ opinion, synthesize village plans; analyze, process collecicd data, and prepare synthesized reports; obtain feedback on draft

plans and prepare official letter to submit to to district People’s Committee for approval;

- Prepare, appraise, and approve technical and economic reports on project construction; commune authoritics (or contracted consultants) prepare this report District

authorities appraise the technical and economic reports fur projects with value from VNDI-

3 billion, while commune authorities are in charge of appraising technical and economic

reports for projects with value less than VND | billion (er contracting consultants/experts to

conduct appraisal on their behalf):

- Selecting contractors: prepare tendering schedule (determining the tendering content

such as the title, price, sources, forms of selecting contractors, timeline types of contract and contract terms): submit the tendering plan to the district People’s Committee, who will

appraise and approve the plan: launch the bid and select a contractor:

+ Supervise the implementation of project in the community

33

- Inspect works: Inspect materials, equipments, and ready-made materials: mspect and

accept construction quality; inspect and accept constructed parts; inspect and accept finished

works for handover ta use;

- Funding payment and settlement with the Treasury: prepare supporting documents for checking, payment, advance payment and, withdrawl and full payment;

- Handover management, operation and maintenance (O&M) of works after

investment fisnihes; O&M; and payment settlement of O&M cost

Even though the legal framework had had detailed regulations about the procedures and specific tasks for authorities at different levels, as well as training materials on C1O decentralication, actual survey showed botilenech issues such as: lack of suitable supervising mechanism, lack of incentives for usits that performed well CIO, etc,

3.2 Culture, custom and tradition factors:

itis a matter of fact that 53 ethnic minorities in Vietnam have different characteristics

Ditspersed residential area and complex topography have led to significant difference among

etnnics groups in terms of natural and habitat conditions which relate to agricultural

production Despite witnessing the ups and downs in history and sharing the solidarity in the

resistance fight for national independence and construction, these ethnic groups still

maintain hasic differences in languages, traditions, customs, and lifestyles, ete

Languages, traditions, customs, religions and other spiritual values affect the

pemceptian and behaviour of individuals and communities Such differences have

comstrained the participation and beneficiary level of different ethnic groups under the same

intervention Presumably, a “good” poverty alleviation intervention for Mong people dacs

not translate into the same effect for Dao and Pa Then people (who share the same Hmong- Dawo language system), or Co Tu, Hre, and Bana people,ete

With regard to deventralization of commune investment ownership in Program 135-

Phiase IL, these cultural, custom and tradition factors were not taken into account, since a

common model was applied for all provinces, thus affecting the result of commune

investment awnership

3.33, Commune staff and community capacity:

> The commune authority's competency has a sigmicant impact on whether the

commune can be appointed as an investment owner, as weil as its actual investment

ewnership Ievei For example in Dakrong district, Quang Tri province the district authority

33

regulated that program communes could only be investment owners of projects worth less than VND 300 million But 3/10 communes were assigned as investment owners of all

program projects thanks to their competency In most cases, communes being investment

owners must satisfy cupacily requirements in terms vf community consultation, project

identification and implementation, financial management, operation, and maintenance

- The implementation uf the democracy principle at grassroot level in some communes was still weuk und symbolic This was a major constraint blocking communes from

becoming investment owners, as there was limited local participation in different stages of the project implementation process Information publicity and community consuitation

were limited in some areas There was no clear regulation regarding dissemination of

inYormation about program activities to communities In some communes, local people were

not fully aware of the plan and expense of the program, or any mechanism relating ta the

project, such as who would sign the contract or who would be responsible for monitoring

the implementation In some areas, commune staff said that getting the opinion of local

people from all villages would be very time consuming, since ic meant organizing many

sirnilar meetings at village and commune levels, which required high competency of village

leaders, In addition, infrastructure projects in these areas were of small and fragmented

sciale, thus, it was difficult to solicite local opinion in the implementation process

- Limited community consultation in selecting and desig ig infrastructure projects

resulted in inactive participation of lecal communities According ta a research paper on inwesiment management decentralization at commune level under the VIF/01/023 project, deicentralization in some communes was challenging and became a burden for local

authorities Some provinces have made a lot of effort to find out suitable implementation

methods for decentralization and empowere grassroot-level authorities to make decision in

order to overcome subjective and objective difficulties

3.4 Support from higher authority to commune implerentor:

- The role of district authorities is crucial: they should support, guide train, monitor

and supervise decentralized communes when they take up investment ownership In some

provinces where district authorities decentralized investment ownership to communes and

assigned capable staff to support the commune project management units, most of these communes performed well the role as investment owners (a good example is Tuyen Quang

province) In contrast in provinces where district authorities did not intend to decentralizc,

even when the commnes were competent enough or had obtained sufficient capacity

"4

through training to become investment owners, such onwership was only symbolic For example, in Ngok Reo commune, Dak Ha district, Kon Tum province, the decentralization

policy was in place, but it was not fully applied in practice The commune chairman was not

aware when asked whether he owned the project bank account In terms of competency, he

himself has a Bachelor degree Another example is Dak Pne commune, Kon Ray district,

Kon Tum province, The commune authority did not actively as:

s its capacity, as guided in

Circular 0] issued in 2007, nor attempt to propose to the district to be the project owner; while the commune chairman is a university graduate and the Party's Secretary of the

commune had worked in a district-level agency (Secretary General of District Youth Union),

Figure 4: The role of district authority in CIO decentralization

Figure 4 shows the role of district authorities in supporting communes in different

categories of work, from information dissemination, propaganding and guide to review and

assessment of communes’ capacity, and training and coaching them io become investment owners

- The provincial authority plays a crucial role in instructing, guiding and detailing

documents from the central government, and developing legal framekworks, including

administrative and financial procedures Some provincial authorities did not develop effective measures to support program communes to be investment owners as instructed in centrally-issued documents, or did not timely assign technical units at the local level to implement the components as scheduled

Figure 5: The role of provincial authorities in CIO decentralization

Instruct to.pk jimplement |

training ‘and cap abity members of The Central

enhancement proiects of Steering Commitee of P435-Il for commune Program 135 and District

investment ownership Peapie’s Council

“Amstruct the Commune

People's Committee: -

Hielp these communes

to: assess competency

‘Stupport GIO

implementation

Similar to the district level, Figure 5 defines the specific tasks of the provincial level

ima supparting the districts and cammunes to perform the roadmap for investment ownership

delegation

4, Status of commune investment ownership decentralization

According to the overall P115-11 review report by CEMA, in 2006, there were only

3010 communes being invesiment owners, accounting for 30.4% of the total communes unider the Program So far, there were 1591 communes as investment owners, accounting for 90% of the total Program communes Although the target was that 100% program

communes would be investment owners by the end of Phase 2, this was still an encouraging result, which outweighted the one in the previous period The rate of commune ownership in

conmmunes facing extreme hardship was 86% and in communes with villages facing extreme

hardship was 96% There were 29/$0 provinces meeting the target with 100% communes

beiing investment owners

Table 2: Result of CIO decentralization implementation in the period 2006-2010

The reports and data collected by the research team have shown an increase and

gradual improvement in implementation of commune investment ownership

decentralization year by year, as follows:

- By the mid-term review, the 100% target achievement in 2010 scemed ton ambitious

against the context thal only 55% of communes were actually investment owners in 2008

Also, the capacity enhancement component was only launched at the end of 2007, much

behind as scheduled The identified barriers included (i) limited capacity at commune level,

(ii) lack of specialised staff in charge of this target, and (iii) low incentives However, in the

iwo last years, the target achivement accelerated and reached 90% in 2010

+ Tuyen Quang was the first pravinee to decentralize to 100% of all communes to be

investment owners in the first ycar of Phase 2, In the following year more provinces

obtained this target, such as Bac Giang, Ha Tinh, Dong Thap, Vinh Phuc, Thua Thien Hue, Hình Phuoc and Phu Yen

+ In 2006, many provinces still had ne commune as investment owner, or the rate of ownership was very low By 2007, they strongly decentralized investment ownership to

50% of the communes, like in Ha Giang and Cao Bang And by en of the second phase, the

rate rose to over 80% by all provinces

- In the tirst two years of Program 135- phase I], many provinces did not decenwalize ownership to their communes (Son La) or decentralization was conducted at limited scale

(Quang Nam, Binh Dinh) despite the fact that 100% communes had been investment owners

in some other intemational-funded projects, However, by the end of the phase, considerable

improvement was seen in all of these provinces, except for Quang Nam, which by the end

vf 2010, only reached 55%, ranking higher than Dien Bien (31%) and Phu Yen (45%)

- General observation trom annual reports reflects that the number of provinces

assigning communes to be investment owners has gradually increased but such decentralization was still symbolic in nature Communes did not actually implement their

responsibily as investment owners because district authorities were doing the majority of the

work The work in some communes, which were still weak in capacity, was mainly done by

Contractors (2.2 Quang Binh) As per the P135-I] implementation review reports, combined

with actual findings from surveying the two provinces covered by this study it can be seen

that most communes needed “hand-guiding” from district authorities, and seme communes

were able to implement program projects independently

Figure 6: Participation level of communes as investment owners

Commune aclively

Ị exerci] | f [Conmunes impiemen CIO

high degree of investment awnership, but at immed number (roughly 30% of all

- By the mid-term review, in most cases, communes were only decentralized to

become invesiment owners of projects in which they could actively mobilized rezauzces, in

Particular, small-budget items The table belaw shows that communes facing extreme

hardship were mainly assigned investment ownership of production developmen’ urd small-

scale infrastructure projects

Table 3; Communes as investment owners by component by 2010

Infrastravure | Predustion [Investment

tal | investment | Development | Owner | Radio | ri oe Investment OF () Investment

48 1.283 1,435 1,591 86.1 1,176

(Saurce: y-year report on implementation of Program 135-1, December ? However, the capacity and proactiveness of Program communes have jsadually increased over time In another word, the program has achieved remarkable imp

Strengthening decentralization of commune investment ownership, and the numb

report are very encouraging, But the actual invesugation shows that this works on pager

only in some provinces, the CIO model was applied reluctantly and there was litle

evidence that chis model would continue to be applied after the Progranr ended

Nevertheless it should be asserted that the commune investment ownership model was an

innovative feature of Program 135 and was institutionalized in a determined manner <1 the

period 2006-2010

38

The program 135 W

apply new ‘mechanism to enhance :

limited to selecting project location

making thoughout the actual const

CHAPTER H IMPLEMENTATION OF COMMUNE INVESTMENT OWNI

DECENTRALIZATION IN PROGRAM 135 ~ PHASE []

(THROUGH ACTLAL SURVEY IN THAI NGUYEN AND KON TUM

highland or mountainous districts and communes Thai Nguyen’ household poverty rate

reduced from 26.8% in early 2006 to 10.8% by the end of 2010, of which the household poverty rate in communes benefiting from Program 135 in 2006 was 49.76% and reduced to 27.43% in 2010

The research team visited 3 communes in two mountainous districts of Dinh Hoa and

Daj Tu to conduct the survey Of the two communes, one was under an investment project

funded by Plan International und was decentralized us the investment owner Ethnic

minority rate in Dinh Hoa accounted for 70% and the district-wide household poverty 1

was 35.3%, in which, poor ethnic minority households accounted for 58%

At the end of Program 135-1], 42/44 communes under the Infrastructure Compoucnt

and 39/42 communes under the Production Components were investment owners of

Program projects, ccsounting for 95.5% af the total communes under the Program ‘This was

a major leap over phasc i when there were only over 10 communes as investment owners in

the whole province Particularly, two communes were not assigned as investment owners

but still performed well their tasks The reason why the two communes were not owners of

the infrastructure component was because they were not decentralized by district authorities

(these districts intended to invest in roads, which required high funding and sophisticated

technology thus communes were unable to implement) In the production component, two

districts assigned their Center for Agricultural Promotion 10 implement the projects, henee

all three communes were not investment owners.

1.2, Hom Tum:

Kon Tum is a mountainous border province with toral natural area of 9.676.5 km2 [t boasts segregated highland terrain and extreme climate conditions Transpartalion is

difficult in mnst communes under Program 138, many soads are accessible only during dry

seasons The province has 100,762 houscholds, of which ethnic minorities account for 49.425 household, 296,095 inhabitants, taking up 53% of the province's population The

nuniber of poar household in the whole province is 19,310 households, accounting 19.16%;

of which ethnic minorities account for 16,884 households, an equal of $8.2% of total poor

households in the province

In 2006, Kon Tum had 48 communes and 35 villages By 2010, there were 31 communes and 36 villages facing extreme hardship under Program 135 The team visited

Dak Ila and Kon Ray districts to conduct the survey In addition to the two communes under

Program 135, the team also visited communes that had implemented the CIO model in the province, under projects funded Plan International, FMV, CECI, JICA and East Meets West

Foundation

By the end 2f 2010, 40/51 communes vere assigned as investmert «mers of

indrastructure projects ed 36/51 communes were owners of production projects (in which,

36 communes were vwmers of both types of projects), accounting for 91.4% of total Program communes in terms of infrastructure, communes were owners of works undez

YND 400 million; in terms of production projects, the funding was assigned as directed by

the: provincial authority

2 Survey result in Thai Nguyen and Kon Tum

The team used 60 questions to conduct the survey, combined with focus group discussion, in order to collect data relating to the implementation organization,

decentralization mechanism, suitability and effectiveness of commune ownership

decentralization 243 officers were consulted, including 21 at provincial level, 21 at district lewel, and 20: ut commune level, which

Tabled Number of officers consulted at different levels

No Authority level Thai Nguyen Kon Tum Total Ì

The table shows that the key subjects of consultation are communal afficers who have

been involving the delegated tasks These officers have been directly invelved in directing

and organizing implementation of P135-II They understand the operation and management mechanism used in the Program, as well as the guiding principle of decentralizing to local authorities, as regulated in Decision No 07/2006/QĐ-TTg dated 10/1/2006 by the Prime

Minister The detailed survey result follows

+ Given the question “whe are owners of works and projects under P135? Is

decentralization of commune investment ownership suitable? ”, 90% of interviewees said

that investment of works and projects under P15-I[ were owned at commune level, only

10% said that district authorities were owners With the same question, 86.8% of

imterviewees expressed that it was better to have communes as investment owners In their

opinion, commune authorities were close ta local people, thus, had better understanding of

local life and expectation Also, implementation time was shortened compared to if projects were owned at district level, especially with regard lo the production component This also explained why Program 135-I! aimed to strengthen commune investment ownership This is

also a pragmatic demand requiring increasing transparency and better accountability in

implementing current programs/projects

Of the remaining, 10.4% interviewees favored district authorities being investment

Dwners, reasoning that they were more capable (especially for infrastructure projects); 2.8%

did not think it made any different whether investment owners were at district or commune

level What mattered to them was better investment effectiveness This is an important

finding of the research to find a suitable intervention approach to foster decentralization of

investment ownership ta communes

Figure 7: Difference in perspective on commune investment ownership

- With the question `'W hat are the key challenges for commune investment ownership

de ceniralizanon?” the research team received different feedback Hawever, interviewees

commonly agreed to the following challenges

- Capacity constraint,

- Commune statf were in charge of other work outside the Program projects as well

- Some administrative procedures were complicated,

- Lack of guideline from district and provincial level

- In some places, district authorities were not willing to decentralize communes to

become investment owners,

According to the result of the survey conducted in the two provinces, interviewees

agreed (o and prioritized the challenges by order from high to low importance as follows

- Complicated and lenuthy administrative procedure (96,5%), especially

documentation for basic infrastructure projects, and payment procedures, even for small-

sciale works, were still required to follow those applied for iarge-scale, highly-invested works

To verify the above feedback, we reviewed a specific project in terms of

administrative requirements to build # kindergarten funded by Program 135 According to

the inter-ministerial circular Ne 01/2008 (UBDT, 2008), commune staff need ta undergo 26

steps to select contractors cud organize contract signing Additionally, they need to study

dowuments by Ministry of Finance regulating cost norms, regulations by the State Treasury

on payment and settlement, reguiztion by the Central Government on bidding (Law on

Temdering, Decree No §5/2009/MD-CP) and other relateral documents by Ministry of

Comstruction (MOC) and Ministry of Planning and Investment (MPI) Not to mention that

these documents were regularly amended and supplemented As a matter of fact, commune staff needed to spend a lot of time on updating different legal documents tv conduct their

assigned tasks

+, {Box Met 2: CIO situation the tne in Ngok Reo commune, Dak : a oe Ha distrief, Kon Tum province

‘The commie wai owner of an'investnent pr

Quiang company won the bid All implementation procedures and paperwork were done by

thiss company In the bidding selection, there were three expressions of interest, but, in fact,

33

ey: were only symbolic, Commune Si spot uogeatend Đại -ostestimale, Aeepaical

lv

-business ‘which điên approached the Để nhi, authority i

negotiated and signed the contract for the design In the process of gblining approval from

the district SE all ch were prepared by the contractor abe ca for payment

of ‘funding Hott iommne ang the-commt

account | ihbee cin Pro

~ In some district, the authorities did not want to decentralize investment mem to communes (72%) Most of them were afraid of losing control when assigning communes to

be investment owners They wanted io retain their right to make decision, thus, estimated

commune and community capacity at low level

+ The interview result in four surveyed districts showed that most district officers in

chiarge of Program 135 affirmed that limited investment management capacity at commune

lewel was the key barrier to decentralization

+ Interview at commune level regarding the above issue revealed that 90% of questioned staff believed that they were capable to manage and implement all projects smoothly “J myself have had « VND 3 billion house built, and managed a team of 30

wowrkers therefore no one can say that [can not manage a simple construction cost less then VND I billion as those in Program 135-IL If empowered, we could really do well”

exppressed a commune officer at Dinh Hoa district, Thai Nguyen province

3>

Given the conflicting survey results at district and commune levels, combined with

related information, the team could only explain that if communes became investment

owners, district authorities 10 tonger maintain a powerful voice in irivestment manager 2nt,

i.e they no longer have the opportunities to control commune authorities, nor receive “kick- back" from construction contractors To some certain extend, this means shared power at

district level We consider it one of the key reasons to rationalize why districts were

reluctant or did not want to empower conimunes to be investment owners of infrastructure projects funded by Program 135

- Limited capacity of commune staff: 52.8% feedback that commune staff were not

capable enough to undertake the role of investment owners As a reflection, it shows that the

right to access basic social services, especially education, in commune facing hardship was

still very limited In fact, from our investigation, the matter was not simply limited access to education Many commune staff did not dare to propose or request district authorities to empower them due to a simple reason: the district authorities directly manage these

communes in all aspects, politically, socially and economically In a discussion with us

outside a meeting, a commune chairman (who requested to remain unanimous) shared with

us: “/ wanted to write a request to be investment owner If thing warks out well, it should be fine: but in case we would not succeed or some issue arises it would be very complicated not to mention that the district authority will conduct inspection, ete And in that case, I'm

not sure I can even keep my chairman position

~ In terms öF undertaking different roles, 48.6% interviewees acknowledged that they

had to undertake differ

sument owners, thus, ent tasks at the same time, while working as inv

they did not have enough time to understand all regulations nor paid enough attention to

directing, guidng and organizing implementation of Program activities

~ Lack of guidance from district authorities to commune ones: 36.8% interviewees

expressed that there were too many regulations about the Program implementation Some

content was regulated exceptionally, thus, they did not have enough time to understand or

update all the documents At the saem time, low incentives for district staff when guiding

commune staff was also a constraint

Additionally, some other challenges also affected the decentralization process,

including natural calamity, segregated terrain in mountainous communes (answered by 4 interviewee) and high poverty rate (answered by 6 interviewees) A lot of constraints, however, were faced in the two surveyed provinces during decentralization effort as mentioned in section 2.2 in Chapter I

- Studying other projects by NGOs in the two surveyed provinces did not yield any

lessons or best practices on commune investment ownership decentralization, since

communes were not assigned as investment owners in those projects, The detail information

about these projects are presented below

+ CE : CECI set up a project office in Kon Tum province It directly hired a consultation company, signed contracts with construction contractors and handed over the

36

finished works to communities for management, CECI did not decentralize management to

district Or commune authorities In other activities it provided barns and livestock to

houschol ds, who only need to take care of such

+ Swiss FMV: all paperwork and procedures were similar to those applied for hasie construction It did not decentralize ownership to commune but to district authorities

+ JICA and East Meets West Foundation: both models were conducted as handover ones, The donors signed contracts with construction and supervising companies When the

works were finished, they were handed over to local communities A supervising board and

community supervising groups monitored implementation Payment was sent directly from

donor's account to that of the contractor JICA’s model was a piloted one It assessed the

need for project formation and supported the development of models, provided seeds and

transferred them to local people for implementation, with technical support

3 Review of C1O decentralization in the two provinces

Actual CIO decentralization in Thai Nguyen and Kon Tum showed that, despite it

being a suitable policy that aims to improve the implementation quality of poverty reduction program and enhance democracy at grassroot level, there were sti!l many limitations that need to be overcome Decetralization to communes to be investment owner of programs and

projects under Program 135-I] was not as effective as expected mainly due to the following

reasons: