Further stepping up decentralization in order to develop road infrastructure in thua thien hue province

The study aims to contribute to further decentralization of management to develop the road infrastructure of Thua Thien - Hue Province, work out a method for effecti\e decentralization o

0^ ^j^ riT < ^

UPPSALA UNIVERSITY UPPSALJ^ UNIVERSITY OF ECONOMICS & BUSINESS, VNU

IN THUA THIEN HUE PROVINCE

Authors: Vu Cao Dam

Le Anh Tuan

Nguyen Ngoc Duong

Supervior: Dr Nguyen Khac Hung

Dr S\ en Jungerheni

Class: MPPM Intake 2,'" U-Group

Group 11: Vu Cao Dam - Le Anh Tu4n - Nguyen Ngoc Duong

MA Thesis: Further Stepping Up Decentralization in Order to Develop Road

Infrastructure in Thua Thien Hue Province

Supervisor: Dr Nguyen Khac Hung & Prof Sven Jungerhem

Date of completion: 01 September 2011

1/Aim:

The road system plays an extremely important role to any countr\\ like the blood vessel of a human body Construction of roads requires big investments, which are, in Vietnam, mainly from the state budget, of which the central budget (including the state budget, government bonds, and loans through loan agreements with other countries or international financial institutions) accounts for a bigger proportion than the local budget Many projects have been, over the past years, funded by the central budget, of which some were not decentralized; others decentralized during their implementation; and, still others decentralized from the beginning The situation has been popular across the countr>\ including Thira Thien Hue Province, although decentralization of management has become a trend in many other countries with certain achievements The Vietnamese Government has had a guideline of acceleration of decentralization since 1986 including in the field of management of central investments for road and bridge constructions, but there has not been any specific legal provision for the field This gap in management not only reduces the effectiveness of government management but also give opportunities for negative issues such

as group interests or corruption which limit the de\elopmenl of road infrastructure in Vietnam in general and in Thua Thien Hue in particular

The study aims to contribute to further decentralization of management to develop the road infrastructure of Thua Thien - Hue Province, work out a method for effecti\e decentralization of management of investment in road and bridge constructions, and make the activity transparent to limit the corrupt issues mentioned abo\ e

2/Method:

Based on our desk study of related theories, existing legal and regulator) documents, international seminar articles, and, our inler\iews and consultations of the stakeholders and investigation of done projects, we shall describe our object of study and conduct a critical analysis to arrive at our conclusions and solutions

2.1 Theory

The authors ha\e found out a number of scholarly concepts and viewpoints, but only the closest definitions to the study will be introduced in this thesis In addition, we have looked into the reforms and decentralizations conducted by some developed countries that share quite

similar characteristics to Vietnam such as the landmass and government levels such as South Korea, Japan, Thailand, and even Sweden, a country that has many preeminent advantages for other countries to learn from Those related contents have been made available at international workshops or summary reports of authorities of those countries

This method allows an overall view of the study, helps work out the development trend, contributions and shortcomings of the activity under question that will in turn enhance confidence in real work and avoid its weaknesses in practice

2.2 Interview

We have interviewed related public leaders such as the representatives of the central Ministry of Transportation, the Provincial Department of Transportation, the districts and the contracts, the latter being intermediary units

Our interviews of related issues clarify the practical problems, concepts and viewpoints that the other information channels may not give

2.3 Investigation of some local decentralized projects

We will investigate some centrally-budgeted projects in Thua Thien Hue for their actual practice, analyse and compare that to the existing regulations and stakeholders' viewpoints to arrive at relevant recommendations for practice and further study

This method allows us to haxe the most specific, practical and objective consideration

of the topic

2.4 Legal documents

We will investigate the contents related to the topic, which are found in Vietnam's legal documents such as laws, government decrees, and other documents, in order to analyse and provide a method for effective decentralization of the task of investor for effective RBC investment management

This method allows us to work out the legal gap, if any, of the topic, based on which

to propose additional contents for further legal amendments so that the study results can work

in practice

3/ Result & Conclusions:

There is then an ureent need of a set of criteria as the basis for coherent logical decentralization in the field, in avoidance of opportunities for corruption or group interests rhe set of criteria consists of two parts on road construction and bridge construction Below is a part of the set:

Highway of traffic of 10.000-30.000 vehicles per

24 hours or speed is more than 80km/h

Traffic of less than 10,000 vehicles per 24 hours and speed is less than 80km/h Projects of national

importance by National Assembly Resolutions and other important projects Total investment is bigger than 1,000 billion VND Total investment is smaller than 1,000 billion VND Project Investor must have competences of Rank 1 Project Investor must have competences of Rank 2 Involving two or more provinces

Involving only one beneficiarx province

CONDITIONS FOR DECENTRALISATION

No condition

No decentralisation

Being experienced of participating in management of projects of similar total investment

No condition

Satisfying required competences

No condition Similar competences of the invoked provinces

No condition

NOTE

Special grade

Grade

1

Grade

2 or lower

Group

A

Group

A Groups

B & C

4/ Suggestions for future research:

The study must be however continued in other pro\ inces to complete the set and add some other criteria such as: the criterion of allocation of the central budget as in\estments to provinces; the criterion on evaluation of citizens' satisfactions to constructions managed by the central authority and provincial authorities as investors; subdi\ision of the proposed criteria with ranges of score for each

5/ ( ontribution of the thesis:

Proposing this set of criteria for decentralization in the field of road and bridge construction that is funded by the central budget is new but the individual criteria of this set

is not new because they have been used individually throughout the country in many different projects of different capital sources However, the scope of their related legal documents has not mentioned decentralization of management of central-budget RBC investments and even such foreign-ftinded projects as WB3, ADB5 We therefore believe that the introduction of this set of criteria in practice of decentralization of management of RBC investments will be highly effective and contributing to the road development in the province, because: 1 It can mobilize the competences of the provinces - they will be made more active, creative and responsible for their decisions; 2 It will reduce many procedures and procedural durations because it reduces intermediary levels; 3 It stops lobbying for becoming in\estor of a project unsuitable with the experience and competences of a province that waste both time and money; 4, The central authority can spend more time and human resources making policies, plans and strategies for development other than on settling micro affairs that pro\ inces can do well

Besides, because this study is highly generalised, we have, based on experience of decentralisation of other countries, drawn out the inevitable trend and effecti\eness of decentralisation The trend not only suits macro-level issues but also the narrower field of decentralisation of management of RBC investments as the topic of this study This has been clarified through our process of collecting and investigating data, related concepts, and legal documents in Vietnam Because every province plays an equal role in the political system of Vietnam, our selection of Thira Thien Hue or any other proxince is random and representative Moreover, Thira Thien Hue has representative characteristics for the other provinces in the region and the whole country, so our selection of the province for this study will enrich the information channels and study methods As a result, the set of criteria, which has been analysed, synthesised, and established, can be applicable suitably to many different pro\ inces of the country, though more infonnation and data must be collected from specific pro\ inces of application for proper adjustments

ACKNOWLEDGEMENT

The thesis subject on decentralization interestingly came into being when our Swedish professors asked us to form a group, consisting two members working for local govemments and one for the central government, for our graduation thesis

The deeper we investigated in the subject, the more we understood that this contains pressing, up-to-date, even sensitive issues on large scales Due to the limit of time and size of the MA thesis, we ended up deciding to study decentralisation only in the field of management

of investment in road and bridge construction because we have certain professional knowledge and a quite favourable starting point during the study In addition, we are grateful to both our Vietnamese and Swedish professors for their enthusiastic guide of our research Our sincere thanks go to Dr Nguyen Khac Hung Chairman of the Board of Directors of Management Consultation and Development, JSC (MCaD) - our Vietnamese co-supervisor, who has spent much time and effort guiding us through this study Our special thanks go to Prof Sven Jungerhem - our Swedish co-supervisor from Uppsala University for his provision of much new knowledge, experience and methods of study Last but not least, we would like to thank the Centre of International Training and Education (CITL), College of Economics and Business under Hanoi National Unixersity for having introduced us to the professors, from whom we have received very useful academic guides for this thesis

Ha Ndi August 2011

Co-authors

TABLE OF CONTENTS

Page CHAPTER 1: GENERAL THEORY ON DECENTRALISATION DECENTRALISATION

OF MANAGEMENT, AND INTERNATIONAL PRACTICES 5

1.1 ''Decentralisation" and "decentralization of management" 5

1.2 International practices 7

1.3 Theory of management decentralization in Vietnam 9

CHAPTER 2: THE REALITY OF MANAGEMENT DECENTRALISATION IN

COMMUNICATION AND TRANSPORTATION IN VIETNAM AND THUA THIEN

2.2 Practice of management decentralization for road infrastructure in Thira Thien - Hue 16

2.2.1 General situation of road communication in Thua Thien - Hue 16

2.2.2 Practice of management decentralization for road infrastructure in

Thira Thien - Hue 16

a Information collected from interviews 1 7

b Analysis of some decentralized projects 20

CHAPTER 3: CONCLUSION AND PROPOSAL OF A SET OF CRITERIA 25

3.1 Proposal of a set of criteria 25

INTRODUCTION

1 Rationale

The road system of a country is consistent To use it effectively requires a consistent development plan and compatible exploitation standards to ensure smooth nationwide transportation The road system plays an important role in socio-economic development, but it can hardly attract private investments because it requires huge funds and takes a long time to take back those investments As a result, road constructions are mainly invested by the state budget, and the central government budget accounts for a bigger proportion than that of local governments in investment in road constructions In the past, road projects invested by the central government budget were all managed by the central government, but many of them have recently been invested by the central budget through the Ministry of Transportation (MoT) but managed by local governments through their Department of Transportation (DoT) Some are first planned to be managed by the MoT but then transferred to DoTs The questions are, "Why are thew including projects under deplo\ment decentralised to local go\emments? Can local governments manage those projects more effectively than MoT?

Since 2000 the Vietnamese Goxernment has been promoting its Public Administration Reform, which encourages further decentralisation of management between the central and local governments There are some criteria for decentralisation of management of taxation or budget, \et there ha\e been no specific regulations on decentralisation of management of projects on road infrastructure construction The question is what projects (of which size nature and scope) should be decentralised to local govemments for more effectiveness

2 Objectives and research question

The thesis aims to accelerate decentralization of management to de\elop road

infrastructure, which is an urgent issue taken into consideration by this stud\ As a result, the research question is "Flow can the task of investor be decentralized to manage in\estments in road and bridge construction cffccti\el\ in avoidance of group interests and corruption?"

3 Scope of study

The thesis shall study the impacts of regulations on investment management to propose a method of decentralization of management of investment in road infrastructure Due to the limited time and resources for this study, the data since 2000 shall be collected from Thira Thien Hue as a typical province for the study

In Vietnam's political system, the provinces all have an equal relationship with the central government Being a province in Central Vietnam with an average landmass population, and GDP per capita, compared to the other provinces Thira Thien Hue has everv normal ways of communication and transportation (i.e airlines, railways, roads, sea lines, and waterways) and corresponding infrastructure facilities for those communication Because it is

a province of highly representative characteristics of all the other provinces Thira Ihicn Hue has been selected as the object of study Besides, the statistics and analyses of this thesis have been generalized, so its results can be applied to the other provinces of the country'

4 Methods of study

Based on our desk study of related theories, existing legal and regulatory documents, international seminar articles, and our interviews and consultations of the stakeholders and investigation of done projects, we shall describe our object of study and conduct a critical analvsis to arrive at our conclusions and solutions

4,1 Theory

The authors ha\e found out a number of scholar!) concepts and \iewpoints but only the closest definitions to the study will be introduced in this thesis In addition, we ha\e looked intti the reforms and decentralizations conducted b} some developed countries that share quite similar characteristics to Vietnam such as the landmass and govemment levels such as South Korea, lapan, I'hailand and c\cn Sweden, a countr\ that has man> preeminent advantages for other countries to learn from Those related contents have been made available

at international workshops or summar\ reports of authorities of those countries

This method allows an overall view of the study, helps work out the development

trend, contributions and shortcomings of the activity under question that will in tum enhance

confidence in real work and avoid its weaknesses in practice

4.2 Interview

We will interview related public leaders such as the representatives of the central Ministry of Transportation, the Provincial Department of Transportation, the districts and the contracts, the latter being intermediary units

Our interviews of related issues will clarify the practical problems, concepts and viewpoints that the other information channels may not give

4.3 Investigation of some local decentralized projects

We will investigate some centrally-budgeted projects in Thira Thien Hue for their actual practice, analyse and compare that to the existing regulations and stakeholders' viewpoints to arrive at relevant recommendations for practice and further study

This method allows us to have the most specific, practical and objectixc consideration

of the topic

4.4 Legal documents

We will inxestigale the contents related to the topic, which are found in X'ietnam's legal documents such as laws, govemment decrees, and other documents, in order to anal\se and provide a method for effective decentralization of the task of investor for effective RBC investment management

This method allows us to work out the legal gap if any, of the topic, based on which to propose additional contents for further legal amendments so that the studv results can work in practice

CHAPTER 1 GENERAL THEORY ON DECENTRALISATION, DECENTRALISATION OF

MANAGEMENT, AND INTERNATIONAL PRACTICES 1.1 ''Decentralisation" and "decentralization of management"

Decentralisation is a popular concept on many information channels and in various legal documents According to en.wikipedia.org, decentralization in an organization is defined

as follows, "Decentralization is the policy of delegating decision-making authority down to the lower levels in an organization, relatively away from and lower in a central authority A decentralized organization shows fewer tiers in the organizational structure, wider span of control, and a boltom-to-top fiow of decision-making and fiow of ideas." This concept of decentralization appeared quite early when Henry Fayol - a mining engineer and a famous French management theorist argued "Everything that goes to increase the importance of the subordinate's role is decentralisation, everything that goes to reduce it is centralisation." (Fayol 1916; available on internet)

Decentralisation of management is a more specific concept of decentralisation It is defined, also by Wikipedia (en.wikipedia.org), "Administrative decentralization seeks to redistribute authority, responsibility and financial resources for providing public services

among different levels of governance It is the transfer of responsibility for the planning

financing and management of public functions from the central govemment or regional governments and its agencies to local governments "

The recent practice shows that "Decentralisation, a worldwide trend, reflects a more democratic and participatory approach to govemment even in countries traditionally characterised by pronounced centralism" (Teresa TerMinassian 1999: pp 55)

1.1.1 Forms of decentrali/ation

The few past decades of the world have witnessed the following forms of

decentralisation:

- In terms of origin, there are four major forms of decentralisation: the models from France, the (former) USSR, the UK and the traditional model This kind of classification is now of almost no consideration (Joint UNDP-Govemment of Germany 1999, pp: 11-14)

- In terms of hierarchy and function, there are territory-based and function-based decentralization The former type is the provision of centrally-produced goods and services to local administrative units in the government hierarchy: the latter is a delegation of responsibility from the central level to para-statal organizations managed by the central government or to non-public or non-governmental organisations (Joint UNDP-Govemment of Germany 1999, pp: 11-14)

- Classification by Berkeley argues that there are eight forms of decentralisation: (1) decentralisation: (2) functional decentralization: (3) interest organization: (4) provincial-level deconcentration; (5) ministerial-level deconcentration: (6) delegation of powers to autonomous authorities: (7) charity; and, (8) marketisation (Joint UNDP-Govemment of Germany 1999, pp: I 1-14)

- Based on the types of administrative framework and functions, which are responsible for production and delivery of collective goods and services that were presented by the L'nited Nations in 1962 there are four forms of decentralization: svstems of local govemments,

systems of partners, systems of multilateral partners, and sv stems of integrated

administrations (Joint UNDP-Govemment of Germany 1999 pp: 1 1-14)

- In terms of political, spatial, market and managerial purposes, there are three types of administrative decentralisation: deconcentration decentralization, and delegation (Joint UNDP-Government ofGemiany 1999, pp: 11-14)

1.1.2 Advantages and disadvantages of decentrali/ation

a, Advantai^es

- Decentralisation gives an opportunitv of making a more responsible, open and transparent [government:

- It helps remove obstacles in a decision-making process',

- Decentralisation can reduce complicated bureaucratic administrative procedures and

increase government officials' sensitivity to local conditions and needs;

- It can enable central ministries to reach more local fields in need of service delivery;

- It helps reduce financial tension of the central govemment when local govemments are empowered more to mobilize their funds through tolls and charges of services they deliver;

- Decentralisation can allow a more political representation of different groups in making;

decision It can reduce amount of minor affairs so that highdecision ranking leaders in central ministries can focus more on policy-making;

- It can create a local geographical focus for more effective coordination and more opportunities for local people's participation in decision=making;

- Decentralisation can provide more creative, responsive and innovative programmes through allowing local implementation of pilot projects;

- It can also increase political stability and national unification;

h, Disadvantaijes

- It can remove the scale economic effectiveness and reduce the control of the central

government over scarce financial resources Weak administrative and technical competences

of local governments may lead to ineffective delivery of public services in some fields

- Insufficient corresponding financial sources for decentralization of administrative

responsibilities to local governments make it difficult to deliver full services Decentralisation may sometimes make if difficult to coordinate national policies and may lead to private benefits of local officials

- During implementation of decentralization, a lack of trust between the public and private sectors may worsen local cooperation (CIEM, pp5-6)

1.2 International practices

An international conference on "Development and Decentralization in Asia" held in Kytakvushu, Japan, in 2003 stated that "Decentralisation is one of the hottest topics all over the world nowadavs"

1.2.1 In Korea

Facing the fact that "In late 1997 Korea's foreign reserves were virtually depleted and

the countrv was on the brink of the declaring a moratorium" (Seung-Woo Chang 2002; pp 01),

the South Korean govemment decided to reform the public sector, including a "change from a centralized to a decentralized government" (Seung-Woo Chang 2002; pp 26)

It means to transfer more service delivery responsibilities to local govemments in order

to make them more responsive and to devolve responsibility w i t h i n public agencies to give frontline managers greater incentive and ability to respond to citizen's needs (Hee Joon Song 2003; p p l 5 ) , specifically:

- Implementation o f Full-scale A u t o n o m y : Local autonomy came to be understood not only as a grass root democracy, but also as an important means o f enhancing and social development through competition among local government

- Reshuffling Local governments: includes merger and abolition o f local administrative units

- Workforce Reduction

- Delegation o f Functions and Resources: Approximately ?>% (1.174 functions) o f all

functions managed by the central government have been delegated to local governments through the scrutiny o f the Committee (Hee Joon Song 2003; p p l 5 )

Five years o f the drastic reform have resulted in successful achievements: "As a result

o f relentless nationwide reform including the public sector, the Korean economv has bounced back rapidly and was revitalized" (Seung-Woo Chang 2002: pp 2)

1.2.2 In T h a i l a n d :

"Most Thai local governments have weak capacitv in financial management, planning and service delivery, and generally lack adequate resources to deliver service effectively or to provide needed investment" (DaNa Weist 2003: pp 83) In 1997 the Thai Pariiament passed a programme of lurllicr decentralization

Strengthening local govemment was identified as a policy prioritv in the Government's 7 National l.conomic and Social Development Plan (1991-1996) and 8^^ Plan (1997-2001) The 7'^' Plan emphasized developing local infrastructure facilities, providing credit to expand and

improve local services, and assisting local authorities in mobilizing capital and formulating development projects The 8th Plan emphasized strengthening the management and budgetary capability of local institutions, and supporting decentralization In support of 8th Plan objectives, the Department of Local administration within the Ministrv of Interior has work to enhance local capabilities in three areas: i) Local administrative system: ii) developing tax and property maps to enhance local revenue collections and increasing local tax rates; iii) training local personnel (DaNa Weist 2003 pp 84)

After six years' implementation, Thailand gained remarkable development Effectiveness

of the decentralization was seen, and further decentralization was made, for example, in the field of health, "The Ministry of Public Health is supporting the establishment of provincial Heath Authorities that would be responsible and accountable for improving heath indicators

by purchasing and/or providing the right mix of health inputs that raise health outcome"

1.2.3 In Sweden

Sweden, a developed country and a world-leading democracy, has carried out decentralization

in the spirit that "the responsibility and decision-making powers of municipalities have been decentralised and shifted to even lower levels" (Lennart Gustafsson, Ame Svensson 1999: pp 72) in fields ranging from garbage collection, health care, education to physical planning and building, where "local roads and streets are the responsibility of local govemments all others are the responsibility of the central govemment (Lennart Gustafsson Ame Svensson 1999: pp 76-77) Obviously, the fact that almost all fields in Sweden have been clearlv decentralised has

contributed to making the countrv one of the richest nations in Europe and a leading

democracy in the world

1.3 Theory of management decentrali/ation in X'ietnam

In Vietnam, "the local authorities were verticallv linked with the central govemment and their exercise of power had to be carried out with due recognition of that vertical link" (Nguyen Khdc Hung: 2003 p: 136) Like in manv other countries, there are five tvpes of

decentralisation in Vietnamese: i) Deconcentration: the stale holds the power which is not concentrated at the centre, but places officials to carry out its tasks; ii) Delegation: an agency

or official authorises a unit or subordinate to use some power, on its behalf to carry out some

special tasks: iii) Devolution: Give power or property to autonomous units to carry out the functions; iv) Deregulation: One the other hand, to reduce cumbersome rules and regulation,

and on the other hand, to make new and easy applicable rule and regulations for the public to

follow; and v) Privatisation: apart from the notion of shifting the ownership from the state to

the private sector, this includes the ownership in the hands of the state while the tasks are carried out by other sectors to make the state free to focus on macro level issues (Nguyen Khac Hung: 2003 p 134) Of the types, devolution and deconcentration are two main forms the government of Vietnam has developed However, there has been much confusion over decentralisation in Vietnam This is indicated in the fact that a distinction is being made between decentralisation of function and decentralisation of power In realitv there is a tendency for the allocation of tasks (decentralisation of function) to become contrary to the desired, decentralisation of power This is widely seen as a major unwanted element of the current situation as it amounts to a lack of central power to confer authoritv leading to a weaker state rather than stronger (Nguven Khac Hung 2003, pp: 137)

The 6^^ National Congress of Vietnam Communist Party (VCP) in 1986 marked an end

to the previous centrally planned economy with subsidy To meet the demands of the new phase, state management has been gradually decentralized with "clearlv defined duties, responsibilities and powers of each level on the principle of democratic centralisation" (Vietnam t\Mnmunist Party 1987.pp: 118) The state clearlv defines "the authoritv and responsibility of each government level The central level will decide macro-level issues while

management is decentralized to promote initiatives and the sense of responsibilitv of local

governments""(Vietnam C\>mmunist Partv 1995 pp: 25), and even emphasized that "power

shall be delegated \o the closest government level of settlement""!X'ietnam Communist Partv:

1997, pp: 52)

Decentralisation was however made reallv more drastic and specific in 2001 with the requirement to "conduct strong decentralization in the administrative svstem along with improved centralization and consistency in issuing institutions I he responsibilitv and power

of each level, organization or individual shall be clearlv defined: personal responsibilitv

0

proper reward and discipline must be upraised: overlaps and "responsibility-passing" that cause difficulties and delays at work and seulement of citizens' complaints must be overcome""(Vietnam Communist Party 2001 pp 216-217)

Accordingly, the Government's Public Administration Reform (PAR) Master Programme 2001-2010, which realizes the VCP resolution, set the target of "By 2005 new regulations on decentralization between the central and local govemments and among local govemments shall be fully developed and issued to improve the authority and responsibility of local govemments and enhance their relations and responsibility to citizens Decentralisation of tasks shall be made along with corresponding decentralization of finance, organization and staff Issues under complete local authority, those in consultation of the central govemment and those to be realized in line with the central government's decisions must be clearly defined" In 2004, the Government issued Resolution No 08/2004/NQ-CP that expressed its determination of "further promotion of decentralisation of state management between the central government and the prov inces and centrally-run cities"

Decentralization in Vietnam has been taking place vibrantly for 25 years, a long time

by the time we conduct this study Some people may wonder if such decentralization is necessary or why it is repeated over different National Congresses of VCP Manv summary

reports of its 20 years' renovation have shown clearly that Vietnam has been achieving

increasingly many more achievements in almost all the fields, partlv thanks to the decentralization, whose lessons have been drawn and practice perfected along the development process of the country

In the early 21'' cenlurv decentralization has become not only an academic concern but also a quite important issue facing politicians in policy-making However, decentralization is still feared to trigger many problems such as " in highly decentralised budget setting, the fiscal operations of subnational govemments can have important macroeconomic effects

which, in the absence of effective co-ordination mechanisms, can run counter to the

stabilisation efforts of the central government." Are those problems reallv strong barriers to decentralisation? Or are they merely reasons to justify delaved reforms or a retaining of powers for private interests? fhe problems have been thoroughlv settled bv manv developed

countries in the worid For example, similar barriers have been removed in South Korea when

" a strategy was devised to encourage the use of citizens' audit request system in order to

improve accountability in local govemments The citizens, audit request system allows

citizens to request an audit by a higher-level office in case a local office is deemed to be

against public interests " OR "investment and loan projects above a certain size will be

subjected to stricter evaluation in order to improve local govemment finances This is in

response to criticism that much wasteful spending has been caused bv unjustified events or

favours by local govemment ahead The relevant laws have been amended to introduce a

financial penalty system whereby transfers to local govemments may be reduced if a local

government is found to have incurred financial losses through illegal activities or

procedures"(Seung-Woo Chang 2002; pp 48-49) Although this is onlv one of the t>pical

solutions to bad consequences of decentralization, but no one has ever persuasively reason that

decentrali/ation will produce more disadvantages than advantages As a result, achievements

of decentralizing countries prov ide clear ev idence of positive contributions of decentralisation

Acceleration of decentralization and empowerment is considered a step ahead in state

management, but to make decentralization successful is an art because decentralization should

reduce but not remove the powers of higher government levels while giving lower-level

governments more powers for ultimate improvement of public alTairs should not lead to their

abuse Decentralisation must be understood in two ways: "top down" and "bottom up" That

is, decentralized powers can be revoked when lower-level govemments have insufficient

competences or conditions, on the principle of "empowering a local government that can

realize those decentralized powers well."

In addition, to avoid interest-gaining and responsibility-passing in decentralization, the

competences of a lower-level govemment must be measured before a certain degree of

decentralization is determined for it in association of powers and responsibilities to specific

organizations and individuals so as to implement decentralized powers correctly At the same

time, to ensure the effectiveness of decentrali/ation the decentralizing authoritv must not

leave evervthinu to the decentralized one: the former must reserve the power of control and

12

supervision over the latter In short, decentralization must ultimately improve work effectiveness; no matter in what approaches it is conducted

Finally, both the theory and practice of decentralization so far applied in the rest of the w^orld are quite cleariy on a macro level However, we can not find any specific documents in Vietnam and other countries that mention decentralization of management of Road-and-Bridge (RBC) investments This is an extremely important and sensitive field because it spends a huge part of the state budget to gradually complete the infrastructure of road communication

As a result, a study to accelerate and enhance decentralization in this field is very necessary

and urgent It will be carried out in the steps below to seek a way for effective decentralization

of management of RBC' investments

CHAPTER 2 THE REALITY OF MANAGEMENT DECENTRALISATION IN COMMUNICATION

AND TRANSPORTATION IN VIETNAM AND THUA THIEN - HUE

2.1 Realitv of management decentrali/ation in communication and transportation in Vietnam

2.1.1 Legal documents

Although many legal documents (such as Budget Law No 01/2002/QHI1 Construction Law No I6/2003/OIII 1 Decree No 209/2004/ND-CP on management of constructional quality Government Decree No 12/2009/ND-CP on management of investment projects in construction Decision No 59/2007/QD-BGTVT of the Ministry of Communication and Transportation (MoC T) on decentralization and delegation of authority in management of centrally-funded MoC I construction projects) have been issued

decentralization (f management of centrally-funded RBC' investments remain vaguely defined

Despite the availability of related legal documents on among other things, decentralized budget management and decision-making on investment projects: there has not been no single

stipulation on the aspect of our study It is easilv understandable because those documents

provide only decentralization of decision-making of projects related to state budget under local management As a consequence, it has not met expectations of good governance in general and those of effective central state budget investment in road and bridge construction in particular

2.1.2 Practice

Although the road plavs a vital role in socio-economic development, its big

investments and very long time of return rarely attract the private sector; as a result, most

investment projects in the field are funded by the central govemment of Vietnam through stale budget allocation, government bonds and loans gained through loans agreements that are signed with other countries or international financial institutions As a result, the central budget often corners a bigger proportion in investments in road development than the local budgets It was a common practice in the past that investment projects under the central budget

were all managed bv the central authoritv (the Ministrv of Communications and

14

Transportation - MoCT) but many investment projects from MoCT budget have recently been decentralized to local authorities (Provincial Departments of Communications and Transportation - DoCTs) for management Even some ongoing projects being managed by MoCT divisions have been transferred to DoCTs Questions then come about the reason(s) of the decentralization to local governments of even ongoing projects; about whether local governments can manage those investment projects effectively; and about what the basis of decentralization was Questions similar to them always remained half-answered because they were sometimes clarified, some other times obscured, and even vaguely explained

Over the past years, MoCT has conducted stronger decentralisation to other investors and project management units (PMUs) for implementation and responsibilitv-bearing while the ministry conducts only its function of state management and provision of institutions for control and supervision For example, the PMU of My Ihuan Bridge and PMU 1 have been decentralised to become direct investors of some big traffic projects that involve investments

of billion VND, on a pilot basis In 2010, 87 out of 267 projects in the field across the nation have been decentralised to DoCT as investors

Although the decentralisation has been increasingly promoted, poor-quality projects have been found more popular over the past few years For example, parts of some constructions have been out of order just after being put into use (e.g the National Highway

91 (in Can Tho), the National Highway 53 (in VTnh Long), the National Highway 48 (in Nghe An), some parts of the National Highway lA (under Project W B4) the National Highway 27B, the surface of Thang Long Bridge, the road in Phii Yen Province ) It is a fact that few projects have been carried out bv local investors in line with their respective progress, and many have been prolonged or extended tor years before completion This situation is caused

by the fact that most investors do not manage projects on their own but hire external consultants to do so while the former are mainly responsible for management of project quality Besides, the competences of some local investors and PMUs remain too limited in terms of skills and professions to meet the requirements of big-scale projects that require high

techniques Those investors have entrusted their whole task of quality management to external supervisory consultants

When local public investors have insufficient management competences, series of other consequences will arise and reduce the construction quality As a result, the basis for further decentralisation to correct local investors and PMUs in avoidance of thin-spread

"egalitarian" division of central investments to all provinces, especially when there is limited budget for management of project quality However, there are stills highlights of the decentralisation in which competent investors manage and implement investment projects effectively (e.g DoCTs of Ha Nam and Thua Thien - Hue

2.2 Practice of management decentrali/ation for road infrastructure in Thua Thien Hue

-2.2.1 (General situation of road communication in Thua Thien - Hue

Thira Thien Hue is a poor province in Central Vietnam with a landmass of 5.053km" and a population of 1.087 million people (as of 2009) whose GDP per capita in 2010 is merely 1,015 USD) The population concentrates mainly in its citv and district centres The road system includes a national subsystem, including National Highwav lA, Ho Chi Minh Trail, and Pan-national railway, that link to the other provinces, and a local system The road systems have been constructed and renovated with provincial and central funds, and foreign loans such as from the Asian Development Bank, the Worid Bank However, the provincial subsystem is too small to meet increasing transportation needs in terms of both fiow of vehicles and loads To complete the subsystem in line with its plan to 2020 requires huge funds while the local financial resources are limited, so the province needs central support in the field

2.2.2 Practice of management decentrali/ation for road infrastructure in Thira Thien

-Hue

Since 2000, some projects, especially focal ones that require big funds, have been deployed in Ihira Ihien Hue with central budget investments Some such as VVB2 (for rural

16

communication) were originally managed by central authorities: some such as ADB5 (for provincial roads) partially decentralised; some such as WB3 (for rural communication) decentralised during implementation; and, still, some others such as RBC project of Ca Cut almost completely decentralised How were those projects decentralised? What do the stakeholders implement, think and propose? We will investigate those questions in the following sections

a Information collected from in-depth inter\iews

We have collected and analysed information from a sufficient number of the stakeholders with critical thinking to identify the problems In terms of psychology and interests, any group has its own reasons to support its viewpoints and interests Our critical analysis will indicate core points that support effective management in terms of decentralization in general and establishment of the set of criteria in particular

a.l Interviews with central stakeholders

We have interviewed Vice Department Directors and higher positions in MoCT and Vice Directors and higher positions of some PMUs under MoCT (see Appendix I for the corresponding interview questions) The interviews were conducted one on one with seven interviewees

Decentralization of management of RBC investments to provinces has been mainly conducted since 2005 In general, the decentralized projects have a small total investment each and require normal technology The purpose of decentralization is to make organization of those projects quicker and more effective Decentralization is mainly based on the nature of a project and the competence of a prov ince apart from political factors Results vary from province to province, with some good results in one province and bad ones in another The decentralized projects have generally met 80"'o of their set objectives Some provinces carry out those projects in line with their requirements of progress, qualitv and disbursement, but some others have so weak project implementation competences in terms of techniques organization of execution, and procedures of payment that MoCT has to prolong the project lifetime and send its staff to those projects for direct support

Generally, all provinces want MoCT to further decentralize management of constmction projects to them Most of the respondents agreed about further decentralization but argued that the competences of provinces must be improved, and projects must not be decentralized to weak provinces As a result, all of the respondents agreed that there must be a set of criteria for decentralization that include such criteria as constructional crade constructional group, competences and nature of and geographical setting of a province (i.e provincial area, in mountain or plain)

a.2 Interviews with provincial stakeholders

We interviewed seven managers or higher positions from DoCT of Thua Thien Hue Province, one after another (see corresponding interview questions in Appendix I)

In general, decentralization of management of RBC investments to Thua Thien Hue since 2000 has been scattered and to a small extent: only six projects including one newly-decided project The interview also revealed that the province was ready for receiving decentralization of central-level projects because it believed that the decentralization will make them more active and quicker in decision-making because it is closer to the Kical practice so that those projects can be accelerated Is that argument firmly based or expression

of an ambition to have more powers? In fact, the province has successfullv managed projects decentralized to it and many big projects of Group B, so it is readv to undertake management

of big decentralized projects In addition, no respondent dared sacrifice his professional life easily to raise the point, because activities of project management are so strictiv legal that a lack of competences can not t\ilfil such a task As a result, the provincial wish of decentralization tor more etTective management is reliable

However, it was found that the respondents' knowledge of decentralization remained insufficient wlien, for example, a respondent said that "the legal documents for

decentralization and management of capital construction are fundamentally complete ",

which is obviously contradict to the results of our analysis of related legal documents that revealed that there is an absence of legal documents on decentralized management of central-budget RBC investments In addition, though most of the respondents agreed about the need of

a set of decentrali/ation criteria, they could not identify those criteria except two respondents

proposing some criteria such as constructional grade, constructional groups, necessary competences, and population size We agreed w i t h one idea that a govemment decree on decentralisation, based on our set o f criteria, must be issued to make transparent the decentralized management o f central-budget investments in capital constmction in general and those in RBC in particular

a.3 I n t e r v i e w s w i t h c o n t r a c t o r s

We interviewed five general directors o f contracting units that have participated in

R B C projects in fhira Thien Hue Province

Generally, the contractors answered our questions quite specifically and straight Fhough some mentioned delays in implementation procedures in participating in projects managed by both the central and provincial governments, most agreed that the province as investor settled the related procedures and arisen problems during implementation more

q u i c k l y because the provincial authority was closer to practice while non-decentralised projects took much more time to go through many different levels In addition, thcv argued that projects managed by the province were slowly disbursed because the province did not have active powers o f funds, w h i c h was caused bv incomplete decentralization when the central government retained the power o f pavment Finallv the respondents proposed further decentralization and one interviewee even argued that "upon decentralization, the province must be given complete authority while the central govemment shall check the legality o f local activities other than have direct interferences in decentralized provinces."

In addition, the contractors also proposed decentralization criteria such as constructional grade, constructional groups, local competences similar to those we have proposed after our analysis o f the legal documents

a.4 I n t e r s i e w s at the d i s t r i c t level

We interviewed fwc related section managers o f the districts in Thira Thien Hue

Because district govemment leaders rarelv have experience o f project management, we started our interviews first w i t h technical section managers

Our interviews indicate that district-level authorities have hardly had any cooperation

w i t h cenirallv-invested projects in their respective districts though they have worked a lot w i t h

projects decentralized to the province as investor or those invested by the province Our interviews with five respondents resulted in similar results, so we, again, stopped interviewing

The district interviewees generally stated that they had good coordination with the province as investor in investment preparation, site-clearing, project implementation and transfer of constructions into use, especially in quick settlement of arisen problems during implementation, which are often the most difficult issue when the investor is far from site in case of the central authority, finally, they strongly supported decentralization to the province

b Analvsis of some decentralized projects

This part of our analysis will give us a lively practical picture to compare with the contents we have discussed above both to confirm our drawn messages and to discover useful information for our research question

bJ Project ADS5:

Project ADB5 was approved by MoCT Decision No 3674/QD-GTVT dated 3 October

2005 to include sub-projects across 19 provinces, which in turn were approved of investments

of their phases I & 2 at MoCT Decision No 4253/QD-GTVT dated 09 November 2005 The project is funded by the loans from the Asian Development Bank (ADB) Accordingly, the following roads are built in Ihira Ihien Hue Province: Provincial Road No 9 (cancelled later due to lack of investment); Provincial Road No 2 (7km) at a total investment of about 15 billion VND; Provincial Road No 4 (20km) at an investment of about 50 billion VND; and District Road No 5 (I 1km) at a total investment of about 17 billion VND

Those sub-projects are classified by both the fomier and current regulation (i.e Decree

12/20()9/ND-CM* mentioned in the Section of Legal Documents of Vietnam) into Group C

Besides, thev are specified bv their investment decisions to be constructions of provincial

roads of the 5"' rank in the plain (i.e being designed at the speed of 25km/h) so they are

constructions of the lowest level - Level 4 In terms of local experience DoCT of Thua Thien Hue had implemented a multitude of projects of (iroup C, bv 2005 and two projects of Group

20

B ' The province therefore could function as investor of those sub-projects However MoCT Decision No 2057/QD-BGTVT dated 06 October 2006 provided that MoCT works as investor and PMU 1 as its representative while the province is responsible for site-clearing, design and budget estimate approving, and bid organisation The other procedures such as bidding, examination for approval, changes to fit practical implementation, etc must be settled through many levels The decision clearly slowed down the decision-making process and prolonged the project lifecycle As a result, though the subprojects in Thua Thien Hue were started early, they were finished merely in late 2009 after an average duration of four years each though the then regulation provided that a project of Group C shall be implemented in two years

It can be concluded that the project phases I & 2 should have been decentralized to the beneficiary provinces for higher effectiveness, at least in temis of earlier time to put it into

use In the light of the previous section on legal documents of Vietnam, perhaps MoCT had

had no clear basis for such decentralization at the time of the project decision-making, but the central authority has decentralized management of phase 3 of the project to the beneficiary provinces to improve its effectiveness Official Letter 1503/PMUI-QLDAI dated 15 August

2010 of PMU I to MoC^r read " Thanh Hoa Quang Ngai and Da Nang have been given

complete decentralization of deployment that resulted well"

h, 2 Project HB3:

I he project was approved by MoCT Decision No 4969/QD-BGTVT dated 26 December 2005 and MoCT Decision No 3818/QD-BGT\T dated 23 December 2008 on its adjusted investment, fhe project is funded through Credit Agreement No Cr.4150-V^ dated

17 June 2007 between the Vietnamese Government and the World Bank, and the Non-return Aid Agreement with the I K Government (TF056320 and TF092068) It has three main components: (A) Improvement of the basic rural road network (107.25 million USD): (B) Maintenance of the district road network (13 million USD); and (C) Institution- and capacity-building programme for MoC 1 DoC Is and the private sector (10.5 million USD) This study

' tfichway lA-IV Hire (at a total irncslmcnt of 180 billion \ N D ) and the road from Thuy Dirong to Lhuan An (280 billion VND)

will focus on Component A, which is its focal part with the biggest spending of the project

that funds improvement of some 3,100 km of the basic rural road network (consisting district-, commune- and village roads) in 33 provinces in Northem and Central Vietnam 10 of the beneficiary provinces received decentralization from the beginning under an M2 model and the other 23 provinces did not under an Ml model The project is divided into two phases without a clear definition of the start of phase 2

The project has a very low technical scale and small total investment, and Thira Thien Hue has 24 sub-projects at an investment of 5 billion VND including three bigger projects of less than 10 billion VND each In tenns of human competences and local experience, which are mentioned in the previous section on project ADB5, the province can completely meet the project management requirements if it is decentralized to it

Although powers are not official decentralised MoCT Document KHDT dated 6 April 2006 gave the 23 provinces under Ml including fhira Ihien Hue more duties, such as selecting designing and supervisory consultants, than those given to them by Project ADB5 This has in part accelerated the project progress: only after two years of its implementation, many provinces completed their subprojects phase I and some 50% of the work amount of their subprojects phase 2, and many of the non-decentralised provinces were

1838/BGTVT-as f1838/BGTVT-ast 1838/BGTVT-as the leading ones of the decentralized provinces As a result, is decentralization or

non-decentralisation a concern? Though given more tasks and responsibilities Project W B3 of

Thira Thien Hue has a much quicker progress than decentralized provinces such as Ha Npi a province with leading experience and competences of the countrv The slow progress could be explained in many ways including unsatisfactory management competence or inadequate attention However, those small low-level projects should have been decentralized to the beneficiarv provinces, and there should have been proper supervision so that central tnanagement can be nn>re general while the provinces' existing competences are promoted The transformation of Ml non-decentralised projects phase 3 into M2 decentralised projects for the 23 provinces under M 1 bv MoC I Decision No 2529/QD-BGTVT, dated 01 September

2009 to some degree acknowledged the efTectiveness of decentralization, even though the projects had bv that time passed half its way

'^1

b,3 Project Tu Hien Bridge

The project was approved by MoCT Decision No 3604/QD-BGTVT dated 20 November 2003, at a total investment of neariy 160 billion VND to build a cantilever bridge

of 90m spans, and DoCT of Thira Thien Hue was the investor It was classified as a project of Group B, Grade II At the time, the province had had experience of implementing projects of Group B as mentioned before, but it hadn't had any experience of implementing bridge projects of Grade II The question is then "On what basis did MoCT decentralize the project to the province?" Although there were no decentralization criteria at the time, the project was clearly not a national secret; it was carried out only in one province: and Thira Thien Hu^ had had experience of managing similar Group B projects, except the fact that it had not implemented any construction of the same grade, fhe construction was in fact completed five months later than originally planned, and our investigation of related documents shows that the slow progress came objectively from some geographic differences from the original technical documents that required another technical plan for the bridge foundation in practice Though the provincial efforts of managing this project in line with related requirements should

be recognized, there was no basis for such decentralization without consideration of the criterion on "constructional grade"

In addititMT the fact that the steps of the project procedure took two to four weeks each

on average to be approved bv the central MoCT though the provincial DoCT had been nominated investor contributed to the longer lifec}cle of the project

b.4 Project Ca Ciit Road and Bridge:

This project was approved by MoCT Decision No 3306/QD-BGTVT dated 29

October 2007 at a total investment of nearlv 312 billion VND to build a cantilever bridge of 9()m spans, and DoC^ f of Ihira Ihien Hu6 was also the investor The project was also classified as one of (iroup B, Grade 11 .At the time of the project, the province had had

sufileient experience of implementing similar projects, and the decentralization had become more comprehensive through legal documents that allowed a province to approve most of the steps of a project except approval of the project itself I h e procedural steps were remarkablv

reduced, taking 1 to 3 days on average to contribute to the project completion nearly one week earlier than its deadline

As a result, there has not been any official research to provide the theoretical and legal backgrounds for decentralization of centrally-funded RBC investments though many projects have been decentralised in practice Consequently, many of the decentralised projects have been prolonged or have produced poor quality due to their investors" weak competences Within this MA thesis, we study and propose solutions to make decentralization of management of central budget investment in road and bridge construction become transparent with minimized opportunities of corruption and wastefulness We study specifically the case

of Ihira Thien Hue province to make recommendations to gradually perfect the road infrastructure of the province

24

CHAPTER 3

PROPOSAL OF A SET OF CRITERIA AND CONCLUSION

As analysed above, roads and bridges form an extremely important field because they link different geographic regions of one country or between countries Decentralization of management of investments in this field has been taking place in Vietnam at many different degrees: some ongoing projects having been decentralized; some others being partiallv decentralized from the beginning; and still, some others - being almost completely decentralized from the beginning Generally, the decentralization was neither clearly legally based nor subject to a common rule, so subordinate units were often made passive and dependent The reality shows that the decentralization of management of central-budget RBC investments has not met the expectations of the Vietnamese Govemment

Decentrali/ation without specific basis in practice in Vietnam has created both an environment that nurture public leaders" subjective decision-making and, especially, opportunities for a popular "asking-granting"" mechanism, which in turn lead to delavs at work and in procedural steps, or even power abuse let alone investments in less urgent projects or widespread ineffective investments in too many projects at the same time so that those projects can not be finished to put into use

As a result, a studv to propose a set of criteria for decentrali/ation in this field is extremely necessary and urgent Hopefullv the studv can positively contribute to make transparent the related processes and procedures as the basis for a clear coordination between the central and local govemments, in avoidance of an "asking-granting" system, corruption, group interests, localism In addition, it is also hoped that this studv can help reduce the

burden of the central level, mobilize the strengths of the whole public sector, and avoid

decentralization to ineligible provinces that can be wasteful so that investments are made effective for the cause of national development

3.1 Proposal of a set of criteria

3.1.1 Basis

The set of criteria will therefore be tools for effective decentralisation A lack o f the set

is like production without a production formula

h Practice

We shall start from the Budget L a w No O I / 2 0 0 2 / Q I H I that provides the functions, powers, duties, etc o f budget revenue and expenditure It provides that "Non-retumable investment in constructions o f socio-economic infrastructure shall be managed bv the central government" (Point a - Clause 1- Article 31) and "Investment in constructions o f socio- economic infrastructure shall be managed by the local government" (Point a - Clause I- Article 31) A glance at decentralization o f management o f central budget investment in economic infrastructure constructions, including RBC" investments as the subject o f this study, requires no more discussion However, not cverv province can have sufficient budget for construction o f roads and bridges needed by its citizens or to motivate a planned regional development At the same time, centrallv' managed RBC constructions are geographically located in provinces, and the central govemment is not the investor o f all o f them As a result

a construction in a province can be funded bv the local govemment or decentralized by the central government to become the investor This studv w i l l clarifv the basis o f that decentralisation

Article I o f the Construction Law N o 16/2003/QHI 1 which was issued in 2003 mentions the sctipe o f the law " f h i s Law stipulates constructional activities: the right and

dutv of the organization or individual as investor o f a construction and constructional

activities" Ihe law specifies constructional activities without anv provision on

decentrali/ation in the field Clause 3, Article 5 on tvpes and grades o f construction provides,

" I h e grade of a construction is determined by its t>pe size, technical requirements,

constructional material, and l i f e " , fhose grades are specified bv the Government in Annex I to

26

Article 5 of its Decree 209/2004/ND-CP that reads "The grade of a constmction is the basis for ranking and selecting constructional contractors; identifying the designing steps and guarantee duration" This means that the technical degree and complicatedness of a construction shall determine selection of a sufficiently competent contractor for the construction and implementation of all the designing steps to ensure the technical accuracy and the required construction amount Is this stipulation related to decentralisation? The Appendix of this law divides constructions into five ranks (Special Grade and Grades I to IV) For example, the Special Grade involves a road of more than 30.000 means of transport per 24 hours or speeds of more than 100km per hour: or a bridge of spans of more than 200m each Those technical standards are, by the time of this study, often for highways or big bridges of complicated techniques such as suspension bridges

Because most provinces have not had any experience of managing those big projects, they have a high risk in doing so Of course, this argument is not always true because experience must have a starting point However, construction of a big bridge is funded bv the state budget, which in turn comes mainly from taxation, so it can not be easily decentralized to

a province inexperienced of managing a project of a higher constructional grade than its ability because such a province may not finish the project or complete it with low effectiveness In contrast, many experienced central units can manage projects of the highest constructional grade, which are on a regional or international scale For example Can Tho Bridge has cable-stayed spans of 550m each, which are the longest in Southeast Asia As a result, we propose to add the criterion of "constructional grade'* as a prerequisite to the set of criteria in question

The Government's Decree No 12/2009/TslD-CP on management of investment projects

in construction provides classification of projects in terms of size and nature, "projects of

national importance shall be considered by the National Assembly to decide their investment guidelines while other projects shall be categorized into Groups A B and C provided in

Annex 1 of this Decree." (Point a- Clause I - Article 2) For example, RBC projects with an

investment of more than 1.500 billion VND will be categorized in Group A, The

categorization of constructions shows the degree of investment in a project, the possible

collection of investment, the efTectiveness of the investment and, especially, its social

outcomes That is why this Govemment Decree also provides the decision-making authoritv of investments "a) The Prime Minister shall decide investment projects of national importance indicated by a National Assembly Resolution and other important projects: b) A minister or minister-level head shall decide investment projects that fall into Groups A B and C and thev can delegate or decentralize the decision-making authority of such an investment of Groups B and C to their direct subordinate agencies; c) The Chairperson of a People's Committee (local government) shall decide investments projects of Groups A B and C within the scope and ability to balance the respective local budget after such a project is approved by the People's Council of the same level The provincial/district-level Chairperson can delegate or decentralize his or her decision-making power of investment projects of Groups B and C for the direct subordinate agencies." As a result, the province and the central ministry have similar role, responsibility and power in deciding investments in Groups A, B, and C Why is this issue raised here? Is it necessary to put the criterion of "Constructional (Jroups" into the set of criteria for decentralisation? Based on the discussion so far manv people mav think that it is unnecessary, but it is a fact that not every province has had reliable experience of RBC projects of big investments of, for example, more than 1.000 billion VND In case such an inexperienced province lacks sufUcienl competence, it can theoreticall) hire a consulting organization to manage such a big investment project, which is allowed by the same Decree

"In case the investor hires a consulting organization to manage a project, the consulting organization must have sufficient competence of organization and management in line with the project's scale and nature." (Clause 3- Article 33) However, it is still unconvincing that it will be more efTective for an inexperienced province to hire a consulting organization than centralisation We therefore propose that the criterion of "Constructional Groups" should be put as another prerequisite into the set of criteria in question Decentralization of projects will not be made to inexperienced provinces though those provinces, as the beneficiaries and users

of those constructions, may have their representative in corresponding PMUs to accumulate experience and competence for future constructions of similar big scales

Decree 12/2()()9/ND-CP requires that "projects of national importance shall be

considered bv the National Assemblv to decide their investment guidelines" (' Point a - Clause

28

1 - Article 2) The nature o f a construction is extremely important in deciding not only its investment but also its management Some examples are constructions o f national defence and security This is a concern o f many countries in the w o r l d , not only o f Vietnam As a result, the criterion on " n a t u r e o f c o n s t r u c t i o n " must be put into the set o f criteria as a primary and prerequisite criterion

Like in most other fields, management o f projects requires certain competences Article 44 o f the same Decree divides management competences into "a) Grade 1 may manage projects o f national importance and Groups A B and C; b) Grade 2 mav manage projects o f Groups B and C" It w i l l be therefore risky to decentralize, for example, a Group A project to a province o f Grade 2 management A l t h o u g h some provinces may complete it successfully, such decentralization is neither firmly based nor legal Competence must therefore be put into the set o f criteria as another prerequisite

Besides, a road or bridge construction often spreads over many provinces or simply, connects the t w o riverbanks o f t w o neighbouring countries Decentralisation o f such a project

is therefore difficult because o f possible imbalance due to unequal competences, responsibility-passing or struggles for local interests Therefore, "scope o f construction"" must

be put into the set o f criteria as still another prerequisite It is a fact that though legal documents have never mentioned "scope o f c o n s t r u c t i o n " in decentralisation, most projects that involve t w o or more projects are non-decentralised

In summary, we w o u l d like to propose the first part o f the set o f criteria, which

includes the fwc criteria o f (1) Nature o f construction; (2) Grade o f construction; (3)

Constructional group; (4) Competences; and (5) Scope o f construction Specifically, no decentralization w i l l be made to constructions o f national defence and securitv or a province

that is inexperienced of managing a project of similar group or grade: regardless it has

sufilcienl human resources Decentralization must be based on the competence profile o f a province, or the central authoritv must regularlv update the competences o f the provinces so that decentralization can be made clearly and quickly Finally, a construction that involves two prov inces w i l l not be decentralised

3.1.2 Contents

To be applicable in practice, the set of criteria must suit the practice of Vietnam and

observe the laws of the country on construction It must contain specific regulations on constructional grouping, decentralisation, constructional classification, and ranking of stakeholders

Based on the analyses above, the set of criteria is proposed as follows:

CRITERIA FOR DECENTRALISATION OF INVESTORS OF ROAD CONSTRUCTION

Highway of traffic of lOrOOO-30,000 vehicles per 24 hours or speed is more than 80km/h

Traffic of less than

10,000 vehicles per 24 hours and speed is less than 80km/h

Projects of national importance by National Assemblv Resolutions and other important projects Total investment is bigger than l.OOO billion VND Total investment is smaller than 1.000 billion

VND

CONDITIONS FOR DECENTRALISATION

Group

A

30

Involving only one beneficiary province

Satisfying required competences j ^

special architecture Spans of 50-200m each, not using new construction technology/ special

architecture Spans of less than 50m, not using new construction technology/ special

architecture Projects of national importance by National Assembly Resolutions and other important projects Total investment is bigger

than 1,500 billion WND

Total investment is smaller than 1.500 billion VND

Project Investor must have competences of Rank 1 Project Investor must have

CONDITIONS FOR DECENTRALISATION

No condition

No decentralisation

Being experienced of participating

in management of projects of similar total investment

No condition i Group

s B &

C

No condition 1

Note: See Appendix III for details of constructional grades, groups and Rank I and Rank 2

3,2 Conclusions and Directions of further study

Proposing this set of criteria for decentralization in the field of road and bridge

construction that is funded by the central budget is new, but the individual criteria of this set is

not new because they have been used individually throughout the countrv' in manv difTerent

projects of difTerent capital sources However, the scope of their related legal documents has

not mentioned decentralization of management of central-budget RBC investments and even

such foreign-funded projects as WB3, ADB5 We therefore believe that the introduction of

this set of criteria in the practice of decentralization of management of RBC investments will

be highly effective and contributing to the road developinent in the province because: 1 It can

mobilize the competences of the provinces - they will be made more active, creative and

responsible for their decisions; 2 It will reduce many procedures and procedural durations

because it reduces intermediary levels: 3 It stops lobbying for becoming investor of a project

unsuitable with the experience and competences of a province that waste both time and

moncv; 4 Ihe central authority can spend more time and human resources making policies

plans and strategies for development other than on settling micro affairs that provinces can do

well

On the other hand, manv people fear that provinces may become too powerful to be

controlled or that coordination will be difficult, especiallv in case there is a priority or

emeruency We agree that those situations mav occur, but we think that there are

corresponding solutions As analysed above, we propose (I) The central govemment to

enhance its regular and perit>dical supervision and evaluation: (2) Ihe provinces to make

reports as required: and, (3) To issue strict legal sanctions to limit those shortcomings

32

Besides, because this study is highly generalised, we have, based on experience of decentralisation of other countries, drawn out the inevitable trend and effectiveness of decentralisation The trend not only suits macro-level issues but also the narrower field of decentralisation of management of RBC investments as the topic of this study This has been clarified through our process of collecting and investigating data, related concepts, and legal documents in Vietnam Because every province plays an equal role in the political system of Vietnam, our selection of Thira Thien Hue or any other province is random and representative Moreover, Thira Thien Hue has representative characteristics for the other provinces in the region and the whole country, so our selection of the province for this study will enrich the information channels and study methods As a result, the set of criteria, which has been analysed, synthesised, and established, can be applicable suitably to many different provinces

of the country, though more information and data must be collected from specific provinces of application for proper adjustments

During the study, the draft of the set of criteria has been commented by various levels of management from the centre to the province, and contractors Some believed that it would be very difficult to develop a complete set of criteria, but thanks to the assistance of a multitude

of the stakeholders, this study has completed the set of criteria above as its initial results

The stud> must be continued in other provinces to complete the set and add some other criteria such as:

- The criterion of allocation of the central budget as investments to prov inces

- The criterion on evaluation of citizens" satisfactions to constructions managed by the central authoritv and prov incial authorities as investors

- I he proposed criteria should be subdivided with ranges of score for each

REFERENCES

Bambang Susantono, 15 April 2010, " attracfing investment in the transportation

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