Capital disbursement far below target

According to the Municipal Department of Finance, a total of VND998.3 billion worth of ODA capital has been disbursed so far this year, meeting approximately 50 percent of the yearly plan. Capital for six key ODA projects has not been disbursed yet, including those on the public lighting system control centre, the distance training centre, the information and communications technology (ICT) development, the hazardous solid waste treatment station, and technical assistance for the Metro project.

Though most of the capital for these projects has not been disbursed yet, the city still has to pay interest every day.

“The slower the disbursement of capital, the higher the payment of interest will be as the proportion of non-refundable aid in ODA loans is rather small,” said Huynh Cong Hung, deputy head of the Economics and Budget Board of the Municipal People’s Council.

Many deputies of the council spoke of far-reaching consequences, citing the Hang Bang canal sub-project as a bitter lesson. This is one of the four sub-projects of the municipal environmental improvement project funded by the Asian Development Bank (ADB). In April 2007, the bank decided not to pour additional US$28 million into the sub-project due to the slow rate of disbursement. According to the bank, only 16 percent of the sub-project capital was disbursed by April 13, 2007, far behind the deadline of late 2005. The incident rang alarm bells for projects getting off to a slow start in capital disbursement. 

Land clearance – a major cause?

Several project management boards attributed the slow progress to the land clearance process, particularly compensation for displaced residents, which they said hampered contractors and investors. Other causes lie in careless investment planning, legal paperwork and appraisal and the approval procedures.

The Ministry of Construction had not included general expenses in initial estimates, which is common in international biddings, causing difficulties for project contractors. In addition, it is difficult to recruit local high-end consultants for areas requiring high professional skills such as working out a Resettlement Action Plan (RAP), Environment Impact Assessments (EIA) and surveys on training demands.

However, Nguyen Minh Hoang, head of the Municipal Economics and Budget Board, who is also ODA management and use inspection team leader, attributed the slow progress in implementing ODA projects to the project management boards’ poor management capacity, inefficient cooperation and poor command of foreign languages and professional skills. In addition, staff members of these boards and relevant agencies do not have general knowledge acquired in the management of ODA projects.