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Key resource & support

Released at: 07:47, 19/09/2015

Key resource & support

Mr. Mori Mutsuya, Vietnam Chief Representative at the Japan International Cooperation Agency (JICA), spoke with VET's Minh Tuyet about Japanese ODA in recent times.

by Minh Tuyet

How would you comment on the effectiveness of Japanese ODA use in Vietnam over recent years?

The Vietnamese Government and JICA have put priority on using Japanese ODA loans for investment in primary infrastructure for the country’s socio-economic development. This use has been highly regarded for its contribution to drastically improving the investment climate in Ho Chi Minh City and Hanoi. For example, this year Hanoi has opened Terminal 2 at its Noi Bai International Airport as well as Nhat Tan Bridge and the road connecting the bridge to the airport. This helps to dramatically improve links from the city center to the international gateway. Similarly, the opening of the Ho Chi Minh City - Dau Giay Expressway in Ho Chi Minh City helps to ease transport from Dong Nai and Ba Ria Vung Tau provinces to the city.  

Moreover, Japanese ODA loans also create benefit for Vietnamese enterprises. For example, the value of contracts awarded to Vietnamese enterprises under Japanese ODA loans has regularly increased 2.4 times, from $4.88 billion in FY 2010 to $11.5 billion in FY 2014, and the technical transfer of very sophisticated technologies has been widely conducted by Japanese companies to their Vietnamese partners thorough Japanese ODA loans.  

Regarding technical cooperation, we can see many successful cases, from the legal sphere to the agriculture field. We believe these activities contribute a great deal to Vietnam’s development. Human resources development activities have been a prominent example. 

Since 2000 JICA has been implementing technical cooperation projects and promoting three strategic solutions: “Training Process Management (PDCA)”, “Employment Support System Development”, and “Skills Evaluation System Development”, to tackle the constraints on industrial human resources development through providing support to enhance capacity and set up equipment at the Hanoi University of Industry and other Technical & Vocational Education & Training (TVET) institutions. 

In the legal sphere, JICA has been implementing projects since 1996 to promote legal and judicial reform through supporting the drafting of civil and commercial laws, enhancing the capacity of central and local legal professionals and judicial officials, and at the moment in realizing the appropriate application of normative legal documents in line with the 2013 Constitution and Party Resolution.

From the perspective of a development partner, what do you recommend Vietnam do to utilize Japanese ODA loans more effectively?

In order to efficiently utilize Japanese ODA loans the proper selection of projects to be funded by such loans is quite important. In my opinion, avoiding delays during project implementation afterwards is the most efficient way. 

To avoid such delays the key solutions to mention are transparency and third party evaluations. 

JICA has currently been preparing for information disclosure in every step of procurement implementation for all projects funded by ODA loans and considering the utilization of third party evaluations for projects that have prolonged procurement periods. 

With the abovementioned solutions, information about government agencies that create delays in their decision-making processes will be disclosed to the mass media and the public. This will help to reduce delays in project implementation.

Meanwhile, JICA is considering the use of third party evaluations for all projects that fail to sign a consultancy services contract within two years or fail to sign a contractor contract within four years from the date of signing loan agreements.  

Thanks to these solutions, JICA expects to disclose and make clear the main causes of delays in projects and identify government agencies that delay project implementation. JICA also expects these mechanisms to be a strong deterrent of delays in project implementation.

What is your advice for Vietnam in using ODA more effectively? 

The need for the effective use of ODA has been thoroughly discussed in connection with the issue of rising public debt. JICA gladly welcomes the initiatives of the Vietnamese Government in promulgating medium-term public investment plans in compliance with the new Law on Public Investment and hopes that the government achieves efficient budget allocation systems and the effective implementation of the public investment projects, including ODA projects. In order to establish a well-functioning medium-term public investment plan, in addition to the development of appropriate investment plans, repayment plans for borrowings for each public investment and improvements in recurrent expenditure should also be considered. 

JICA has been preparing to establish the Web-monitoring System Project, through which the progress of procurement of contract packages and the implementation of all projects financed by Japanese ODA loans can be monitored. As the next step, in cooperation with the Ministry of Finance and the Ministry of Planning and Investment, it plans to upgrade the system to cover all public investment projects in Vietnam, in order to enhance efficiency and transparency.

What new ODA programs will there be and what commitments will come from JICA to Vietnam in the future? 

In the last 20 years Vietnam has recorded robust growth. However, in order to resolve the negative impacts of that growth, support for agriculture and rural development plays an extremely important role. 

I would like to introduce JICA’s technical cooperation project in northern mountainous Dien Bien province. JICA has implemented “The Northwest Region Rural Development Project in Vietnam” since 2010. Within the framework of this technical cooperation project, JICA has encouraged local government entities to establish a voluntary farmers association for irrigation canal management in parallel with the dissemination of the “Guideline/Manual for Agricultural Extension” and “Guideline/Manual for Irrigation Management by Farmers”. 

These aim at securing sustainable water distribution and irrigation management by farmers themselves and also aims at developing the capacity of local government, such as provincial, district and commune people’s committees, in the effective use of the limited local budget regarding rural development. As a result, the project has gained major achievements, such as sustainable irrigation management and a drastic increase in rural livelihoods. 

For the efficient utilization of limited budget funds for rural development, the key is to make appropriate budget allocations according to the execution capacity of local governments, which are verified based on their accomplished results.  

Under this direction, JICA will strongly introduce the Results-based Financing Model for the development of rural infrastructure. The more a local government can encourage farmers to establish their own voluntarily associations for irrigation canal management and can achieve improvements in other rural indexes, the more it can secure budget funds for rural infrastructure development. 

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