Problems and shortcomings

Although the implementation and disbursement of ODA and concessional loans have achieved certain progress, but compared with the schedule set out in the agreements signed, it still remains unsatisfactory, in which, many programs and projects have to be extended. This limitation stems such as:

Difference between the procedures of Vietnam and Donors: Although between Vietnam and donors have achieved much progress in the harmonization of process and procedures, there are still

differences between the two sides. In the current legislation, there are often provisions on the primacy whereby in case of the difference between the provisions of Vietnam and the donors, provisions stated in the signed international treaties shall be complied. In fact, showing specifically the detailed difference in the international treaties is not simple, therefore, to ensure the safety before inspection and audit, the project owners usually apply methods of "dual submission for approval" to both sides of Vietnam and the donors leading to time consuming process in submission for approval and decision making during the implementation of ODA programs and projects.

Quality of documents of Programs, and projects has not met the requirements due to of the Executing agencies; project owners have not promoted their ownership in developing project documents, feasibility reports. In order to make the project documents adopted easily, the project owners often let the international consultants (hired signed contracts by donors) autonomous in designing and the project owners only provide information and data leading to the unsuitable design options which cannot be applied in Vietnam when being put into practice. The next reason is the qualification of construction consulting experts does not meet the requirements and the last is the quality of survey, design is not sufficient and is not close to the actual situation leading to the fact that, when implementing, there is the need of adjustment and supplementation and during the construction, there is appearance of volume increased.

It often lasts a long time to prepare the project and prepare the project implementation: The time for preparation of programs, projects often lasts, ranging from stage of proposing the project until the conclusion of specific international agreement. It often takes around 2-3 years leading to the need of adjusting the design, changing the estimated technology option, changing in total investment capital due to fluctuation of price and increase of land clearance. Based on Decree 38/2013/ND-CP dated 23/4/2013 by the Government to conduct advance actions, the time to prepare programs and projects has been shortened considerably in 2013 and 2014). Problems in land clearance (Difficulties in land clearance due to: (i) difference in policies of compensation, clearance and resettlement between Vietnam and donors; (ii) the unstable planning in some localities has led to the adjustment of projects; (iii) lack of counterpart funds for compensation, land clearance and resettlement.

Problems in procurement process: The problems in the procurement process take place from the preparation of bidding documents to the stage of organization, review and approval of the bidding results: The difference in processes and procedures between Vietnam and donors, the unsatisfactory quality of bids are due to limited capacity of preparing bidding documents, the difficulty in selection of contractors, the delayed time of reviewing and approving the bidding results both from

Vietnam and donors and other problems arising in the bidding process such as complaints of contractors, policy and institution changes, etc. have slowed the process of project implementation.

Problems in lacking the counterpart funds: The lack of domestic capital, especially in some ministries and agencies receiving and implementing ODA and concessional loans (Ministry of Transport, Ministry of Agriculture and Rural Development, etc.) and in some localities that are eligible for supported by the central budget, the lack of counterpart funds have affected the implementation progress of programs and projects, especially in the stage of compensation, land clearance and resettlement and implementation of construction works under the contribution of Vietnam.

Limitations in qualification of organizing and managing ODA and concessional loans at local level: Because leaders and officers of some project management units often hold concurrently so their professionalism is not sufficient. Many officers have experience in managing projects, and have been trained, but due to the work requirement, they have to move to other positions, thus, the management and implementation of project is inefficient. In addition, the salaries and incentives for project officers are limited. Regarding the cooperation and support of the relevant units, due to their limitation in capabilities of foreign languages, understanding the donors’ processes and procedures and the project, it has resulted in limitation of submission for approval and slow handling of problems, causing delays for the project implementation process.

Lack of experience in negotiating contracts: Management of contracts (price adjustment, formula of calculating price escalation, change in costs leading to prolonging the contract performance, etc.) is a difficult problem in recent times faced by a number of programs and projects. For contract management issues, in addition to the fact that the project owners have not had a lot of experience in establishment, negotiation and management of contracts, there is the other reason that foreign contractors have not thoroughly grasped the laws of Vietnam, leading to different interpretations of the contract and occurrence of disputes.

Qualification of contractors: Limited qualification of domestic contractors is one of the reasons leading to progress delay. Due to regulations, to change the unqualified contractor, there shall be a need of re-bidding another contractor instead of continuously selecting the second ranked contractor and the arbitration of responsibilities and obligations of contractors is complicated, thus, project owners often do not apply the option of changing contractor, leading to the delay in project implementation progress.

This fact requires a consistent procurement mechanism to facilitate the replacement of contractors that are not qualified enough. Some contractors performed the projects with concessional loans in Euro so these contractors went bankrupt (as in some projects funded by Italy). The handling of this

issue meets difficulty because the projects were sponsored by European bilateral donors under the form of binding conditions.

4.2 Contribution of ODA to the socio-economic development in period of 2011 - 2015