Regions and Countries

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p. 3 of 4 BACK | NEXT I. Development Situation II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Lending Level

Country Strategy and Program Update 2002-2004: Viet Nam

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III. Portfolio Management Issues

A. Portfolio Performance Implementation

23. Since operations resumed in 1993 and up to end-2000, ADB has provided 30 loans amounting to nearly $2 billion and TA of about $76 million for 108 projects. Implementation performance is still behind ADB-wide average, but has been improving. The disbursement ratio was 18.7 percent in 2000, still lower than the ADB average of 20.5 percent, but showing steady improvement from 14.2 percent in 1998 and 16 percent in 1999. Contract awards and disbursements in 2000 exceeded projections, but the contract award ratio of 19.0 percent was still lower than the ADB average of 21 percent. Delays in loan signing and effectiveness again have become significant. To address this issue, Government and ADB processing procedures are under review to identify opportunities for harmonization. Appendix 3 shows that most Viet Nam projects being implemented are rated satisfactory or highly satisfactory in implementation progress (85 percent) and achievement of development objectives (96 percent). The Government has expressed some concern about the effectiveness of TA projects, including quality of project preparation, development impact of advisory TAs, and level of ownership. To improve TA quality, design phases are now longer and more interactive, and TA projects are more closely scrutinized.

B. Counterpart Funding

24. Counterpart funds allocated to line ministries are usually enough and are not a serious issue. However, their slow and inadequate release was identified as one of the causes of delays in implementing resettlement and compensation in some ongoing projects, along with procedural difficulties. Funds allocated by line ministries to some projects have been insufficient. The issue is being monitored through monthly project implementation meetings. Through TA, ADB will also assist in preparing a new decree on resettlement.

C. Monitoring and Evaluation

25. The improvement in portfolio performance in recent years can be attributed to government efforts, supported by ADB TA to familiarize the executing agencies with implementation procedures and requirements, and to monthly project implementation review meetings held by the Viet Nam Resident Mission with MPI and the line ministries and executing agencies concerned. Issues still to be addressed are the centralized and cumbersome approval processes; inadequate project implementation capacity; delays in recruiting consultants and procuring goods and services; and issues on land acquisition, resettlement, and compensation. To address these issues, a project management conference, jointly sponsored by ADB, World Bank, and Japan Bank for International Cooperation (JBIC), was organized in April 2000. The Government used the conference outcome as an input to prepare the new Decree 17/CP, issued on 4 May 2001, which regulates the management of official development assistance. A joint portfolio review with the World Bank and JBIC, first held in 1999, will be repeated in 2001, to address common implementation issues. Advisory TAs proposed for 2001 will help in establishing more adequate cost and technical norms, addressing issues of SOE participation in procurement, and in preparing a new decree on resettlement.

26. The country assistance program evaluation (CAPE) for Viet Nam was completed in December 1999. It concluded that, while ADB operations were appropriate for the prevailing circumstances at the time, in the future (i) a narrower focus should be pursued; (ii) a long-range perspective and greater synergy should be developed among TA operations; (iii) the emphasis on rapid legal and regulatory reforms in program lending should be tempered by a more realistic assessment of the consensus-based decision-making process in Viet Nam; and (iv) a sharper geographic focus would be desirable. So far, no projects approved after 1993 have been post-evaluated. Two project completion reports were concluded for Loans 1340 Agriculture Sector Program Loan and Loan 1272 Road Improvement Project. Both loans were classified as generally successful.

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