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Seminannual Report on Project Administration and Technical Assistance Implementation for the Period Ending 30 June 1999 : Country Implementation Highlights
Viet NamThere were 21 ongoing loans, with no loans approved or closed during the period. All were in the early or middle stages of implementation. All loans were classified as satisfactory in implementation progress and achievement of development objectives, except one, which was unsatisfactory in implementation progress. One loan that was approved during the second half of 1997 was declared effective during the period. Of the three loans approved during the second half of 1998, two were awaiting effectiveness and one was awaiting signing. One loan underwent a minor change in scope and another a minor change in implementation arrangements. Project implementation improved significantly over the last three years. The Government, through assistance from the Bank, is continuing to take actions to improve the efficiency of its internal procedures. During the joint portfolio performance review meeting of the major funding agencies and the Government, which was held recently in Hanoi, it was agreed that there had been a significant improvement in the fund flow mechanism for both funding agency and government funds in the past year, as illustrated by a decrease in the number of complaints of delayed payments from contractors. The Government's other internal procedures (increased threshold of contracts to be approved by the Prime Minister; exemption of international consultants from taxes, duties, and other fees; exemption of aided projects from value-added tax on imported goods and equipment, etc.) were also streamlined to some extent. Despite these positive developments, there were still signs of difficulties in project implementation. In particular, there were delays in loan signing and effectiveness, and in the establishment of project management units; problems with insufficient capacity of staff at the provincial level; delays in the fielding of international consultants and ineffective use of their services; insufficient procurement expertise in project management units; and problems in implementing resettlement plans. To address these issues, the major funding agencies, in consultation with the Government, initiated the preparation of a time-bound action plan. To assist the Government in strengthening its project implementation capacity, the Bank provided several capacity-building TAs. More TAs are planned for the near future. A CPIA seminar was conducted in April 1999 to train staff of the EAs in the Bank's procurement guidelines and procedures, and related operational matters. A major concern affecting the implementation of projects, particularly in the road sub-sector, has arisen in recent years. Domestic contractors are submitting low but responsive bids. However, these are too low to ensure completion of projects in time and to the appropriate quality. The outcome of these contracts raises severe doubts about the capabilities of the local contractors and their supervision. Projects in the road subsector, in particular, have been adversely affected by this issue. There is a need to improve the prequalification and bid evaluation process. It was stressed that future prequalification will need to more accurately reflect the existing commitments of contractors to other projects. The Bank's periodic project review and administration missions, and future CPRMs will continue to work with the Government to address these issues. Contract awards of $27.9 million were 59 percent of the semiannual projection of $47.5 million and 14 percent of the annual projection of $203.0 million. Disbursements of $74.5 million were 91 percent of the semiannual projection of $82.0 million and 35 percent of the annual projection of $213.9 million. Contract awards were lower than expected because of poor performance in the social and transport sectors, while disbursements fell short of the projection because of the performance in the social sector. The second tranche release from the Financial Sector Program loan is expected during the second half of 1999. The disbursement ratio of 8.2 percent was slightly lower than 8.6 percent as of 30 June 1998 and compared with the Bankwide average of 11.9 percent, due to the higher undisbursed loan balance. Net resource transfer was $71.9 million, compared with $66.6 million as of 30 June 1998 due to the comparatively higher disbursements. Audited project accounts and financial statements were due for 11 loans and compliance was achieved for 8. Of the remaining three, two were delayed by less than six months and one was delayed by 6-12 months. Environmental covenants were met for 5 loans and compliance was ongoing for 11. The covenants were not applicable to five. The social covenants were met for two loans but not for one. Compliance was ongoing for 11. The covenants were not applicable to the other seven. Tables 81 and 82 summarize the data for Viet Nam.  
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