Description

Background

This country assistance program evaluation assesses the performance of ADB's country strategies and assistance programs for Viet Nam during 1999-2008, and will be an input to the country partnership strategy for 2011-2015.

ADB assistance to Viet Nam in 1999-2008 was marked by significant growth and a shift in focus from projects in agriculture and natural resources; multisector urban services; and law, economic management, and public policy, to large infrastructure (roads and energy) projects. From an average of $217.3 million per year in 1999-2001, the average annual sovereign lending more than quintupled to $1,102.0 million in 2007-2008 with the use of ADB's ordinary capital resources for large road and power transmission projects that started in 2004. The total public sector lending approved for the evaluation period was $4.4 billion. Viet Nam received 56 public sector loans, 143 technical assistance (TA) operations, 22 project grants, and 9 private sector loans during the evaluation period. In 2007-2008, Viet Nam is the fourth largest recipient of ADB assistance ($2.4 billion), accounting for about 10.4% of ADB's total approved assistance for those years. Aid has been less than 5.0% of gross national income. At present, Viet Nam faces the repercussions of the global financial crisis, but it is among the few countries in the world that is still expected to grow.

Throughout Viet Nam's economic development, the Government has demonstrated strong ownership and direction of the country's development agenda. In the process of undertaking reforms and finding new ways of doing things, the country's approaches have been broad ranging. While Viet Nam continued to address its large infrastructure gaps, it is now progressing to the next development phase that would entail a need to address the more challenging development constraints, such as fostering relevant and efficient supporting institutions and deepening reforms of state-owned enterprises (SOEs).

Key findings

The overall performance of the country assistance strategies and programs of ADB in Viet Nam in 1999-2008 is assessed successful, which takes into consideration the assessments of its strategies and the performance of its programs. While alignment, flexibility, replication, and aid coordination were areas of strength in ADB strategy, improvements are needed in implementation performance, institutional capacity building, and geographical focus.

Although ADB assistance has been a small share of Government's capital expenditure, ADB has contributed substantially in terms of providing concessional funds over the years as a trusted development partner for infrastructure financing gaps and strengthening capacities, safeguards, procedures, and processes to move Viet Nam along the transition path.

Key issues for future assistance

• Improving implementation performance
• Sustainability of investments
• Changing development context
• Engaging in governance issues
• Expected reduction in grants and highly concessional assistance and expanding ADB infrastructure operations
• Improving ownership of grant-funded TA projects

Recommendations

The evaluation provides recommendations for ADB's consideration in the following strategic and institutional areas:

• Enhance implementation performance and support decentralized project implementation by improving implementation capacity assessments, particularly at subnational levels; incorporating capacity gaps in project designs; familiarizing implementation units more with ADB and government procedures; fielding a critical mass of empowered ADB staff in key sectors at VRM; and continuing ODA implementation harmonization efforts.
• Strengthen government commitment to the post-completion sustainability of investments by undertaking policy dialogue coordinated with development partners, preparing project business plans that are results-oriented, and establishing mechanisms for O&M and tariff collection.
• Increase engagement in governance and public finance by having a long-term commitment and engaging actively with other development partners, extending support for SOE reforms, strengthening institutional capacity, and developing ways to interact with public finance reforms.
• Expand support to private sector development by improving legal underpinnings of commercial activity, improving government procurement systems to enable private sector participation, providing support to facilitate business start-ups, and promoting public-private partnerships.
• Improve selectivity of operations in the future through sector/subsector selectivity and/or geographical selectivity.
• Increase government ownership of grant-funded TA by strengthening country systems and governance to facilitate gradual delegation of TA administration.

Contents

• Executive Summary
• Background
• Development Context and Government Priorities
• Asian Development Bank's Assistance Program and Performance—Top-down Assessment
• Bottom-up Assessment
• Performance Assessment and Rating
• Findings, Lessons, and Recommendations
• Appendixes