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Viet Nam: Support to Improve Portfolio Performance and Aid Effectiveness

Sovereign (Public) Project | 45280-001 Status: Closed

The impact of the TA will be effective utilization of ODA resources by the Government of Viet Nam. The outcome will be improved portfolio performance of ADB-funded projects in Viet Nam.

Project Details

Project Officer
Nguyen, Binh My Southeast Asia Department Request for information
  • Viet Nam
  • Technical Assistance
  • Public sector management
Project Name Support to Improve Portfolio Performance and Aid Effectiveness
Project Number 45280-001
Country Viet Nam
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8034-VIE: Support to Improve Portfolio Performance and Aid Effectiveness
Technical Assistance Special Fund US$ 800,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Sector / Subsector

Public sector management / Economic affairs management

Gender Equity and Mainstreaming Some gender elements
Description The impact of the TA will be effective utilization of ODA resources by the Government of Viet Nam. The outcome will be improved portfolio performance of ADB-funded projects in Viet Nam.
Project Rationale and Linkage to Country/Regional Strategy

ODA has been an important catalyst for Viet Nam's rapid economic development, which has averaged 8% per year since 1997. From the resumption of development partner assistance to the country in 1993 until the end of 2010, the total ODA resource commitment amounted to over $46.3 billion, of which $29.7 billion has been disbursed. As Viet Nam has acquired middle-income country status in 2010, it is likely that ODA will be less available in the future, although in the short and medium term ODA will continue to play an important role. To ensure sustained economic growth, the government will therefore be required to effectively utilize ODA and better manage its public investments.

As one of Viet Nam's development partners, ADB has provided assistance since 1993 with annual lending averaging $200 million-$300 million up to 2007. However, with the introduction of less-concessional loans (i.e., ordinary capital resources), particularly since 2007, ADB's Viet Nam portfolio has expanded - with an average annual lending volume of $1.4 billion. As of the end of September 2011, the ongoing ADB Viet Nam portfolio comprised 55 loans totaling $6.42 billion, 9 grants totaling $93 million, and 42 TA projects totaling $95.2 million for a total of $6.61 billion in overall assistance.

The rapid expansion of the portfolio provided opportunities as well as challenges in terms of portfolio performance. Overall, portfolio performance -as reflected in indicators such as disbursements, project start-up compliance, average loan extension, and account turnover ratio -has deteriorated since 2004 and improved in 2009, but slid back again in 2010. Currently most projects may take up to 8 months from loan approval to loan effectiveness and another year for approval of the first contract, therefore totaling 2-3 years to establish procedures, recruit consultants, prepare detailed designs, and bid out procurement contracts. The disbursement ratio for ADB-funded projects in Viet Nam was only 12.3% compared with the ADB-wide figure of 20.2%. Comparing the portfolio performance of Viet Nam with other countries in the region gives a mixed result. The average time from loan approval to effectiveness of Viet Nam's portfolio in 2010 was 8.3 months compared with 6.0 months for the Philippines and 9.4 months for Indonesia. Viet Nam's disbursement ratio in 2010 (12.3%) was about at par with that of the Philippines (13.2%) but substantially lower than that of Indonesia (36.8%). Viet Nam's portfolio had 7.3% of projects at risk compared with 0% in the Philippines and 10% in Indonesia. The portfolio expansion has been a major challenge, which must be urgently addressed through performance improvements.

ADB's Viet Nam 2010 and 2011 portfolio reviews identified key constraints, which among others, include:

(i) Lack of harmonized procedures on project management-Government and donor procedures for project preparation and implementation and key outputs are not fully aligned, which cause additional workload for EAs and PMUs and implementation delays.

(ii) Implementation start-up delays-projects face procedural and capacity constraints during its initial phases, resulting in high costs of development and delayed benefits.

(iii) Limited effectiveness of portfolio performance monitoring mechanisms-coordination between government and ADB and enhanced government ownership of portfolio performance have improved during the past few years. However more effort will be required to effectively monitor the portfolio performance through increased dialogue with Government.

(iv) Capacity constraints-Government capacity on project management, particularly at the subnational levels is limited. Previous efforts to build capacity will need to be better structured and aligned with the needs of beneficiaries.

(v) Institutionalization of results of dialogues on ODA effectiveness-Government and donors have been engaged in previous and ongoing dialogue on ODA effectiveness. However the results need to be further refined and institutionalized.

ADB's country strategy and program, 2007-2010 clearly indicates the importance of a results-based approach. In order to reduce transaction costs and improve development impacts, ADB interventions should improve project preparation and design processes, and implementation performance. The forthcoming country partnership strategy, 2011-2015 will build on the results achieved, and refine the means and procedures to achieve these objectives.

An ADB TA to enhance ODA absorptive capacity and efficiency was implemented from October 2007 to August 2011 to assist the government in addressing some of the portfolio performance issues. Outcomes included capacity built for some executing agency and project management unit (PMU) staff to manage and implement projects, harmonized feasibility study guidelines, revised cost norms, improved payment procedures, and use of aligned monitoring tools through government-Six Banks dialogue. The TA also supported dialogue on advance actions, streamlining the project detailed outline, working group discussions on procurement and environmental and social safeguard compliance, and government-development partner dialogue on aid effectiveness, particularly in forums such as the semiannual Consultative Group meetings and the Aid Effectiveness Forum. In addition, it produced the Handbook on Processing and Implementation for ADB-Funded Projects in Viet Nam (blue book). Lessons learned include: (i) progress in building capacity has been uneven, particularly at the provincial and lower levels; (ii) targeting of training investments must be improved to ensure a balance among PMUs with disparate levels of capacity and varying degrees of strategic importance; (iii) harmonization with development partners (on procedures for procurement, social and environmental impact assessments, and resettlement) has attained progress, but some differences remain and results/agreements have yet to be institutionalized; and (iv) closer collaboration among the Six Banks and dialogue with the government will need to be continued to enable the revision and streamlining of the government's existing regulations and procedures on ODA.

The government currently has plans to amend various decrees and regulations. which will have significant impact on ODA project management, particularly Decree 131/2006 on managing ODA, the 2005 Procurement Law, and the Public Investment Law. It is therefore important that (i) outputs and outcomes of the previous TA will need to be better disseminated as knowledge products; (ii) dialogue will continue to provide critical inputs to the revision of key legal documents to facilitate the institutionalization of the outputs of the previous TA; (iii) the capacity of EAs and PMUs are improved to effectively implement the new harmonized procedures; and (iv) the government acquires greater ownership of activities to better monitor portfolio performance and ensure aid effectiveness.

The proposed TA will, therefore, not only build on the results achieved in the previous TA to enhance ODA absorptive capacity and efficiency, but will further institutionalize and mainstream the outcomes of the policy dialogues and develop knowledge products/tools for better implementation. The timing of the proposed TA is critical as revisions to Decree 131/2006 and the 2005 Procurement Law and Public Investment Law are expected to be finalized within 2012. The next opportunity to revise these important pieces of legislation may not occur until after 2017.

Impact Effective utilization of ODA resources by Government of Viet Nam
Project Outcome
Description of Outcome Improved performance of ADB funded projects in Viet Nam
Progress Toward Outcome The TA activities has contributed to improve the performance of the ADB portfolio in Vietnam. The disbursement ratio in 2014 was 19.17%, which was higher than that of 2013 (18.12%) and was almost double the 2012 ratio (10.05%).
Implementation Progress
Description of Project Outputs

1. Procedures of the Government and development partners for ODA project management harmonized

2. Project start-up compliance achieved

3. Institutional mechanism for joint portfolio management and supervision with GOV/MPI strengthened

4. Capacity for project management and supervision of Executing Agencies and PMUs strengthened

5. Results of dialogues on ODA effectiveness in Viet Nam institutionalized

Status of Implementation Progress (Outputs, Activities, and Issues)

harmonized PDO refined and proposed for institutionalization sent to MPI.

Decree 38 on ODA Utilization and Management approved in April 2013 allows advance actions in PMU establishment, procurement and resettlement. Guidance on implementation of AA under ADB projects prepared and dissemianted.

Handbook reflecting Decree 38 was completed. The Handbook will be further updated to reflect the revisions to Decree 38 which is ongoing.

An ADB-WB joint Study on Provincial Project Management Units completed.

16 projects to be approved from 2012 onwards are implementing advance actions.

A quarterly portfolio review meeting was organized on 12 October 2012. Sector reviews were conducted for energy, transport and Agriculture and natural resources sectors in 2013 and 2014.

Sector results monitoring matrix being finalized. A training on results framework and monotoring results was organized for VRM staff and line agencies in December 2012. Finalizing sector results monitoring matrix is an action of 2012 CPRM action plan.

About 1,200 staff of EA and IAS were trainned.

Report of each training include data on the female and male participants.

Economic reports for CG 2012, 2013 and 2014 were prepared with TA support include recommnedations.

Economic reports presented at CG 2012, 2013 and 2014.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design The TA is based on findings and recommendations of recent ADB Country Portfolio Performance Reviews and other ODA management forums such as Consultative Group, Six Banks, and the Aid Effectiveness Forum. In conceptualizing the TA, the ADB project team held preliminary discussions with MPI on key portfolio management issues along with immediate possible actions to improve the performance of ADB's portfolio in Viet Nam along with the mid- and longer term actions to institutionalize the gains achieved in portfolio management. MPI proved strong commitment to and ownership in the proposed TA by offering to provide counterpart contributions, including the co-financing of TA activities.
During Project Implementation The Ministry of Planning and Investment as the EA of the TA will directly involved in all TA activities. Other ministries/agencies will be consulted on TA activities through the Government Inter-Ministerial Task Force for ODA Problems Solving. Other bank members of the Six Banks group will also contribute technical inputs to various activities of the TA.
Business Opportunities
Consulting Services

A total of 39 person-months of consulting services (7 pm international and 32 pm national consultants) will be recruited individually to carry out TA activities. The consultants will be engaged by ADB in accordance with the Guidelines on the Use of Consultants (2007, as amended from time to time), and will comprise:

International Experts:

(i) Institutional Development Specialist (5 person-months)

(ii) Strategic Planning Specialist (2 person-months)

National Experts:

(iii) Institutional Development Specialists /Team Leader (20 person months)

(iv) Portfolio Management Specialists (6 person-months)

(v) Economists (4 person months)

(vi) Public Policy Specialist (2 person months)


Procurement will be undertaken in accordance with ADB Procurement Guidelines (April 2010 as amended from time to time)

- PMU office equipment (Goods)

Responsible ADB Officer Nguyen, Binh My
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Viet Nam Resident Mission
Executing Agencies
Ministry of Planning and Investment
6 B Hoang Dieu street, Ba Dinh district, Hanoi, Viet Nam
Concept Clearance 10 Nov 2011
Fact Finding 17 Nov 2011 to 17 Nov 2011
Approval 22 Dec 2011
Last Review Mission -
Last PDS Update 01 Apr 2015

TA 8034-VIE

Approval Signing Date Effectivity Date Closing
Original Revised Actual
22 Dec 2011 20 Apr 2012 20 Apr 2012 30 Nov 2014 30 Jun 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
800,000.00 0.00 0.00 0.00 0.00 0.00 800,000.00 22 Dec 2011 665,587.18

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

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Related Publications

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Contracts Awarded

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Procurement Plan

None currently available.