ODA policy hurts VN: Japanese official

Stringent regulations regarding foreign loans are stopping lending organisations carrying out projects in Viet Nam effectively, said Chief Representative of Japan International Co-operation Agency (JICA) Viet Nam Office Fujita Yasuo on Thursday. — VNA/VNS Photo

The introduction of an annual quota on official development assistance (ODA) funding last year as part of the Vietnamese Government’s efforts to keep public debt under control resulted in a stall in money disbursement to pay several contractors on JICA projects, Fujita said during a press conference on JICA’s activities in the fiscal year of 2016 and 2017.

Contractors were owed up 10 billion yen (US$91.6 million), of which a major part was from the ongoing Ho Chi Minh City Urban Railway project, said Yasuo.

“Failures in paying the contractors and hence the workers stopped the money flow in the society which was a real pity,” Fujita said.

“It is also not beneficial for Viet Nam when it wants to call for capital or issuing bonds as its credibility is already tainted.”

Fears over increasingly high public debt, which stood at 64.7 per cent of GDP in 2016, nearing the red line of 65 per cent, prompted the Government to tighten controls on foreign loans.

A governmental decree went into effect in May last year – Decree 16 on the management and use of ODA funding – making the approval of an ODA project more complicated, which has prolonged time spent on the projects, said Yasuo.

“We know that this is a common problem of other lenders like the World Bank or the Asian Development Bank,” he said.

“We will work with loan providers to ask the Government to fix the issue.”

In the fiscal year 2016 starting from April 2016 to March 2017, Japan pledged to provide Viet Nam 187 billion yen ($1.7 billion) and managed to disburse 175.6 billion yen ($1.6 billion). The disbursement amount was the second highest that Viet Nam received from Japan over the last seven years.

Japan planned to provide Viet Nam 130 billion yen ($1.19 billion) this year for five big projects, one of which is to strengthen the country’s maritime security.

“However, the funding depends on many factors, like Viet Nam’s actual demand considering the public debt context,” Fujita said.

Ha Noi urban railways

JICA is stepping up its efforts to resume the two urban railway projects in Ha Noi that have been up in the air for four years.

Out of the nine railway lines planned in the capital, railway Route 1 and Route 2 will be funded by Japan’s ODA.

Route 1 will run from Thanh Tri District’s Ngoc Hoi to Yen Vien in Gia Lam District while Route 2 will connect Noi Bai international airport and the Thuong Dinh area in Thanh Xuan District

The delays were Viet Nam’s fault, Fujita said, adding that it took up to four years for authorities to finalise the total investment amount.

“We are working with the authorities in order to start the bidding round as soon as this year,” he said. — VNS