The use of ODA capital in Vietnam still has many hidden corners.

Projects that have just been completed are now outdated, products cannot compete; preferential capital has turned into bad debt... are the hidden corners that experts have dissected after more than 20 years of Vietnam receiving ODA.

Along with the major shortcomings still mentioned by management agencies, a series of other shortcomings in the use of official development assistance were frankly raised by experts at the Workshop "Reviewing 20 years of ODA mobilization and use in Vietnam", held on August 7 in Da Nang.

As someone who followed the first ODA funds coming into Vietnam, Dr. Nguyen Thanh Do, former Director of the Department of Debt Management and External Finance (Ministry of Finance), said that the use of this capital source still has hidden corners that cannot be ignored.

The management and use of ODA in Vietnam still has many shortcomings. Illustrative photo: VNA

Citing the rice bran oil extraction project in Ben Tre or the jute bag weaving line in Ho Chi Minh City that borrowed Indian ODA, Mr. Do said that in many cases, due to outdated technology, lack of raw materials, and lack of product consumption, the project could not operate at all after handover. Or the case of the Ha Long frozen seafood project that borrowed Italian ODA could not operate due to lack of raw materials; the mulberry development program in Lam Dong failed because the products could not compete in the market...

According to Mr. Do, about 2% of the capital lent by the central government is bad debt. "Although the number is not high, it is still bad debt. The failed projects all follow the mechanism of borrowing and then lending again. According to this mechanism, when the project cannot repay the debt, we clearly see and have to admit that it is a failure," Mr. Do said.

The former Director said that the biggest failure was the waste of capital due to slow progress, ineffectiveness, and scattered investment. There were investment projects, but when they were put into use, no capital was allocated for maintenance, leading to damage and waste.

"Some ODA beneficiaries at both central and local levels still have the perception that ODA is free money, is free money, considers ODA as non-refundable, is given by the Government, is paid by the Government... leading to a situation of competing to do projects and ineffective use of capital. In addition, the policy mechanism is not synchronized, procedures are cumbersome, while project preparation is very sketchy, does not measure the socio-economic impacts of the project, and the appraisal process is poor," said Mr. Do.

Sharing the same view, economist Dr. Tran Du Lich frankly said: "We must completely stop viewing ODA as something that is given and then shared. That will be a disaster in the near future."

However, Dr. Lich also affirmed that public debt does not come from ODA but from short-term domestic loans. This has led the National Assembly to pass a resolution forcing the government to restructure medium-term bonds into long-term bonds to reduce annual pressure.

"The biggest risk of ODA is that Vietnam is an export-oriented country, the trend is not to let the currency appreciate to encourage exports, which means the risk of lower exchange rates and low interest rates, but the risk is that when the borrowed currency appreciates, the debt increases terribly," Mr. Lich added.

Dr. Tran Du Lich believes that it is necessary to stop viewing ODA loans as "given and then shared". Photo: Nguyen Dong.

Meanwhile, Dr. Le Dang Doanh said that Vietnam must have a long-term capital plan to avoid depending on ODA capital in the face of the fact that this capital source is no longer as abundant as before. "At some point, Vietnam will have to become an ODA provider. Now, policymakers must see the use of this capital to deal with climate change and natural disasters. That is the focus of attracting and using capital effectively," Mr. Doanh stated his opinion.

Many economic experts also mentioned the need for an independent agency to monitor, as well as to make ODA loans transparent and public, to overcome the long-standing situation of "both playing football and blowing the whistle". In the internet age, the online community will also contribute to providing information and evaluating ODA in terms of both positive and negative aspects.

Dr. Vo Dai Luoc added that Vietnam needs to choose ODA sources that can bring about socio-economic efficiency, and at the same time must know how to refuse loans that bring little or no benefits. "We also have to plan which projects should use ODA, because localities everywhere want to share ODA without focusing on priority items, so it will not be effective," he said.

Answering the question of whether Vietnam still needs ODA capital, former Deputy Minister of Planning and Investment - Cao Viet Sinh said that although there are enterprises in Vietnam that have refused ODA, this capital source does not come naturally, or is forced to borrow. In the next 5 years, our country needs about 400-450 billion dollars for development investment. Therefore, ODA capital is still very important to Vietnam, and it needs a strategy to attract and use it effectively.

According to VNE