Vietnam considers granting private sector access to ODA

By Staff reporters   April 28, 2018 | 08:16 am GMT+7
Vietnam considers granting private sector access to ODA
A construction project in Hanoi using preferential loan to deploy

A draft decree has been put forward to give private firms a slice of the low-interest pie.

Vietnam's Ministry of Planning and Investment has suggested opening the door for private companies to access official development assistance (ODA) and concessionary loans from overseas providers in a new draft decree.

If the decree is approved, private enterprises will be able to access and utilize ODA and preferential loans within the country's current credit limit to implement legal activities in accordance with the international treaty on ODAs and loan procedures followed by the foregin organizations.

Private enterprises will act as capital contributors on projects under the form of public-private-partnerships (PPP) that use ODA and preferential loans as government investments; and also obtain ODA through the commercial banking system, for which the banks will take full credit risk.

The draft also suggests a seven-step management mechanism: the use of ODA and preferential loans, include ODA mobilization; construct, select and suggest projects; appraisal establishment; approval of investment policy; negotiate and sign international treaties; agree on terms; implementation, management and completion of the project.

Vietnam has been receiving preferential loans from multilateral and bilateral financial institutions such as the World Bank, Asia Development Bank and International Monetary Fund, and countries such as Japan, France, Denmark and Canada since 1993. In July 2017, after Vietnam was officially classed as a 'middle income country', the World Bank stopped providing preferential ODA and replaced it with concessionary loans with higher interest rates.

According to data from the Ministry of Planning and Investment, Vietnam had 2,594 programs and projects that were using ODA and preferential loans at the end of 2017. Of them, about 1,300 were government projects and 1,197 were locally run. As reported by Chinhphu in 2017, the total amount of ODA and preferential loans can be disbursed is $4.6 billion. In the first six months of 2017, $1.5 billion was disbursed, equal to 32.6 percent of the annual plan.

 
 
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