Aid Effectiveness - Moving up to the higher...

Partnership Group on Aid Effectiveness (PGAE)

Aid Effectiveness - Moving up to the higher level

Consultative Group Meeting Hanoi, December 6 - 7, 2007

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Preface

This report presents the combined efforts of the Government and donors over the past year to put the principles of the Hanoi Core Statement (HCS) into action. Substantial progress has been made on many fronts: from the legal framework to government systems; from Ministry of Agriculture and Rural Development action plans to the one United Nations; from Six Banks portfolio review to the European Union Code of Conduct; and the Like‐Minded Donors Groups’ continuing efforts, all Partnership Group on Aid Effectiveness (PGAE) members continued to support the Government make ODA more effective in Vietnam. This year Civil Society Organizations were warmly welcomed into the PGAE with the aim of ensuring that the Government and donors were fully accountable to beneficiaries for the use of aid. Additionally the first independent exercise under the HCS Monitoring and Evaluation Framework was undertaken to monitor Government and donor progress in HCS implementation.

The conclusions from the final draft of the Independent Monitoring Report were clear. Government commitment and leadership has been strong and the donors’ support well aligned to putting the HCS into action. Substantial progress has been made but challenges for achieving the ambitious HCS targets still remain. Additional efforts with clear goals now need to be developed for addressing the identified gaps in Government Systems and accelerating their use by donors.

The title of the PGAE Report this year is “Aid Effectiveness – Moving up to the higher level”. Taking this step will require the continued, strong leadership of the Government, and the full support of the donor community in Vietnam. With this commitment the HCS can be successfully implemented by the year 2010. Achieving these targets will be an important contribution to ensuring the sustainable development of Vietnam beyond 2010 – as it steps‐up to middle income country status.

Ho Quang Minh Director General, FERD

Ministry of Planning and Investment

Laurent Msellati Manager, Portfolio and Operations,

World Bank Office in Vietnam

Co‐Chairs of the Partnership Group on Aid Effectiveness

Partnership Group for Aid Effectiveness Report 2007

Table of Contents

Chapter 1 Executive Summary........................................................................................................... 1

Chapter 2 Joint Work to Strengthen Government’s System .......................................................... 4 2.1 Development of the ODA Policy and Legal Framework ......................................... 4 2.2 Strengthening ODA Management Capacity ............................................................. 5 2.3 Five/Six Banks – JPPR V ............................................................................................... 5 2.4 The European Union ..................................................................................................... 7 2.5 The LMDG ...................................................................................................................... 9 2.6 United Nations ............................................................................................................. 11 2.7 Civil Society Organisations ........................................................................................ 13

Chapter 3 Implementation of the Hanoi Core Statement............................................................. 16 3.1 Contribution made by Thematic Groups..................................................................... 16 3.1.1 Procurement Thematic Group ................................................................................... 16 3.1.2 Public Finance Management Thematic Group......................................................... 17 3.1.3 EIA Thematic Group.................................................................................................... 18 3.1.4 SIA Thematic Group.................................................................................................... 19 3.2 ODA Project Management Unit .................................................................................... 21 3.3 Sector Pioneering: the HSC implementation in MARD............................................. 22 3.4 Monitoring and Evaluation ........................................................................................... 23 3.4.1 National Rollout of Monitoring and Evaluation System........................................ 23 3.4.2 Progress Assessment of the HCS implementation.................................................. 25

Chapter 4 Looking Ahead................................................................................................................. 29 4.1 The HSC mid‐term evaluation and survey .............................................................. 29 4.2 Independent Monitoring............................................................................................. 30 4.3 Why should the PGAE be renovated? ...................................................................... 31 4.4 How should the PGAE renovate itself? .................................................................... 32 4.5 How to mobilize resources to the HCS? ................................................................... 33

Appendix ‐ Summary Report of JPPR V ............................................................................................ 34

Aid Effectiveness – Moving up to the higher level

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Acronyms

ADB Asian Development Bank AFD Agence Francaise Development AMT Alignment Monitoring Tool AUSAID Australian Agency for International Development CIDA Canadian International Development Agency CCBP Comprehensive Capacity Building Programme CG CSO

Consultative Group Civil Society Organizations

DAC OECD Development Assistance Committee DAD Development Assistance Database DFID Department for International Development of United Kingdom EC European Commission EIA Environmental Impact Assessment EU European Union EVN Electricity of Viet Nam GoV GoV of Viet Nam GTZ German Agency for Technical Cooperation HCS Hanoi Core Statement IFAD International Fund for Agricultural Development IMF International Monetary Fund ISG International Support Group (MARD) ISGE International Support Group for Environment (MONRE) JBIC Japan Bank for International Cooperation JICA Japan International Cooperation Agency KfW Kreditanstalt für Wiederaufbau LMDG Like Minded Donor Group M&E Monitoring and Evaluation MARD Ministry of Agriculture and Rural Development MDG Millennium Development Goal MDTF Multi Donor Trust Fund MOC Ministry of Construction MOET Ministry of Education and Training MoF Ministry of Finance MOFA Ministry of Foreign Affairs MOH Ministry of Health MONRE Ministry of Natural Resources and Environment MOT Ministry of Transport


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MPI Ministry of Planning and Investment MTEF Medium Term Expenditure Framework NAM New Aid Modalities NGO Non‐GoV Organisation ODA Official Development Assistance OECD Organization for Economic Cooperation and Development OOG Office of GoV PBAs Programme Based Approaches PD Paris Declaration on Aid Effectiveness PEFA Public Expenditure and Financial Accountability framework PER Public Expenditure Review PFM Public Finance Management PGAE Partnership Group for Aid Effectiveness PMU Project Management Unit IMTF Inter‐Ministerial Task Force on ODA Problem Solving SBS Sector Budget Support SBV State Bank of Viet Nam SEDP Socio Economic Development Plan SIA Social Impact Assessment SWAp Sector Wide Approach TG Thematic Group of the Partnership Group on Aid Effectiveness TOR Terms of Reference UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific and Cultural Organization UNFPA United Nations Population Fund UNODC United Nations Office on Drugs and Crime VAMESP Viet Nam Australia Monitoring and Evaluation Strengthening Project – Phase II V‐HAP Viet Nam Harmonization Action Plan WB World Bank


Chapter 1 Executive Summary

Remarkable socio‐economic development in 2007. Growth hit a ten year high of 8.5% this year continuing Vietnam’s dramatic reductions in poverty and improvements in living standards. Export volumes increased by over 20% and many other economic targets were exceeded including the contribution of the service sector and budget revenues. Vietnam’s integration and international standing was further increased with Vietnam’s membership of the WTO and election as a non‐standing‐member of the UN Security Council. The strong partnership between the Government of Vietnam and its development partners is, in part, responsible for these achievements bringing the prospect of middle income status sooner than expected. This partnership continued to strengthen and develop in 2007 focussing on implementation of the Paris Declaration and the Hanoi Core Statement (HCS). This is critical to ensure that the US$ 11 billion of ODA planned for 2006‐2010 is effectively used to support further growth and poverty reduction. To ensure this target is met the Government this year completed a comprehensive set of ODA management and utilization policies and legal documents. These are detailed in Chapter 2. HCS implementation was further supported by a number of initiatives. These all aimed to enhance aid effectiveness in Vietnam and are summarised below. The Five Banks worked closely with the Government Inter‐Ministerial Task Force (IMTF) four ministries and HCMC to conduct the fifth Joint Portfolio Performance Review (JPPR V). This produced twelve “Fast Track” recommendations for review by the Prime Minister on improvement of ODA performance. The EU and its member states initiated activities to improve their effectiveness at the policy level through the PRSC and at the sectoral level in education and health. The EU Private Sector Working Group also broadened its activities to support trade. Importantly the EU developed a harmonization roadmap for implementation of HCS. This includes the “EU Code of Conduct on Complementarity and Division of Labour in Development Policy” a significant step on the way to rationalising support from the EU members and EC. 13 LMDG donors have continued to support strengthening of Government systems and implementation of the HCS through the Comprehensive Capacity Building Programme (CCBP), funding PGAE activities and projects. They have also introduced new initiatives and approaches such as common programmes and projects. The LMDG have also stated their intention to focus on the public administration reform, anti‐corruption and public finance management (PFM) in future. An important milestone for the Government ‐ UN “One UN” initiative in Vietnam was the signing of the ‘One Plan – One Budget’ program document. This is a legally binding agreement between UNDP, UNICEF, UNFPA, UNV, UNAIDS, UNIFEM and the Government of Vietnam that provides the basis for full implementation of the ‘One UN’ initiative in Vietnam.


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International non‐governmental organizations (INGOs) and civil society organizations (CSOs) also demonstrated their interest in aid effectiveness and accountability through the setting up of Aid Monitoring Group (AMG). The AMG will undertake independent monitoring of aid and organize consultations on the effectiveness of aid delivery with beneficiary groups. Thematic Groups (TGs) progress in 2007, continued to contribute to the achievement of the HCS. The Procurement TG supported the Government to strengthen the national procurement system and Procurement Law. The thematic groups on ODA on Budget and Public Financial Management (PFM) have been dissolved and activities in this area have been organized around the joint preparation of the Country Financial Accountability Assessment (CFAA) Update. This is expected to be completed by the end of 2007. The TG on EIA completed the joint study on EIA harmonization leading to the development of the detailed working plan for the 2008‐2012 period. Similarly the TG on SIA completed its gap analysis on resettlement policies, and developed an action plan to achieve the HCS targets for resettlement. Guidelines for independent resettlement projects were also developed. At the sectoral level the Ministry of Agriculture and Rural Development (MARD) has developed an action plan for meeting the HCS commitments with regards to ODA programs and projects under MARD management. The action plan is expected to be approved by the beginning of 2008. The action plan will be used as a good practice model for replication in other sectors and provinces. Heading to the 3rd High Level Forum of Aid Effectiveness in Ghana. The HCS Independent Monitoring Team (IMT) report indicates that significant progress has been achieved. However a lot of work remains to achieve the HCS targets. This conclusion is similar to that found in four regional consultation meetings which were carried out from June to September 2007 in Mauritius, Ghana, Honduras and the Philippines on implementation of the Paris Declaration. These reviews will help frame the OECD/DAC mid‐term survey on the implementation of Paris Declaration/Hanoi Core Statement to be conducted in the first quarter of 2008 and reported on at the 3rd High Level Forum on Aid Effectiveness in Accra, Ghana in September 2008. Renovating the PGAE to achieve faster progress is a key recommendation to ensure HCS targets are met. As Vietnam develops so does its development assistance needs and the range of aid and financing instruments broaden. To reflect these changes the PGAE requires renovation to fulfil its mandate, and to set the priorities for and co‐ordinate aid effectiveness activities. To do this the PGAE now needs to: (i) support the Government put in place the strengthened policies and regulatory systems required to manage a market orientated, middle‐income country; (ii) continue the improvement of public finance management to increase aid predictability and facilitate the application of new aid modalities; (iii) develop capacity for ODA management and coordination, particularly at sub‐national levels; (iv) improving ODA program/project performance; (v) take more advantage of complementarity and labour division among donors; and (vi) scale up M&E activities, particularly joint Government ‐ donor impact evaluations.


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The PGAE also needs to redefine its remit focusing on making strategic decisions and supporting HCS implementation in specific sectors and areas. To do this requires broader participation of Vietnamese government agencies and Civil Society Organisations to ensure accountability. It also needs to support and be informed by other partnership groups in order to resolve the technical and sector issues that are slowing the implementation of the HCS. To implement this ambitious agenda requires more support and delegation to the Government‐led Comprehensive Capacity Building Programme (CCBP), TGs and sector partnership groups. This will allow them to fulfil their important tasks ‐ assisting the Government and donor‘s to deliver the aid effectiveness improvements that are at the core of the PGAE agenda. Once the principles of the renovation have been agreed by the PGAE a joint working team will be established to develop a medium‐term program and budget for the 2008‐2010 period. This will be submitted to the PGAE for consultation and approval in early 2008.


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Chapter 2 Joint Work to Strengthen Government’s System

2.1 Development of the ODA Policy and Legal Framework

In 2007 development cooperation between Vietnam, other countries and international organizations continued to flourish, with joint efforts focusing on the implementation of the Paris Declaration (PD) and Hanoi Core Statement (HCS) on Aid Effectiveness. Reaching the ambitious targets set out in these documents requires improvements in the legal framework to improve Vietnam’s own country systems. Legal reforms will also improve the effectiveness of aid delivery by streamlining procedures and improving the alignment of support to government priorities.

To support development and eliminate poverty the Government has set out its target to disburse US$ 11 billion of ODA in 2006‐2010 period. In order to achieve this target, the Government has introduced a complete set of ODA policies and legal documents on ODA management and utilization, including:

• ODA Strategic Framework for 2006‐2010 period and its Action Plan; and • Decree 131/2006/ND‐CP on ODA Management and Utilization.

Under the instructions of the Prime Minister, the Ministry of Planning and Investment (MPI), Ministry of Finance (MOF) and Ministry of Foreign Affairs (MOFA), have been working closely with other relevant Vietnamese agencies and donors to formulate and issue their guiding circulars and decisions for implementation of Decree 131/2006/ND‐CP as follows:

• Circular 04/2007/TT‐BKH of the Ministry of Planning and Investment guiding the implementation of Decree 131/2006/ND‐CP;

• Circular 03/2007/TT‐BKH of the Ministry of Planning and Investment guiding the Organizational Structures, Functions and Responsibilities of ODA Programs and Project Management Units;

• Decision 803/2007/QD‐BKH of the Minister of Planning and Investment on the Reporting Mechanism for implementation of ODA programs and projects;

• Decision 1248/2007/QD‐BKH of the Minister of Planning and Investment issuing the ODA Monitoring and Evaluation Framework for 2006‐2010 period;

• Circular 82/2007/TT‐BTC of the Ministry of Finance on Financial Management for ODA grant projects and programs;

• Circular 108/2007/TT‐BTC of the Ministry of Finance on the Implementation of Decree 131/2006/ND‐CP on Financial Management for ODA projects and programs;

• Circular 123/2007/TT‐BTC of the Ministry of Finance on providing guidance on taxation applicable to ODA projects and programmes;

These documents set out the policies and framework for the utilisation and mobilization of ODA. They decentralize appraisal, approval and implementation of ODA programs and projects and harmonise and simplify the procedures governing the utilization of ODA.

It is recognised that inconsistencies and potential bottlenecks still remain in the new legal framework. The Government and donors will continue to work on these issues. In particular other ODA‐related legal documents require improvement to simplify, decentralise and ensure


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consistency. In particular Decree 111/2006/ND‐CP guiding implementation of the Law on Procurement, Decree 112/2006/ND‐CP on management of construction investment, etc. and the upcoming development of the Public Investment Law.

Putting the Government ODA policies and legal documents into practice following the issuance of the above ODA policies and legal documents was a major priority in 2007. MPI with support from CCBP organized a series of ODA legal training workshops nation‐wide for Government officials at all levels and for Vietnamese program officers working in donor agencies. These aimed at putting all the new ODA policies and legal documents into practice.

2.2 Strengthening ODA Management Capacity Capacity is required to effectively implement the new, decentralised ODA policies and legal documents. The development of capacity for ODA management, especially at the provincial level, is a priority. With the support of CCBP, a series of five‐day Project Management Courses for more than 350 Government Officials and Project Management Units’ (PMU) Staff at national and local levels have been organized. Along with support from international and national consultants under CCBP, many communication activities and a number of workshops have been held to help improve aid effectiveness, reduce transaction costs and lighten the administrative burden of ODA management in 2007. These include: (i) taking stock of international experience and reviewing Vietnam‘s experience in application of NAM; (ii) reviewing case studies in applying NAM in Vietnam; (iii) developing training materials integrated into the overall CCBP project management training; and (iv) developing a road map for the application of NAM in Vietnam from 2008‐2010. The results of this work were broadly disseminated at the completion workshop, a PGAE Meeting in October and are now posted on the CCBP website.

2.3 Five/Six Banks – JPPR V

Achievements in 2007

From the Five Banks to the Six Banks. The Development Banks welcomed a new and active member, the Export‐Import Bank of Korea (KEXIM). This is part of the Korean Government’s agency for Economic Development Cooperation Fund (EDCF) that has made a decision to significantly increase support to Vietnam.

Table 1: Yearly Commitment by EDCF to Vietnam (in million USD, * tentative)

Year 2004 2005 2006 2007e 2008~10*

Commitment 21.0 19.5 26.0 243.4 800

EDCF’s support is based on a ʺMid‐term Rolling Planʺ with the Vietnamese Government based on the 2005 ʺCountry Cooperation Strategy and Program for Vietnamʺ. These agreements and associated technical assistance are paving the way for future EDCF investments. As EDCF wishes to become an ‘active and integrated donor in Vietnam’, it is taking measures to harmonize and align its support. This includes joining the Five Banks


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Group ‐ making it the Six Banks Group ‐ to improve its partnership with the Vietnamese Government and other donors.

Enhancing Portfolio Performance – JPPR V. The Fifth Joint Portfolio Performance Review (JPPR V) aimed at identifying the bottlenecks in Vietnamese and donor systems and agreeing on common approaches to addressing them. It reviewed the Five Banks activities in the following five portfolio: transport, energy, urban water/waste water, rural water supply and irrigation, and infrastructure in Ho Chi Minh City. The final multi‐agency workshop, held in Haiphong on May 23, identified key actions on both sides. These actions could significantly improve performance and ensure achievement of the HCS targets on procurement, financial management and safeguards.

A ‘Fast Track Action Plan’, derived from the JPPR V, was developed focusing on three areas1: • Accelerating Project Preparation, Appraisal and Approval including common

feasibility/design procedures, increased preparation funding and delegation of approvals;

• Accelerating Project Start‐up including: Delegation to implementing agencies, and starting implementation preparation early; and

• Accelerating Project Implementation including: Removal/revision of cost norms, accelerated payment processing and faster land clearance procedures.

The JPPR V was organized in cooperation with the IMTF and reported to the Prime Minister as a jointly agreed input into the Government’s internal discussions on improving investment efficiency. In response the Prime Minister issued two directives 836 and 5103 requesting IMTF and other ministries to take concrete steps to implement key fast track actions. Intensive follow‐up work has been conducted. This has focused on: common feasibility studies (including simplifying ‘basic design’); ‘advance actions’ to speed project start up; revision of cost norms in construction cost estimates; and piloting separately funded land acquisition/resettlement projects.

Enhanced Systems for Aid Effectiveness. The 6 Banks continued work in other areas, all aimed at strengthening government systems and their use by the Development Banks. Three focus areas for 6 Banks work were:

• Adoption of the Aligned Monitoring Tool (AMT). On July 30, 2007, the Ministry of Planning and Investment (MPI) issued the Decision 803. This decision mandates the use of the AMT for all ODA projects in Vietnam. In parallel the 6 Banks also agreed to use this reporting format. The AMT will reduce the reporting burden on government agencies and ensure that donors and government have access to the same information to evaluate project performance. The AMT tool is now being rolled out with the assistance of VAMESP II and CCBP support.

• Adoption of common Feasibility Study guidelines. The 6 Banks have also been working closely with MPI and more recently with MoC, to develop new guidelines for the development of feasibility studies that are consistent with both international standards and government regulations. In‐principle agreement has now been reached on the

1 The detailed plan is presented in the full 6 Banks report to the CG, available separately.


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adoption of a common set of feasibility study guidelines acceptable to all. Importantly the definitions used in these common guidelines may be included in revisions to Decree 112. These are currently being submitted to the Prime Minister for approval.

• Procurement, environmental and social impact assessment (EIA & SIA). In addition the 6 Banks have continued leading work in these areas, as co‐chairs of the Thematic Groups for Procurement, EIA, and SIA. Details are provided in Chapter 2 of this report. Work is also being supported on Financial Management and improving construction sector transparency. The goal of this work is to improve Vietnamese legislation and practice to recognised International Standards.

Looking ahead

The 6 Banks recognize that much work remains to be done if the ambitious targets set out in the HCS are to be achieved and Development Banks aid is to be more effective. Three main areas of work have been identified for future 6 Banks activities.

• New approaches to delivery. As Vietnam’s develops so does its assistance needs. The 6 Banks will explore with the Government how to deliver more strategic and flexible financing that responds to the demands of a country reaching middle income status. Options for discussion include sub‐national financing, the introduction of new financial products and working more through financial intermediaries, to complement more traditional stand‐alone project support.

• Continued support for country system enhancement. The Hanoi Core statement cannot be achieved without further development of the legislation governing procurement, financial management and safeguards. The 6 Banks will continue to support the thematic and partnership groups in these areas. In particular the 6 Banks would like to offer assistance in the development of the Law on Public Investment, to be undertaken in the coming year.

• JPPR V follow‐up. JPPR V achieved an unprecedented level of consensus on key areas for action to accelerate aid delivery and improve effectiveness. It also demonstrated that agreed solutions can be implemented if both sides take a flexible approach, for instance, by agreeing to introduce specific measures as ‘pilots for ODA’. Pilots can demonstrate how improved systems work in practice, leading to government reforms to improve the effectiveness of all public spending. Consequently the 6 Banks will continue work to implement the agreed JPPR V actions, including: support to pilot FS Guidelines; agreeing advance actions; improving transparency of investment procedures and reform of the construction cost norm system. All these activities aim at supporting the long‐term development of Vietnamese government systems.

2.4 The European Union

Achievement in 2007

The EU sectoral working groups continued to discuss and promote aid effectiveness. Besides providing inputs and joint analytical work to the VDR (“Aiming High” in 2006, “Social Protection” in 2007) and to the PRSC policy dialogue, the EU Health Sector Working Group


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initiated and provided support, together with other development partners, to the first ever Joint Annual Health Sector Review 2007. This provided a comprehensive mapping of the health sector and set out a clear vision for its reform. This review was used as an input for the annual planning cycle of Ministry of Health. It highlights the technical and financial gaps, where donors can provide support in the most harmonized way. This is one step further towards a sector programme in the health sector in Vietnam.

As to the education sector group in which the EU plays a leading role, in December 2006 the first annual dialogue between the Minister of Education, HE Mr Nguyen Thien Nhan and the international donors active in the education sector was organized. The dialogue focused on challenges for the education sector, priorities of MoET and improved ways of working to support the sector. It was followed by a full day retreat to review the activities of the ESG in 2006 and to discuss priorities and ways forward for 2007.

Highlights of the EU higher Education Working Group include: • A Website on studying in Europe is up and running and has attracted many visitors; • 6 Weekly meetings where one EU member state makes a presentation on their activities

in the (higher) education sector in Vietnam; • Preparations for the European Higher Education Fair (Hanoi, HCMC 7‐12 December

2007).

In 2007 the EU Private Sector Development Working Group expanded its remit to include Trade Related Assistance. The group met in March and again in October. The main purpose of the group remains threefold: (i) to share information on programmes and projects with a view to creating synergies and opportunities for co‐operation; (ii) to update participants on incoming monitoring/evaluation missions for co‐ordination purposes; and (iii) to generate options for policy actions under the Private Sector Development and Global Integration areas of the PRSC.

The EU continued to play an active role in the PGAE Thematic Groups, in particular in the Thematic Group for Cost Norms. In line with the Action Plan 2007 on Cost Norms, EU and UN cost norms have been merged. The merged cost norms were sent to MPI for comment and their views are expected soon. In the future it will be important for other donors to adopt the same cost norms to avoid further distortions and jointly move towards full alignment with Government cost norms by 2010.

Finally, with the MPI‐managed Development Assistance Database (DAD) having become fully operational, the design and content of the Blue Book underwent major changes in 2007. Published in June 2007, the Blue Book has become more fact‐and‐figure based, based on the model of the EU Donor Atlas, and drawing information from the DAD. It reflects longer term trends in EU commitments and disbursements, and highlights key policy features such as the move towards new aid modalities, better division of labour and donor complementarily.

Looking ahead

The EU Harmonisation Roadmap continues to guide EU activities aiming to implement the Hanoi Core Statement. On 1 July 2007, EU Ambassadors approved the report on activities carried out during the preceding year, and approved a set of future actions. These activities


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have been tailored to the circumstances of Vietnam and are largely inspired by the new EU Development Policy laid down in the “European Consensus on Development” of December 2005. Along with endorsing the commitment of the “Paris Declaration” and the “Hanoi Core Statement”, it adds “four additional commitments” (coordinated capacity‐building programmes with increased use of multi‐donor arrangements; channelling 50% of official ODA through government systems; no new parallel PMU’s; and reduction of uncoordinated missions by 50%).

Furthermore, on 15 May 2007, EU Ministers adopted a landmark new instrument for improved donor harmonisation and aid effectiveness namely the “EU Code of Conduct on Complementarity and Division of Labour in Development Policy”. EU Development Counsellors in Hanoi held a retreat on this issue in March 2007. This led to the inclusion into the Roadmap of the following principles and activities:

• The GoV should be invited to assume leadership and encourage the wider donor community to engage more in a better division of labor, geographically, thematically, but also on aid modalities.

• Vietnam’s graduation adds to the need to improve dialogue, complementarity and division of labour, whenever relevant.

• Division of labor and donor representation is already applied in different forms which should be further discussed and developed, e. g. in the context of Targeted National and Sector Budget Support. The Code of Conduct of the Donors participating in the targeted budget support programme for education will be assessed and might provide lessons for other sector approaches. Further joint impact assessments of targeted budget support are envisaged (P 135, education).

• A lead donor approach is followed for Public Financial Management (by NL), clearly going beyond coordination purposes, and may be replicated in other areas.

• EU PRES and EC will propose to PGAE to include Division of Labor and complementarity in the PGAE Workplan 2007 and the Hanoi Core Statement Action Plan. This was proposed in a letter to the co‐chairs of the PGAE on 8th June 2007.

2.5 The LMDG2

Achievement in 2007

Focus on alignment, strengthening of core GoV systems, and realising the Hanoi Core Statement. LMDG action in 2007 included promoting innovation and new approaches and supporting the harmonisation agenda through common projects and programmes as well as funding PGAE activities. The LMDG was active through delegated co‐operation and through the individual and bilateral action of its members. The LMDG remains an important informal forum for exchange of information on harmonization and aid effectiveness issues.

2 The LMDG is an ad‐hoc grouping of 13 bilateral donors (Australia, Belgium, Canada, Denmark, Finland, Germany, the Netherlands, Ireland, New Zealand, Norway, Sweden, Switzerland and the United Kingdom) who are drawn together by the idea that working together is more effective than working bilaterally.


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During the past twelve months, the LMDG, through its members DFID, New Zealand, Ireland and Norway, coordinated the donor response and support to the One Plan which was launched by the Government of Vietnam and the six participating United Nations organizations in June. This innovative pilot is being managed by a Tripartite National Task Force (TNTF) with representatives from GoV, donors and the UN.

More recently, LMDG members, under the lead of DFID, have been working towards streamlining their inputs into the PRSC dialogue process. The group has been consulting with EU member states with a view to disseminating information on the PRSC, advancing the time table for action and focussing dialogue inputs though donor countries acting as the focal point for PRSC donors in thematic working groups.

Denmark organised the international independent monitoring study of the Hanoi Core statement, the results of which will be tentatively discussed at the Consultative Group meeting of December 2007. The practices of three LMDG donors ‐Belgium, Denmark and the UK‐ were used as case studies for the report, the World Bank being the fourth case study.

Support to the Harmonisation Action Plan (HAP). The LMDG is funding the Comprehensive Capacity Building Project (CCBP) in conjunction with the World Bank administered PHRD trust fund, and the Public Procurement Training Project (PPTP).

• The four components of the CCBP contributed to: the development of the legal ODA framework (Decree 131 and its circulars; PMU circular); training of over 350 government officials at the national and local levels on the newly issued legal documents; the project management training in eight 5‐day project management courses for more than 500 participants nation‐wide; the report on the application of new aid modalities; and support to the PGAE on aid effectiveness. CIDA leads this component.

• The LMDG also supports the Public Procurement Training Project (PPTP) managed by MPI. Developing training curriculum, training certification, training of trainers and trainees, and enhancing the capacities of staff working in public procurement. Denmark is the lead donor on this program.

In the longer term the LMDG will focus on Public Administration Reform Master Plan support, Anti‐corruption and Public Financial Management:

• PAR Master Plan Support. Together with UNDP, the LMDG will continue its support to the GoV’s PAR Master PLAN. The formulation of a second phase of the UNDP/LMDG support program is still ongoing and will address improved management and coordination of the PAR support activities. Switzerland leads this activity.

• Anti‐corruption. Five LMDG members are working together in a program aimed at strengthening the GoV Inspectorate. Elaboration of laws, capacity building and reinforcing the institutional setup of the Inspectorate system are the main goals. The program is in its design phase the implementation phase is planned to start in 2008. Sweden is the lead donor.

• Public Financial Management. A number of LMDG members support a multi‐donor trust fund for public financial management reform in the Ministry of Finance, with technical


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assistance from the World Bank. A proposal for a second phase has been submitted to a group of eight donors, not all of them LMDG‐members. The Netherlands leads this activity.

Looking ahead

Besides its ongoing programmes (CCBP and PPTP), the LMDG will continue to promote innovation in a flexible manner through its dedicated fund, as well as increase the impact of its actions. The aid effectiveness advisor of the LMDG, who started last September, is currently finalizing research proposals.

2.6 United Nations

Achievement in 2007

One Plan/One Budget ‐ One Plan 2006‐2010 was signed as a legally binding programmatic document on 23 August between UNDP, UNICEF, UNFPA, UNV, UNAIDS, UNIFEM and the Government of Viet Nam. Before the signing ceremony in August, a special session of the Tripartite National Task Force (TNTF) was convened to discuss the One Plan on 12 June. Donors responded positively to the One Plan and are providing unearmarked funds through the One Plan Fund. Eight additional agencies plan to join totalling 14 by December 2007: IFAD, ILO, UNESCO, UNIDO, FAO, WHO, UNODC and UN‐Habitat. A revised One Plan (One Plan 2) is currently being developed to incorporate the contributions of the UNCT. UNHCR and IOM will not join the One Plan.

The One Plan is accompanied by a Results and Resources Framework (One Budget), which highlights the resources required for implementing the One Plan for 6 Agencies combined over the 5 year time frame. The One Budget for One Plan I amounts to 218 million USD, and contains details regarding both core (73 million USD) and non core resources (145 million USD), as well as detailed resource requirements at the level of the 5 outcomes of the One Plan and the individual Outputs. The funding gap for the implementation of the One Plan is 88 million USD for the six UN Agencies signatory to one Plan 1 as per June 2007. The One Budget will change upon the integration of the results and resources of the incoming UNCT agencies.

One Plan Fund (OPF) ‐ The draft ToR for the One Plan Fund was finalized in June 2007. Several donors have signed the LoA and transferred their contribution to the One Plan Fund (Norway, UK, Netherlands, Luxemburg), while other donors have announced contributions and it is anticipated that they will sign the LoA in the near future (Ireland, Canada, New Zealand).

One Leader ‐ During a recent retreat of the UNCT (13‐14 September), the UNCT collectively concluded that a One Leader is imperative as coherence at country level requires decisions from a UN‐wide perspective. As there is no enhanced authority and accountability framework for the Resident Coordinator which allows for that at present, UNCT decided to develop a local Memorandum of Understanding for RC containing among others the following principles:

• One Leader has the authority to give guidance on One Plan


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• One Leader is the ultimate decision maker on the allocation of funds from OPF

• One Leader acts as One Voice on behalf of UNCT as appropriate.

A draft MoU will be circulated among UNCT shortly. As a complement to the MoU, a draft Code of Conduct for the UNCT is being developed.

One UN House ‐ One UN House is an important component of the UN reform programme. Physical co‐location will help to break down the (communication and other) barriers associated with physical separation, foster a sense of common UN identity, and lead to considerable savings for individual Agencies through the establishment of common support services and enable the achievement of programmatic synergies – goals that are clearly outlined in the HCS. The technical feasibility of an eco‐friendly UN House through refurbishment and expansion of the current UN Apartment Building has been established. An independent, external financial analyst will undertake a financial scenario mapping in November. A UN House Project Manager is being recruited. The preliminary eco‐design by the Centre of Excellence, Faculty of Architecture, Chulalongkorn University is ongoing with funding from Norway. All UNCT confirmed their support for a UN House but financial feasibility remains a challenge. Total costs are expected to be around 6‐8 million USD if all UNCT join. In addition to UN contributions, external support from donors and the Government is essential.

One Plan M&E Framework ‐ A Monitoring and Evaluation Framework (MEF) of the One Plan to measure development impact has been prepared. The MEF will be reviewed by the mission of the United Nations Evaluation Group (UNEG) in November 2007 to asses the ‘evaluability’. The mission will also review a set of process benchmarks to measure progress in the achievement of the 5 ‘Ones’ in the One UN initiative. As part of establishing a baseline, an independent and external stakeholder (perception) review is planned late 2007, as well as a staff survey early 2008.

Looking ahead

In 2008 the focus will be on the implementation of the One Plan 2 (to be finalized in December 2007) which will combine the development contributions of 14 UN Agencies in Viet Nam. In addition, the focus will be on further detailing the One Plan Management Plan (OPMP) as an internal management tool on how UNCT will organize itself to better achieve the strategies and results in the One Plan 2006‐2010. As the principal reform tool it outlines operational changes for enhanced effectiveness and coherence – ensuring that the One Plan is matched by an adequate management structure, human resources, and improved business practices and common services. OPMP will provide details on the current situation and changes in the immediate future, i.e. the period until early 2008; set out a strategy for how management structures, resources and practices are expected to be in 2009 when One UN House should be completed; and it provides pointers to the future beyond. It provides information on change processes, for example development of joint programme‐management groups with staff from different Agencies who are to be co‐located in the immediate or medium term future, and harmonisation of programme / project management guidelines.

In addition, OPMP will outline the process for an external competency mapping based on a three‐tier process agreed by UNCT:


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What do we have: comprehensive mapping of available human resources in UNCT short term operational measures for better coherence and effectiveness;

What do we need: matching long term aspirations for a changed UN with adequate human resources (quantity and skill‐mix), noting that in changed development context of Viet Nam achieving MIC‐status in 2010, the UN should adapt programmatically and operationally.

How do we deliver as UNCT: timeframe/decisions.

UN will also focus on the establishment of an eco‐friendly UN House in 2008, and review the operational modalities of a common support office structure and the inter‐agency collaborative structures that would lead to better programmatic synergies (clustering, programme management groups etc).

2.7 Civil Society Organisations

Achievement in 2007

As development actors, International NGOs (INGO) and Civil Society Organisations (CSOs) in Vietnam have a keen interest in the aid effectiveness agenda. This is in order to in strengthen development efforts in Vietnam and draw attention to the outcomes and impacts of development aid across the country. In 2007, there have been an increasing number of initiatives launched by INGOs and national CSOs to enhance the monitoring of aid and strengthen the important role of CSOs in improving aid effectiveness.

Launch of the Aid Monitoring Group (AMG)

In June 2007, the Aid Monitoring Group (AMG) was initiated by a group of INGOs and CSOs that have been involved in aid effectiveness activities and monitoring official development assistance (ODA) for several years.

The AMG was initiated with the purpose of developing and carrying out independent monitoring of the implementation of aid in Vietnam. This will enhance the accountability of donors and government to citizens in Vietnam, and ensure that donor strategies and programmes reflect the priorities of the Vietnamese people ‐ particularly poor and vulnerable members of society. By enhancing coordination between INGOs and CSOs in the monitoring of aid, the AMG also seeks to strengthen the dialogue and interaction between development actors and donors in Vietnam. The AMG is organised on a voluntary basis and co‐chaired by the VUFO‐NGO Resource Centre (NGO RC) and the Vietnamese Centre for Cooperation & Human Resource Development (C&D).

In 2007, the AMG provided input for the Independent Monitoring Mission and organised the Consultation with NGOs on World Bank Conditionality. The AMG has also been preparing a national level study on aid.

Training‐Workshop on building the capacity of civil society to advocate and influence Multilateral Development Banks’ (MDB) Operations in Vietnam. In July/August, the Rural Development Services Center (RDSC) organised a five‐day training workshop for Vietnamese NGOs (VNGOs) on MDB operations in Vietnam. Organised by RDSC with support from the


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Bank Information Centre (BIC), more than 20 organisations participated in the event, which lead to increased awareness of i) the influence and ramifications of ADB and World Bank activities in the development processes of Vietnam’s doi moi period, and ii) how to increase and expand the advocacy knowledge and skills of VNGOs towards informed engagement with the MDBs.

Workshop on elective members and the monitoring of aid for social programmes, policy, and the Law on Charitable Activities. In October, C&D and ActionAid Vietnam organised a two‐day training workshop with the purpose of enhancing knowledge of ODA among Committee of Social Affairs members, National Assembly members and elective members of Peopleʹs Councils. The workshop also aimed to discuss ways to make aid more accountable, and included presentations and discussions on the concrete experiences and challenges faced by elective members involved in aid monitoring at the provincial level.

National consultation on CSOs and aid effectiveness. This workshop was held in October as part of a global consultative process on aid effectiveness issues relating to civil society. This is led by the Advisory Group on Civil Society and Aid Effectiveness (AG), created by the OECD‐DAC. The purpose of the consultation was to raise awareness of aid monitoring among national civil society organisations (CSOs), and specifically to discuss the role of CSOs in enhancing aid effectiveness This will inform the submission to the High Level Forum on Aid Effectiveness in Accra in 2008. Facilitated by the regional Reality of Aid Network, the consultation was organised by Vietnam Union of Science and Technology Association (VUSTA), with the support from the S‐CODE, the VUFO‐NGO Resource Centre, and UNDP. Some of the key findings from the consultation were:

• The awareness and knowledge on AE, and particularly the Paris Declaration (PD) and the Hanoi Core Statement (HCS), is presently fairly low among national CSOs, and there is a need for awareness‐raising and information‐sharing on these issues for CSOs to take an active role in relation to enhancing AE;

• The role and capacity of CSOs in relation to the HCS needs to be addressed by GOV, donors and CSO, similar to the process and discussion of role of CSOs in relation to the Paris Declaration at the global level;

• CSOs could play the role of monitoring the effectiveness of the implementation of ODA at the commune level in Vietnam, as well as monitor funds from INGOs and other international organizations;

• Donors and INGOs should consider how to relate to and involve national CSOs in the design, implementation and monitoring of development programmes and project.

The national consultation provided input for the Civil Society Organisations & Aid Effectiveness Regional Workshop held in Hanoi between October 9 to 12.

Looking ahead.

As several activities have been initiated this year, future plans in the areas of CSOs and aid effectiveness will be further discussed and defined by the end of 2007. At the beginning of 2008, the different activities and processes will be taken into account, finalising plans for next year. Following are some general orientations that are being have already been discussed:


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In 2008, the Aid Monitoring Group (AMG) will continue to carry out analytical activities. In addition, the AMG will focus on: • Building capacity of CSOs on aid effectiveness issues and the monitoring of aid; • Aid effectiveness of CSOs as development actors; • Aid monitoring at the sub‐national level; and • Linking up with regional and global processes and networks, including the Global Call for Action Against Poverty (GCAP), and the 2008 High Level Forum meeting in Accra.

New activities are envisaged as follows: • Carry out national and sectoral studies on aid effectiveness in Vietnam, including studies of the implications and outcome of direct budget support modalities;

• Analyse and enter into dialogue on the issue of CSOs and the Hanoi Core Statement; • Develop and pilot community aid monitoring models.

CSO’s Recommendations to PGAE • Carry out consultation with the AMG and CSOs in relation to studies and initiatives facilitated by the PGAE, including the next Independent Monitoring exercise.


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Chapter 3 Implementation of the Hanoi Core Statement

3.1 Contribution made by Thematic Groups

After achieving “quick wins” in various aspects of HCS implementation during the year 2006, the thematic groups working in areas of procurement, public financial management, EIA, SIA have continued making considerable progress in 2007. A summary of progress in each group is presented below, along with planned next steps for 2008.

3.1.1 Procurement Thematic Group

Achievements in the sector in 2007

An Assessment of public procurement system (Law on Procurement and Decree 111) was carried out using the OECD/DAC Base Line Indicator (BLI) Assessment Tool. The independent assessment was completed in February, 2007. This work also informed the Development Partners recommendations for specific modifications required in the Legal Framework in order to remove identified gaps. These were communicated to MPI in July 2007. These were taken into consideration in the proposals for amending Decree 111 before submitting by MPI to the Prime Minister in September 2007. Work on Harmonised Standard Procurement Documents also made good progress The Standard Bidding Documents for Goods were completed in May 2007 and the Standard Bid Evaluation Report in September. Standard Bidding Document for Civil Works, Standard Request for Proposals, and Standard Prequalification Document for Civil Works are under preparation. Standard procurement monitoring and reporting formats were also adopted as part of Aligned Monitoring Tool (AMT) in June 2007. Support was also provided to upgrade the Procurement website and upgrading the Procurement Bulletin to a Newspaper. This is still ongoing and is scheduled for completion in February 2008. LMDG Support was also provided for the procurement Capacity Building Program. Training modules are being prepared and are scheduled for completion by December 2007. The Procurement Accreditation / Certification Scheme also started early 2007. During the year thousands of procurement personnel were trained on procurement regulations and skills using public and private institutions. Finally a procurement compliance and performance measurement system using OECD/DAC/WB methodology was developed. Two pilots of its use have been completed and six oversight groups are currently under assessment.

Gaps in the legal framework remain and need to be addressed, in particular:

• In some cases local laws currently prevail over the procurement law. • Direct contracting for works and goods contracts below VND 1 billion is still allowed even

when competition is possible. • The minimum time allowed bidders to complete expressions of interest, prequalification

and bidding documents is insufficient.


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• Bids are not opened at the stated time when there are fewer than three bids. This applies even under open bidding. Extension of bid opening/cancellation when fewer than 3 bids are received is also allowed.

• There is an urgent need for harmonized standard procurement documents acceptable to donors.

• Use of the merit point system for evaluation is still allowed. This should be limited to procurement of complex Information Systems and textbooks.

• There is lack of clarity between evaluation factors and qualification criteria. • Bids cannot be recommended for award if they exceed the approved estimated price.

Next steps and support requirement

Based on these identified gaps the immediate priorities for future works are as follows: • Completion of Harmonized Standard Procurement Documents; • Further upgrading of the website and procurement newspaper; • Monitoring and measuring procurement compliance & performance; • Implementation of a procurement complaints mechanism; and • Introduction of annual procurement audits.

The TG for procurement needs MPIʹs support for the proposal to the Prime Minister for Amendment of Decree 111. This is required in order to accelerate progress to allow the HCS targets to be met by 2010. The group also needs to collaborate more with the PFM TG.

3.1.2 Public Finance Management Thematic Group

Achievements in the sector in 2007 The thematic groups on ODA on Budget and Public Financial Management have been dissolved and PFM Issues are being dealt within the Public Finance Partnership Group and around the preparation of the Country Financial Accountability Assessment (CFAA) Update under preparation and led by the World Bank. The CFAA is a diagnosis of a country’s financial management environment and public financial management system. It aims to help the Government and development partners assess and develop a common understanding of the risk that public funds may be used for unintended purposes; identify the key risks, capacity gaps and constraints to progress; help the Government develop strategies for reform; and assist in program design for improving and building financial management capacity in the public and private sectors. The CFAA Update is being jointly undertaken by several Donor Partners and the Government. Its specific objectives are: (i) to support Vietnam’s ongoing program to strengthen budget planning, execution, reporting, monitoring and accountability; (ii) to provide analytical inputs to the public financial management strengthening programs particularly at the sub‐national levels and for decentralization developments and the use of country systems for all investment financing; (iii) to strengthen capacity to conduct public financial expenditure performance and fiduciary risk assessments in the Ministry of Finance, the Ministry of Planning and Investment, in selected sector ministries and provinces; and (iv) to provide information and analysis for assessment of the degree to which reliance can be placed on the


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country’s public financial management systems and for fiduciary risk assessments by the Government, the World Bank and to other financiers and donors

Gaps

Progress since the last CFAA, remaining gaps and ways to address them will be identified as a result of CFAA update and other on‐going work.

Next Steps and support requirement The CFAA Update began in April 2007 and is planned to be completed by the end of 2007. A draft report is nearing completion, and was expected to be shared with donor partners in November 2007.

3.1.3 EIA Thematic Group


The TG for EIA engaged a team of consultants to conduct a study to: (i) update harmonisation progress between the Government’s and development partners’ requirements for EIA; and (ii) develop a detailed workplan for the TG for EIA for the period 2008‐2012, including suggested implementation arrangements. The consultants started the field work on 10 July, submitted the inception report on 27 July and the draft final report on 21 September. The TG will revise the draft final report incorporating comments from the TG members, organize a TG workshop, and finalize the final report by the end of 2007.

Gaps

The gap analysis conducted in 2006 and was updated under the on‐going study. Priority issues for harmonization include: (i) criteria for EIA screening; (ii) timing of EIA; (iii) independence of consultants and appraisal authorities; (iv) scope and TOR for EIAs; (v) public consultation and information disclosure; (vi) language used in reports; (vii) requirements of complex projects; (viii) environmental management plans (EMP), (ix) post‐EIA enforcement, and (x) application of EIA.

Next steps and support requirement

The following priority areas are proposed for the workplan for the TG for EIA from 2008 to 2012 and the indicative budget required to complete the activities has been estimated.

• Technical Sector Guidelines: updating of existing guidelines and/or development of new guidelines to address the Government’s legislative changes and enhance harmonization with donor requirements.

• Public Consultation: Identification of priorities for improving capacity in public consultation and increasing harmonization with donor requirements through development of technical guidelines, decrees/circulars and capacity building activities.


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• EMPs and Post‐EIA Enforcement: Identification of regulatory instruments, guidelines and capacity building requirements for enhancing capacity in EMPs and post‐EIA activities and improving harmonization with donor requirements.

• Further Legislative Reform: Identification of priorities for legislative reform to support harmonization efforts including review of existing decrees and circulars, development of new decrees and circulars and revision of LEP.

• Capacity Building: Identification of capacity building activities required to support EIA harmonization efforts for MONRE, line agencies/ministries, DONREs, and districts.

Activities proposed for 2008 include: • A review of Decree 80; • A review and preparation of technical sector guidelines for transport, thermoelectricity, hydroelectricity, electricity transmission, and small‐scale rural infrastructure;

• Development of regulations on public participation for incorporation into legislative documents;

• Training and awareness raising on public consultation in EIA; and • Development and maintenance of EIA information dissemination network.

Importantly the TG for EIA needs financial and technical support from development partners to implement the proposed workplan to achieve the HCS target.

3.1.4 SIA Thematic Group


The TG for SIA engaged a team of consultants to conduct a study to: (i) compare and identify gaps between the Government’s and donors’ resettlement policies and regulations; (ii) develop an action plan and institutional arrangements for achieving the targets under the HCS relating to resettlement; (iii) help the Government prepare leaflets and brochures on the harmonized resettlement policy; and (iv) help the Government prepare guidelines to implement separate resettlement projects. The consultants started the field work in mid‐July, and submitted the draft table highlighting the differences between the Government’s and donors’ resettlement policies and the draft leaflet on the harmonized resettlement policy in September. The draft final report was submitted in November and it is expected that it will be finalized by December incorporating comments from the TG members.

Gaps

The following gaps were identified under the ongoing study:

Non‐legal Land Users: Under the Government regulation, affected people (APs) who do not have user rights are not entitled to full compensation.

Tenants: Under the Government regulation, APs who rent state‐owned housing are not entitled to compensation if they do not accept to relocate to an available resettlement site, or may receive only small cash compensation; APs who rent private housing may not receive


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any assistance beyond a relocation allowance; and APs who rent land are not entitled to any compensation or assistance.

Small and Non‐registered Business: APs who operate small and non‐registered business are not entitled to any compensation or assistance under the Government regulation.

Compensation Rates: The Government uses the rates established by the Provincial People’s Committee (PPC). PPC rates are updated annually. It is observed that PPC rates are usually well below actual market rates.

Income Restoration: The Government regulation defines severely affected APs as those losing more than 30% of their productive assets, while it is 20% for the World Bank and 10% for the ADB.

Vulnerable Groups and Ethnic Minorities: The Government regulation covers special needs of poor households, but does not explicitly recognize other vulnerable groups such as ethnic minorities.

Monitoring: The Government regulation does not have indicators and procedures for independent monitoring.

Next Steps and support requirement

Based on the gap analysis, a draft action plan towards 2010 was developed. The proposed priority actions in the draft action plan include: (i) development of project classifications based on the level of resettlement impact; (ii) preparation of detailed guidelines for resettlement impact assessment; (iii) identification of compensation unit prices, (iv) preparation of detailed guidelines for livelihood rehabilitation; (v) revision of eligibility criteria, (vi) development of a policy for ethnic minority APs; (vii) strengthening of monitoring and evaluation; (viii) preparation of resettlement plans before project appraisal; (ix) strengthening of public participation and information disclosure; and (x) policy dissemination and awareness raising.


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3.2 ODA Project Management Unit Circular 03 on MPU: Promoting Decentralization and Accountability – Following the issuance of Decree 131/2006/ND‐CP the Ministry of Planning and Investment issued Circular 03/2007/TT‐BKH on 12 March, 2007 guiding the organizational structure, functions and responsibilities of ODA program/project management units. The Circular 03 defines the legal status and the mandates of ODA PMUs as well as their inter‐relationship with other Government agencies in the State ODA management system. Attached to this Circular is Appendices with the forms of Decision on Establishing the Management Units of Technical Assistance/Investment Project. Progress made since the last PGAE Proposed Key Strategic Actions:

From Last PGAE Status Follow‐up

Institutionalize PMU‐related legal framework. Dissemination and training activities on Decree 131/2006/ND‐CP and its guiding Circulars and related regulations through workshops, meetings, media, internet;

Five training cources on ODA Strategic Framewok, Decree 131, Circular 04 and Cirular 03 on PMU were conducted from September to October 2007. About 400 participants from the line agencies, provinces, and donor communities were trainned.

Continues to conduct the training program under the Project Management Training to the PMUs and donor communities.

Conduct an in‐depth study on “parallel” PMUs to clarify the validity of the baseline results, identify what practices need to be changed and encourage the establishment of project management structures that sustainably build Government capacity;

In‐depth study conducted under the CCBP. Study results have been incorporated to establish Circular 03/2007/TT‐BKH of MPI on PMU

No follow‐up

Comprehensive capacity building on Project Management for line agencies and PMUs staff through courses, consultancy workshops, media and possible help desks with CCBP support;

Eigh Project Management training cources were conducted. Target goups are staff from the line agencies, PMUs, and provincial departments of planning and investment. About 450 participants from the North and Central regions were trained

Two additional training courses are being scheduled in December for staff from the Southern region.

Difficulty Remains. In process of implementing Circular 03/2007/TT‐BKH, the Line Agencies have faced a number of difficulties with on‐going ODA programs/projects when the role and


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functions of “Program/Project Owner” is required to be clear‐cut with that of the Line Agency or of the PMU as the model that used to exist in the past. Some Line Agencies like MOT, MARD has moved faster than the others by integrating PMUs with their new Program/Project Owners such as the Road/Railway Administration Authorities. Progress has been made also in HCMC while the other ministries (MOH, MoET) have been struggling with this transfer process due to the difficulties in defining the Program/Project Owners for PMUs. To ensure the Circular to be effectively complied, one of important elements is the support and the alignment of the donors to the Government systems on ODA PMUs.

3.3 Sector Pioneering: the HSC implementation in MARD

More than two years have passed since the Prime Minister approved the Hanoi Core Statement (HCS). During this time numerous activities have been undertaken to ensure the HCS, 2010 targets are achieved, meeting the commitments made at the mid ‐ term CG for Vietnam of 2005. These initially focused at the central level but now need to focus on developing the capacity of sector ministries who will implement the HCS principles in their projects and programmes. In order to accelerate implementation of the HCS, Vietnamese agencies have agreed the following approach:

• MPI will support other ministries develop roadmaps for HCS implementation. These will reflect the priorities and needs of the sector. These efforts must be led by the respective ministries;

• Focus on one pilot ministry that meets the requirements of a ‘pioneer in HCS implementation’; and

• Continue support for HCS implementation in ministries and sectors that have been involved in the thematic groups of PGAE and CCBP activities. For example; Ministry of Finance, and Ministry of Natural Resources and Environment etc.. After drawing lessons from these exercises these support activities can be replicated in other ministries and areas of support.

To take this approach forward MPI – the government coordinator in HCS implementation, recognizes that some ministries and sectors have been far more active in HCS implementation. In particular the Ministry of Agriculture and Rural Development (MARD) has been outstanding. MARD has already achieved significant results in implementing the HCS since 2005 and is now striving to identify its implementation approach over the coming years. Consequently in August 2007 the leader of MPI sent an official letter to propose MARD as a co‐implementer of the HCS.

Under the direction of MARD’s leadership, International Cooperation Department (ICD) was appointed as focal point to conduct the implementation of HCS led by a deputy director of ICD. This task force will identify with FERD MPI the targets for and the approach and specific action plan for implementation of this sector pilot. The taskforce has now completed the draft status report, defining indicators, priority activities, and the proposed objectives of implementing the HCS in MARD.


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This has now been reviewed and the action plan for HCS implementation submitted to the MARD leadership for approval.

MARD’s Implementation plan for HCS is a clear example of the active cooperation between two ministries, MARD and MPI, to achieve the HCS targets committed to by the government. These results came from working together at the highest level in each ministry, supported by close technical cooperation between FERD – MPI and ICD – MARD.

3.4 Monitoring and Evaluation

3.4.1 National Rollout of Monitoring and Evaluation System During the life of the current 5‐year plan the Government has developed tools for monitoring donor commitments and disbursement as well as implementation processes and performance. With the support of several donors, particularly the 6 Banks, AusAID, JICA, JBIC and UNDP the Ministry of Planning and Investment now has systems and tools in place for national adoption to enable effective monitoring of ODA commitments, implementation and impact.

As part of its commitment to aid effectiveness, articulated through the Hanoi Core Statement on Aid Effectiveness, the Government of Vietnam has institutionalised official development assistance (ODA) monitoring and evaluation. Following the issue of Decree 131/2006/ND‐CP by the Prime Minister in November 2006, the Government has issued:

• Circular 04/2007/TT‐BKH guiding the implementation of the regulation on management and utilisation of ODA;

• Decision 803/2007/QĐ‐BKH for the monitoring report format to be used by ODA programs and projects; and

• Decision 1248/2007/QĐ‐BKH on the Framework for Monitoring and Evaluation of ODA Programs and Projects in 2006 – 2010 Period.

The overall objectives of the Framework are to set out the strategy for monitoring and evaluation of ODA programs and projects. This is supported by an action plan to develop, operate and improve the national system of monitoring and evaluation of ODA programs and projects. This was put into implementation in the Decision No. 94/2007/QĐ‐TTg dated 27 June, 2007 of the Prime Minister. The M&E Framework and related Action Plan can be downloaded in Vietnamese and English at: www.mpi.gov.vn/tddg.

The monitoring format institutionalised in Decision 803 was developed with ODA project managers and major donors, including the 5 Banks, over a 3‐year period, with support from the Vietnam Australia Monitoring and Evaluation Strengthening Project. The format was trialled by more than 40 PMUs and further refined before being institutionalised by MPI. Major donors have already aligned with the format. The Foreign Economic Relations Department of MPI, which is the focal point for ODA monitoring, has recently established an email address for electronic submission of monitoring reports – as required in Chapter 6 of Decree 131/2006/ND‐CP and Circular 04/2007/TT‐BKH. The email address is: [email protected]


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http://www.mpi.gov.vn/tddg

mailto:[email protected]


These new regulations institutionalise the national system to monitor ODA in Vietnam enabling PMUs, sector ministries, donors and central ministries to better manage for development results. The formats monitor:

• Disbursement rate – variance between actual and planned rate of disbursement to contractors and investment activities.

• Process – variance between actual and planned time taken to complete required processes for bidding, contract implementation, resettlement and environmental management.

• Performance – variance between actual and planned implementation of activities and delivery of outputs. Performance indicators are project specific and entered by the PMU and Project Owner.

The formats are supported by a range of tools and resources to enable project management units, project owners and line agencies to use them:

• Aligned monitoring tool (AMT) – is an Excel tool for quarterly monitoring and performance reporting using the formats in Decision 803. Major donors have aligned with these formats, so PMUs only need to prepare one report for use by the government and donor(s). The AMT includes harmonised ODA data coding that has been adopted nationally – including standard codes for donors, countries, currencies, province, regions, and sectors.

• Portfolio monitoring tool (PMT) – is an Access database that extracts data from the AMT to collate, analyse and benchmark performance of a line agency portfolio of investments. A number of management indicators are programmed into the tool to allow quick assessment of variance from plan and benchmarked efficiency of implementation.

• National monitoring manual – published in August 2007. The monitoring manual provides a detailed introduction to logical frameworks, practical selection of indicators, measurement of performance and use of data to support management for development results .

• Training handbook for teachers – published by MPI in May 2007, this is a training resource for teachers that sets out a monitoring curriculum, training resources and exercises. The handbook is available from the Foreign Economic Relations Department of MPI.

• National M&E website – the national M&E website (www.mpi.gov.vn/tddg ) provides a focal point for monitoring and evaluation resources, news, communication, data exchange and international links for practitioners in Vietnam. All the manuals, tools and other resources mentioned above can be downloaded from this site.

These regulations, tools and other resources provide guidance and support for implementation of the monitoring system. Already more than 40 PMUs are using the AMT and more than 10 line agencies are using the PMT. Contact FERD/MPI to get in contact with these monitoring practitioners to learn from their experience. In addition MPI and JBIC have signed a memorandum of understanding on joint evaluation. The 3‐year agreement provides for both parties to prepare an annual “Implementation


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Program of Joint Evaluation”. In 2007 the Implementation Program includes ex‐post evaluation of three projects executed by MOT: • National Highway No. 5 Improvement Project • National Highway No. 1 Bridge Rehabilitation Project • Hanoi – Chi Minh City Railway Bridge Rehabilitation Project

The joint evaluations will be conducted by a team of Vietnamese and Japanese evaluators, with counterparts from MPI, MOF and MOT. The methodologies used are those set out in Decree 131/2006/ND‐CP and Circular 04/2007/TT‐BKH as well as the National Evaluation Manual – published in May 2007. The evaluation manual introduces 5 evaluation criteria, 4‐steps for evaluation, questions and practical selection of indicators, evaluation frameworks, methods for gathering data to measure indicators of performance and use of lessons learned to support management for development results. Meanwhile, MPI has completed 3 evaluations during 2007 with support from Vietnam Australia Monitoring and Evaluation Strengthening Project:

• Baseline evaluation for the Second Ho Chi Minh City Water Environment Improvement Project (JBIC, HCM City)

• Mid‐term evaluation of the Road Network Improvement Project (World Bank, MOT) • Impact evaluation of the Hanoi Water Treatment Project (World Bank, Hanoi People’s Committee)

Case studies from these and other evaluations implemented by MPI are available at the national M&E website: www.mpi.gov.vn/tddg

With support from UNDP and collaboration from many donors, the Government has implemented a system to monitor donor commitments and disbursement by donors – the Development Assistance Database (DAD). After completing the validation of historical ODA project data for 2001‐2005, donors, together with Government, are validating the data for 2006‐2007 in DAD for the CG 2007. The updating and validating process will ensure that DAD provides updated donor ODA information that is of high quality, comprehensive and transparent. The DAD database allows MPI to analyse donor commitments by location and sector and inform ODA strategies based on information provided by the donors.

3.4.2 Progress Assessment of the HCS implementation

In June 2007, the PGAE developed an Issues Paper, that analysed where the gaps and challenges lay in achieving the agreed HCS targets. From this a set of strategic actions were identified for the remaining three years of HCS implementation. The Paper set out a more systematic and in‐depth approach to implementing the HCS. This builds on the “quick wins” of 2006 which were achieved through the joint efforts of the GoV and donors. The key improvements are highlighted in this report (Chapter 1 and 2) and summarized in the Table 2 below. The next round of formal monitoring will be conducted through the HCS monitoring surveys scheduled for 2008, these activities are described in Section 4.1.






















Table 2 Progress and Initiatives in implementing HCS till the end of 2007

HCS Target Indicators Benchmark ’05 Targets for 2010 Important progress till the end of 2007

Ownership

1. Five Year Socio‐Economic Development Plan (SEDP) targets achieved

SEDP developed and approved

SEDP targets achieved

ON TRACK: SEDP ʹs targets are being achieved under the framework of annual national plan ‐ M&E Framework for National SEDP (Decision 555/2007/QĐ‐BKH)

Alignment

2. Donor assistance strategies are aligned to the SEDP and related to national, regional, provincial and sector strategies

100% of donors aligned

100%

ON TRACK: ODA strategic framework approved by the Vietnamese Government ‐ Donors through Partnership Groups continue to support SEDP at national and sectoral levels (e.g., health and education)

3. Donor strengthen GoV capacity by avoiding parallel PMUs

111 parallel PMUs 0 No progress reported

4. GoV integrates capacity building objectives in the SEDP and related national regional, provincial and sector plans and leads comprehensive CB programmes with coordinated donor support

84% of aid for CB delivered through GoV‐led / coordinated programmes

100% Progress to be identified during the 2008 survey

5. Donor progressively rely on the GoV’s procurement system once mutually agreed standards have been attained

32% of aid flow and 23% of donors using GoV procurement systems

50% 50%

ON TRACK: Assessment of Vietnamʹs Procurement Systems using BIS and APPI when Decree 111 was revised

6a. Donors progressively rely on the Government of Vietnam’s public financial management and accounting systems strengthened once mutually agreed standards have been attained

27% of aid flows and 6% of donors using GoV PFM system

50% 50%

ON TRACK: CFAA Update, PFM reforms ‐ MTEF, TABMIS under implementation

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Targets for HCS Target Indicators Benchmark ’05 Important progress till the end of 2007 2010

6b. GoV publishes timely, transparent and reliable reports on budget planning and execution

27.7% of GoV budget accounted for and audited

50% Audited report on budget planning and execution was published

7. Donor enhance the predictability of future aid

69% of aid disbursed according to agreed schedules

75% Efforts are made among the Government and donors to increase the disbursement rate in ODA programmes and projects

8a. GoV and donors improve environmental safeguards (EIA)

9% of EIA used GoV system ‐ 61.7% with additional safeguards

30% EIA TG Workplan on hamonization the EIA procedures between the Government and donors

8b. GoV and donors improve social safeguards (SIA)

0.4% of SIA used GoV system ‐ 78.3% with additional safeguards

30% New decree (supplementing Decree 197/2004/NĐ‐CP) being preparedSIA TG Workplan

Harmonization and Simplification

9. Fewer, better core diagnostic (CFAA, PER, CPAR, etc.) and country analytical reviews of Vietnam’s development needs

80% used CDW 32% of CAW shared

100% 75%

ON TRACK: VDR, Vietnam Environmental Monitor, Joint CAW on Alternative Aid Modalities for Health Sector,... ‐ DAD, SBS Website ‐ ODA Evaluation survey by VAMESP II

10. Common project cycle management tools agreed and used throughout the project/programme cycle (planning, design, implementation, M&E and reporting)

Donors using common project/programme cycle tools ‐ no data

50%

ON TRACK: ‐Common FS format ‐ Common reporting format AMT legalized ‐ Decision 803/2007/QĐ‐BKH ‐ M&E framework in ODA programmes and projects with action plans ‐ Decision 1028/2007/QĐ‐BKH ‐ One UN reform

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HCS Target Indicators Benchmark ’05 Targets for 2010 Important progress till the end of 2007

11. GoV and donors increasingly use programme based approaches

34% of aid is national or sector programme based

75% ON TRACK: Decree 131/2006/NĐ‐CP recognizes PBAs ‐ NAM studies by CCBP ‐ Donors support GoV NTPs, SWAPs

12. Decentralization and delegation of authority to the country level is maximized for each donor

60% of aid interventions that are managed at the country level

75% ON TRACK: ‐ Delegated cooperation among the donors ‐ EU donor complementarity and division of labour

Managing for Results

13. Results framework developed and used to assess the performance of the SEDP and sector programmes

Based on OECD/DAC scoring ‐ no data 3

ON TRACK: Results framework for national SEDP (Decision 555/2007/QĐ‐BKH) ‐ Result frameworks for ARD and NRE sectors

Mutual Accountability

14. Periodic mutual assessment of progress in implementing agreed commitments on aid effectiveness

No Annual Assessments

ON TRACK: Regular GoV/donors dialogues within PGAE and PGAE reports to CGs ‐ DFID, AusAiD, Belgium shared HCS action plans ‐ Independent monitoring mission in 2007


Chapter 4 Looking Ahead

4.1 The HSC mid‐term evaluation and survey As agreed in the HCS M&E framework, formal HCS monitoring is to be conducted every 2 years to review progress in implementing the HCS. Next year this exercise will be undertaken jointly with the monitoring of the Paris Declaration planned to be conducted in 1st Quarter, 2008 as decision at the meeting of the OECD‐DAC Working Party on Aid Effectiveness (WP‐EFF) held in late November, 2007 to report monitoring results in 3rd High Level Forum in Accra (Ghana) in September 2008. The harmonised survey is scheduled for the first quarter of 2008. It will have 3 main objectives:

• To track progress in implementing the Hanoi Core Statement based on the 14 agreed indicators against the benchmarks of 2005;

• To take stock of progress in implementing the Paris Declaration (in preparation for the third high level forum to be held in Accra next year);

• To review GoV and donors’ successes and challenges, stimulate broad discussion and reach agreement on specific, future actions to improve aid effectiveness.

Based on the lessons learned from the baseline surveys in 2006 and as suggested by the JV‐PDM, the coming HCS/PD monitoring surveys is to be organized through the PGAE. The PGAE Coordinator will act as the National Coordinator and one or more Donor Focal Points will be nominated. Further support will be provided by CCBP. The 2008 survey will compose of donor surveys and GoV surveys using the same methodology as 2006 to ensure consistency. (A separate survey of selected GoV agencies will be conducted later to serve the monitoring needs of the HCS. This will be conducted later). Learning form the 2006 survey three improvements to the survey process will be introduced:

• Improving the clarity of the definitions of PD and HCS indicators and provide firmer instructions based on the comments of donors and GoV agencies who participated in the 2006 surveys, the PGAE Issues Paper (6/2007) and JV‐PDM survey instruments (whilst maintaining consistency with the 2006 data);

• Developing a web‐based IT tool to operationalize the survey process in order to broaden dialogue, facilitate responses, speed‐up data collection and analysis and generate country reports and communicate findings faster;

• Improve the survey process through better integration of the qualitative and quantitative dimensions of the survey. Donors’ responses will be verified and supplemented through results of the GoV survey and other data sources, consultation with CSO’s and linkages with other processes (e.g., JV on Procurement, JV on Managing for Development Results, Independent Monitoring). Special studies will also be undertaken if needed.


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Table 3 presents the tentative 2008 survey plan with milestones and responsibilities parties:

Table 3: Tentative 2008 survey plan with milestones and responsibilities

Milestones Activities Responsible

Dec 2007 Formation of the 2008 Survey Management Group including nomination of Donors Focal Point(s)

PGAE

Dec 2007

Revision of survey instruments including definitions and guidance, GoV and donors questionnaires,. Development of tools to operationalize the survey process and communicate findings

CCBP

15 Jan 2008 Launch the 2008 Survey with lunch , meeting with participating donors and CSOs

PGAE with CCBP support

Jan 08 – Mar 08 Conducting the 2008 Survey: including donor responses, collecting data from key GoV agencies


Mar 08 Consolidating responses, generating Vietnam country worksheet

CCBP

15 Apr 2008 Submitting the results of the Survey to the OECD for analysis after consulting PGAE members

Nat’l Coordinator

Apr – May 08 Conducting the survey of selected GoV agencies CCBP

June 08 HCS Monitoring Results for PGAE report to mid‐CG 08 PGAE

Apr – Sep 08 Data verification for the Vietnam’s country chapter in communication with Working Party on Aid Effectiveness looking ahead to the Accra event


2‐4 Sep 2008 The Accra High‐Level Forum on Aid Effectiveness Nat’l Coordinator

Sep – Nov 08 HCS Data verification with results from GoV survey, PGAE TGs outputs, additional studies


Dec 2008 HCS Monitoring Results with findings and recommendations for PGAE report to CG 2008

PGAE

4.2 Independent Monitoring The HCS sets out 28 Partnership Commitments and 14 targets to be achieved by 2010. To monitor progress all HCS signatories agreed that the Government of Vietnam (GoV) and donors should periodically review their progress against these commitments through an Independent Monitoring process. The first review is currently being finalised. The assessment was carried out by an Independent Monitoring Team (IMT), using a methodology agreed with a Management Board established by the Partnership Group on Aid Effectiveness to oversee the process. It offers an overview of HCS implementation to date, plus detailed


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examination of three thematic areas: (i) country leadership and donor alignment behind the national development agenda; (ii) use of country systems for ODA delivery; and (iii) organising HCS implementation. These themes were explored through case studies of three sectors – education, transport and rural water and sanitation. The IMT also conducted reviews of four donors (Belgium, Danida, DFID and the World Bank) who participated in the exercise on a voluntary basis. Under the HCS, the Independent Monitoring process is intended to support mutual accountability. The IMT is called upon to make judgments on the quality of effort by both GoV and donors to implement the HCS, and to point out any shortcomings. It will be up to the government and donors to review these findings and collectively make judgements on their usefulness and what steps should be taken to address them.

4.3 Why should the PGAE be renovated? The PGAE was set up three years ago as a government‐donor platform with the mandate to guide and coordinate aid effectiveness activities. Since then it has taken on an ambitious agenda. Firstly agreeing the Vietnam Harmonization Action Plan (V‐HAP) and developing programs such as the CCBP to support its implementation. This was followed by Vietnam becoming the first country to localise the Paris Declaration with Government and donors jointly committing to the principles and targets of Hanoi Core Statement. By implementing work on the “quick wins” as well as initiating longer term work on government systems the PGAE has made a tremendous contribution to the aid effectiveness agenda. All concerned should be congratulated on the PGAE’s achievements and by backing their joint HCS commitments with action. During the lifetime of the PGAE Vietnam has maintained its remarkable development and poverty reduction record. It is now expected to become a middle‐income country by the year 2010, several years ahead of previous estimates. With WTO accession Vietnam is also internationally recognised as integrated into the global economy and moving rapidly to full market economy status. Further evidence of Vietnam’s increasing level of international stature was the recent election of Vietnam as a Non‐standing Member of the UN Security Council.

An example of how this progress affects development assistance occurred in October 2007 when the World Bank announced that Vietnam’s development progress and increasing creditworthiness had made it eligible to access International Bank for Reconstruction and Development (IBRD) financing ‐ available to middle income countries. Other donors will also be considering changing their aid policies to Vietnam as Vietnam approaches middle‐income country status. These transition issues now to be discussed as part of the PGAE agenda.

In addition, four regional consultation meetings which were carried out from June to September 2007 in Mauritius, Ghana, Honduras and the Philippines on Paris Declaration implementation have affirmed that although progress has been made more effort was required in all areas. From donor behaviour change to stronger application of new aid modalities; increasing aid predictability and supporting capacity development; improving aid coordination and


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strengthening monitoring and evaluation of PD implementation. The report of Independent Monitoring Team (IMT) recognises a similar trend in Vietnam. It recognizes significant progress and achievement on the implementation of the HCS, but also recommends that to achieve the HCS targets, the PGAE should renovate itself. In Vietnam, some donors and groups of donors have already responded actively. For instance the EU and its member states have adopted “The EU Code of Conduct on Complementarity and Division of Labour in Development Policy”. This is based on the principle that donor complementarity is of paramount importance to increasing aid effectiveness. Thus it is expected that donor complementarity and division of labour will be an important part of the future PGAE agenda.

Vietnam’s development partners are proud to have assisted in its remarkable transition. They also fully recognise the efforts made by the government to continually improve the mobilisation and utilization of development agencies’ support. In the future these efforts must recognise that Vietnam’s development needs and options are changing rapidly. It is in this spirit of mutual commitment to improving the quality and appropriateness of development assistance that the renovation of the PGAE will be undertaken.

4.4 How should the PGAE renovate itself?

The renovation of the PGAE will not alter its focus on achieving the PD and HCS targets Instead the PGAE has taken this opportunity to review past successes, remaining challenges and the changing development context. This has led to identification of six immediate PGAE priorities:

(i) supporting the Government to continue economic and social reforms and further strengthen country systems and policies to meet the demands of a middle‐income, market orientated country;

(ii) Stimulate the improvement of public financial management and increasing aid predictability to promote the application of new aid modalities;

(iii) Increased support for capacity development including ODA management and coordination capacity, particularly at sub‐national levels;

(iv) Improving ODA program/project performance through harmonization and simplification of procedures between the Government and donors;

(v) Taking more advantage of donor complementarity and division of labour; and

(vi) Scaling up M&E activities in ODA programmes and projects to monitor the progress of PD and HCS implementation. This will include joint impact evaluations between Government and donors based on the Governments’ M&E framework for ODA programmes and projects in the 2006‐2010 period.


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The PGAE needs to renovate its working arrangement to ensure:

(i) Broader participation of the relevant Vietnamese agencies;

(ii) Engagement of international support groups and partnership groups in the PGAE agenda;

(iii) Facilitating CSO’s to contribute to greater aid effectiveness.

It is proposed that in future PGAE meetings should be organized every quarter. They will focus on strategic direction, policy and resourcing issues. The PGAE will continue to be supported by thematic and sectoral working groups, but with clearer delegated mandates defined by the six priorities shown above.

Once the renovation plan has been adopted by the PGAE, a joint working team will be established to develop the medium‐term program for 2008‐2010. This will then be circulated to the PGAE consultation and approval in early 2008.

4.5 How to mobilize resources to the HCS? The work above will require resources. So far the TG’s and other activities have relied on the efforts and funds of individuals, agencies and the CCBP, often on an ad‐hoc and voluntary basis. An additional issue noted in the final draft IMT report is that many of the individuals and agencies who committed time and support to the HCS have moved on and have not been replaced. In addition the CCBP will be drawing to a close next year. It is critical for the achievement of the HCS that these additional resources are now committed to ensure that the renovated PGAE and its working groups have the resources required to fulfil their mandates. Resources are required to develop government systems, and help line ministries and donors put the HCS principles into action. The CCBP remains the best placed vehicle for supporting these activities. The PGAE therefore recommends that the CCBP and TG budgets and work programmes be revised to extend their mandates, resources and duration – to ensure comprehensive achievement of the HCS targets. To take this forward the joint working team established to develop the medium‐term program for 2008‐2010 will develop a detailed budget estimate for further support. This will be circulated in early 2008, for adoption and financing by the PGAE members.


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Appendix ‐ Summary Report of JPPR V

The Fifth Joint Portfolio Performance Review (JPPR V) aimed to improve the delivery of aid in Vietnam. It was carried out jointly with close working between the ODA Inter‐Ministerial Task Force of the Government (IMTF) and the Five Development Banks we represent representing around 80 percent of the total ODA commitments to Vietnam. Given the importance of infrastructure projects in our portfolio the JPPR V focused on reviews of transport; energy; urban water/waste water; irrigation and rural water supply; and infrastructure in Ho Chi Minh City. This JPPR is a remarkable example of our joint efforts to improve the effectiveness of aid delivery in Vietnam and further strengthen our relationship. Five Banks’ Portfolio: Current Status. The analysis of the overall performance of the Five Banks’ portfolio shows that Vietnam is using its ODA resources well. Programs and projects co‐financed by the Five Banks uniformly achieve their development objectives and the outcomes are satisfactory and sustainable. Slow implementation and increasing undisbursed balances remains a major source of concern. By the end of December 2006, the active portfolio of the Five Banks amounted to approximately US$13 billion. Annual disbursement, including program lending was around US$1.2 billion (about 9.2 percent of the total portfolio). This slow implementation pace is the core concern of the IMTF and Five Banks. The efficient and timely implementation of ODA programs and projects is not only necessary to support the attainment of annual economic development targets and improving living conditions for the poor, but is also key to attracting increased levels of ODA and FDI funding. Recommendations to Improve Implementation Performance. The Government and Donor Community have committed themselves to significantly improving the rate of implementation, but not at the cost of quality and sustainability. For that reason, the JPPR was designed to focus on key areas for improvement and the production of concrete recommendations. The three key areas identified for attention were:

1. Simplify and increase consistency in the Government systems. One coherent and consistent set of ODA management decrees and its implementation circular with other ODA related legal documents in procurement, financial management and MoC guiding regulations. In future joint work on the Law on Public Investment was recommended.

2. Accelerate preparation, appraisal and approval ‐ three recommendations. (i) simplify the project detailed outline and include the preparation timetable and budget Second, (ii) adopt the jointly developed common feasibility study guidelines to streamline appraisal; (iii) adopt a “one‐stop appraisal” process based on line agency approval of the Feasibility Study. Combined these measures would reduce preparation time by around one year.


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3. Agree and provide guidance on treatment of ODA under the Procurement Law. Procurement remains the most important bottleneck. It was recommended to revise Decree 111/2006/ND‐CP guiding implementation of Procurement Law to reduce the gap between the Government and donors’ systems.

We recognize that many of these issues also affect Government investment programs. We are jointly committed to improving performance and accelerating Vietnam’s development.

JPPR Fast Track Actions

Challenges ODA Fast Track Actions Who/How

A. Accelerate Project Preparation, Appraisal and Approval

1. Misalignment between Government and Five Banks procedures

1. Streamline approval process and supporting document:

• Harmonize Project Detailed Outline (GoV) and Project Concept Note (5 Banks)

• Institutionalize Guidelines for the preparation of the Feasibility Study/Project Investment Document

• Synchronize GoV and 5 Banks approval process: (a) upstream approval of the ODA Requesting List by Prime Minister; and (b) approval of Feasibility Study by Line Agency prior to Negotiations

MPI / PGAE New Guiding Circular on Decree 131/2006/ND‐CP

2. Inadequate funding of preparation stage, including for resettlement activities

2. Include in Project Detailed Outline Approval by the PM project preparation timetable and funds, including Government Counterpart Funds, Preparation and Technical Assistance Grants and other Project Preparation Facilities.


3. Inconsistent framework for public investment management

3. Delink for ODA Programs and Projects the requirement of Basic Design from the approval of the Feasibility Study

MPI/MOC/PGAE New Decision

4. Cumbersome and heavily centralized approval procedures of Program / Sector Loan

4. Base the approval of Program/Sector Loan on general program frameworks

Allow delegated management of final list of sub‐projects

Consider applying these retro‐actively for on‐going project


B. Accelerate Project Start‐up

5. Still limited empowerment of project entities in project preparation and start‐up

5. Identify the Project Owner for all Five Banks’ projects

Ensure that maximum delegation of power is institutionalized in line with Decree 131 – Circular

LA / 5 Banks Special Correspondence


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03

6. Disconnect between preparation and implementation teams within the Line Agencies and limited empowerment of decentralized entities in project preparation

6. Early establishment of the PMU by the Project Owner

• Same PMU(s) for preparation and implementation • Early appointment of Project Director and Key Staff • Adequate budget provided for PMU operation (or

continuation in the case of repeater project)

MPI / PGAE New Decision

7. Widespread adoption of a sequential approach, rather than parallel approach, to implementation in particular in the early stages

7. Advance Action Allow procurement (primarily for consultant

services, technical assistance and key packages), resettlement and other key project start‐up activities to commence after Government approval of Feasibility Study and formal commitment of Donor


8. Long delays in procurement planning and processes because or remaining gaps between new procurement law and related decrees and donor guidelines

8. Identify clearly remaining differences between Government and Donor regulations

• Provide clear guidance/training during the project launch to Project Owners, as well as auditors and inspectors, on how to deal with major inconsistencies

• Ensure awareness that in case of conflicts between Government and Donor regulations the agreed procedures in the legal agreement prevail


C. Accelerate Project Implementation

9. Excessive reliance on Construction Cost Norms for the preparation of cost estimates in the procurement process (as per Art. 37 and 38 “a successful bidder must have a winning price that does not exceed the approved estimated price of the procurement package”)

9. Use Article 3.3 of the Procurement Law for ODA programs and projects to:

• Reform the cost norms system through establishing a system whereby costs are controlled at the overall project level rather than for individual packages (this would allow reallocations within the project

• allow winning bids to exceed the approved estimated price of the procurement package (exception to Articles 37 and 38);

• Higher bid prices should not be a valid reason for rejecting bids

• Allow procurement with variable costs (consider price adjustments clause in contracts)

MPI / PGAE Revise Procurement Law (N. 61) and Implementation Decree (N. 111) In the meantime, issue a new Decision applicable to ODA Projects in accordance with Article 3


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10. Long delays in the selection of national consultants as government consultancy rates are well below the market

10. Remove/Revise the restrictions on consultancy rates on ODA Programs and Projects so that market rates can be paid for high quality consultant services

MOF / 5 Banks New Decision

11. Long delays in internal payment processing at various levels, and in particular for the preparation of final accounts which requires a large volume of supporting documents

11. Accelerate payments: • Remove non essential expenditure checks (ex.

National Treasurer Office) • Enforce business standard • Relax the requirements in order to speed‐up the

liquidation of completed contracts or contracts close to completion

• Lump sum items should be treated in line with the payment conditions specified in the contracts

MOF / 5 Banks New Decision

12. Slow clearance and compensation processes

12. Pilot the establishment of a separately funded land acquisition/resettlement project, implemented in accordance with guidelines that would meet the Five Banks’ due diligence requirements

LA / 5 Banks Pilot basis


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