Japan International Cooperation Agency The Japan International Cooperation Agency | |
QLRR | Risk Management |
MIC | Middle income country |
NHPT | Development Bank |
State Bank of Vietnam | State Bank |
State budget | State budget |
OECD | Development Assistance Committee of the Organization for Economic Cooperation and Development Organization for Economic Cooperation and Development |
ODA | Official Development Assistance Official Development Assistance |
TCTD | Credit institutions |
TDĐT | Investment credit |
TDXK | Export credit |
TMCP | Joint stock trading |
Ltd. | Limited liability |
Fixed assets | Fixed assets |
RRTD | Credit risk |
SHB | Saigon - Hanoi Commercial Joint Stock Bank |
Socialism | Socialism |
XHTD | Internal credit rating |
VBARD | Vietnam Bank for Agriculture and Rural Development |
VCB | Joint Stock Commercial Bank for Foreign Trade of Vietnam |
VDB | Vietnam Development Bank |
Vietinbank | Vietnam Joint Stock Commercial Bank for Industry and Trade |
WB | World Bank World Bank |
Maybe you are interested!
-
Some solutions to improve the efficiency of attracting and using ODA capital in the forestry sector in Vietnam - 13 -
Some solutions to improve the efficiency of attracting and using ODA capital in the forestry sector in Vietnam - 1 -
Lessons Learned to Improve the Efficiency of ODA Re-Lending at Credit Institutions for Vietnam -
Improving the efficiency of Vietnam's capital market management in the context of the 4.0 industrial revolution - 2 -
Improving the efficiency of organizing and preserving document capital at the Library Information Center of the University of Transport - Hanoi - 8
Table 2.1: Assets in VDB's business activities 79
Table 2.2: Re-lending ODA capital in the form of VDB not subject to RRTD 83
Table 2.3: Re-lending ODA capital in the form of VDB bearing RRTD 84
Table 2.4: Value of assets securing loans 92
Table 2.5: Classification of ODA loan debt 94
Table 2.6: Disbursement of ODA capital for re-lending at VDB 98
Table 2.7: Implementation of the ODA capital re-lending growth plan 101
Table 2.8: Debt collection of ODA loans due 102
Table 2.9: Overdue debt of ODA re-lending at VDB 104
Table 2.10: Provision for risks of re-lending ODA capital 108
Table 2.11: Results of ODA capital re-lending activities 109
Table 2.12: Structure of ODA capital disbursed at VDB for economic sectors 112
Table 2.13: General assessment of the social effectiveness of project 115
Table 2.14: Survey results on added value and social surplus 117
Table 2.15: Survey results on income regulation impact 120
Table 2.16: Social efficiency of water supply and drainage projects 122
Table 2.17: Social efficiency of projects in the energy sector 125
Table 2.18: Social efficiency of projects in the field of urban infrastructure and transportation 128
LIST OF DIAGRAM
Diagram 1.1: ODA capital re-lending process 32
Diagram 1.2: Appraisal process for ODA capital re-lending [13] 34
Figure 1.3: Internal credit rating system 59
Diagram 2.1: Management organization at VDB [7],[36] 75
Diagram 2.2: Organization of foreign capital re-lending apparatus at VDB 81
Diagram 3.1: ODA re-lending management apparatus at VDB 161
Diagram 3.2: Risk management model for ODA capital re-lending 162
Chart 2.1: Vietnam's ODA commitments, signings, and disbursements in the period 1993 - 2017 77
Chart 2.2: ODA capital signing by donors in the period 1993 - 2017 78
Chart 2.3: Proportion of ODA capital re-lent in VDB's business assets 79
Chart 2.4: Proportion of ODA capital re-lending by lending agency in the period 2012 - 2017 80
Chart 2.5: ODA re-lending rate by form at VDB 82
Chart 2.6: ODA capital committed to re-lending at VDB in the period 2012 - 2017 98
Chart 2.7: ODA disbursement growth rate 99
Chart 2.8: Growth rate of outstanding ODA loans at VDB 100
Chart 2.9: Debt collection rate and ratio compared to outstanding debt 103
Chart 2.10: Fluctuation in overdue debt ratio in the period 2012 - 2017 105
Chart 2.11: Bad debt ratio of ODA capital re-lending in the period 2012 - 2017 105
Chart 2.12: Ratio of re-lending risk provision compared to bad debt 107
Chart 2.13: Growth of gross surplus of ODA re-lending at VDB 110
Chart 2.14: Structure of ODA re-lending at VDB by sector 111
Chart 2.15: ODA disbursement rate for industry and services 113
Chart 2.16: Structure of ODA capital re-lent by Donor at VDB 114
Chart 2.17: Structure of ODA re-lending in the water supply and drainage sector 121
INTRODUCTION
1. Urgency of the topic
In recent years, Vietnam's socio-economy has had positive changes and achieved remarkable achievements. In the period of 2012 - 2018, economic growth was stable and in-depth, with an average growth rate of 6.21%; the economic structure shifted in a positive direction, gradually increasing the proportion of industry and services; labor productivity increased by an average of 5.75% and social issues were ensured. ODA, a source of social development investment capital, has played an important role in the successful implementation of Vietnam's socio-economic development strategy. ODA is used mainly for the purpose of upgrading and developing socio-economic infrastructure. ODA accounts for 3.5% of GDP, 12% of total social development investment capital, which has had a positive impact on stimulating investment, contributing to maintaining economic growth momentum. In the context of decreasing attraction, the effective utilization and use of ODA capital has been and is a matter of practical significance today. Re-lending ODA capital through credit institutions is an effective capital supply channel for programs and projects to ensure the re-lending and repayment mechanism, ensuring the purpose of capital use. The effectiveness of ODA re-lending activities at credit institutions not only helps credit institutions achieve development goals, affirm their role and prestige in the national and international financial system, but also serves as a basis for the State to effectively supply capital for ODA projects, contributing to the implementation of the socio-economic development strategy in each period.
VDB is the focal organization for managing development investment finance, a tool for implementing the State's socio-economic development policies. VDB is a policy bank, an important financial institution providing financial resources for the economy, ensuring that development investment activities are professional and effective in line with the socialist-oriented market economy in the context of international integration. VDB re-lends about 60.4% of the total ODA capital signed by the Government with foreign donors. Re-lends ODA capital to development investment programs and projects to upgrade and complete
Improving socio-economic infrastructure is an important activity of VDB, in addition to investment credit and export credit activities, in order to contribute to maintaining growth rate and shifting economic structure towards modernization. Currently, VDB implements both forms of ODA re-lending: regular re-lending under the Government's mandate and re-lending with VDB bearing the risk. In the period of 2012 - 2017, ODA re-lending activities at VDB have achieved certain results. Many projects invested by ODA re-lending at VDB have been effective, infrastructure has been upgraded, creating momentum for socio-economic development. The efficiency of investment by ODA re-lending at VDB has been better than the previous period, the projects have created added value, workers' income and social surplus, social security and welfare, and people's lives have been improved. ODA re-lending at VDB has contributed to sustainable economic growth. Re-lending ODA capital and outstanding loans have achieved annual growth. Disbursement is guaranteed according to the planned schedule, debt collection of re-lent ODA loans is guaranteed, the rate of overdue debt and bad debt is quite low. Just counting ODA re-lending activities, the average overdue debt rate is about 1.35%, the bad debt rate is about 2.91%. Every year, re-lending ODA capital has created financial resources for VDB to implement the goal of restructuring operations, moving towards financial autonomy and self-responsibility. However, the efficiency of re-lending ODA capital at VDB in recent years has not been high. The ability to monitor the purpose of using re-lent ODA capital is not good, leading to some ODA projects using capital for the wrong purpose, implementing unsuccessfully or operating ineffectively, causing losses to the economy. Although the rate of bad debt and overdue debt remains at a fairly low level, it has tended to increase in recent years. Financial results for ODA re-lending activities at VDB tend to decline...
With the aim of systematizing the theoretical basis on the effectiveness of ODA re-lending at credit institutions; studying the practical effectiveness of ODA re-lending at VDB; proposing a system of solutions to improve the effectiveness of ODA re-lending at VDB, the author chose the topic: "Improving the effectiveness of ODA re-lending at Vietnam Development Bank" as the topic of his doctoral thesis.
2. Overview of the research topic
The research topic does not overlap with scientific works and published theses that the author knows. The thesis honestly cites published research topics and results to serve as reference materials.
2.1. Foreign studies
The effectiveness of ODA re-lending at credit institutions has been studied by many scientists in the world from many different perspectives and approaches. The studies not only stop at analyzing the effectiveness for credit institutions, but also evaluate the effectiveness of ODA re-lending for additional capital for economic development.
- society, implementing the strategy of national innovation. The thesis divides scientific works on the research aspects of the role of ODA capital, the efficiency of ODA capital use and the efficiency of ODA capital re-lending at credit institutions.
Assefa Abebe (2013) studied the role of ODA in economic development based on the experience of Korea. Using the descriptive research method, the author pointed out that "In countries with strong economic policies, competent and responsible government organizations, ODA plays a catalytic role in promoting economic development and solving social problems". This shows that the effectiveness of ODA depends not only on external factors but also on internal factors [64]. Rob Tew (2013) has made in-depth analysis of the impact and role of ODA capital on the economy of countries receiving ODA loans. In fact, ODA loans are increasing to ensure capital needs for development investment. That means the outstanding debt of these countries is also increasing [93]. Hansen, H., & Tarp, F. (2001) also studied the impact of ODA on economic growth of developed countries and showed a positive relationship between ODA and GDP per capita growth [81].
Although approached from different angles, the above studies have a common consensus on the viewpoint, objectives and role of ODA in socio-economic development. ODA is a non-refundable aid and loan with preferential conditions to support underdeveloped countries. ODA plays an important role in helping
The host country develops its socio-economy, provides additional capital for infrastructure investment, contributes to economic growth, economic restructuring and ensures social security.
Francisco Sagati (2005) asserted that the effectiveness of ODA use in countries is not the same and depends on the type of support, the capacity of the recipient country, the policies of the country and the international sponsoring organization [75]. Accordingly, the recipient country with a high level of transparency and responsibility, a complete legal framework, and domestic policies for projects funded by partners that are consistent with the regulations of the sponsor will ensure the effectiveness of ODA. Chanboreth & Hach (2008) showed that improving the effectiveness of ODA use depends on: (1) providing clear projects, prioritizing national strategic projects and ensuring the ODA budget process; (2) strengthening and thoroughly reforming public administration management; (3) Prioritizing project investment individually, avoiding overlap; (4) managing well the disbursement as well as project implementation; (5) ensure communication between the donor and recipient to improve project quality [68].
SangKijin (2012) analyzed the effectiveness of ODA capital use in aid recipient countries in 117 countries during 28 years from 1980 to 2008 [95]. The analysis results showed that the economic efficiency of ODA in developing countries varies depending on the political and economic conditions of each country. The research results showed that once a country's transparency level reaches a certain point, the net economic marginal effect of ODA for countries decreases, and ODA effectively affects the socio-economic development of aid recipient countries. Antonio Tujan Jr. (2009) presented a number of lessons learned in the process of attracting and using ODA capital: (i) Unconditional withdrawal of aid, including food aid and technical assistance; (ii) Strengthening local ownership and responsibility by gradually reducing their dependence on donors; (iii) Increase direct support for social organizations [62]. Besides, there are also studies on the negative side of ODA capital. Studies by Boone (1996) [65] and Lensink & Morrissey (2000) [91] focused on evaluating the effectiveness of ODA capital on the economic development process of developing countries from a microeconomic perspective.
model, pointing out the limitations and negative impacts of developing countries when receiving ODA capital. That is, receiving unstable and uncertain aid from outside has negatively affected the financial and investment policies of the recipient country. These studies have emphasized the responsibility of donors in ODA policy. Moreover, the authors have affirmed that the impact of ODA is dangerous and negative to economic development, largely due to corruption and inefficiency in the implementation of ODA capital of the recipient country.
Asian Development Bank (1999) pointed out that one of the successes in attracting and using ODA capital in Thailand is the establishment of a strong enough management, coordination and implementation system for programs and projects from the central to local levels, with aid programs concentrated in an agency, the General Department of Economic and Technical Cooperation under the Government [63]. Sankar & Schneider (2013) evaluated the effectiveness of using Japanese ODA in Laos, and ODA projects funded by the Japanese Government for Laos often focus on the following aspects: (1) considering from the early stages of the project whether it has a negative impact on the environment or society; (2) ensuring a political system in which policies reflect the voice of the people; (3) always implementing projects in accordance with the law; (4) fully disclosing information; (5) strengthening control over anti-corruption work. Mohamed Ariff (1998), when referring to the cooperation between APEC countries from many perspectives, discussed the ODA funding of countries. The author analyzed the benefits that China has achieved when receiving ODA capital and the author also pointed out the risks that ODA loans bring to this country stemming from exchange rate risks, weaknesses in loan management... The author also made some recommendations in the management, use and repayment of ODA loans of this country [88]. The World Bank (2005) also conducted a survey of countries using ODA capital to evaluate the effectiveness of this source of capital [98]. The study showed that, in a well-managed environment, 1% of GDP aid will lead to sustainable growth of about 0.5% of GDP, with a growth rate of 2.2% of GDP per capita. The impact of aid does not stop at growth but also contributes to significantly reducing the poverty rate in countries with good management mechanisms.