With Vietnam expecting to draw 5.5 billion USD in official development assistance (ODA) this year and Japan planning to provide a record amount of funds, ODA attraction efforts are off to a flying start.

Japan’s Ambassador to Vietnam Mitsuo Sakaba told reporters late last month that Japan’s ODA commitment for the country this year will exceed the record 1.1 billion USD in loans in 2007.

Japan ’s upcoming expansion of ODA is viewed as a recognition of Vietnam ’s efforts in disbursing this valuable source of capital. Total ODA disbursement is projected to reach a record high of 3 billion USD this year, according to the Ministry of Planning and Investment (MPI).

In the first seven months of this year, Vietnam disbursed over 1.47 billion USD of ODA, of which 1.35 billion USD is in the form of loans and the rest in grants, fulfilling nearly 80 percent of the yearly target.

According to Doctor Nguyen Minh Phong of the Hanoi Socio-economic Policy Research Institute, as Vietnam is stimulating investment to boost production and consumption, an increase in ODA disbursement will help create a powerful driving force for economic growth in the following years.

This is because ODA capital, especially that provided by Japan , is mostly focused on infrastructure, which is a critical sector to lay the foundation for recovery in the post-crisis period, Phong added.

Loan agreements for megaprojects are expected to come later this year, including a Japanese-funded 665 million USD power project in Thai Binh province, a 500 million USD loan by the Asian Development Bank (ADB) to help Vietnam deal with fallout from the global economic crisis and a 100 million USD bridge project in Vinh Thinh by the Republic of Korea (RoK).

The progress in ODA disbursement is largely attributable to the continuous efforts in reforming disbursement-related procedures and speeding up land clearance, the MPI said.

The progress is also thanks to the assistance provided by six world financial institutes including the French Agency of Development (AFD), the Japan International Cooperation Agency (JICA), the Export and Import Bank of the Republic of Korea (KoEXIM), Germany’s KfW bank and the World Bank.

The WB supported the MPI in conducting two reviews of 20 WB-financed projects in June and July.

International donors have closely worked with relevant Vietnamese agencies to improve the harmonisation and effectiveness of ODA administration. Emblematic of the cooperation is a tripartite initiative by the Vietnamese government, the European Union (EU) and the United Nations (UN) in developing the document, “Guidelines for Financing of Local Costs in Development Cooperation with Vietnam Version 2009.”

The unified norms for local costs help accelerate the rate of ODA disbursement, and enhance the quality of EU and UN-funded projects and programmes in Vietnam./.