Future ODA to Vietnam should focus on ideas, not money: World Bank official

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The Thanh Tri Bridge in Hanoi, which opened to traffic in 2007, was mainly funded by official development assistance from Japan. Photo: Dau Tu newspaper

Official development assistance has funded Vietnam's striking achievements in the last two decades, but with its middle-income status now, the country needs ODA mainly for the solutions it brings with it, not the money itself, a World Bank official said Thursday.

Victoria Kwakwa, World Bank Country Director for Vietnam, speaking at the 20th anniversary celebration of cooperation with the country in Hanoi Thursday, she underlined the socioeconomic progress the country had made partly with the ODA over the last two decades by quoting some remarkable figures.

In 1993 Vietnam had been one of the poorest countries in the world with income per capita of US$100 and low social indicators.

Today it is an emerging middle-income country with a $154-billion economy and income per capita of around $1,700.

More than 30 million people have risen out of poverty.

Vietnam's social indicators are better than that of most other countries with the same or even higher income: For example, the number of rural people having access to electricity is higher than in the Philippines and Indonesia.

"A fundamental reason for the extraordinary success of Vietnam's ODA partnership is the strong Government ownership of its development vision and agenda," Kwakwa said, adding Vietnam has sought ideas, knowledge, and even advice from development partners and then found ways to contextualize and adapt it to fit its context.

From 1993 to 2012 international donors pledged $78 billion in ODA to Vietnam, figures from the Ministry of Planning and Investment show.

Of this, agreements worth $63 billion were signed and $42 billion was disbursed.

Around two-thirds of the ODA has been used for infrastructure development.

At the ceremony, other donors also appreciated Vietnam's use and management of the ODA.

Japanese ambassador to Vietnam, Hiroshi Fukada, said Japan is willing to help Vietnam tackle its challenges by utilizing ODA that would include technical cooperation in economic restructuring and human resource development in addition to infrastructure development.

Japan is Vietnam's largest bilateral donor with $20 billion.

Prime Minister Nguyen Tan Dung thanked donor countries for their strong support to Vietnam in the last two decades.

He said the ODA had contributed significantly to the country's socioeconomic development and pledged to address weaknesses in using ODA such as low aid absorption and slow disbursement.

Kwakwa said despite Vietnam's remarkable success, its development journey is far from over. Poverty reduction gains while impressive are still highly vulnerable to reversal, she warned.

To achieve its longer term objective of becoming an industrialized economy, development partnerships would continue to be important and relevant for it, she said.

Since Vietnam is now a middle-income country, partnerships and financing sources are changing, she said, adding that the experience of other MICs show that ODA partnerships would need to deepen their focus on ideas, knowledge, and solutions.

"For several successful MICs, the attraction of ODA is not so much in the resources it brings but in the solutions, ideas to help solve specific complex issues that countries face "¦ ODA will need to be used more strategically and deliberately to leverage private financing to complement public resources."

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