Private enterprises would likely have access to loans from official development assistance (ODA) sources under a new plan from the Ministry of Planning and Investment, according to a report from the Lao Dong newspaper.
The ministry’s move is part of a draft decree that makes adjustments to the existing Decree No.131 that was issued in 2006 on the regulation on management and use of ODA. The ministry’s decision was done to speed up the disbursement of ODA, which has been reportedly slow because of project delays.
The new policy would also help settle companies’urgent need of capital.
According to the ministry, in recent years some projects have used only 50 per cent of ODA capital set for the year.
The main reasons for the slow disbursement were a shortage of corresponding capital, slow land clearance and complicated legal regulations.
Minister of Planning and Investment, Bui Quang Vinh, said that in 2011 the ministry worked with major partners such as the World Bank, Asian Development Bank and embassies to identify projects behind schedule.
As a result, the disbursed ODA funds this year reached $3.6 billion, higher than the previous years’ average figure of $3 billion.
The ODA disbursement rate in other countries was higher than in Vietnam because these countries have used the private-public partnership model, thus offering enterprises opportunities to have easy access to ODA resources, according to Vinh.
Many experts agree with the investment ministry’s reform plan but say that this change should have been done a long time ago. The country needs large amounts for development but wastes ODA capital because of sluggishness caused by weak policies and even ODA users, according to Dr Nguyen Quang A, chair of Vietnam-Hungary Business Association.
In the past, the government did not have enough confidence in the private sector and was still afraid that private enterprises would use ODA for wrong purposes. Thus, it did not inject ODA into this sector, A said.
Allowing private enterprises to borrow funds from ODA resources to develop business activities would contribute to efficient use of ODA resources. Private enterprises often are more flexible and have skilful staff, according to A.
With this change, private enterprises would be able to get long-term and cheap loans, thus contributing to production and trading activities in the country.
Senior economics expert Dr Le Dang Doanh said that, to enable private enterprises to get access to ODA loans and use them effectively, the investment ministry should publicise detailed information on ODA resources and the conditions required for enterprises that want to borrow money from ODA.