
VDB has re-lent ODA since 1994 when it then worked as the General Department of Development Investment (under Ministry of Finance (MoF), later the Development Assistance Fund (from 2000 until June 2006) and VDB (from July 2006 to present).
From 2000 until June 2006, the Development Assistance Fund received 172 ODA projects with a totalODA commitment by credit agreement of up to 3.4 billion USD.
The projects cover areas such as energy (43 projects building and upgrading power plants, transformer stations and transmission lines with the capital of 2.38 billion USD); water supply, drainage and treatment (38 projects worth 346 million USD); construction, aviation, post and telecommunications, processing industry (91 projects valued at 685 million USD).
As of June 30, 2006, the Development Assistance Fund re-lent 272 projects with a total committed investment of 5.894 billion USD, with the total outstanding loans stood at 44.173 trillion VND (2.09 billion USD).
From July 2006 until December 31, 2012, VDB managed the on-lending of 390 foreign invested projects as authorized by the MoF and 07 programs on foreign credit funding limit and credit risk with the total capital of over 11 billion USD and as non-performing loans hit VND 118.6 trillion($5.63 billion).
This funding continued to be funneled into the Vietnamese Government’s priority projects like infrastructure, energy, industrial production, agriculture, aquaculture processing, and support for those in need of incentives like small and medium-sized enterprises and remote and mountainous areas in special difficulties.
VDB performs ODA on-lending in three basic forms: management of regular ODA on-lending (the MoF assigns VDB to offer on-lending for each projects), management of ODA credit programmes and a results-oriented capital turnover fund, management and Vietnam’s ODA loán abroad.
VDB expanded partnerships with different donors, from multilateral organisations like World Bank (WB), Asian Devlopment Bank (ADB) and European Union (EU), and bilateral agencies like Japan International Cooperation Agency (JICA), German Bank for Restruction (KfW), Danish International Development Agency (DANIDA) and French Development Agency (AFD).
The donors hailed VDB as a trustworthy partner in coordinating and carrying out credit schemes and projects. As the Government’s biggest ODA on-lending supplier, VDB was granted non-refunable ODA to enhance its skills in appraising, analysing and managing projects via Japanese and the WB ‘s technical support projects. The technical support not only improvesVDB’s staff professional expertise and foreign language skills but also their spending know-how, to meet international standards.
Some key and national projects under the VDB’s on-lending management are Noi Bai - Lao Cai expressway (1.087 billion USD), Pha Lai thermal power plant (569.9 million USD), Ho Chi Minh - Long Thanh - Dau Giay expressway (ADB and JICA funding worth 546 million USD), Phu My thermal power plant (JICA’s capital worth 507.6 million USD), Ham Thuan - Da Mi hydropower plant (JICA funding 435 million USD), Ben Luc - Long Thanh expressway (the ADB funding 350 million USD), Hanoi - Hai Phong expressway (the Republic of Koea’s capital worth 200 million USD) and Tan Son Nhat airport expansion (JICA funding 186 million USD). In regard to these projects, the Ministry of Planning and Investment and the MoF are in charge of arranging and mobilising ODA. VDB offered on-lending without exposure to credit risk.
VDB implemented turn over funds similar to the DANIDA’s Seed Industrial Investment Fund, Danish Ferry Fund, the German KfW support scheme for Small and Medium-sized Enterprises , the WB capital turnover fund for Urban Water Supply, the Dutch Water Supply Project,the AFD Mekong Delta Water Supply Programme, the JICA scheme on effective energy use and renewable energy development, and an EIB credit limit to mitigate enviroment impacts caused by climate change.
The management of ODA on-lending has over the past years contributed to the common successes of VDB, bringing it to prestige and an increasingly important position in the national financial system and its relations with the global financial community. It is also a task of strategic importance in its operations.
From a passive lender, VDB affirmed its role as the Governement’s biggest ODA on-lending supplier, appointed by the MoF as the ODA on-lending controller and an important Government advisory unit in terms of policy making in attracting loans, managing and appraising projects, and disbursment.
VDB strives to overhaul organisational apparatus and utilise ministries and departments’ support to gradually reshuffle and perfect professional procedures and improve management quality to become the Government’s most important unit tasked with offering ODA on-lending in different forms, including VDB’s credit risk tolerance to make use of the Public Debt Management Law and capital mobilisation.
ODA-funded programs and projects have contributed to Vietnam’s sustainable development in line with its existing viewpoints, orientations and socio-economic development goals. Outstanding achievements like socio-economic infrastructure , better healthcare and education, environmental protection,and rural development, energy saving and development of renewable energy have received due attention. ODA-funded projects have also propelled business growth thereby creating jobs.
In the coming time, together with the management of ODA on-lending, VDB will focus its resources on lending to those in need of development credit to meet the nation’s investment goals, especially in new sectors like highways, energy conservation and climate change mitigation.
VDB will strengthen cooperation with domestic and foreign financial institutions, banks and donors to mobilize resources, which will help realise scheduled goals, thereby confirming its role as the Government’s tool in mobilising domestic and foreign resources and implementing global economic integration via re-lending foreign capital and Vietnam's ODA loans abroad.
Source: Đầu tư – Vietnam investment veview