VIETNAM

PROGRAMMATIC COUNTRY PORTFOLIO PERFORMANCE REVIEW

September 2014

EACVF

EAST ASIA AND PACIFIC

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WB406484Typewritten Text 94202

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Table of Content

ABBREVIATION LIST .............................................................................................................................................II

INTRODUCTION ....................................................................................................................................................... 1

CHAPTER 1: HEALTH OF THE PORTFOLIO ..................................................................................................... 3

CHAPTER 2: IMPLEMENTATION OF DISBURSEMENT ACTION PLAN FY14 ........................................ 10

CHAPTER 3: VIEWS FROM THE PROJECT MANAGEMENT UNITS (PMUS) .......................................... 16

CHAPTER 4: MAIN LESSONS FROM 2012 – 2013 ICRS .................................................................................. 20

CHAPTER 5: MOVING FORWARD ..................................................................................................................... 27

ANNEX 1: FY13-15 RESULTS FRAMEWORK ................................................................................................... 29

ANNEX 2: TRANSPORT PORTFOLIO REVIEW ............................................................................................... 31

ANNEX 3: DIALOGUE WITH THE NATIONAL ODA STEERING COMMITTEE ...................................... 31

ii

ABBREVIATION LIST

AAA Analytical & Advisory Assistance

ADB Asian Development Bank

BW Business Warehouse

CMU Country Management Unit

CPOs Central Project Offices

CPPR Country Portfolio Performance Review

DO Development Objectives

DPLs Development Policy Lending

DPM Deputy Prime Minister

DPOs Development Policy Operations

EAP East Asia and Pacific

EAPDE East Asia Pacific Development Effective

ECA Europe and Central Asia

ESW Economic Sector Work

FM Finance Management

FPD Financial & Private Sector Development

FY Fiscal year

GOV Government

HCMC Ho Chi Minh City

HD Human Development

IBRD International Bank for Reconstruction and Development

ICRs Implementation Completion and Results Reports

ICT Information and Communication Technology

IDA International Development Associates

IDF Institutional Development Fund

IEG Institutional Evaluation Group

IP Implementation Progress

IPF Investment Project Financing

ISRs Implementation Status Reports

JICA Japan International Cooperation Agency

iii

JPPR Joint Portfolio Performance Review

KFW Kreditanstalt für Wiederaufbau

M&E Monitoring and Evaluation

MARD Ministry of Agriculture and Rural Development

MOET Ministry of Education and Training

MOF Ministry of Finance

MOH Ministry of Health

MOJ Ministry of Justice

MOT Ministry of Transport

MPI Ministry of Planning and Investment

MS Moderately Satisfactory

MU Moderately Unsatisfactory

ODA Official Development Assistance

PCN Project Concept Note

P-CPPR Programmatic Country Portfolio Performance Review

PDO Project Development Objectives

P4R Program for Results

PMU Project Management Unit

PPMU Provincial Project Management Unit

PPTAF Project Preparation and Technical Assistance Facility

PREM Poverty Reduction & Economic Management

PSRC Presidential Sector Reform Commission

QAG Quality Assurance Group

RNIP Road Network Improvement Program

S Satisfactory

SAR South Asia Region

SBV State Bank of Vietnam

SDN Sustainable Development Sector

SIL Specific Investment Loan

SMU Sector Management Unit

SOE Statement of Expense

SOP Standard Operating Procedures

iv

TA Technical Assistance

U Unsatisfactory

UWSP Urban Water and Sanitation Project

VDR Vietnam Development Report

VN Vietnam

1

INTRODUCTION

1. The Vietnam Programmatic Country Portfolio Performance Review (P-CPPR) is a three year program which started in FY13 and aims at “Improving Operational Efficiency

for Achieving Results Faster” with a set of quantifiable indicators to measure the

achievements1. This objective is being achieved through:

(a) maintaining a continuous assessment of the health of the portfolio with a view to

achieving the intended results and acting upon identified problems;

(b) addressing, in consultation with the government, obstacles to smooth preparation

and faster implementation; and

(c) strengthening the capacity of decentralized Project Management Units (PMUs),

which are critical for managing the smooth implementation of investment

operations.

2. The Review set forth a simple Results Framework to monitor the progress as below.

Outcomes Portfolio proactively

managed for better results

Accelerated

implementation of SILs

Strengthened

capacity of sub-

national PMUs

Indicators

Proactivity ratio improved from 25% in

FY12 to 80% in FY15

Projects at risk improved from 19.6% in FY12 to

around 15% in FY15

All problem projects having a clear time

bound action plan for

improvement

FY12 FY13 FY14

Proactivity

ratio

25.0% 50.0% 50.0%

Projects at

risk

19.6% 19.0% 16.7%

Disbursement ratio increased to 22% for

IDA for FY13, 14, 15

Board to Effectiveness time shortened from 6

months in FY12 to 3

months in FY15

First year disbursement for new projects exceeds

10% in FY14 and FY15

FY12 FY13 FY14

IDA Disb.

ratio

18.8% 21.1% 20.8%

Board to

Eff. Time

5.7m 4.7m 5m

# of PPMUs reduced or re-used

for new projects

from over 300 in

FY12

Satisfactory rating of Project

Management

Training

1 See Annex 1 for the three year Results Framework. The CPPR focuses on the review of IDA and IBRD operations

as agreed during the PCN review. While the trust funded operations are outside the scope of review, the portfolio

data presented in chapters includes those operations. This is to be consistent with other portfolio reports such as the

Regional Dashboard and Vietnam Dashboard.

2

3. Based on the encouraging achievements of the first year P-CPPR, a second year program was formulated and implemented. The results have been positive in several areas yet

serious challenges remain. The review of health of the portfolio shows that the proactivity and

candor lag behind the other countries in the Region. Problem projects tend to stay in the status

for much longer than other countries’ problem projects. While the speed of preparation and

implementation has been accelerated as evidenced by (a) reduced time between PCN and the

Board, and (b) an improved disbursement ratio, the quality of completed projects has declined as

measured by the IEG review of Implementation Completion Reports. The review of ICRs points

out factors such as overly complex project design, weak results framework and delay in taking

remedial actions leading to an unsatisfactory outcome. For the PMU capacity, a structured PMU

training program was rolled out. The early results from a PMU survey show positive feedback. A

series of studies and workshops on the structure of PPMUs led some provinces to begin an

initiative to consolidate multiple PMUs, or to utilize existing PMUs to undertake new projects.

4. This report presents a summary of the progress and achievements made during the second year of implementing the P-CPPR. It also points to areas needing attention and

further work. The report is presented in five Chapters: Chapter 1 assesses the overall health of

the portfolio; Chapter 2 reports on the progress with the Disbursement Action Plan; Chapter 3

covers PMU issues; learning from the PMU surveys and the PMU training; Chapter 4 looks at

lessons from ICRs filed between January 2012 and December 2013; and Chapter 5 lays out the

activities for the third year of the P-CPPR.

3

CHAPTER 1: HEALTH OF THE PORTFOLIO

5. This chapter examines the health of the portfolio by reviewing portfolio indicators and ISRs of ongoing operations. It follows up on the findings from the previous year’s review

and summarizes the issues and recommendations to improve portfolio performance. Issues,

actions and recommendations on disbursements, improvement of the capacity of PMUs and

findings of the ICR review will be discussed in detail in Chapters 2, 3 and 4 of this report and,

therefore, this chapter will not touch upon the topics.

A. Vietnam portfolio performance: status, challenges and achievements

Portfolio Composition

6. Vietnam has a large and diversified portfolio. The number of projects in the Vietnam portfolio grew steadily from 46 to 52 between the end of FY10 and FY14. The net commitments

increased from $6.37 billion to $9.71 billion. While Investment Project Financing (IPF)

operations are dominant, the portfolio also includes two Program-for-Results (P4R) operations,

the only active P4R operations in the EAP region, and three Development Policy Operations

(DPO) which complement investment operations in priority areas such as Macro Economic,

Energy, and Climate Change. The share of IDA vis-a-vis IBRD remained in the range of 85%

over last three years. The portfolio covers all 14 Global Practices (GP) with four GPs

dominating: Social, Urban & Rural, Transport & ICT, and Water and Energy. The Portfolio is

also substantial in “soft” sectors such as Education, Health and Environment. Table 1 below

summarizes portfolio trends and indicators from FY10 to FY14.

Table 1: Vietnam Portfolio Trends2

Projects at Risk and Proactivity

2 Source: Vietnam Dashboard of July 2014.

4

7. Projects at risk and problem projects increased in FY12&13 to over 19%, but dropped to 16.7% in FY14. The main factor affecting such a change relate to the regional and

CMU led initiatives to improve candor in reporting, which resulted in increased downgrading of

project performance (Implementation Performance in particular). Simultaneously, the project

teams and CMU management have increased attention and efforts to inform the government

about portfolio issues and also pursued remedial actions to ensure smooth implementation and to

effectively remove the projects out of problem status. Note that the share of commitments at risk

has been lower than the share of projects at risk (16.7% vs 12.5%) which points to relatively

more implementation challenges for smaller projects.

8. While the ISR candor has been improved the “proactivity” in taking remedial actions remains low - 50% vs 63.8% region wide. Two key factors play a critical role in

proactivity: identifying the problems as early as possible and taking measures. Delays in starting

project activities in the first 12-18 months of implementation should be deemed an important

signal that the project may need some adjustments. For example, most of the current projects at

problem status were categorized as such around the second and third year of implementation

although the issues with implementation had been identified and recorded earlier.Vietnam

problem projects tend to stay in problem status in more than one year as seen below.

Table 2: Duration of Projects in Problem Status in FY143

Resp Unit Proj ID Project Name

Age

in Yrs

%

Disb

Months in

Problem

Status

EASFP - HIS P088759 Fin Sector Modern and Info Mgnt System 5.7 14 1

EASHE - HIS P110693 VN New Model University 4.0 3 12

EASHH - HIS P119090 Hospital Waste Management Support 3.3 9 19

EASPV - HIS P099376 Tax Administration Modernization 6.8 2 34

EASVS - HIS P083581 VN-Hanoi Urban Transport 7.0 36 60

EASVS - HIS P103238 VN-Renewable Energy Development 5.2 29 27

EASVS - HIS P113151 VN- Industrial Pollution Management 1.7 10 1

EASVS - HIS P118610 VN-Project Preparation TA Facility 4.0 25 26

Country: Vietnam (15.3% Projects at Risk, 12.1% Commitments at Risk, 8 Actual Problem Projects

9. At the end of FY14 Vietnam portfolio had the highest share of long term problem projects (in problem status for more than 24 months) in the region. This status is consistent with

low proactivity in Vietnam. Figure 1 shows the comparison.

3 Source: Vietnam Dashboard of July 2014 and ISRs of the projects.

http://projportal.worldbank.org/servlet/secmain?pagePK=112935&piPK=69345&theSitePK=213348&menuPK=109012&PSPID=P088759http://projportal.worldbank.org/servlet/secmain?pagePK=112935&piPK=69345&theSitePK=213348&menuPK=109012&PSPID=P110693http://projportal.worldbank.org/servlet/secmain?pagePK=112935&piPK=69345&theSitePK=213348&menuPK=109012&PSPID=P119090http://projportal.worldbank.org/servlet/secmain?pagePK=112935&piPK=69345&theSitePK=213348&menuPK=109012&PSPID=P099376http://projportal.worldbank.org/servlet/secmain?pagePK=112935&piPK=69345&theSitePK=213348&menuPK=109012&PSPID=P083581http://projportal.worldbank.org/servlet/secmain?pagePK=112935&piPK=69345&theSitePK=213348&menuPK=109012&PSPID=P103238http://projportal.worldbank.org/servlet/secmain?pagePK=112935&piPK=69345&theSitePK=213348&menuPK=109012&PSPID=P113151http://projportal.worldbank.org/servlet/secmain?pagePK=112935&piPK=69345&theSitePK=213348&menuPK=109012&PSPID=P118610

5

Figure 1. Percentage of Long Term Problem Projects by CMU

10. Taking project specific and portfolio wide measures to turn around the problem projects is critically needed. The issues with problem projects are complex involving design,

capacity, readiness, among others. It may require radical actions, beyond the ones that the project

teams can take. Some projects report that proactive follow up on agreed implementation targets

(monthly or quarterly monitoring as relevant), clearly makes a difference in implementation

progress but may require much more than the teams can remedy. One issue that has affected

many transport and urban projects is the recent lack of counterpart funds for land acquisition and

resettlement. The country team’s efforts in addressing these systemic issues through the

Disbursement Action Plan have had good impacts and should be continued in this regard.4

11. Other proactive measures such as partial or full cancellation of underperforming projects could be implemented to shift IDA resources where they can be used more

productively. Experience and lessons from other regions (SAR and ECA), where substantial

cancellations were successfully carried out, could be of value to Vietnam and would help in

taking a strategic approach and actions to improve the health of the whole portfolio.

Realism and Outcomes

12. While the Vietnam portfolio has had a good record of realism and a high level of achievement of satisfactory outcomes for a number of years, it has seen a decline in both

aspects recently. The realism ratio of the Vietnam portfolio has dropped to 80% in FY14 and

will likely drop further in FY15 with recent IEG evaluations of the two ICRs. Accordingly, net

disconnect may increase and the level of satisfactory outcomes may go down. This is a key area

that the country team needs to address as the program tries to addresses more complex and

challenging issues. While findings from the review of the ICRs of the Vietnam portfolio will be

discussed in details in Chapter 4, the review of ICRs clearly shows that (a) acknowledging issues

early on of project implementation and (b) taking remedial actions, either through intensive

supervision and/or restructuring are critically needed to improve the quality.

Quality of ISRs and Candor of Ratings

4 Chapter 2 discusses in detail the challenges in streamlining government procedures to facilitate timely restructuring

of the projects.

20%

33% 40%

0% 0%

50%

14% 14%

0% 0% 0%

33%

0%

20%

40%

60%

EACCF EACIF EACNF EACPF EACTF EACVF

Percentage of long term problem projects at the end of FY14

Percentage of projects in problemstatus for > 24 mos

Percentage of projects in problemstatus for >24mos, but < 30 mos

6

13. Quality and Candor in ISR ratings has improved in Vietnam but further attention is needed. As discussed above, the country team made a concerted effort in assessing ongoing

projects’ implementation status. However, out of 54 active projects in FY14, 85% were rated MS

and above for DO and 84% rated MS and above for IP. These rates are higher than the realism

ratio which indicates that ISR ratings of some projects are still over-optimistic. Figure 2 shows

the active portfolio DO/IP rating distribution of all projects in the Vietnam portfolio at the end of

FY14.

Figure 2: DO/IP Ratings5

14. Progress in disbursments, paricularly those showing a substantial lag, is an important indicator to check the adequacy of project ratings. At the end of FY14 there were

23 projects older than two years which disbursed less than 40%, seven out of them were in

problem status. Out of 40 projects approved between FY08-12, 31 of them (78%) were rated

perfoming satisfactorily. However, only seven of them disbursed more than 40%. Moreover, nine

projects disbursed less than 10% and eight projects less than 20%.6 While some projects have a

good reason to be rated MS or above, as they are in line with the disbursmenet schedule by and

large, it is likely that overall satisfactory ratings are overoptimistic for some other projects.

15. It is worth noting, however, that out of good practice examples of the ISRs of closing projects in EAP in FY13&14, four out of eight and three out of nine ISRs (respectively in

FY13 and FY14) in the region, were from Vietnam. 7

However, almost all ISRs need to

provide a stronger and up to date evidence-based justification for the ratings and ensure

internal consistency. Internal consistency between the ratings and messages in different sections

5 Source: EAP Dashboard, BW data as of June 30, 2014. Note that one IPF project did not have DO rating, but it

was included for IP calculation. 6 Source: EAP Dashboard data for end June 2014. EASDE monitors the slow disbursing projects as part of ABCD

exercise. 7 EAPDE has been reviewing the ISRs in the region for a number of years and providing comments and guidance to

the teams and management. ISRs of the following closing projects in FY13&14 were considered as good practice

examples: Natural Disaster Risk Management, 3rd Rural Finance, 2nd Transmission and Distribution and Avian

and Human Influenza Control in FY14 and Rural Distribution, Priority Infrastructure Investment, RRD RWSS and

System Energy, Equitation and Renewable projects in FY13.

55%

30%

15%

54%

30%

16%

30%

57%

13%

27%

59%

14%

10%

20%

30%

40%

50%

60%

S MS MU

Active Portfolio DO/IP Rating

DO (All)

DO (IPF)

IP (All)

IP (IPF)

7

of the ISR also needs more attention, particularly where DO ratings remain MS or higher. Only

two projects (Hanoi Urban Transport and Hospital Waste Management, both in problem status)

rated Safeguard Compliance as MU; four projects rated Project Management MU or U (Central

North Region Health Support, New Model University, Science & Technology Innovation and

Hospital Waste Management) and only six projects (three of them in problem status) rated

Procurement as MU. Note that none of the Vietnam projects have been assigned a High rating

for overall risk to achieving the Development Objectives. Some long term problem projects

should reconsider the risk ratings.

B. Relative portfolio quality

16. Table 3 further below compares the Vietnam Portfolio quality with the two other large EAP Portfolios: China (CN) and Indonesia (IN), as well as with the overall EAP and

Bank portfolios in FY13&14. The Vietnam Portfolio remains the second largest portfolio in EAP

after China, both in terms of number of projects and net commitments.

17. The stellar realism ratio of 100% of the Vietnam Portfolio has dropped in FY14, and although it still remains higher than the corresponding ratio in the EAP and the Bank, 69% and

61% accordingly, it is now lower than China and Indonesia. Candor gap8, another indicator that

is being used to assess regional portfolio performance, increased from 11.8% to 15.1% in FY14

in Vietnam and is close to the EAP ratio of 15.4%. It is the second lowest gap indicator in the

region and compares with the gap of 6.1% in China/Mongolia and 15.6% in the Pacific Islands.

Indonesia’s candor gap was at 19.7% in FY14.9

18. The Vietnam Portfolio’s Proactivity Index has improved in FY14 but lower than China’s and falls behind the EAP and Bank averages of 64% and 70%, respectively.

Table 3: Comparison of Portfolio Quality in FY13&1410

8 Definition: The difference between % of projects with Satisfactory DO in a FY’s active portfolio (including IPF,

DPO) and IEG Satisfactory outcome based on projects evaluated in the past 18 months as of the date of data

download. 9 Source: Status of EAP Portfolio Performance. EAPDE, June 30, 2014 (available on EAP web page).

10 Sources: Except for Vietnam, data from this table are from the EAP Dashboard for July 2013, data as of July 15,

2013 and EAP Dashboard for July 2014, data as of July 18, 2014. To ensure the comparability of data between

countries, this table uses the data from the EAP Dashboards for July 2013&2014. The figures for Vietnam are based

on the Country Dashboard to ensure the consistency of the report.

FY13 FY14 FY13 FY14 FY13 FY14 FY13 FY14 FY13 FY14

# of Projects 50 52 107 104 33 32 273 287 1540 1646

Net Commitments ($billion) 8.8 9.7 11.1 11.9 7.5 6.6 30.1 31.6 176.2 195.2

Disbursement Ratio (%) 19.9 18.6 18.8 15.8 17.1 23.2 19.6 19.4 20.6 202

# of Projects at Risk 11 8 17 20 5 9 61 58 388 382

# of Problem Projects 11 8 13 18 5 9 47 48 269 285

Realism Ratio (%) 100 80 100 100 51 98 88 69 63 61

Rolling Proactivity (%) 50 50 64 73 83 40 63 64 66 70

Key Indicators/FY13&14VN CN IN EAP Bank

8

C. Duration of preparation and implementation start up

19. Duration of project preparation in Vietnam significantly dropped in FY14 to 16 months from PCN to Board for all type of operations. Historically, preparation time of

investment projects in Vietnam has been quite high compared with EAP and Bank averages;

usually it took approximately two years to prepare a project. Figure 2 below shows the historical

trends of preparation time in Vietnam, EAP and Bank wide.

Figure 3: Elapsed Time from PCN to Board11

20. In FY13 the Vietnam Portfolio Team conducted an analysis to find out whether specific sector or project related factors determine slow preparation. The results of the

analysis showed that none of the examined factors, such as the sector, use of Trust Fund

proceeds along with other funding, Environmental Category or a need for resettlement can

explain a long duration of project preparation. Furthermore, the application of the readiness filter

did not lengthen the preparation time either. Based on the findings and in accordance with the

key preparation activities required from the government and the Bank, the team has proposed an

Action Plan to shorten preparation time. The main highlights of the plan focus on: (i) alignment

of some Bank and government preparation milestones; (ii) tailored funding including use of

“business development” budget, advanced project funding and subsidizing preparation from

active projects where relevant; (iii) aligning ESW and AAA to preparation needs, and (iv)

supporting capacity building of project preparation counterparts.

21. The efforts of the country team have resulted in faster preparation. Project complexity or novelty has also contributed to long gestation periods of some projects in previous

years. The programmatic approach (for two programmatic DPOs) has made it possible to reduce

the overall preparation time. Going forward, the use of the programmatic approach for IPF

operations (SOP) could be considered in order to allow focusing on activities of one phase

11

Source: BW.

FY 09 FY10 FY11 FY12 FY 13 FY14

Average SIL + P4R (VN) 25.6 24.3 25.7 20.6 25.0 19

Average SIL + P4R + AF (VN) 22.3 15.9 18.3 15.1 24.0 19

Average SIL + P4R + DPL (EAP) 15.8 14.5 16.1 16.7 16.6 10.8

Average SIL + P4R + DPL (VN) 16.4 12.7 16.2 13.1 20.7 15.9

Average SIL + P4R + DPL (Bank) 12.4 12.3 12.1 12.1 12.6 10.7

10121416182022242628

Mo

nth

s

Elapsed time from PCN to Board (mos.)

9

instead of on the whole program. The development of realistic project preparation estimates for

different types of projects could help to expedite overall preparation periods.

22. With the improved trends in start up, disbursements in the Vietnam portfolio have improved in FY13&14, but sustaining the achieved levels is a challenge. Further concerted

actions of the government at all levels and the country team will be needed to address a set of

previously identified and newly emerging issues which are discussed in detail in Chapter 2.

Figure 4: Total Elapsed Time from Board Approval to First Disbursements12

Recommendations:

23. The Vietnam portfolio, as discussed above, has strengthened its performance in many areas, including the accelerated project preparation time, disbursement and candor in reporting

implementation problems. The recent trend in realism and proactivity, however, is worrisome as

it points to the portfolio’s decline in quality. The long period required to move problem projects

out of the status is also a concern. The team should focus attention to these areas during the final

year of P-CPPR.

12

Source, Vietnam Portfolio Team.

0

5

10

15

20

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Mo

nth

s

Elapsed Times (Boar - Sign - Effe - Disb)

Effe-Disb

Sign-Effe

Boar-Sign

10

CHAPTER 2: IMPLEMENTATION OF

DISBURSEMENT ACTION PLAN FY14

Disbursement Performance:

24. The overall disbursement continued to perform well, disbursing $1.35 billion in

FY14: investment portfolio $1,036 million, development policy operations $396 million and

the Program for Results $22 million. The disbursement ratio was 19% overall and 21% for

the IDA portfolio. The ratios were slightly lower than the previous year’s achievements and

lagged behind the region’s average because of a large increase in the opening undisbursed

amount13

. Nonetheless, the country’s disbursement performance has seen a continuous

improvement from the 12% to 15% levels of the past.

Figure 5: Vietnam Total Disbursements FY04 – FY14

25. The rural, energy and education sector portfolios had good results, all exceeding the 20%

disbursement ratio. While the rural portfolio continued to perform well as a whole, it is worth

pointing out that it is a result of continuous efforts to proactively turn around non-performing

projects such as the Agriculture Competitiveness Project and Livestock Improvement Project.

Both projects had suffered from slow implementation at an earlier stage. The performance got

turned around in the last two years, which led to a higher disbursement ratio. Intensive

supervision with clear milestones agreed upon with the counterparts has resulted in an improved

13

The opening undisbursed amount increased by $500 million from the previous year as the portfolio grew by

almost $2 billion.

0.42 0.41 0.42 0.48 0.64 0.68

1.72

1.17 1.39 1.36 1.35

15% 13% 12% 12% 13%

15%

19%

15% 16%

20% 19%

0%

5%

10%

15%

20%

25%

0.00

0.50

1.00

1.50

2.00

FY04FY05FY06FY07FY08FY09FY10FY11FY12FY13FY14

Ave

rage

Dis

b R

atio

%

Dis

b in

FY

US$

bil

Vietnam: Total Disbursements (US$ bn) FY04 - FY14

11

status. The energy sector performed well with the experienced counterparts and advanced

procurement preparedness at the Board approval stage. The education sector, on the other hand,

has a unique portfolio mix with one results-based investment, another one “on budget” support

and three regular investment operations. Together with the Global Partnership for Education

project, which has a restricted project implementation period of three years, the results-based

investment and the budget support operations, the disbursement has reached a high level.

26. On the other hand, the urban, transport and health sectors did not perform as well as

expected. For both the transport and urban sectors, a major issue impeding smooth

implementation was the inadequate allocation of counterpart funds for land acquisition and

resettlement, as discussed later in the report. The transport team underwent a sector portfolio

review14

which confirmed issues such as the counterpart’s funds, overly complex procurement

approval processes in the government, inadequate readiness of projects, and the capacity and

decision-making authority of PMUs. The health portfolio suffers from an overly complex

approval procedure at the MOH as well as the relatively weak capacity of departments at the

provincial level. The minister has requested the Bank to thoroughly review the portfolio and

recommend an action plan for improvement; this will be a priority action during FY15. PREM

and FPD have a project each and their disbursement performance is influenced by the project’s

characteristics. Both projects include large and complex ICT packages which have taken a long

period of time in procurement processes. The FPD project has seen an improvement recently

with the signing of several contracts, whereas for the PREM project, an agreement was reached

between MOF and the Bank to cancel it15

.

Figure 6: Disbursement Ratio by Sector

14

The Transport Portfolio Review as discussed with the Vice Minister in charge is attached as Annex 2. 15

More discussions on the project are provided in the section on individual project level actions.

0

10

20

30

40

50

Disbursement Ratio (%) by Sector

(FY12-FY14)

FY12

FY13

FY14

12

Strategic Action Plan of FY14: Achievements and Challenges

Achievements:

27. The Strategic Action Plan on Disbursement was initiated in late FY12 to address the

bottlenecks of implementing investment operations. The first action plan resulted in

significant achievements, increasing the IDA disbursement ratio to the 20% level for the first

time in history.

28. The Action Plan of FY14 was initiated in September 2013, focusing on three levels:

institutional, portfolio and project levels, and using the lessons of the first year. At the

institutional level, it specifically focused on the implementation circulars of the new ODA

Decree, Procurement and Land Laws as they most affect the implementation of operations. At

the portfolio level, concerted efforts were made to address the capacity of PMUs and to remove

the perceived bottlenecks on procurement. At the project level, concerted efforts were made to

restructure problem projects and to improve the performance of these projects.

29. Achievements during FY14 have been positive. Perhaps the most noteworthy

achievements, while not directly impacting short-term disbursement performance, are the good

outcomes on the revision of Procurement Law and Land Law, a reinforced working relationship

with the National ODA Steering Committee led by the Deputy Prime Minister in charge of ODA,

and an excellent progress made on the PMUs’ capacity building. Several projects also saw a

major turnaround and started to achieve the intended results as discussed later in this report. Yet,

new issues have emerged which have hampered the smooth implementation of projects.

30. Revisions to the Procurement and Land Laws promise to pave the way for better

ODA project management. During the fiscal year, the revisions to these two critical laws were

approved by the National Assembly and became effective as of July 2014. The Bank teams

worked very closely with the government counterparts to make the laws more in line with

international best practices. The teams are now working on implementation decrees which are

expected to impact the ODA-financed projects positively, as steps to streamline and eliminate

overly complex procedures for approval on procurement and land related transactions are

incorporated. On the Land Law, the revision clearly recognizes the ODA-funded projects’

resettlement policy requirements and eliminates a Prime Minister approval process on the

resettlement policy framework which was previously required for Bank-financed projects.

31. A solid working relationship was established with the new ODA National Steering

Committee, and a series of sessions resulted in concrete actions from the Government.16

The Committee was established in January 2013 to propose to the Prime Minister policies on

resource mobilization and management of ODA, address issues pertaining to ODA programming

16

See Annex 3 for the details of the Committee and its instructions to the Project Owners to improve the ODA

project performance.

13

and implementation, and to promote dialogue with donors, especially the large development

partners including the Six Development Banks17

(6 Banks). The 6 Banks has engaged with the

Committee to raise structural issues such as the adequate provision of counterpart funds, the use

of ODA resources for land acquisition and resettlement compensation, and the PMU capacity.

The dialogues led the Committee to issue a series of instructions to improve the investment

projects’ performance. One of the key decisions is to professionalize the capacity of PMUs,

while at the same time acknowledging the capacity issue of PMUs. MPI was instructed to

prepare a country-wide capacity building program for PMUs. The 6 Banks have agreed to

support MPI for the initiative, with the World Bank taking the lead in a scoping study for the

program.

32. At the portfolio level, one of the key outcomes from the Action Plan was the roll out

of a structured training program for PMU staff members. As discussed in Chapter 3 the

program, which was developed based on the first PMU survey conducted in FY13, covered

general project management issues, fiduciary and safeguards’ aspects, and monitoring and

evaluation. The feedback from the trainees was overwhelmingly positive. The second year PMU

survey confirmed the effectiveness of the training program as can be seen in the figure below.

Figure 7: Impact of FY14 training program on staff performance

33. At the project level, out of nine problem projects at the end of FY13, two

restructurings were completed, one project was upgraded and another one was closed. In

addition, a key decision was made between the government and the Bank to cancel a long 17

Asian Development Bank, Agency for Development, Korea EXIM, KFW, Japan International Cooperation

Agency and the World Bank.

14

standing, slow disbursing project managed by MOF. The rolling proactivity ratio has thus risen

to 54.5% at the beginning of FY15 from the 50% level at the start of FY14.

Challenges:

34. Despite the achievements, newer issues emerged in FY14 that limited smooth

disbursement activities. The government faced serious budgetary constraints during FY14 and a

number of measures were undertaken by the MOF to control expenditures of investment

operations, including the ODA projects. One such action was to limit the total amount that a

project owner can pay as an advance payment to contractors. This was directed by the Prime

Minister’s instruction 1792 and has had negative impacts on the withdrawal applications of

infrastructure projects requiring large contracts. The Bank’s transport projects were adversely

affected by this decision, requiring a couple of PMUs to split the payments into smaller amounts

in order to circumvent instruction 1792. While the ODA projects were eventually exempted from

the instruction, this incident highlighted the need for a better and proactive dialogue with MOF

on the overall portfolio management.

35. The budget situation also seriously affected the allocation of counterpart funds for

land acquisition and resettlement. Projects in the urban and transport sectors have been

affected the most. As a result of the 6 Banks’ discussion with the National ODA Steering

Committee, the government has issued bonds to allocate funds to ODA-supported projects in

2013. The allocation, however, has not been adequate for 2014. The transport team estimates that

over $1.2 billion worth of civil works under the Bank’s transport projects are affected by the lack

of $130 million counterpart funds. In order to avoid further delays, the ADB and the Bank have

started to discuss with the MPI and MOF possible use of Bank/ADB financial resources for land

acquisition and resettlement. Currently, the government is reluctant to let project owners to use

ODA resources for land and resettlement compensation. The issue will be pursued further and

together with other development banks during FY15.

36. The revised Constitution, which took effect as of January 2014, has instituted an

additional process for approving negotiations, signing and effectiveness of the World Bank

financing agreements. This requirement has lengthened the time needed for negotiations.

Previously, the State Bank of Vietnam (SBV) required 45 days to obtain authorization for

negotiations from the date the invitation to negotiate was issued. It now requires additional seven

to 10 days for them to receive such authorization. The Bank has suggested measures to the SBV

and to the Ministry of Foreign Affairs to shorten the procedures and will review the experience

of the first year to once again engage with them for accelerating the process.

37. On the institutional level support, one of the actions that the Bank together with

other five development banks took, was to make the ODA circulars clear and consistent

with other regulations. Two circulars related to the new ODA Decree were prepared with

inputs from the Six Banks. While some issues were further clarified, such as the advance

15

procurement activities, these circulars accompanying Decree 38 did not fully address the

concerns of the ODA donors. Specifically, the circular on financial management could have

promoted the use of country systems and efficiency further. Suggestions from the Bank included,

for example, the risk-based verification of the State Treasury, an approval of a multi-year plan

which will be used as basis for annual budget allocation, and an adoption of e-transactions for

withdrawal applications process. These were not included in the revised circular. Nonetheless,

the country team plans to continue working with the government to seize any opportunity to

address these systemic issues so that the ODA management becomes clearer, is consistent with

the government’s overall public investment and debt management policies, and brings about

accelerated implementation.

38. As to the individual project, despite the efforts made by the teams, the process of

restructuring takes a long time given the government’s process of requiring an approval from

the Prime Minister for even a simple extension of a project’s closing date. Together with the

development partners, the Bank will continue to request the government to streamline the

process and to delegate authority for non-substantial decisions to lower levels. The proactivity

ratio should be improved in FY15.

Moving Forward

39. It is clear that the disbursement performance continues to need close attention from

the entire country team and the management at the institutional, portfolio and project

levels as discussed above. Concerted efforts are necessary to maintain the improved

performance of the Vietnam portfolio disbursement. The joint efforts with other development

partners to address systemic issues, such as the restrictions on the advance payments for

contractors, will continue via the National ODA Steering Committee.

16

CHAPTER 3: VIEWS FROM THE PROJECT MANAGEMENT UNITS

(PMUS)

PMU Survey Results and Lessons from the PMU Training Program

40. The ODA Program in Vietnam generated a large number of Project Management Units (PMUs) at the central government level as well as at the provincial level. This is partly

because the previous ODA decrees mandated Project Owners to establish a unit to manage an

ODA project regardless of its size and content. Also, the country’s decentralization of investment

management has encouraged the provinces to establish their own units in implementing ODA

projects. While they are all established within the government and very few PMUs exist outside

the government structure, the proliferation of PMUs18

and their relative weak capacity, especially

at the provincial level, have been identified as challenges for smooth implementation by many

development partners19

. In addition to the capacity issue, the PMUs are often not provided with

decision-making authority on key actions, such as procurement decisions, and often they wait for

the responsible ministry and/or Provincial People’s Committee to approve their decisions.

PMU Survey of FY13

41. To understand the implementation issues from the PMU perspective, a first PMU survey was conducted in April 2013. The survey covered 64 PMUs at the central government

level and 225 PPMUs at the provincial level and received responses from 59% of PMUs and

66% of PPMUs. The results served to (a) identify areas where the Bank team’s support is most

needed; (b) develop a comprehensive training program for PMU staff members and (c) provide

feedback to the central government officials who oversee the portfolio of the World Bank.

42. The FY13 survey identified a number of issues relevant to smooth project

implementation. Three issues stood out in the first Survey. First, at the project design stage,

while the central PMU often played an active role in the design, the provincial PMUs appeared

to have limited involvement. Provincial PMUs were not adequately consulted, beneficiaries were

not properly identified at the provincial level, and the risk mitigation measures could have been

strengthened. The provincial PMUs’ relatively inactive role during the project design stage has

been considered as one of the factors leading to their lack of ownership of the project. Secondly,

during project implementation, procurement seemed to have been a major issue. In addition, an

approval/clearance procedure and a lack of counterpart funds were pointed out as delaying the

implementation. Thirdly, both central and provincial PMUs confirmed the need for further

training opportunities as they believe that the opportunity to learn while working at the PMU is

one of the most effective motivational tools for staff members. These issues were shared with the

Bank operational staff and were addressed in part via a comprehensive training program.

Comprehensive Training Program

18

There are close to 300 PMUs for the World Bank-supported 52 projects as each province created one provincial

level PMU for their component. 19

See P-CPPR FY13 Chapter 3 for further discussions on the PMU structure and issues.

17

43. Based on the findings from the FY13 survey, a comprehensive training program on

Bank policies and procedures was designed for PMU directors, project managers and staff

members and rolled out between September 2013 and March 2014. It focused on overall

project management, procurement, financial management, safeguards’ issues and monitoring and

evaluation topics.

Figure 8: Participants for FY14 training programs

44. The program was designed to address the learning needs of new and experienced PMU

staff members, and was offered to a total of 758 participants in FY14. The training was delivered

mostly by the World Bank Country Office staff members from the FM, Procurement, Safeguard,

Disbursement and Portfolio teams.

45. The assessment of the training program was overwhelmingly positive. Participants

requested for the program to be continued with emphasis on using “more scenarios and/or real

cases so that the participants can discuss and learn from the cases”, and also requested additional

time for group work and peer learning. Participants also suggested to include other countries’

experiences and the creation of a PMU forum or network for knowledge and experience sharing.

18

Figure 8: Post course evaluation for Procurement module

46. Due to the very positive feedback from participants, the Country Office plans to continue

the training program in FY15. However, the program needs to be sustainable and manageable by

the operational staff in the office. The team has started to look into possible twinning

arrangements with universities and/or training institutes so that in the medium term, the program

can be managed by a professional training institute on a fee-for-service basis. In addition, the

MPI has been tasked by the National ODA Steering Committee to roll out a comprehensive

training program of all ODA PMUs. The materials of the World Bank’s training program could

also be transferred to the MPI-supported program. The team will continue exploring all the

options.

PMU Survey of FY14

47. A second PMU survey was conducted between April and May of 2014 to continue

identifying implementation issues and also to determine the opinion of PMUs a year after

the comprehensive training program had been conducted. The survey had good responses

from the PMUs and PPMUs. The Bank’s project implementation support is deemed very positive.

Interesting observations emerged regarding issues affecting smooth project implementation.

While FY13’s survey identified the “procurement process” as the most important issue, FY14’s

survey named the “approval and clearance procedures” of the government and the Bank as the

number one issue affecting project implementation, followed by land acquisition. The

procurement process was ranked as the fourth issue in the FY14 survey.

19

Figure 10: Responses on major issues affecting implementing progress

48. While the survey findings need to be carefully verified with face to face discussions, they

provide useful information for the Bank’s team to provide better support for smoother project

implementation. The team intends to continue conducting the survey on an annual basis to gather

information about the PMUs’ concerns and to improve the support from the Bank’s operational

team.

20

CHAPTER 4: MAIN LESSONS FROM 2012 – 2013 ICRS

A. Overview

49. Sixteen Implementation Completion and Results Reports (ICR) – eight per year - were completed during calendar years 2012 and 2013. Of these, 13 were for investment

operations (12 Specific Investment Loans and one Financial Intermediary Loan), and three were

for Development Policy Loans (DPLs). Eleven of these ICRs (including one DPO) have been

reviewed by the Independent Evaluation Group (IEG) (see Table 4 and 5).

50. Most of the ICRs rated project development outcomes (DO) and performance positively: 14 out of 16 ICRs rated project outcomes Moderately Satisfactory or better, and 14

rated the risk to development outcome to be Moderate or Low. Similarly, Quality at Entry and of

Supervision were rated Moderately Satisfactory or better in the vast majority of cases (12and 14

respectively).

51. ICR assessments were generally more positive than the IEG reviews.. Of the 11 ICRs reviewed by IEG, more than a third (4/11) were rated Moderately Unsatisfactory on

outcome, while the risk to development outcome was rated Significant in 5 of the reviewed

projects. IEG also rated Quality at Entry Moderately Unsatisfactory in 5 of reviewed ICRs, while

Quality of Supervision ratings were more closely aligned, with 9 being rated Moderately

Satisfactory or better. While for FY12 closings IEG only rated one additional project as MU

compared to the ICR self-assessments, for FY13 ones the difference was more marked, with the

ICRs rating all projects MS, and IEG rating one of them MU and one U. Of the five projects that

closed in FY13 and whose ICRs have not yet been reviewed by IEG, two were rated S, two MS,

and one MU.

Table 4: ICR PDO Ratings ICRs vs. IEG Reviews – FY12 and FY13 Exits

Exit FY FY12 FY13

ICR IEG ICR IEG

Satisfactory 2 3

Moderately

Satisfactory

4 2 4 2

Moderately

Unsatisfactory

1 2 1

Unsatisfactory 1

Sub-total 7 7 4 4

21

B. Key lessons from ICRs and IEG ICR reviews

1 Investment Lending Operations

Cross-cutting lessons

52. The key lessons summarized below emerged from the ICRs themselves, as well as from the IEG reviews of the ICRs. While project-specific and more technical lessons were also

highlighted across ICRs, the focus below is on cross-portfolio lessons that, although to varying

degrees and depending on the context, apply to most of the reviewed operations.

53. Simplicity of design helps accelerate implementation and reduce implementation efforts and costs. In both the Road Safety Project and Water Resources Assistance Project

(P065898)20, IEG found the design to be overly complex. The Road Safety Project included 18

sub-components, which triggered the procurement of more than 60 packages, involved 63 cities

and provinces all over Vietnam, posing serious implementation challenges compounded by a

lack of clear and effective institutional arrangements. Similarly, during the implementation phase

of the Water Resource Assistance Project it proved difficult to handle the “myriad of activities

targeted at appraisal”, and the conclusion was that two separate projects would have been

advisable to address the two broad thrusts of irrigation and agricultural improvement on one side,

and water resources management and dam safety on the other. Both these operations closed with

a Moderately Satisfactory outcome rating, but at the cost of lengthy duration and intensive

supervision efforts, which could have otherwise focused elsewhere. The System Efficiency

project21, on the other hand, was rated MU by IEG, on the basis that it tried to address too many

objectives, and in doing so the project became too ambitious and very complex.

54. A well-designed and measurable PDO is critical, but needs to be accompanied by good quality M&E. PDOs were found, for the most part, to be relevant and measurable. In the

case of the HCMC Environmental Sanitation Project, the PDO was found to be overly ambitious

and generic, and thus difficult to measure and attribute to the project’s activities. The project,

however, underwent a Level 1 restructuring and eventually closed with an MS rating for

outcome. At the same time, the quality of M&E was rated Modest in all the ICRs reviewed by

IEG (see paragraph 2.1), due to weaknesses in M&E design and/or implementation. Ultimately,

these shortcomings prevent a fully adequate measurement of project development objectives,

regardless of how well formulated they are. It is thus important that well-designed PDOs are

supported by M&E frameworks that are as well designed and implemented.

55. More regular monitoring, from the onset, is necessary to detect issues on a timely basis. Lack of early detection of issues has led to poor supervision quality and, in turn, to delays

and less than satisfactory outcomes. In the case of the Road Safety Project (P085080) 22

the

disbursement ratio was below 8 percent during the first two years of implementation, but Bank

formal supervision remained limited in spite of this. Prior to the project being flagged as being in

20

Source: IEG ICR Review 21

Source: IEG ICR Review 22

Source: IEG ICR Review 22

Source: IEG ICR Review

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22

a problem status in July 2008, only three official supervision missions had been conducted, while

only three ISRs had been completed - one in 2006, one in 2007, and one in 2008. As a result, and

also because of the complex institutional arrangements and the high number of packages in the

project design, procurement problems were not thoroughly followed up and the closing date had

to be extended twice.

56. Both quality and timing of remedial actions are important. Most notably, all the operations whose outcome rating were Moderately Unsatisfactory or less, have had very late

restructurings, with the exception of the System Energy, Equitization and Renewable Project, or

no restructuring at all (as was the case for the Public Investment Reform 2 Project). Furthermore,

all the restructurings were Level 2, mostly involving reallocations of funds, extensions, and

revisions of results indicators (see Table 5). The Road Network project, whose outcome was

rated MU both in the ICR and in IEG’s ICR review, underwent a Level 2 restructuring almost

eight years after approval and seven months from the closing date, involving reallocation of

credit proceeds, inclusion of new implementing agencies, and a revision of indicators. However,

while the IEG review acknowledges that design was overall robust and highly relevant, it also

points to substantive issues that were not adequately addressed, and resulted in a less than

satisfactory outcome and Bank supervision quality. The HIFU Development Project, whose

outcome was rated Unsatisfactory by IEG, underwent a restructuring to revise some outcome

indicators 1.5 years before closing. Nonetheless, outcome was rated Unsatisfactory by IEG on

the grounds that the Project’s results framework did not provide adequate measures of outcomes

and efficacy, and on the modest relevance of the objective and design. Cases like this suggest

that a Level 1 restructuring of the PDO may at times be more appropriate. The Urban Water

Supply Development Project, rated MU, underwent a comprehensive Level 2 restructuring only

12 months before the closing date, despite a history of unsatisfactory performance dating back to

2007, and reflected in various ISRs. Finally, the System Energy, Equitization and Renewable

Project was restructured five times, but nonetheless closed with an MU outcome rating by IEG.

These cases suggest the need for more timely and correct adequate identification of issues and

their resolution. The appropriateness of the selected level of restructurings, as noted above, may

also need to be monitored closely, to ensure that PDO-level design issues are adequately

addressed.

57. Proactive implementation support makes a difference, particularly for more problematic or complex operations. While design issues should be ideally resolved through an

early restructuring, a number of ICR reviews noted that proactive Bank support and interactions

with the implementing agency and other stakeholders often compensated for some of the

structural issues, and helped in addressing issues and thus accelerate implementation.

64. Implementation capacity needs to be carefully assessed upfront, to ensure adequate

and feasible designs, and/or to introduce remedial actions to compensate for any

shortcomings. In the case of the System Effectiveness Project, despite the considerable

experience gained under other Bank operations in Vietnam, IEG found that the implementation

capacity was overestimated across the board, which led to serious implementation delays. In

particular, there ICR review refers to a lack of realism regarding the actual capacity of the local

organizations.

23

65. A project with significant innovation needs adequate time for project preparation

and subsequent familiarization with stakeholders. This was noted for the Water Resource

Assistance Project,23

where detailed designs for the new structures in the irrigation

modernization program were only partly ready at project commencement. Software areas such as

modernization guidelines, performance benchmarking and computerized water control plans

were developed only at the end of the project.

2 Monitoring & Evaluation

66. M&E quality was rated Modest in all of the ICRs. Although individual operations display aspects of M&E design and/or implementation that are strong, in general there were a

number of shortcomings, the main ones of which are highlighted below:

67. Weakness in baseline quality and reliability, preventing adequate measurement of changes during implementation. In the Road Safety project, for example, the baselines were

found to be based on unreliable and inappropriate data for the Vietnam context. The IEG review

noted that this issue was addressed by including a contract for monitoring and evaluation which

confirmed the problem of significant data underreporting and inconsistencies across sources.

However, because the results of this M&E work were only available at the end of the project,

they could not be effectively utilized.

68. Output focus of M&E frameworks. From the ICR review it emerged that the focus of the Results Frameworks should increasingly shift towards measuring outcomes and a closer link

to the PDO. In the case of the Water Resources Project, for example, most monitorable indicators

measured outputs (such as new irrigated area) without considering outcomes (e.g. changes in

agricultural productivity). In the Mekong Regional Health Support project24

, a QAG review

found that the intermediate result indicators were not adequately formulated to measure the

achievement of the project with reasonable validity and accuracy. The initial set of indicators

was considered as lacking focus on outcomes, not specific on quality dimension to be measured,

and vaguely formulated on patient satisfaction. This issue was eventually addressed through a

restructuring. Similar issues were identified for the Water Resource Assistance Project, where

indicators were mostly related to outputs rather than outcomes.

69. Implementation and utilization of M&E should be an integral part of the M&E framework. The HCMC Environmental Sanitation Project, for example, posed a lack of

evidence and attribution issue, with regard to its objective. Specifically, the public health impact

of the project was not adequately monitored, as data on sanitary and health conditions of affected

beneficiaries was collected by the Department of Health only up to 2006, whereas the project

closed in 2012.

3 Development Lending Operations

70. Several factors make the Vietnam DPOs effective development support instrument for the Government. These include:

23

Source: IEG ICR Review 24

Source: IEG ICR Review

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24

a. Overall strong ownership: All three DPOs benefitted from strong Government ownership of the reform agenda. In the case of PSRC, although the commitment to

key structural reforms, such as SOE reform, wanted in the later part of the series,

authorities exhibited a strong and sustained push to meet the high level goal of

achieving middle income status, which yielded a positive enabling environment for

the reform dialogue especially in the first half of the series.

b. Solid, underpinning analytical work: The DPLs benefitted from supporting analytical work, including technical assistance, in the identification of potential prior

actions and triggers. The Vietnam Development Report (VDRs) supporting the PRSC

program is a good example of a underpinning work which benefitted from

contributions by a large number of development. Topics were chosen to link closely

with the policy actions supported by the PRSCs, including individual reports covering

each of the four pillars.

c. Close cooperation and complementarity with Development Partners (DP): The Bank took the lead in coordinating the contributions of key DPs to the policy actions

supported under the development lending operations. The PRSC series, as noted

above with regard to the VDR, served as an effective framework for policy dialogue

and interactions between the government and donors. The benefits were fundamental

and manifold. An Independent Evaluation Group review in 2009 found the Vietnam

PRSC series to be exemplary in its predictability, continuity, and development partner

coordination. At the same time, the Bank bore the coordination cost, especially in

prioritizing the policy actions proposed by various DPs. In the case of PRSC6, 198

policy actions were proposed by 10 DPs, which the Bank had to prioritize into a

concise list for discussion with Government.

71. At the same time, DPOs pose specific challenges, some of which were highlighted as part of the ICR reviews.

a. DPO leverage has been, at times, limited. The budget support modality provided less leverage to the Bank and other DPs in pressing for deeper reforms, particularly in

public procurement and community participation procurement, as these require the

participation of line ministries in time intensive dialogue. In addition, in order to be

successful, complex decentralization reforms need to be long term, gradual and on an

extended time scale (e.g., five to ten years) with active engagement at both the

national and sub-national levels of government. Actions and reforms at the national

level (e.g., enhanced financial reporting and auditing, baseline and end line surveys)

were more successful than those that were implemented at the local level (e.g.,

demand driven approach, community contracting, land acquisition and resettlement).

b. Measuring results stemming from policy actions is difficult, and requires balancing higher-level outcomes with realistic indicators and targets that can be measured

within the DPO timeframe. The annual cycle of the DPLs contributed to the

difficulty in framing an appropriate results framework (RF). ICRs found the RFs to be

25

unrealistic, as more time was needed for realization of some targets. Issues included:

Government procedures for issuing legal documents; and coordination issues among

Government agencies. There was lack of clarity in the policy monitoring matrix on

how the policy actions in a particular area tied together over time toward a specific

goal. There were also too many indicators, e.g., in the case of the PRSCs, 12 of the 51

original monitoring indicators were dropped either due to conceptual or data issues.

26

Table 5: Detailed list of IEG ICR Review Ratings and ICR WB Rating

27

CHAPTER 5: MOVING FORWARD

72. The Second year review showed good achievements in the accelerated project

preparation time, disbursement performance, and PMU training. The country team’s recent

efforts in improving the quality and candor of ISRs, addressing systemic issues hampering

smooth implementation, and intensified working relationship with the government’s National

ODA Steering Committee have contributed to the first goal of Programmatic CPPR; faster and

better results.

73. Yet, many issues have been identified as needing attention. The most critical of all is

the decline in portfolio quality, which have affected the indicators in many ways; realism,

proactivity, and disconnect between IEG ratings and the team’s ratings. The review also

points out the long time it takes to make problem projects out from the status. The need for much

more decisive actions in addressing the problem projects is clear. The candor in assessing the

implementation of projects early in their implementation stage is questionable. The ICR review

also points out the need for much more attention at the design stage with a sharper focus on the

design of results framework and Monitoring and Evaluation framework. It also points out to the

stronger support during the implementation period – proactively support the counterparts and

address obstacles early on.

74. With the above, the final year of P-CPPR, FY15, will address the following areas so

that the portfolio will achieve the objectives laid out at the beginning of P-CPPR: Improving

Operational Efficiency for Achieving Results Faster.

a. Continue the efforts in improving the quality of portfolio. For the ongoing

projects, this may involve taking decisive actions for long term problem status

projects and identifying/addressing obstacles for projects in early stage of

implementation. For new operations, strengthening the results framework design is

crucial. The country team will enlist support from M&E specialists.

b. Expand the ICR review of CPPR FY14 and identify areas for support to the

teams. Chapter 4 already points to many factors that led to a decline in the portfolio’s

outcomes. During FY15, further efforts will be made to understand factors leading to

the decline and an action plan will be prepared to address the issues.

c. Revise the Disbursement Action Plan and continue the country team’s efforts in

maintaining the good performance over the past two years. The team will work with

the ODA National Steering Committee to support the government’s efforts in

improving the disbursement performance and tackling obstacles, including the

possible use of ODA resources for land acquisition and resettlement.

And;

d. Continue working closely with the National ODA Steering Committee to

improve the country’s ODA management. The Committee requested the

28

development partners’ support in revising the ODA Decree, prepare a new External

Financing Strategy for 2016 to 2020, and continue working on action plans to move

problem projects out of the status and strengthen the capacity of PMUs.

29

ANNEX 1: FY13-15 Results Framework

Programmatic Country Portfolio Performance Review FY13 - FY15

P-CPPR Outcomes 1st year actions 2

nd year actions 3

rd year actions

Portfolio proactively managed for better

results

Proactivity ratio improved from 25% in FY12 to 80% in FY15

Projects at risk improved from 19.6% in FY12 to around 15% in

FY15

All problem projects having a clear time bound action plan for

improvement FY12 FY13 FY14

Proactivity

ratio

25.0% 50.0% 50%

Project at risk 19.6% 19.0% 16.7%

* ISR Review [Realistic

assessment of project

ratings; time bound action

plan for improvement for

problem projects prepared]

* Proactive engagement

with MPI for DPM’s

meeting with project

owners of problem

projects

*Addressing cross cutting

issues arising from

problem projects review

* Second ISR Review

[Realistic assessment of

project ratings; time bound

action plan for

improvement for problem

projects prepared]

Proactive engagement

with MPI for DPM’s

meeting with project

owners of problem

projects

*Integrated fiduciary

assessment conducted

* Third ISR Review [Realistic assessment of

project ratings; time bound action plan for

improvement for problem projects prepared]

*Detailed problem projects review conducted with

at least two long term problem projects get out

from the status

*National ODA Steering Committee and 6

Banks agree on concerted efforts in taking the

problem projects out from the status in less

than a year with decisive actions.

*IEG ICR evaluation reports for the past 10

years carefully reviewed, lessons clearly

identified for overall portfolio and used for

new operations.

Accelerated implementation of SILs

Disbursement ratio increased to 22% for IDA for FY13, 14, 15

Board to Effectiveness time shortened from 6 months in FY12

to 3 months in FY15

First year disbursement for new projects exceeds 10% in FY14 and

FY15

*Disbursement Action

Plan acted upon

*Elapsed time from Board

to Effectiveness time

discussed with SBV and

MOJ and agreements

reached on necessary steps

*Learn from peers on

* Disbursement Action

Plan updated and acted

upon

*IDF grant for MOJ

implemented and

streamlined ODA

management measures

agreed

*Disbursement Action Plan updated and

acted upon

*Use of ODA resources for land acquisition

and resettlement piloted for a Bank project

*ODA Decree revised with streamlined

Government procedures; supported by the 6

Banks

30

FY12 FY13 FY14

IDA Disb.

ratio

18.8% 21.1% 20.8%

Board to

Eff. Time

5.7 months 4.7 months 5

months

modality and tools

(Indonesia and China)

*Review of FY11, 12 and

13 projects on their

readiness and

disbursement performance

of its first year; Readiness

filter critically reviewed

Strengthened capacity of sub-national

PMUs

# of PPMUs reduced or re-used for new projects from over 300 in

FY12

Satisfactory rating of Project Management Training

* PMU survey conducted

to assess the current set up

* Provincial Portfolio

Review conducted (#2)

and lessons from the first

and second distilled

* PMU survey conducted

*Structured PMU training

on project management

launched

*Provincial Portfolio

Review #3 and lessons

shared

*PMU workshop

conducted to follow up on

the discussions held in

June 2012

* PMU survey conducted

*Structured PMU training continuously

implemented

* Provincial Portfolio Review #4 and lessons

shared

31

ANNEX 2: Transport Portfolio Review

Transport Portfolio Review (ML, 12Aug2014).pdf

Transport Portfolio Review (Minutes, 12Aug2014).pdf

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ANNEX 3: Dialogue with the National ODA Steering Committee

1. The National ODA Steering Committee (NODASC) was established on 23 January 2013, under the Decision No. 216/QD-TTg of the Prime Minister with the key tasks of:

Proposing to the Prime Minister on the orientation, directions and policies along the mobilization and management of ODA and concessional loans;

Assisting the Prime Minister in coordinating the line ministries and provinces to take measures to resolve cross-cutting issues under their authorities with regards to the

preparation and implementation of the ODA programs and projects and to accelerate

the progress of ODA programs and projects;

Promoting dialogues with donors or donor groups to seek for consensus with the orientation, policies of the government at the macro level in mobilization,

management and utilization of ODA and concessional loans; directing the realization

of commitments and enhancing aid effectiveness.

2. NODASC is chaired by the Deputy Prime Minister H.E. Mr. Hoang Trung Hai and vice-chaired by the Minister of Planning and Investment H.E. Mr. Bui Quang Vinh. The members of

the NSC include Vice Ministers of the Ministries: Planning and Investment, Finance, Foreign

Affairs, Construction, Natural Resources and Environment, Transportation, Agricultural and

Rural Development, Industry and Trade, Health, Education and Training, and Deputy Governor

of State Bank of Viet Nam, Vice Chairman of Office of Government, Vice Chairman of Hanoi

People’s Committee and Vice Chairman of Ho Chi Minh city People’s Committee (See Prime

Minister’s Decision #216 in Attachments).

3. On 29 March 2014, DPM Hoang Trung Hai chaired the first joint NODASC and Six Banks’ Meeting in Ha Noi. The meeting focused on discussing the issues and recommended

actions to be taken for improving performance of the selected problem projects of the Six Banks.

The meeting also discussed the cross-cutting issues for further accelerating the pace of project

implementation and disbursement of the Six banks’ programs and projects, especially the

meeting focused on the following areas: (i) counterpart funds (ii) land compensation and

resettlement (iii) procurement and financial management (iv) PMU capacity building (v) impact

of Constitution 2013 on the negotiation, signing and implementation of international agreements;

(vi) enhanced transparency and anti-corruption, and (vi) coordination and problem solving

regime.

4. Based on the results of the first joint meeting, on 10 April 2014 the Prime Minister’s Office issued the instruction No: 149/TB-VPCP to assign the line ministries and provinces under

their authorities to resolve problems arising in the process of preparing and implementing

programs and projects financed by the Six Banks (See OOG’s Instruction #149 in Attachments)

5. Several follow up meetings were held internally among the government agencies as well as jointly with the development partners. Among the key meetings were the joint meeting of the

Ministry of Finance with ADB and WB to address the payment limit by 30% of the annual

budget plan as promulgated under the government’s instruction #1792. In addition, quite a few

number of follow up meetings were held by DPM Hoang Trung Hai with the line ministries

(ADB and WB were also invited) to review the business timeline for negotiations, signing and

effectiveness of the ADB and WB operations. MPI and WB also started working on the PMU

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capacity building through a study on PMU Scoping Study. (See PM’s Instructions #870/TTg-

KTTH and MOF’s Instruction #1365/KBNN-KSC in Attachments.)

6. The most achievable outcomes of the collaboration with the NODASC can be seen in the payment processing i.e. removal of the payment limit by 30% of the annual budget plan, as well

as in shortening the government processing for negotiation, and signing of the FY14 operations

which partly contributed to improve the WB’s FY14 delivery as well as the disbursement

performance.

7. Another major initiative of the NODASC was the Prime Minister’s approval for the launching of the Action Plan for improving the performance of ODA programs, projects and

concessional loans in the period of 2014-2015, which is designed for further accelerating and

upgrading ODA project performance (Decision No: 1257/QD-TTg dated July 25, 2014). This

was started by supporting the 25-points categorized under the six-action plan for implementation

in 2014 and 2015 (See Prime Minister’s Decision #1257 in Attachments). The Action Plan

covered the key activities of the OOG’s instruction No: 149/TB-VPCP and some new activities

that had emerged as constraints on investment performance.

(i) Developing strategies, policies for ODA and concessional loans

(ii) Improving legal framework and institution of ODA and concessional loan

(iii) Improving the quality of program and project documents, ensuring the negotiation and signing progress of international treaties

(iv) Enhancing capacity for project management and implementation

(v) Increasing responsibility of different levels in handling difficulties and constraints; transparency, anti-corruption enhancement

(vi) Enhancing supervision and evaluation

8. Future activities with the NODASC: in the coming period, the WB together with the other development partners will maintain discussions on the future agenda with NODASC

through occasional meetings during the year. Main points that emerged for these meetings are as

follows:

Maintain a close interest in the revision of Decree 38 and exchange views with the drafting committee when needed;

Bi-annual meetings with NODASC to review the implementation status of problem projects and reviewing progress with implementing previous recommendations;

Review of portfolio performance in one or two key sectors (Transport and Urban?). Specific issues such as counterpart fund allocation; use of donor funds for land

compensation and resettlement; on-lending arrangement to the provinces will be

selected for the discussion;

Special studies on topics of concern e.g. PMU capacity building.

In File:

i) Prime Minister’s Decision on establishment of the National ODA Steering Committee ii) Prime Minister Office’s Instruction for the 1st ODASC Meeting

34

iii) Prime Minister’s approval on Action Plan for improving the performance of ODA programs, projects and concessional loans in the period of 2014-2015

iv) PM’s Instructions #870/TTg-KTTH v) MOF’s Instruction #1365/KBNN-KSC