Due to the above issues, Vietnam “National Road Maintenance Fund” wasestablished in December 2012 and officially activated on January 2013 by the Decision of Government with the goals th
LIST OF TABLES
INTRODUCTION Background
In Vietnam and most other countries in the world, road transportation is a major mode and accounted for the biggest portion of inland transportation Trend of social-economic development is ongoing to increase in the coming years In order to meet increasing road transportation demand, beside investment in new road infrastructure, further supplementation into existing road network, rehabilitation and upgrading existing roads, road management and maintenance is certainly not only an important strategy to extend road network life cycle, but also an important task in road transportation infrastructure management strategy.
For the last two decades, Vietnam road network has reached a significant progress in both quantity and quality as it could be said In 1993, the WB and ADB officially kicked off a comprehensive renovation on road network via funding for Vietnam Government for ODA projects of National Highway 1 Rehabilitation Projects This National Highway | 1s considered as the backbone of the road transportation system nationwide and connectivity from a very up-north point to a very down-south point of the nation Right after these donors, it was also involvement the Government of Japan who reserved ODA project financing through
JICA for upgrading the National Highway 5 (NH5) which is an important commercial route connecting Hai Phong sea port which is the biggest in the north of the country to Hanoi capital More and more donors then agreed with Vietnam Government to complete a lot of big road infrastructure projects, which connect cities, focal point economic regions, airport terminals, seaports and national border corridors with Lao PDR, China, the Kingdom of Thailand and the Kingdom of Cambodia.
Developed road transportation has ensured goods circulation demand among regions in the country and among neighboring countries; timely solved people’s traveling demand to facilitate exploitation of regional potential, considered as economic structure transition; and contributed in the task of poverty eradication and poor mitigation in the remote and isolated areas.
During the process of operation of a certain road, maintenance is a necessary task and a must as required to maintain the existing technical specifications and sustainability of such road, ensure traffic safety on that road and utilize investment efficiency In fact, this road maintenance requirement has not been significantly considered and invested in The main reason is because of lacking of state budget allocating for annual road management and maintenance, which is very constrained.
The state budget allocation for this is met only 30% of actual requirement for national road while for provincial roads, it is even much lower There is a great difference in financial provision between road maintenance and capital reserved for road rehabilitation, upgrading, improvement and new road construction; taking fund for national road maintenance alone, it is equal to only 11% of fund for capital construction, including road upgrading and new road construction As a result of lacking capital for road maintenance and management and capital unsustainability, many national roads are under operation without maintenance or they are just at least received care taken when there is an emergency event but regular attention on maintenance is ignored The road management and maintenance have not been periodically followed specifications, which made the rapid deterioration of the road network This even happens to the newly constructed roads, which have been newly upgraded with high quality of pavement.
In this regards state above, in 2008, Road Acts was passed by the National
Assembly which created major premise for the Government to promote investment in road transportation development under which the preservation and maintenance of the existing road network was included Socio-economic development strategy for period of 2011-2020 of the country determines that “construction of infrastructure system in consistency with some modern structures, focusing on transportation system and big city urban infrastructure” is a breakthrough At the same time, transportation development strategy to 2020, vision to 2030 has been approved by the Prime Minister’, which promulgated that “road maintenance, efficient operation of roads, sustainability of the existing road transportation infrastructure have to be taken care” These policies indicate that the Government determines to develop transportation infrastructure system in general and road transportation infrastructure system together with road management and maintenance in particular On the other hand, the Road Acts also provides other direction to the road maintenance which is establishment of Road Fund to centralize and mobilize other types of capitals which, in short term, together with state budget, lift up the capital burden on road
‘Decision No.35/2009/QD-TTg dated 3 March 2009 maintenance and later on, gradually strong enough to provide sufficient fund, instead of state budget for road maintenance requirements.
The NRMF was established by Vietnam Government “with financial source of annual road user charges accounted on road users of motorized vehicles, annual state budget providing as supplementation and other revenues relating to road users The
Fund shall be used for road maintenance and other related operations of the whole road network in Vietnam Since then, road network management and maintenance in
Vietnam has shifted into new age.
After two years of implementation of the Fund, road maintenance activities have been changed from state budget provision mechanism into NRMF mechanism.
In last June 2014, basing on the report to the Prime Minister by the Central Road
Fund Board, the most positive changes can have been seen on both quantity and quality of the roads which have been providing services to people’s and goods’ transportation needs From the fact, raising points as questions of whether NRMF, a unit holds control of revenues relating to road operations, is necessary or not Or such revenues should be collected by the Government and then allocated to NRMF via annual state budget allocation.
Until now, there have had none of the studies to be conducted to analyze effects or impacts by the NRMF as well as its role or its necessity to road network maintenance under transport sector Individually, having been as an officer of transport sector for more than 17 years, this is the right period the transport sector has the biggest and most vigorous change due to renovation policies and experience learnt from developed countries in the world, particularly the establishment of Road Maintenance Fund which is a significant progress to make the policy makers change their view points on the need of road maintenance, placing a corner stone for gradually socializing the public goods which reduces a heavy burden of road maintenance expenditure from state budget It is therefore, since the “birth of NRMF” of more than a year of operation, to make me, a member accompanying with NRMF’s operation, interested and excited in selecting the study on NRMF effect assessment and what NRMF has ben bringing about to road maintenance in Vietnam.
* Decree No.18/2012/ND-CP dated 13 March 2012
In this study, through real data I collected which describes the reality of road network maintenance in Vietnam in period between 2010 and 2014, an analysis is undertaken to identify effect by the NRMF onto road maintenance sub-sector before and after its establishment’.
This study is to assess the considerable changes in road network maintenance in Vietnam where the financial source of RMF can bring back, compared to road conditions before the road network was funded for maintenance by the said Fund; road and bridge network to be well preserved with longer life, to provide road users smooth traffic services, especially in the remote and isolated areas where annual state revenue is low Beside, this study also consider other impacts of RMF such as changing management method of government agencies, applying science and technology on road maintenance as well as raising awareness of resident Therefore, it can be seen that road maintenance fund plays vital role for the development of transportation sector in Vietnam in general, toward the step by step of full privatization of road maintenance activities in particularly contributing to eliminate the state budget.
This study want to find out that, since established in December 2012, how has the NRMF impacted on the road maintenance sub-sectors of Vietnam due to impressed increasingly investment funding.
The study undertakes on road network maintenance including national road and provincial roads (mainly in difficult provinces with low state revenue in Vietnam such as Nghe An, Nam Dinh, Hoa Binh, Quang Binh, Ha Nam) The study mainly bases on documents available in Central NRMF Office and Directorate for Roads of Vietnam under Ministry of Transport In order to assess and compare the differences of road maintenance before and after NRMF be established, fingerers and data collected during the period of years from 2010 to 2014 have been separated
* Decree No.18/2012/ND-CP dated 13 March 2012 on two phases that are from 2010 to the end of 2012 and from at the beginning of2013 to the end of 2014.
FRAME OF REFERENCE 1 Theoretical basis on road network management and maintenance
The Road Acts in 2008 provides “Road maintenance is taking action of road maintenance and repair in order to uphold technical standards and specifications of the operated roads"" MOT providing definition on road structure maintenance including: “Road maintenance is a series of actions taken to preserve normal operation and safety use of the works”.
According to direction by M of Vietnam “Road maintenance is total actions of management, routine maintenance, periodic maintenance and emergency repair as needed” in compliance with technical specifications referring to each typical type of works”.
Examples of ways in which different countries contract road maintenance services, in general, road maintenance activities can be broken into four categories:
Routine works: Periodic works: Special works and Development.
2.1.2 Roles of road network maintenance
Maintenance of a construction structure, including road structure maintenance IS a part of its cycle It is therefore to keep on operating safely in the same original conditions to ensure its design lifecycle as per design standard of the road structure, its maintenance is obligatory.
Proper road maintenance contributes to reliable transport at reduced cost, as there is a direct link between road condition and vehicle operating costs (VOC) An improperly maintained road can also represent an increased safety hazard to the user, leading to more accidents, with their associated human and property costs’.
“Circular No.10/2010/TT-BGTVT dated 19 Apnl 2010)
` (Including medium repair and big repair)
* (due to natural disaster, works breakdown, overloaded problem, etc.}
` (Road Maintenance on World Bank document)
Road maintenance is essential in order to (i) preserve the road in its originally constructed condition, (11) protect adjacent resources and user safety, and (iii) provide efficient, convenient travel along the route Unfortunately, maintenance is often neglected or improperly performed resulting in rapid deterioration of the road and eventual failure from both climatic and vehicle use impacts It follows that it is impossible to build and use a road that requires no maintenanceŸ.
Road management and maintenance should be taken care regularly and continuously to ensure roads are operated in safe and smooth mode with timely treatment to damages which may cause congestion, traffic accidents and emergency cases due to heavy rain and seasonal monsoon or force majeure (typhoon, flood, slide etc.); to detect and prevent acts of encroachment to road infrastructure, right of way (ROW) encroachment If road maintenance is not sufficiently taken proper care, road infrastructure will promptly deteriorate and damage, and as a result, non-safe operation will be and in case of rehabilitation, it will be very costly and reduce efficiency of government and society’s investment.
During operation and maintenance period, causes of defects shall be early prevented, damages shall be early detected and timely repair and therefore cost for overcoming these defects and repair shal] be reduced and less complicated If the repair is not taken place, damages and defects can get worse, then the repair shall cost a large amount of money And repair alternatives shall be complicated
Keeping the road network system in normal and safe conditions depend son a lot of aspects of climate and hydrology Storm and flood cause landslide slope sliding and other phenomenon that damage the road infrastructure At places where the ground water or hydrological phenomenon’s are complicated, damages to road embankment and pavement shall be caused High temperature and rain shall make road pavement quickly aged and deteriorated.
Vehicle load directly affects bridge components and road and road facilities and makes them deteriorated Road damages and quick deterioration of national and provincial roads are also because of circulation of overloaded vehicles.
* In documents of Transport Department of the US).
As time passed by, road pavement strength decreases; loading capacity of bridges, culverts and other road facilities also reduce and more damages appear with more seriousness On the other hand, socio-economic development creates increase of transport demand and daily traffic volume on roads; and vehicle loading also increases because of cargo transport demand pressure and profit born by the transport operators In this view, vehicle-loading control to protect road and bridge system is one of the urgent needs at present The above mentioned issues directly impact road and bridge system and make it deteriorated as operation time passed by and for a certain period of operation time (or as indicated in detailed design) periodic repair (medium or big repair) is a must or investment upgrading, rehabilitation or improvement to the roads and bridges This is highly agreed by the road network managers and international and national experts.
The existing factors, which are insufficient in road management and maintenance, in sufficient in finance and inefficient use of fund which impact quality of road maintenance and road infrastructure lifecycle.
Nowadays, preservation and extension of life cycle of road transport infrastructure becomes one of the important contents in.road asset management strategy In many countries.
2.1.3 Factors affect road maintenance activities
- Management mechanism and implementation method of government agencies
- Investment fund - Science and Technology in road maintenance construction
Out of the above factors, policies and fund are the most important ones that affect the whole operation of road maintenance.
2.2 Model of Road Maintenance Fund
Finding a method that collect differently financial sources in order to meet the road maintenance demand is always urgent need of any government Model of Road
Maintenance Fund is encouraged to apply According to the primary statistic of WB, in the world now there are 55 nations that have their RMF established They areASEAN countries, developed countries and South American and Latin AmericanAfrican.
The main objective of RMF establishment is to ensure finance for road network maintenance; however, in some countries a part of this fund is reserved for road system development, urban transport system and urban railway development.
In the countries with RMF established, Japan, as example, reserves a part of the Fund for capital investment in road system development and other part for road management and maintenance or for urban transport development, urban railway etc Particularly American established two RMF, one for national road network and the other for provincial road network In general, Establishment of RMF _ is expectation of governments who wanted to have a sufficient, actable and sustainable fund reserved for road maintenance.
According to study conducted by the W, management and operation a national road network is equal to revenue of one of 500 leading biggest corporation in the world To operate such a big property and rely only on state budget allocated fund will be insufficient to the requirements On the other hand road management organization is authorized to manage such a big fortune should be authorized to manage annual road maintenance and repair fund from the RMF.
allocating basing on real requirement
Many industrial developed countries, developing countries and under developing countries have established road maintenance fund or road fund which after about 60 to 80 years of operation, the Fund has developed from the Ist generation (depending mainly on state budget) to 2nd generation (relatively independent, self managed) and 3rd generation (highly independent, self managed);
Most of developing countries have applied fund of 2nd generation, developed have applied fund of 3rd generation.
2.3 Vietnam National Road Maintenance Fund
But until March 2012, Vietnam established NRMF for road maintenance; there have so far been no studies on the effectiveness of NRMF of Vietnam.
Therefore, although NRMF of Vietnam has been operated for nearly two year, it is time to study assessing the impact of NRMF to the maintenance of the road system then to have solutions for NRMF to carry out more effective and bring benefits to residents.
Decree establishing the NRMF was signed by the Prime Minister on 13
March 2012” The establishment decree has been followed by a number of circulars, which together begin to define the structure and detailed operation of the Vietnam’s
RMF'° The most detailed of these, the joint circular No.197/2012/TTLT-BTC-
‘Guiding Regime of Management, Use, Payment and Settlement of RMF of MOF, was issued on the 15"of November 2012 to define the process, requirements and responsibilities to collect funds from road users and manage use of those funds for road maintenance in Viet Nam.
The NRMF is to be used for National Highway maintenance and management through the DRVN and for maintenance and management of sub-national roads under provincial responsibility through the Provincial People’s Committees (PPCs).
The Vietnam’s RMF established at central level is NRMF, and that established at provincial level is the LRMF The Prime Minister decides the organization and
* No 18/2012/ND-CP: DECREE on Road Maintenance Funds, Hanoi, March 13, 2012
'"No.197/2012/TT-BTC: Circular guiding regulation on collection, payment, management and use charges by unit of vehicle, Hanoi, November 15, 2012;No.230/2012/TTLT-BTC-BGTVT: Joint circular, guiding regime of management, use, payment and settlement of Road Maintenance Fund,use, payment and settlement of Road Maintenance Fund, Hanoi, December 27, 2012.
11 management structure of the NRMF and issues regulations on the operation of the Management Board of NRMF, which controls disbursements from the NRMF.
Chairman of the Board decides the organization and management structure of the LRMF and issue regulations on the operation of the Local RMFB.
The focus for management of the Vietnam’s NRMF is the NRMFO That office reports to the IRMF Management Board chaired by the MOT Other members of the management board as the chart bellows:
Figure 1: Organization Chart of Vietnam s RMF
National Road Maintenance Fund Board
Almost of board members are assigned from MOT, MOF and MPI At the moment, only one member of the management board is appointed from outside government The Vietnam Automobile Association represents some level of road users on the Board.
Sources of funding for the NRMF include road user registration fees to be collected directly from vehicles, including: cars, trucks, trailers, semi-trailers and two-wheeled and three-wheeled motorcycles The total of the road maintenance budget will be comprised of the above fees supplemented by annual allocation from the central state budget for NRMF or provincial budget of each province for its LRMF The NRMF may also collect other revenue related to road use, as regulated by Viet Nam law All monies collected from motorcycles are allocated
12 to the LRMF Other fees collected from vehicles are allocated 35% to the LRMF and 65% to the NRMF.
Figure 2: Diagram of Collection and Allocating Financial Fund
Annual collecting fee of vehicle transportation
The NRMEB approves the revenue and expenditure plan of the fund; is responsible for managing the use of revenues trom the fund It supervises the application of the NRMF and ensures that the monies collected are spent prudently and for the purpose intended under the state management functions regulated by the
Road Act Together with the MOF, MOT can submit recommendation to the Prime Minister for adjustment to the allocation of fees between the NRMF and the LRMF.
The NRMFB is responsible for guiding the administration and management of the NRMMF.
The permitted allocation of funding from the NRMF is for: Expenditures for routine maintenance; Expenditures for periodic maintenance (major and medium repair); Road management services needed for road maintenance; Operational expenses and repair and upgrading of vehicle weight inspecting stations; Financing of the offices of the RMF, which carry out RMF Board’ assignment including staffing, special operations and irregular expenses; Expenditure for operation of theNRMFO including staffing for specialized tasks and expenditures to operate the
FRM; Other expenses related to road management and maintenance authorized by the NRMFB.
Recognizing the importance of maintaining the road, there are 55 countries, which so far have established the RMF to support the maintenance of the national road system So the WB as an off-budget mcthod introduces the concept of RMF.
The effectiveness of NRMF in developed countries and developing countries as a solution for maintenance problem has gained attention and was evaluated separately as well.'ÌJennaro B Odoki and Paulina Agyekum Boamah (2012) developed an optimal fund allocation method for road maintenance on the basis of Multi-criteria analysis (MCA) NRMF’s impacts are of multivariate priorities and MCA are considered as the current decision paradigm for meeting this requirement The application of the models developed is compared against current practice in Ghana to determine which approach provides overall best performance of the road network.
Malkanthi and Matsumoto (2012) analyzed the effectiveness of Second Generation Road Fund and to propose whether it is desirable solution for Sri Lanka road maintenance problem This study shows very clear that inadequate financing for maintenance is a critical problem faced by Sri Lanka Spending on road maintenance is about 0.0031% as proportion of country’s GDP in Sri Lanka With the deficit budgetary arrangement, it 1s hard to achieve money from the general budget.
Therefore it is essential to look for an off-budget financing method.
Thus, many countries having the development level similar to Vietnam had have NRMF for long time and there are many studies evaluating the impact of these funds to road maintenance work in their country But until March 2012, Vietnam stabilized NRMF for road maintenance There have so far been no studies on the effectiveness of NRMF of Vietnam Therefore, although NRMF of Vietnam has been operated for nearly two years, it is time to study assessing the impact of NRMF to the maintenance of the road system then to have solutions for NRMF to carry out more effective and bring benefits to residents.
STUDY METHOD
'' See Heggie, lan G and Piers Vickers (1998), Kenneth M Gwilliam & ZmarakM Shalizi (2000),
3.1 Methods of collecting and analyzing Data
This study obtained data that are documents from the DRVN, Transport Infrastructure Department of MOT, VSAO and NRMF Collected Data of implementation of Road system maintenance in the period of using government budget (from 2010 to the end of 2012) will be compared with those data in the period of using Fund budget (from 2013 to 2014) in order to find out the impact of NRMF including improved road system rapidly, raised competitiveness between companies because of stable annual financing, applied science and technology in road maintenance sector as well as raised awareness of resident.
This study also used questionnaires in order to gather assessments’ and comments of stakeholder After interviewing (i) government official of MOT, MOF, NRMFO and DRVN who performance state function on management road maintenance, (ii) contractors and consultant companies who bid and implement maintenance contract, and (iii) transportation firm`s representative and residents living in the poor area who are benefited from using road system in order to find out the assessment of the NRMF their appreciation on NRMF will be found out.
Interviewing results of group (1) to clarify the impact of the NRMF changing the mode of operation management and also policy applies of state agencies on the road maintenance sub-sector The author interviewed permanence Vice President of NRMF
Board who is responsible for managing and controlling NRMF activities; Deputy Chief of NRMF office carrying out the planning and decisions of NRMF Board.
Two contractors and one supervisor and Consultant Company are also interviewed in order to find out the impacts of NRMF After interviewing group (ii), it is discovered the fact that, apart from the traditional state-owned company before, but now the company carried out construction bid has included many different economic sectors such as the private equity company, the limited liability companies and joint stock companies with state capital associated private participate Thank to sufficient and timely funding what is more attractive to companies on road maintenance sub-sector, leading various competitive environment and managers also has benefited when having the better road with lower costs The quality of construction is also increased when companies forced to seek cost reduced measurements as applying science and technology and newly management practices.
Besides, targets of interviewing group (iii) are finding out profits what automobile transportation companies benefited after reducing cost of fuel and depreciation of vehicle as well as saving labor due to the smoothly operated road system Chairman of Vietnam Automobile Transportation Association and 50 local residents in Ninh Binh, Nghe An, Quang Binh, Cao Bang, Bac Kan, Yen Bai, Thai Nguyen, Bac Lieu and An Giang provinces are interviewed.
S.W.O.T is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats A SWOT analysis is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats Strengths and weaknesses are internal to the company (think: reputation, patents, location) You can change them over time but not without some work Opportunities and threats are external (think: suppliers, competitors, prices}—they are out there in the market. happening whether you like it or not.
The analyzing SWOT method is used in this study to recognize NRMF’s chances as well as its obstacles in order to recommend some rational ideas in which management agencies could be applying as oriented-strategy of NRMF development in the future.
DATA ANALYSIS 1 Analyze secondly data
4.1.1 Effects of capital investment on the road maintenance sub-sector before and after NRMF’s foundation.
In the Report of Audit of State'”, the NRMF activities have been evaluable apprised contributing of physical changing road system They also created a trust in residents at first that their annual fee used for annual road maintenances Their said results were drawn after examining real road, working with provinces and reviewing report of DRVN, RNMF.
In order to clarify the said identify of the Audit of state, here by the author will put the collected data from MOT, DRVN and RNMFO on comparisons.
12 ỹ http: /articles.bplans.com business/how-to-perform-swot-analysis’ | !6#ixzz3OIDDssJn
"Audit Report No.260/BC-KTNV on collection/allotion of the year 2013 of NRMF issued by Audit of State in June 2014
4.1.1.1 Investment for road maintenance before having NRMF
Before January 1°2012, the investment for the maintenance of bridges and roads have only one source of funds from the state budget, the investment for the national highway system is administered by the MOF from Central budget to the Directorate for road of Vietnam after annual plan is approved by the MOT; the local road system will be controlled by the local Department of Finance and the Department of Transportation.
Table 1: Highway maintenance budget in the period 2010-2012
- Allocated fund from state budget k
Source: Author collected from MOT (2010 2011 and 2012)
The capital for each year (in million VND) was not stable Annual increases in the period 2010 -2013 (not to mention the sale of extra fees in 2011) are 11% / year On the overall level of capital increase is only to cover the increase in the consumer price index CPI in this period (the CPI in 2009 was 6.9%, 11.4% in 2010 and 2011 was 18.8%) Whereas MOF have not financed for local road maintenance
In provinces, repairing of these local roads is funded by these province's budget.
However, as can be seen from the table above, capital resources for the management and maintenance of the national road network and highway system is below the demand It’s only satisfying about 30% of the demand for highway Due to lack of funds, only some urgent works are focused, regular maintenance and repair do not fully carried out on time, the increase of the vehicles is higher than the estimated forecast, which has led to the serious degradation of road and bridge, ineffective investment, affecting socio-economic development
4.1.1.2 Investment on road maintenance from NRMF
14 In 2011 there was some excess capital, 819 billion VND be additional for charging stations Hoang Mai, BanThach and stations T1 on highway 5].
According to Vietnam regulation'”, annual capital RMF are expended as follows: NRMF funds used for the maintenance and management of the national highway system; LRMF are used for the maintenance and management of the local road system, locally responsible for maintenance and management as assigned by the provincial People's Council Contents of Fund expenses include:
- Expenses for maintenance of roads.
- Expenses for the management tasks of road works.
- The operation of the Fund management.
- Other expenses related to the maintenance and management of road works decided by the Fund management Council.
Along with the payments specified above, from 2013'° up to now, the Fund has capital funding to make up for the entire operation of the ferry terminal revenue does not cover the whole country The table below shows the funds for road maintenance in 2 years (calculated on the total existing highway and bridge) when
Table 2: Actual capital for the highway system period 2013-2014
Content Allocated fund from NRMF
Source: Author collected from the national NRMF.
Thanks to NRMF, besides local budget, local road maintenance have been allocated which is a traditional fund for provinces.
Table 3: Additional capital levels for local road system period 2013-2014
"Decree 18/2012 / ND-CP issued by VN Government on Road Maintenance Fund
Source: Author collected from MOT and NRMF office.
The table below shows clearly changes of the capital since the establishment of Road Maintenance Fund from 1/1/2013 when the fund took effect.
Table 4: Comparison changes of the capital for road maintenance
Unit: Billion Dong mm ee ee
Local road (capitalize for LRMF)
Source: Author collected from MOT and NRMF
Figure3: Comparison among road maintenance investment (2010-2014)
@ Highway B Local road O Investment total
The amount of capital that the NRMF capitalized in 2014 in comparison with 2010 before the NRMF foundation has increased 308.5% Meanwhile, if the average growth in consecutive years with a progressive 2011.It is clear that the budget has tried to prioritize the areas of maintenance, the amount of capital in 2014 will be around 3300 billion equivalent to 46 % compared with funds allocated from current funds.
4.1.2 Changing of management mechanism of government agencies on Road maintenance before and after NRMF was established.
4.1.2.1 Contractors selection method of national road management and maintenance unit: From 2012 backward’ :
Road maintenance activities have been Vietnam Government'* has considered as the production and supply public products provided that road system management and maintenance shall have to organize bidding or place an order for state enterprises or other economic sectors (including cooperatives) Ministry of Finance on guidance of financial regime for production and supply public products in the field of road management and maintenance`”, regulating road management and maintenance shall have to organize bidding or place an order, except for management and maintenance of ferry, tunnel, floating bridges, urban roads, remote and isolated roads But since 201] backward, national road network management and maintenance did not follow the form of bidding or placing an order in compliance with above mentioned legal documents (other type of works like road repair, Inspection have been followed bidding mode, bid appointment in compliance with bidding laws and decree on bid guidance) During this period implementation mode at Regional Road Management Units (RRMU) and Provincial Departments of Transport (PDOT) as following:
- Planning for annual road maintenance is prepared at beginning of the traditional companies on national road management and maintenance) then RRMU signs a contract of road management and maintenance on a quarterly basic with traditional companies.
- At the end of each quarter, acceptance and evaluation on performance quality are conducted for payment: also basing on grade of national road damage to
"the NRMF was founded at Decree 18/2012 / ND-CP
"Decree No.31/2005/NĐ-CP dated 11/3/2005 by the Government
"Circular No.30/2010/TT-BTC dated 05 March 2010 by MOF
Identify quantity of regular repair work for the next quarter (only management quantity is assigned basing on target, not on quarterly basic).
4.1.2.2 Contractors selection method of national road management and maintenance unit after NRMF was established:
DRVN is responsible for reviewing and approving the annual settlement of the RMBs, the PDOTs (for highway authorized management) and for summarizing those expenditures and reporting to the NRMFB The NRMFB is responsible for approving the settlement of expenditures for the operation of the NRMF and the NRMFO The summary of expenditure under the fund is then reported to the MOT and hence to the MOF Any funds surplus to the approved spending in any year is transferred to the following year.
State companies had been ordered to maintain the road by DRVN annually.
However, because order procedures have not yet completed, signing a contract or placing orders is not practical, not much improved in nature; each RRMU still approves cost estimate and adjustment of periodic repair to supplement the contracts executed by the Companies.
Regarding bidding processes, the bidding plan for 7 packages of national roadway maintenance and 4 packages of medium repair and maintenance of 4 other national roads was prepared in early 2012 In June 2012, the bidding process could not be implemented because the relevant procedures, bidding document samples and contract forms have not yet prepared While waiting for the bidding process to be carried out, the ad hoc ordering contracts were signed for the above mentioned 1] routes to assure management and maintenance of national roads It was expected to organize the bidding process in July 2012 and to execute the ordering contracts since
Changes by the funding source impacts
In early 2013 and especially after implementing road maintenance works by the source of NRMF, changing of management, operation and maintenance of roads, replacing the previous regulations were promulgated by MOT” Main contents of20 the new regulations are as follows:
““MOT issued the Circular No.52/2013/TT-BGTVT dated 12/12/2013
The old road management regions both perform state management in their area (including 4 regions within the country) and manage conventional road maintenance companies acting as public enterprises of the Government At present, these companies have been equitized and the old RRMUs were transformed to Road Management Administrations in 04 regions and only perform state management on road maintenance in their area.
For rehabilitation and renovation works, the Contractor must submit the
Employer (Directorate for Road of Vietnam - DRVN) documents related to maintenance procedures of his old works in the construction design stage.
For annually maintained works, DRVN shall plan and submit the DRVN, at the same time MOT at the request of the DRVN for the maintenance plan of the following year on which appraisal and approval shall be completed before every
RESULTS AND CONCLUSION
After analyzing the actual data collected from the government agencies on road maintenance operation and information interviewed by questionnaire, it is found that NRMF foundation is the rational decision of Vietnam Government, adapting to the socio-economic circumstances of Vietnam today In addition, through positive results of the NRMF’s activities brought back, one of the goals of
Vietnam Government, which is oriented strategy on development of maintenance sub-sector toward the step by step of full privatization, 1s clearly supported evidence.
With two years only, Vietnam's road and bridge network has been well preserved with longer life, also provided road users smooth traffic services, especially in the remote and isolated areas where annual state revenue is low.
Therefore, it can be seen that road maintenance fund plays vital role for the development of transportation sector in Vietnam in general, toward the step by step of full privatization of road maintenance activities in particularly contributing to eliminate the state budget.
Due to the extremely limited state budget, which is not insufficient to sponsor the social welfare system such as maintaining the road network in good operation,
31 the NRMF capital, which contributed by resident is the first step in the privatization process of road maintenance works.
With the funding of the NRMF, shorted capital situation are overcome in part.
Road and bridge systems, after many years of lacking fund for fragmented repair, with fund of 3 times higher from the Fund than from state budget before, have their quality improved to ensure smooth movement on the roads for the people This ts significant to remote and isolated area where the local state budget is low, have created belief to the people, brought into full play direct contribution by the people (according to audit report prepared by the state auditor in September 2014).
Enhancing accountability because of management mode by a state administrative agency that is responsible for road maintenance is therefore changed as the timely provided fund meeting progress As a result of this, interest in participation in this field is attracted by several economic sectors Road maintenance becomes more competitive, so bidding method to select contractor with high quality and low cost has been applied Application of science and new technology, which has been the first time to be supported by the NRMF’s funding, changed previously subsidized construction process Companies are obligatory to.be interested in studying and finding out how to reduce cost of materials and laboring increasing lifecycle for their constructed structures.
Awareness of preserving public assets has been raised up because of recognition of practical and quick efficiency from annual contribution that they did.
The study also shows that for Vietnam economy with majority (70%) population live on agriculture and individual business is mainly, therefore, tax collection to meet social welfare is very difficult and impossible As state budget relies mainly on export which is very constrained, and public debt is increasing, privatizing road network maintenance is an objective that Vietnam Government set up is fully reasonable Forming the Fund to directly manage revenue and allocate investment right in the fiscal year with transparent results shall generate belief of the public in efficiency of their direct contribution.
RECOMMENDATIONS
This studies show that, NRFM plays a vital role in the transport sector in
Vietnam, particularly in road maintenance sub-sector In the future, with the goal of sustainable development NRMF, I have some recommendations as follows:
- The biggest constraint is seeking a development financial source for NRMF to satisfy road maintenance works The Government should consider other resources such as collecting electricity infrastructure user fee, optical cable fee, etc As reality shows that, Vietnam transport infrastructure are invaded by power lines, water pipes, fiber optic cable a lot, especially in big cities Therefore, said rented fees could be abundant revenues for further needs of the NRMF Taking advantage of study assistance of the WB, MOT needs to assign consultant that build up a 5 year road toll collection plan with the aim of making use of revenue from leasing infrastructure transport into communication and electricity.
-Government also early encourages various business modes, promote privatization process on road maintenance sub-sector in order to eliminate state abundant.
- Based on the positive support from the road users on the impressed results brought back by NRMF, to built up legal corridor for NRMF following direction of increasing revenue from road toll imposed on road vehicles in compliance with GDP growth and to look for other sources as well.
- For further construction projects, maintenance should be subjected to an item in the contract, guaranteed by the contractor for at least 5 years after construction completion and handing over.
- Government should quickly develop other transportation modes such as: (1) railway transportation (this is under a study conducted by MOT) and (ii) continuing to build and develop sea favorable transportation routes, which run along the country.
- In order to achieve high efficiency in collecting fee, the Government should issue penalty regulations to well control road fee, particularly motorbike users.
- NRMF need to closely coordinate with WB funded consultants to early build up provincial road maintenance fund (PRMF) model nationwide to create consistency and control of revenue and expenditure favorably.
- MOT, NRMF should continue using the media, educating and disseminating and building propaganda campaigns to direct benefits brought back from NRMF against the road users’ contributions.
Above are my study and assessment that are so primary on impacts by NRMF in its 2 years of establishment and operation; and looking for measures in order to affirm the roles of NRMF to Sub-section NRMF in particular and transport sector in general I wish to receive sincere comments from the tutors and mates.
1 Annual Report and Documents from Ministry of Transport, The Directorate for
Road of Vietnam and National Road Maintenance Fund of Vietnam
Asian Development Bank (2002), “TA SRI 3110 Re-engineering of Road Sector
Institutions, Final Report, Volume A Analysis”.
Asian Development Bank (2003), “An Asian Perspective, Road Funds and Road
Circular No.10/2010/TT-BGTVT dated 19 April 2010 issued by Ministry of
Circular No.197/2012/TT-BTC: Circular guiding regulation on collection,
payment, management and use charges by unit of vehicle, Hanoi November 15,
6 Circular No.230/2012/TTLT-BTC-BGTVT: Joint circular, guiding regime of management, use, payment and settlement of Road Maintenance Fund, use, payment and settlement of Road Maintenance Fund, Hanoi December 27 2012
7 Circular No.52/2013/TT-BGTVT issued by MOT dated 12/12/2013
Decree No.31/2005/ND-CP dated 11/3/2005 by the Government on production
9 Degree No18/2012/ND-CP issued by Pnme Minister of Vietnam in 13 March
10.Heggie, lan G and Piers Vickers (1998), “Commercial Management and
Financing of Roads” the World Bank Technical Paper No 409, May 1998
11.Jennaro B Odoki and Paulina AgyekumBoamah (2012), “Optimal Fund
Allocation for Road Maintenance”, University of Birmingham 201 2.
12.Kenneth M Gwilliam&ZmarakM.Shalizi, “Road Funds, User Charges and
Taxes” World Highways, Vol 9, No 7, October 2000 “Second Generation Road Funds: The Way Ahead”.
13.Law on Road Traffic approved by Vietnam National Assembly in 13 November
Official letter No.430/UBATGTQG-VP dated 16 November 2011 by Office of
15.S.N Malkanthi and T Matsumoto (2012), “Study of Effectiveness of Road Fund as a Solution for Maintenance Problem in Sri Lanka”, ACEPS 2012.
The research of PADECO Consultant for Ministry of Transport (2011) 17 Transportation development strategy to 2020, vision to 2030 has been approved by
the Prime Minister under Decision No.35/2009/QD-TTg dated 3rd March 2009
QUESTIONAIRES FOR DEEP INTERVIEW
DESCRIPTION
Overview of road maintenance in Vietnam compared on periods before and
Assessing on the positive and negative changes that Road Maintenance Fund
affects road maintenance in Vietnam after 2 years of implementation of operation of the road fund.
3.1 Changes on mechanism, policies and procedures to road maintenance works and road maintenance management.
3.2 Changes of investment sources in road network maintenance and mechanism on collecting and managing allocation of Road Maintenance Fund.
3.3 Changes on quality of road and bridge system, especially in remote areas and provincial areas
3.4 Renovation in application of science and technology in order to increase efficiency of implementation and saving human resources in road maintenance work.
Awareness of the road users
Road Maintenance Fund has been established and become effective since 2012 basing on the Vietnam Road Acts and Decree No 18/2012/NĐ-CP by the Government which aims at creating fund via road vehicle toll together with annual state budget allocation for road maintenance which has ever been so constrained; and, gradually, for heading total socialization of road maintenance to reduce national budget burden.
In order to contribute to the more and more effective road fund operation, deep interview to state road maintenance management agencies to seize effects from Road Maintenance Fund to road maintenance works etc so that financial management mechanism for the fund shall be perfected and more efficient and so on.
Therefore, we wish to receive support by Madam/Sir in providing information as stated in the following table.
Thank you very much for your cooperation! All information received from the interview shall be used for the above mentioned purpose only.
Al |! Province/City: Ha noi
A2 ! Full name of the interviewer:
A4 | Full name of the interviewed person:
A6 | Address of the office/agency: Street, Hanoi, Vietnam
How many members are there in VATA and the form of participation and
operation? we) The positive and negative changes that Road Maintenance Fund affects directly to the VATA.
3.1 Effects by mechanism, policies and procedures on production and operation after the establishment of Road Maintenance Fund; and effects by road toll to the corporate revenue?
3.2 Economic benefits to the corporate, such as the smooth traffic on road and bridge system, reduction of traffic congestion, easy movement of traffic and saving of human resources, time and fuel consumption.
3.3 General assessment on economic benefit and loss against gained benefits and costs.
Recommendations by the VATA to Road Maintenance Fund and the Government
Road Maintenance Fund has been established and become effective since
2012 basing on the Vietnam Road Acts and Decree No 18/2012/NĐ-CP by the Government which aims at creating fund via road vehicle toll together with annual state budget allocation for road maintenance which has ever been so constrained; and, gradually, for heading total socialization of road maintenance to reduce national budget burden.
In order to contribute to the more and more effective road fund operation, deep interview to state road maintenance management agencies to seize effects from Road Maintenance Fund to road maintenance works etc so that financial management mechanism for the fund shall be perfected and more efficient and so on.
Therefore, we wish to receive support by Madam/Sir in providing information as stated in the following table.
Thank you very much for your cooperation! All information received from the interview shall be used for the above mentioned purpose only.
Province/City: Ha Noi Full name of the interviewer:
Full name of the interviewed person
Of office/agencyAddress of the office/agency: Street, Hanoi, Vietnam
At present, how many companies, you think, are there who take part in road
maintenance in Vietnam; apart from the traditional road maintenance companies,are there any other economic sectors who also take part in road maintenance? as mn
Assessing changes in mechanism and policies on selecting contractors participating in road maintenance works after the existence of finance from Road Maintenance Fund The positive and negative changes that Road Maintenance Fund affects directly to the corporate operation and production.
Economic benefits to the corporate, (such as quick circulation and rotation of the corporate’s capital, in-time disbursement that meet construction progress for acceptance and no bad debt because of the stable fund from Road Maintenance
General assessment on economic benefits and disadvantage after investment in and application of science and technology on management to raise competitive capacity when bidding for Road Maintenance Contract.
Recommendation of the association to the Road Maintenance Fund and the
Road Maintenance Fund has been established and become effective since 2012 basing on the Vietnam Road Acts and Decree No 18/2012/ND-CP by the Government which aims at creating fund via road vehicle toll together with annual state budget allocation for road maintenance which has ever been so constrained; and, gradually, for heading total socialization of road maintenance to reduce national budget burden.
In order to contribute to the more and more effective road fund operation, deep interview to state road maintenance management agencies to seize effects from Road Maintenance Fund to road maintenance works etc so that financial management mechanism for the fund shall be perfected and more efficient and so on Therefore, we wish to receive support by Madam/Sir in providing information as stated in the following table.
Thank you very much for your cooperation! All information received from the interview shall be used for the above mentioned purpose only.
General information
A2 | Full name of the interviewer:
A4 | Full name of the interviewed person: _AS | Of office‘agency: RESIDENTS
How do you think of the quality of roads in your local area? Is there any change
Do you support government policy as NRMF was established using
transportation fee in order to provide for road maintenance?