IMPROVING THE EFFECTIVENESS OF ODA MANAGEMENT IN VIETNAM CASE OF RURAL FINANCE PROJECT FUNDED BY WORLD BANK AT TRANSACTION CENTER III BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM

MASTER IN FINANCIAL MANAGEMENT IMPROVING THE EFFECTIVENESS OF ODA MANAGEMENT IN VIETNAM: CASE OF RURAL FINANCE PROJECT FUNDED BY WORLD BANK AT TRANSACTION CENTER III BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM Tutor : Ms Céline Barrédy Student : Nguyen Thu Huong Intake : 2012- 2013 Hanoi, October 2013 LIST OF TABLES AND FIGURES TABLE OF CONTENT 1.4.1 Philippines 14 1.4.2 China 15 1.4.4 The lesson towards Vietnam .16 3.1 Solution for attracting ODA capital of WB into Vietnam 42 3.2 Improve quality of management to main contents of rural finance project 44 3.3 Building strategy of whole sales of Rural Finance at Transaction Office III 47 3.4 Building finance project in accordance with the real situation of Vietnam 49 INTRODUCTION The thesis necessity In 2012, Vietnamese economy has continued to grow at an average rate of 5.25%, the macro economy has improved especially public debt which, at about 55.4% of GDP, is at safety level Facing with the demand of making use of different resources to boost socioeconomic development in whole country, Vietnam has broadened international relationship, focusing on attracting, receiving and managing well Official Development Assistant (ODA) projects funded by international financial organizations such as World Bank (WB), Asia Development Bank (ADB), European Investment Bank (EIB), ect Actually, WB is the earliest donor; the World Bank’s funded projects are by far the largest capital projects with high degree of influence and thus are most extensive in typical field of management of ODA projects in Vietnam Thanks to many open and incentive policies by the Government recent time, this growing economy with steady increasing GDP is acquiring a great amount of investment capital In response to this demand, besides capital accumulated internally, an increasing flow of official development assistance capital (from US$ 1,810 million and US$410 million of committed and disbursed amount respectively in 1993 to more than US$ 6,486 million and US$ 3.9 million in 2012) has been pumped into various aspects of Vietnamese economy by international donors and non-governmental organizations through Development Agreements with the Government of Vietnam ODA capital played a positive role for Vietnam’s socioeconomic development, transforming Vietnam from a poor country with GDP per capita per year of only US$140 in1992 to a middle-income country with GDP per capita per year of US$1,600 in 2012 Vietnam has disbursed more than US$37 billion worth in ODA However, this figure has not satisfied international donors and the Vietnamese Government Vietnam is still in the first period of the middle-income country and faces difficulties due to weakness in infrastructure, low national competitiveness, unsustainable poverty reduction and the risk of severe consequences from global climate change Therefore, improving ODA disbursement and increasing ODA effectiveness are the Vietnam’s goals in the near future The Rural Finance Projects under Development Credit Agreements in 2003 and 2009 for Credit NO 3648-VN (US$ mil 200 equivalent) and 3884-VN (US$ mil.200 equivalent) respectively entered into the Government of Socialist Republic of Vietnam (SRV) and International Development Association (IDA) with objective of assisting Vietnam in its effort to improve living conditions in the rural areas are three of the most biggest projects of the same kind in Vietnam The two projects have been implemented in the form of wholesale banking operation (WBO) They have introduced the concept of WBO for the first time Vietnam Because of this new nature, the project management has become a very essential activity to a successful project performance It is project management unit (PMU) nominated by Bank for Investment and Development of Vietnam (BIDV) called Transaction Center III (TCIII) responsible for managing both Rural Finance Project II (RFPII) and Rural Finance Project III (RFPIII) RFP II is one project that has unsatisfactory performance at completion with 21 months delay although it was assessed satisfactory in terms of achieving all its objectives The similar RFPIII came into effect in April 2009 and has been in it ending phase The project’s management now faces the challenge of implementing this project satisfactory and on schedule For the above existing reasons, a research on ODA management is very important to a successful performance of not only Rural Finance Projects funded by World Bank but also for the alike, which have been getting increased in numbers recently Objective of the thesis This study aims at reviewing, analyzing Management method of RFPII to find out its problems that have affected adversely to project performance and drawing lessons for improvement of the system contributing to better performance of RFP III and the alike These objectives will be achieved by performing the following tasks: - Making clear the concept of ODA management - Analyzing RFPII management to find out its obstacles and problems in project - implementation Proposing suggestions for improving ODA projects management efficiency Scope of thesis This study focuses on examining RFP II management method mainly at project management unit in terms of its process, impact factors, standard criteria in project implementation stage to identify its problems Research methodology and approaches ODA management is discussed in general and then applied to analyze current status of management efficiency and problems occurred during implementation of the Rural Financial Projects and after that, recommendations will be made upon findings Secondary data and primary data are used to conduct this study Secondary data is gathered from external resources like textbooks, government documents and internal resources like progress reports, project documents Primary data is collected by conduct qualitative research The qualitative research objective is to obtain information on the obstacles of RFP II management and requirements for RFP III from interviewing PMU’s staff and managers Managers and staff of PMU have been interviewed on how they used information for making decision in project implementation, what obstacles they encountered, what they can to improve management effectiveness for better project performance Data sources The literature review and collection of secondary data has been performed by research books, reports, newspapers and internet sources; by exchange information with managers and staff form WBO, PMU in project PFIs Significance By reviewing the issues on project management and understanding, findings the common problems through case study analysis, the thesis benefits the implementing agency and PFIs in providing appropriate recommendations to improve project management of RFD III as well as applies in other cases in Vietnam Thank to the weakness found from RFP II’s performance, author will propose practical solutions and recommendations to help improve management of other similar projects Expected result The result of this thesis is to improve project management for further development of BIDV and PFIs who involving in WB projects; to be expected effectively applied in the case study of other projects funded by different donors The thesis structure The thesis started with the introduction part, following by three chapters and the conclusion part: Chapter will introduce general theoretical framework for ODA management Chapter provides an overview and performance of RFP II that is one of ODA projects in Vietnam funded by WB in finance field and implemented by BIDV through project documents Basing on this overview, framework discussed in chapter is applied to this specific case to find out obstacles during project management process and the possible causes leading to the unsatisfactory project performance Chapter will address some recommendation to improve the effectiveness of ODA project management in TC III and in Vietnam in general CHAPTER 1: THE EFFECTIVENESS OF ODA MANAGEMENT – GENERAL THEORETICAL ISSUES 1.1 The overview of Official Development Assistance (ODA) 1.1.1 Official Development Assistance Definition ODA stands for Official Development Assistance According to Decree No 131/2006/ND-CP issued by the Government on th Nov 2006 about Regulation on Management and Utilization of Official Development Assistance, the definition of ODA is: “Official Development Assistance (ODA) in this Regulation is construed as the development cooperation activities between the State or the Government of the Socialist Republic of Vietnam and the donors, which are foreign governments; bilateral donors and multilateral or inter-state organizations Notion of ODA refers to (i) the relationship in development cooperation between countries that aims at the promotion of the socio-economic development (ii) in the form of official financing aid between the State or the Government level and the Foreign Governments level, bilateral donor and multilateral or inter-state organizations This (ODA) relationship has formed and developed in the form of non-refundable concessional loan that included in annual ODA that one country pledge to assist other The grant element should reach at least 25% for untied loans 1.1.2 The duality of ODA Analyzing the duality of ODA is essential in order to have appropriate managing strategy for ODA It is necessary to not only policy-making body, but also individual/ people who reuse this assistance By understanding its duality, the process of ODA management meets the requirement: quick and accurate ODA disbursement, increase grant element, efficient use and constantly improve the repayment capacity a Strengths of ODA - Supplement medium and long-term to the development investments The terms of ODA loans are usually from 30 to 40 years repayment period including – 10 years grace period There is no interest rate, but commitment fees and service fees are applied and they add up to around 0.75% to 2% per annum Because of these advantageous characters, the grant element in the form of non-refundable loan is at least 25% to 100%, and it becomes important, stable and long-term capital that supplement to development and investment in developing countries Especially at developing countries where commercial banking system performs poorly, and is incompetent to mobilize the large amount of medium to long term capital for economic and social infrastructure development; Government bonds are not attractive to investors in the international capital markets and the weakness of the stock market in mobilizing development and investment resources - Promote and attract Foreign Direct Investment (FDI) When the system of economic and social infrastructures are solid improved, ODA plays an important role in appealing individual investment in business in that country To countries who commit to embark on its economic reforms with open-door policies by receiving ODA the reform contributes to strengthen its belief and encourage individual investment (FDI) - Support strengthening institutional capacity and promote economic policy reform In each ODA, recipient countries are always required to conducting strengthening institutional capacity activities and economic policy reform Their purpose is to facilitate the funds and technology transfer from developed countries to developing countries by training, experiment and applying new technologies These activities will help ODA recipient countries to improve their strategic planning capacity, program and plan economic development policy that help foreign investment in general and ODA in particular to be distributed more efficiently - ODA is one of the important sources of foreign currency supplements and to compensate for the balance of payment deficit Developing countries have huge demand for foreign currency in order to push up their process of industrialization and modernization, while their interior foreign currency sources are insufficient because of the weak financial system and the Government’s unprogressive foreign currency mobilization tools Therefore, ODA is one of the important foreign currency sources that help to compensate those deficits Besides, goods and services, modern equipments and high technologies will be imported into developing countries in order to support for the implementation of industrialization and modernization, social and economic infrastructure development - ODA plays a part in guarantee for the Government essential expenditure without causing inflation Government spending is limited by ability of budget reimbursement, especially in the Government of developing countries Hence, they have to print more money to compensate the deficit Yet the amount of money that has been issued not based on the volume growth of products and services, it leads to the currency depreciation, then inflation The more money supply, the higher inflation rate and it finally end up with financial crisis This action will be denominated as a violation to circulation currency In short, the cash outflow from foreign investment will satisfy Government spending without printing more money, or causing inflation - ODA is the linkage of cooperation and exchanges in political, cultural, economic and other fields between donors and recipients Through ODA, recipient countries establish and expand their bilateral and multilateral relationship in development cooperation with donors Besides exploiting the strength of capital, technology and management experience that included in ODA program, funds transfer activities also play a role in encouraging cultural and social exchange through training program, conference, investigation tour and research Furthermore, donors by committing to provide a part of ODA to developing countries per annum have consented to socio economic development policy of those developing countries b Weaknesses of ODA - In some case, ODA associated with political elements rather than economic elements To avoid the political constraint by receiving ODA, The Government issued Decree No.20CP on 15th March 1994 and affirmed that: “The Government of the Socialist Republic of Vietnam welcomes all foreign governments and organizations to support Vietnam by providing Official Development Aids on the principles of respecting its independence and sovereignty.” - ODA associates with economic benefits of donor countries Nowadays, the trend of ODA donors is to reduce non-refundable aid and increase ODA loan with conditions that constrain recipient countries to purchase their goods and services That is a spotlight in actual state of foreign aid in the world, however the level of constraint are different from countries - Foreign exchange risk Most of the ODA have been received in strong foreign currency that might cause exchange risks such as: US dollar, pound, euro… while the escalation of domestic currency (e.g Vietnam dong) happens over time So the longer time of the loan is, the higher the variance of exchange rate between foreign currency and domestic currency are This variance will be borne and compensated by the State budget Thus, recipient countries should have an appropriate loan management policy if no they will face insolvency - ODA can become debt burden of recipient countries in the future The Government often uses these loans to build up social and economic infrastructure and its short-term profitability is extremely low, even zero Therefore, if the infrastructure are invested and used but work inefficiently, it will become a latent debt burden in the future 1.1.3 Forms of ODA provision: a ODA in the form of a non-refundable grant Is form of ODA provision which is not refundable to the donor (or the grant element for a grand is 100%) Non-refundable ODA which is denominated as technical assistance is an inseparable part of ODA This fund is used mainly to develop human resource, institution, knowledge and technology transfer that recipient countries cannot implement by themselves b ODA in the form of concessional loan Is form of ODA provision which is assistance through a loan with concessional conditions in interest rate, grace period and debt-payment term The grant element should be at least 35% for tied loans and 25% for untied loans c Mixed ODA loan Is assistance that includes a grant or a concessional loan provided simultaneously with other commercial loans, but as a whole, its “grant element” should reach at least 35% for tied loans, and 25% for untied loans 1.1.4 Key modalities of ODA delivery: a Program support Program support is a term that is used to describe the grant to investment in balance of payment and State budget It comes with the conditions of how the Government uses the aid and conditions that related to the policy reform Support for program includes: balance of payments support, budget support, sector budget support and reducing debt b Project support Project support is the grant that aim at specific purpose Activities and expenses of the project will be elaborated and frequently not have additional condition A develop project includes a series of separate activities with its definite goal, budget and result, as well as thorough project management There are three modes: - Aid project managed by the Government Aid project that managed by the Government is a project where the Government of recipient countries are responsible for managing the project and control the fund usage In this case, the fund will be disbursed directly to government’s account and the Government of recipients has to record their usage explicitly Besides, donors also provide suggestion of how to use the fund - Aid project managed by the donor Is a project where the donor will take the control and manage operation and finance of the project In this case, the donor establishes management board responsible for project implementation and fund management Fund will be disbursed and recorded by the donor This project is not a part of program and regular budget of government This funding Development of Vietnam, the author gives several solutions and recommendations as follows: 3.1 Solution for attracting ODA capital of WB into Vietnam 3.1.1 Stablize economy, politics and maintain national security One of factors concerned in analysis of operating environment of organization requesting to borrow is socio-political factor Is political situation in area of such organizations stable? Because loan demand will be restricted, credit quality is not high, risk will be considerable if such area is suffered from unstable security, poor social order and safety, significant social evil In addition, operating in unstable environment may make organization requesting to borrow closed or broken down (due to war, uprising, theft and so on) which is of challenges of organization in case of capital borrowing Therefore, the first thing must be implemented by the Government is to stabilize economy and maintain national security This is favorable condition for continuous socio-economic activities In particular, the government should have measures and incentive policies for investment in rural area such as tax decrease, expansion of external relationship in order to seek, create output market for agricultural products, have price support policy Economy is of a system including related economic activities Any variation of economic activities also make impact on production and business activities Moreover, operation of commercial banks may be considered as connecting bridge to different sectors of economy Therefore, economic instability, development and recession will make strong influence on operation of banks, especially credit activity With healthy economic environment, economic subjects will bring about effective operation, expanded business and operation, increase in capital demand of such subjects, increased credit scope in borrowing and lending banks In contrast, with unexpected economic variation, or economic crisis, investment demand will be reduce, resulting in decreased credit scope The Government should provide typical programs and policies for small and medium sized enterprises in private sector, encourage enterprises to make investment in projects with 42 ability to create many jobs, for example: policies to minimize issuance of license and business registration certificate, measures to prevent smuggled goods, preferential tax or conditions for capital borrowing In addition, the Government should give further priority to spend budget on investment to develop infrastructure in rural area such as: construct road, bridge and culvert, irrigation system, upgrade equipment of medical and education system Developed infrastructure not only is favorable condition for operation and business of citizen and enterprise but also make impact on PFIs’ decision to lend 3.1.2 Promote investment with sponsors The Government plays a decisive role in relationship with sponsors Development and expansion of relationship with sponsors will significantly affect quality and quantity of sponsored finance from international sponsors The Government should strengthen diplomatic activities with international sponsors to increase committed capital for Vietnam, strongly advocate capital mobilization programs for credit projects of banking sector, give direction for ministries and sectors to work in collaboration with State Bank of Vietnam and borrowing bank in preparation, construction and implementation to credit projects in the sector The Government also need expand orientation to management and use of capital for projects directly gaining profits and lending as per commercial mechanism such as Rural Finance Project This is very important because it ensure solvency of the country in long time 3.1.3 Complete legal frame in term of management and use of ODA Complete legal frame of ODA management model through wholesaling bank At present in Vietnam, only rural finance project is disbursed through banking system and finally, both rural finance projects are assessed as the most successful projects, it is proven that overdue debt is It can be explained that project capital is delivered to bank for management, separating capital manager and capital user In addition, the bank is professional, experienced, with network in nation-wide leading to safe and high effective capital management The Government should completely review and assess efficiency of rural finance capital management through transaction office III- Bank for investment and Development of Vietnam to maintain and expand this model for other ODA projects such as electric supply 43 project, water supply project, clean water in rural and so on, from that making decision on establishment of ODA capital wholesaling bank Moreover, the Government should study to make and issue regulations on ODA capital management through wholesaling bank in order to increase efficiency of ODA capital, making contribution to economic development of the country 3.2 Improve quality of management to main contents of rural finance project For successful implementation of rural finance project, transaction office III need step by step improve quality of management to each aspect for PFIs selection, project appraisal, training, information technology to environment work In conclusion, management activity uses basic conditions as follows: - Human resource (including officers and employees of transaction office and consulting specialists) - Technical facility - Professional procedures - Information system Therefore, solutions are to improve quality of aforesaid conditions through basic contents as follows: 3.2.1 Enhance training for qualified officers When apprasing wholesaling credit projects, sponsors pay special attention to quantity and quality of officers Institutional capacity and qualified officers are considered as the key for project’s success One of the poorest factors of most of Project Management Unit is capacity of Project’s officers in term of professional knowledge and project skills, especially ODA project profession such as: tendering profession, procurement, disbursement accounting, use of consulting services, environment, inspection, supervision, project assessment and so on; In addition, foreign language including popular languages (public language of ODA program/ project), and specialized languages of project’s team remain limited, has not met route of ODA project implementation; Main reason is that profession training related to operation to specific tasks of ODA programs/ projects has not been paid attention to by State’s ODA management agencies and Bank for Investment and Development of Vietnam Moreover, training is characterized by formality, patching up, asynchronous, without planning, etc 44 and popularly, through short-term training courses, conferences, talk shows organized under collaboration between sponsors and project owners within scope of ODA project, general knowledge and overview in respect of profession related to ODA project have not been equipped for project’s officers.ODA programs and projects often have significant influencing scope, considerably make impacts on policies and mechanism of the country, project’s officers must have general knowledge at “macro level” and operation knowledge at “micro level” to undertake the project Therefore, when project officers directly operate the project, many problems are arisen, requiring study of the project’s contents again under form of combining doing, learning, studying, supplementing what is short, which spends much time and results in delay for implementation of ODA program/ project Although up to now, over 20 years Vietnam has received and implemented hundred of ODA programs and projects, we not have any ODA specialized training center has been established, and any summary documents in term of ODA has been provided for looking up This fact should be dealt with as soon as possible to create favorable conditions for thousand of officers directly working in ODA programs/ projects, especially projects implemented in localities which have opportunities to take part in methodical, large scope, and long-term training programs In order to achieve this, it is necessary to establish and execute specialized and directive training programs to have qualified officers, which assists financial PFIs to participate in and support the end borrowers In the short term, when there have not been Centers for training specialized operations about ODA, Transaction office III should promote training under various forms such as: employing lecturers of Academies, Universities in combination with domestic and foreign specialists on ODA or working for ODA projects, etc…, or organizing training courses on ODA operation for all officers who are directly working in Transaction Office III Firstly, officers need to be trained specializing in financial analysis and specialists on project financing, specialists on external relations, lecturers specializing in financing small and medium enterprises and micro-finance These officers shall be in charge of two strategic tasks which are: taking in part in building credit trading projects; executing training courses for private sector and supporting PFIs of micro-finance The best solution is improving foreign language for officers, and then sending them to participate in abroad training courses 45 The next step is selecting professional officers with high qualification and professional knowledge, virtue, self-taught and self-researched abilities It may be necessary to train and improve specialized operation on appraisal and assessment of environment impacts and selection of PFIs for officers From that, it step by step standardizes officers based on their capacities, qualification, and virtue to meet demand of business activity In human resource training and developing strategy, Transaction Office III must also consider the issue of renovation and improvement of salary and award scale for staff, creating motivation for development of their creation capacity and responsibilities in working 3.2.2 Improving material and technical facilities for the bank Staff and material facilities of the bank are the first impression of customers and sponsors Thus, besides improving quality of staff, TC III should pay more attention to supplement and equip material and technical facilities The Office must continue to complete software for preparing SOE (Statement of Expenditure) and comprehensive management in PFIs, which creates conditions to update figures for exact and timely statistic and reports; simultaneously apply up-to-date management information system (MIS) in banking activities Software such Microsoft Project should be used to facilitate schedule arrangement, budget preparation This kind of software is very useful for preparing weekly, monthly or yearly schedule with high flexibility and convenience The installation of a document managing software enabling systematic filling, quick and precise search with different level of information access is also recommended to consolidate electronic data system 3.2.3 Completing operation process At present BIDV researches and executes credit rating system for PFIs Therefore, besides assessment criteria which are agreed with WB, Transaction Office III may take rating results of this System for reference to add more bases to select banks to participate in the project, monitor, manage and propose adjustment of credit limit for PFIs Moreover, Transaction Office III should complete PFIs selection handbook, Appraisal Handbook and authorization decentralization mechanism to create conditions and basis for process of appraising the end borrowers and appraising sub-projects which are in and beyond approval authority 46 Besides, it has been very difficulties for commercial banks in Vietnam to assess to setting up stages in project life cycle such as foundation, design, preparation, preparation and planning approval which always have been done by other agencies such as MPI, MOF, SBV… The banks usually take part in the implementation phase for almost financial projects So, if they have chances to join in to the planning stages, the problems would be reduced 3.3 Building strategy of whole sales of Rural Finance at Transaction Office III Organizing and re-structuring Transaction Office III of BIDV to establish professional wholesale bank of ODA which not only wholesales capital source of Rural Finance Project but also performs task of wholesaling ODA credit capital, improving efficiency of overall management of ODA Disbursement of project capital through wholesale bank creates main capital channel financing agricultural and rural development in Vietnam Furthermore, when commercial banks participate in deployment and management of ODA project in general and Rural Finance project at present, the problem of disbursement of project capital, using funds and refunding…shall be better timely solved with credit sanctions This creates level playing field and opportunity to access ODA funds for financial institution community in Vietnam and for the end borrowers Acting as managing unit of ODA projects and wholesale bank, Transaction office III BIDV has advantage of an effective business apparatus for wholesale bank’s operation which is on the first step of mastering and successfully operating credit wholesale mechanism The second advantage is creating certain reputation when the Office successfully deploys Rural Finance Projects of WB If wholesale bank business is expanded, Transaction office III - BIDV may considerably improve its profitability because this is high profitable and sustainable type of business Thus, Transaction office III - BIDV must build its own operating strategy with main contents as follows: Firstly, promptly improving and strengthening institution capacity to have sufficient conditions to be a wholesale bank (according to WB’s standards) not only for Rural Finance Project but also for others next time because only when financial capacity of wholesale bank is healthy are projects approved; and only PFIs with healthy financial capacity are selected 47 For PFIs participating in the project, IDPs also must be seriously deployed to become healthy PFIs Major measures which should be implemented are expanding bases of own capital, tightening credit quality control, strengthening risk controlling mechanism and implementing large and specialized training programs In addition, when building projects, Transaction office III should attach more attention to require sponsors to use appropriate forces to support PFI/MFI and the end borrowers in establishment and appraisal of sub-projects with small and medium scale, marketing, and risk management Secondly, orienting wholesale as one of main business activities; maintaining wholesale banking and retail banking activities independently with each other At present, BIDV is on the way of development of a multi-functionally financial group which is the general trend of banks in the region and all over the world Nevertheless, wholesale of credit sources for development is a special type of business which has separate market, separate professional techniques, so those two types of business should be independently organized Thirdly, in order to mobilize maximum sources of ODA financing wholesale credit projects, it is necessary to implement following tasks: - Based on lists of wholesale credit projects of Banking Sector, Transaction Office III BIDV should deploy specific activities and promote financing activity Under regulating and directing of State Bank of Vietnam and ministries and industries concerned, Transaction Office III is responsible for preparing material facilities, information source and regulating co-ordination of potential PFIs in building and executing wholesale credit projects - Taking shape of specialized departments of Transaction Office III to manage and promote preparation for wholesale credit projects with function of researching policies and procedures of sponsors, maintaining and promoting relationships with sponsors and storing and managing information for long-term use - Promoting mobilization of financing in ministries and industries concerned and improving relation between Transaction Office III and representative office of potential sponsors 48 3.4 Building finance project in accordance with the real situation of Vietnam - During appraisal and building projects, Project Management Committee and functional ministries and industries should closely co-operate with sponsors to negotiate terms and conditions of Credit Agreement to ensure that conditions of implementation of the project are in accordance with the real situation of Vietnam On the other hand, it must ensure objective of two parties, sponsor and Vietnam, is for agricultural and rural economic development, strengthening institution capacity for financial institutions participating in the project, and improving countryside people’s life Results of negotiation much depend on preparation step for contents of negotiation as well as professional capacity, qualification, negotiating skill, knowledge of laws, normal practice and international treaties on ODA…of members of negotiating group Therefore, in negotiating period, Vietnam should have careful preparation for contents of negotiation; members participating in negotiation must have professional capacity, experience and knowledge of normal practice and international laws - Making Policy Handbook, Handbook of management and disbursement, operation process…is a very important task, which must be prepared professionally and methodically to ensure that the project is effectively monitored during period of project implementation (25 years) - There are measures which may remedy imposable regulations of sponsors In more details, if the sponsor requires to focus on making medium and long-term loans for agricultural and rural economic development and restrict short-term lending, Project management committee may research localities all over the country and consider programs of concentrated agricultural economic development such as: planting coffee trees, raising catfish, breeding dairy cattle, planting forest, transforming rural motorized vehicles…From that, the Committee with PFIs co-operates with local Department, boards and industries to deploy lending activity according to that program Therefore, in one hand, the situation of lending for decentralized investment to develop rural economy spontaneously is remedied; on the other hand, lending for deep investment, promoting rural economy with key industries of each locality and supporting and encouraging concentrated economic development in large scales is strengthened CONCLUSION The RFP II was successfully concluded and the implementation and impact of the project was assessed as very positive The project had much support for the Vietnam Government 49 in efforts to develop the rural economy, poverty alleviation through enhancing the access of households and rural enterprises to official development assistance capital Besides, RFP II also supported capacity building for the PFIs to provide better financial services to rural area, contributing to the development of rural financial system The ending of RFP II is a prerequisite for the implementation of RFP III which is currently in the final stage with the very positive evaluation However, the problems in RFP II which are typical issues encountered in ODA project management still need to be carefully considered With the objectives set out from the beginning, the thesis was somewhat lightened to the following key issues: (i) Systematize the theoretical issues underlying the management of ODA; (ii) Analyze and assess the situation of RFP management at TCIII BIDV; (iii) Offering solutions and recommendations for a better performance of RFP and the alike Because of time, ability and framework constraint, this study can have inevitable errors that always open to suggestions and welcome criticisms Finally, I would like to express my gratitude to all those who gave me the possibility to complete this thesis First and foremost, I wish to thank Ms Celine Barredy who gave me precious advice to make my study smooth and available I also owed great thanks to management and colleagues at TCIII BIDV who have created favorable conditions for me to pursue my MBA course, in particular to those of Project Management Unit at TCIII for their valuation information and project experiences My warmest thanks go to my family and my fiancé who share happiness and difficulty with me in writing this paper REFERENCES Ton Thanh Tam, PhD Solutions for improving the effectiveness of ODA management in Vietnam, NEU Le Thi Thu Trang, Improving ODA project monitoring and controlling, Master thesis, VNU NEU Microfinance Research Center Socioeconomic Impact Assessment RFP, Credit No.3648-VN financed by the World Bank 50 BIDV Quarterly, semi and yearly progress reports by PMU and project information documents World Bank Staff Appraisal Report (SAR) Socialist Republic of Vietnam Rural Finance Project Report No 15088VN World Bank Project appraisal Report (PAD) Report No 23817-VN World Bank Development Credit Agreement (DCA) Credit 3648-VN World Bank Development Credit Agreement (DCA) Credit 3884-VN World Bank RDF and FRP Policy Manuals 10 World Bank RDF and MLF Policy Manuals 11 World Bank Manuals on Financial Management 12 World Bank Implementation completion report 13 World Bank Aide Memoire 14 Website: http://www.mpi.gov.vn 15 Websites: http://www.mof.gov.vn 16 Websites: http://www.worldbank.org/http://www.worldbank.org.vn 51 APPENDIX SOME INFORMATION OF RURAL FINANCE PROJECT III ... State and banking sector in boosting mobilization of ODA capital and targets for developing this activity of the Transaction Office III – Bank for Investment and 41 Development of Vietnam, the. .. and PFIs) to WB and other stakeholders like Ministry of Finance (MOF), Ministry of Planning and Investment (MPI) by collecting information from PFIs’ head offices who is the leading body in information... managing information for long-term use - Promoting mobilization of financing in ministries and industries concerned and improving relation between Transaction Office III and representative office