CPR Volume II Sector Reports v2

VVIIEETTNNAAMM

Country Program Review

2005

Volume II Sector Reports

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ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities M&E Monitoring and Evaluation ADB Asian Development Bank MARD Ministry of Agriculture and Rural Development AFD Agence Française de Développement MOF Ministry of Finance BIDV Bank for Investment and Development of Vietnam MPI Ministry of Planning and Investment CAS Country Assistance Strategy ODA Official Development Assistance CG Consultative Group OED Operations Evaluation Department CPO Central Project Office PAD Project Appraisal Document CPR Country Program Review PCLIP Poor Communes Infrastructure & Livelihoods Proj. CPRGS Comprehensive Poverty Reduction and Growth Strategy PCN Project Concept Notes CPPR Country Portfolio Performance Review PDO Project Development Objectives DO Development Objectives PPC Provincial People’s Committee EAP East Asia and Pacific Region PPMU Provincial Project Management Unit EG Energy PMO Project Management Office FAO Food and Agriculture Organization of the United Nations PMU Project Management Unit FM Financial Management PREM Poverty Reduction and Economic Management FSQL Fundamental School Quality Level PRSC Poverty Reduction Support Credit GA Grant Agreement PSR Project Status Report GDO Grant Development Objective RD Rural Development GEF Global Environment Facility QAG Quality Assurance Group GRM Grant Report and Monitoring SBV State Bank of Vietnam GOV Government of Vietnam SIDA Swedish International Development Agency HCMC Ho Chi Minh City SEDP Socio-Economic Development Plan HD Human Development TA Technical Assistance ICM Implementation Completion Memorandum TF Trust Fund ICR Implementation Completion Report TR Transport ICT Information and Communication Technology VBARD Vietnam Bank for Agriculture and Rural Devt IDA International Development Assistance VDG Vietnam Development Goals IDF Institutional Development Fund WB World Bank IMTF Inter-ministerial Task Force ISR Implementation Status Report IP Implementation Progress JBIC Japan Bank for International Cooperation JSDF Japan Social Development Fund KFW Kreditanstalt für Wiederaufbau KPI Key Performance Indicator

Task Team Leader: Rakesh Nangia (Portfolio and Operations Manager, World Bank, Hanoi)

Task Team: Lada Strelkova (Sr. Operations Officer, OPCS), Manuel Penalver (Consultant), Nga Thi Quynh Dang (Sr. Program Assistant, World Bank Hanoi), Phuong Anh Vu Tran (Program Assistant, World Bank, Hanoi), Son Duy Nguyen (Operations Officer, World Bank, Hanoi), Victoria Gyllerup (Operations Officer, World Bank, Hanoi) and Yoshine Uchimura (Consultant).

The Country Program Review was prepared under the overall guidance of Klaus Rohland, Country Director for Vietnam. The report is prepared in consultation with members of the World Bank country team and representatives of Government offices, implementing agencies, and other donors. The report also benefits from inputs and guidance from Christian Rey, Manager Quality and Trust Funds and Susan Stout, Manager Results Secretariat.

Vietnam Country Program Review (CPR) 2005

Background As part of the World Bank’s enhanced focus on results, the annual portfolio review framework is being adapted to systematically assess quality performance and alignment of all Bank instruments to the results framework in the Country Assistance Strategy. The Vietnam Country Program Review (CPR) is one of the first such program reviews undertaken in the Bank. Objectives The objectives of the Vietnam CPR are to assess the: • Strategic focus, alignment and development effectiveness of the ongoing and emerging program; • Focus on results at national, sector and project levels; and • Overall program sustainability and institutional effectiveness. The findings of the CPR will serve as a building block in the preparation of the World Bank Country Assistance Strategy for Vietnam (2006-2010). Methodology The CPR methodology included: • Desk review of available documentation on country-level strategies, sector studies and individual project design and

implementation progress. • Consultations with Bank HQ and Vietnam-based staff, Government officials, PMUs and donor representatives. • Panel assessment of individual projects in the program with respect to alignment, results framework and project

implementation. The intent of the Panel assessments was not an in-depth evaluation of each operation, but an effort to gain an overall sense of the portfolio as a whole and to identify priority actions.

Scope The CPR covers IDA investment credits and trust-funded operations under implementation, as well as proposed new operations in an advanced stage of preparation. Only limited references are made to PRSCs and AAA activities. Structure The CPR is organized into two volumes: Volume I - Main report; Volume II - Sector reports. The Main Report provides a broad overview of the program. It provides information on the overall portfolio and discusses issues related to alignment of the portfolio with the CAS priorities, strengths and weaknesses in implementing the results agenda, as well as the portfolio performance and suggestions for scaling-up and sustaining high levels of resource transfer while strengthening portfolio management. The Sector Reports drill-down from the main report and provide details for each sector. These reports are envisaged as stand-alone pieces, and thus there is some duplication across sectors. Looking Forward. At the end of each chapter in the main report and in the sector notes, the "Looking Forward" section provides steps to strengthen alignment, results management and portfolio performance. These recommendations complement the ones of previous CPPRs and JPPRs. All the data in the CPR is as of December 2005.

Table of Contents

ABBREVIATIONS AND ACRONYMS............................................................................................................. 2

CHAPTER 1 EDUCATION SECTOR ...................................................................................................... 7

1.1 Education Portfolio at a Glance ................................................................................................... 7

1.2 Strategic Alignment of the Education Sector Portfolio ................................................................. 8

1.3 Results Achieved in the Education Sector ................................................................................. 13

1.4 Managing for Results in the Education Sector ........................................................................... 15

1.5 Portfolio Implementation ............................................................................................................ 19

CHAPTER 2 ENERGY SECTOR .......................................................................................................... 24

2.1 Energy Portfolio at a Glance...................................................................................................... 24

2.2 Strategic Alignment of the Energy Sector Portfolio .................................................................... 25

2.3 Results Achieved in the Energy Sector...................................................................................... 30

2.4 Managing for Results in the Energy Sector................................................................................ 32


CHAPTER 3 HEALTH SECTOR ........................................................................................................... 41

3.1 Health Portfolio at a Glance....................................................................................................... 41

3.2 Strategic Alignment of the Health Portfolio ................................................................................ 42

3.3 Results Achieved in the Health Sector....................................................................................... 47

3.4 Managing for Results in the Health Sector................................................................................. 49


CHAPTER 4 PREM SECTOR (INCL. CITPO & COSU)........................................................................ 57

4.1 PREM, CITPO and COSU Portfolio at a Glance........................................................................ 57

4.2 Strategic Alignment.................................................................................................................... 58

4.3 Results Achieved in the PREM Sector....................................................................................... 64

4.4 Managing for Results ................................................................................................................. 71


CHAPTER 5 RURAL DEVELOPMENT SECTOR ................................................................................. 79

5.1 Rural Development Portfolio at a Glance................................................................................... 79

5.2 Strategic Alignment of the Rural Development Portfolio ............................................................ 81

5.3 Results Achieved in the Rural Development Sector .................................................................. 87

5.4 Managing for Results in the Rural Development Sector ............................................................ 94

5.5 Portfolio Implementation (as of December 2005)..................................................................... 100

CHAPTER 6 TRANSPORT SECTOR ................................................................................................. 106

6.1 Transport Portfolio at a Glance ................................................................................................ 106

6.2 Strategic Alignment of the Transport Sector Portfolio .............................................................. 107

6.3 Results Achieved in the Transport Sector................................................................................ 112

6.4 Managing for Results in the Transport Sector.......................................................................... 115

6.5 Portfolio Implementation .......................................................................................................... 119

CHAPTER 7 URBAN DEVELOPMENT SECTOR............................................................................... 125

7.1 Urban Portfolio at a Glance...................................................................................................... 125

7.2 Strategic Alignment of the Urban Portfolio............................................................................... 126

7.3 Results Achieved in the Urban Development Sector ............................................................... 132

7.4 Managing for Results in the Urban Development Sector ......................................................... 134

7.5 Portfolio Implementation .......................................................................................................... 139

VN COUNTRY PROGRAM REVIEW 2005 EDUCATION SECTOR 7

Chapter 1 Education Sector

1.1 Education Portfolio at a Glance

The Education Credit Portfolio Since FY94: • Cumulative Net Commitments of US$ 362 million • Cumulative Disbursements of US$ 133 million (Dec.05) • 6% of total IDA commitments for Vietnam

The Active Education Portfolio (as of December 2005):

• Four active credits (US$ 292 million – 8% of VN portfolio) • 9 active grants (US$ 73 million) – 30% of VN TF portfolio) • Average project age of 3.6 years

Education Portfolio Performance:

• 100% of portfolio rated satisfactory on DO and IP • OED – 1 project evaluated by OED. 100% S outcome • Average disbursement lag: 61%

Disbursement Ratio below Regional Average: IDA Projects Grants

FY01 14.0% 11.8 MUS$ 30% 0.2 MUS$ FY02 14.8% 11.9 MUS$ 3% 0.4 MUS$ FY03 9.8% 9.1 MUS$ 5% 0.6 MUS$ FY04 8.3% 18.4 MUS$ 4% 2.5 MUS$ FY05 6.9% 15.4 MUS$ 5% 3.5 MUS$

(EAP FY05: 19.9% for projects and 18.3% for grants )

Figure 1.1: Use of IDA funds in the Education Sector

FYIDA

Credit

CAS Theme 2.2/2.3

Support to Ethnic

Minorities/Women

CAS Theme 2.4

Basic Social Services for the

Poor

CAS Theme 3.3

Public Administration

Reform

Higher Education PMU

Higher Education 1999 83.3

Primary Teacher Development

2002 19.8

Primary Education for Disadvantaged Children

2003 138.8

Education for All 2005 50.0

Higher Education II 2007 72.0

Education Work-Force 2008 100.0

Total On-Going Projects MUSD (%) 291.9 27 (9%) 81 (28%) 2.2 (1%)

Total All Projects MUSD (%) 463.9 27 (6%) 153 (32%) 2.2 (1%)

179 (61%)

279 (60%)

19

128 11

257 16

72

100

81

Note: Each project component has been mapped to the one CAS sub-theme to which the major contribution is expected. The Primary Education for Disadvantaged Children component for achieving FSQL standards contributes to both increasing access to basic social services and to supporting ethnic minorities and the advancement of women.

Investment Project Progress Education Sector

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Elapsed Times (%)

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Annual Commitments


1.2 Strategic Alignment of the Education Sector Portfolio

CAS Strategy. The current Vietnam CAS contains multiple sets of objectives: (i) the Government strategy as expressed in the CPRGS; (ii) the overall three CAS themes divided into 16 sub-themes; (iii) specific sector priorities; (iv) the Vietnam Development Goals and (v) program goals such as strengthening partnerships and harmonization.

Education Sector Initiatives. Bank credits and trust funds in the education sector cover four main areas: (i) primary education infrastructure and services; (ii) primary teacher training, teaching material and methods; (iii) higher education development; and (iv) capacity

development at different levels of the Government to plan and manage the education sector.

The table below maps these areas of intervention against the various relevant objectives outlined in the CAS and illustrates the varying degrees of alignment. The different sets of objectives presented in the CAS do not provide a consistent framework of priorities. This complicates a review of alignment of the various types of education interventions, as illustrated below.

Table 1.1: Alignment of Education Sector Portfolio to CAS objectives

Areas of Intervention

CPRGS objectives (Policy matrix in CAS Annex)

CAS sub-themes CAS Sector Priorities for Human Development

Making basic social services accessible and affordable to the poor Build a more equal and higher

quality education for people Raising the living standards of ethnic minorities

Address inequalities in service delivery across provinces, resulting from the increased decentralization in public provision of education

Primary Education

Infrastructure and Services

Move towards completion of junior secondary education and illiteracy eradication

Realizing gender equality and advancement of women

Reduce the burden of poor people in financing basic social services

Making basic social services accessible and affordable to the poor Build a more equal and higher

quality education for people Raising the living standards of ethnic minorities

Primary Teacher Training,

Material and Methods Move towards completion of

junior secondary education and illiteracy eradication

Realizing gender equality and advancement of women

Support modernization of education provider networks in line with pressures of globalization, a market-oriented economy and a greater role for the private sector

Higher Education

Build a more equal and higher quality education for all people.

Support for the Domestic Private Sector

Support modernization of education provider networks in line with … (see above)

Public Administration Reform GOV Capacity Development

Accelerate the reform of public administration Improving Public Financial

Management

Support modernization of education provider networks…

Strong Alignment Weak Alignment


Overall Assessment of Alignment. All projects and grants in the portfolio, regardless of approval date, are well-aligned to at least one of the three sets of priorities. Alignment is strongest with the CPRGS objectives with all four credits directly supporting the CPRGS objective “to build a more equal and higher quality education for people”. The alignment to the CAS sub-themes is in general satisfactory, but weaker than to the CPRGS, due to the absence of a focus on strengthening quality which is a prime objective of all three primary education projects. The relevance and alignment of the Higher Education project to the CAS sub-themes are less clear, with only indirect contributions expected to the goal of private sector development.

The alignment to the HD sector priorities outlined in the CAS is strong, although the sector priorities do not explicitly include improving

education quality as a priority. The education sector also contributes to the achievement of the VDG-2 and associated targets outlined in the Box above.

Table 1.2: Alignment of the Education Sector Portfolio

Alignment CPR Panel Assessment Education

Sector Credits FY Project Development Objective

(abbreviated) CPRGS CAS Sub-Themes

CAS Sector Priorities

Higher Education 99

� Improve responsiveness of higher education system to changing demands of the market economy, improve efficiency of resource allocation and improve quality of curriculum, teaching, learning and research.

S MU S

Primary Teacher Development 02

� Lay the foundation for a nationwide program to upgrade the quality of primary teaching service HS MS MS

Primary Education for Disadvantaged Children

03 � Improve access to primary school and the

quality of education for disadvantaged girls and boys

HS HS HS

Education For All 05

� Assist the Borrower implement the National Education for All Plan through targeted budget support to enhance quality and strengthen administration of basic education

HS HS HS

Higher Education II (pipeline) 07

� Increase the number of graduate students with relevant skills for the modern society and market-based economy

S MU S

Education Sector TFs (only one TF selected for detailed review)

IDF TF – Result-based Management for VN Education Manager

05

� Enhance capacity of MOET in providing leadership and guidance on result-based management to various levels of education management

S S S

HS- Highly Satisfactory, S-Satisfactory, MS- Moderately Satisfactory, MU-Moderately Unsatisfactory, U-Unsatisfactory, HU- Highly Unsatisfactory

Box 1.1. Education Sector VDGs

Vietnam Development Goal 2: “Universalize education and improve education quality”

(i) increase the net enrolment in primary school to 97% in 2005 and to 99% in 2010;

(ii) increase the net enrolment rate in junior secondary school to 80% in 2005 and 90% by 2010;

(iii) eliminate the gender gap in primary and secondary education by 2005 and the gap with ethnic minorities in 2010;

(iv) increase literacy to 95% of under 40 year old women by 2005 and 100% by 2010

(v) improved the quality of education and increase the full-day schooling at primary level by 2010


1.3 Alignment of Different Education Sector Interventions

As noted above, the different sets of objectives presented in the CAS do not provide a fully consistent framework of priorities. Below the various types of education sector interventions found in the portfolio are reviewed in terms of alignment to (i) CPRGS objectives; (ii) CAS Sub-themes; and (iii) CAS Sector Priorities.

Primary Education Infrastructure and Services. Primary school infrastructure investments (US$ 154 million) account for more than half of the education lending portfolio. In addition, the Community Driven Development (CDD) projects are contributing to construction of school facilities. These initiatives are strongly aligned with the CPRGS objective of building an equal and higher quality education system and removing illiteracy. They are also well-aligned with the CAS sub-theme of making basic social services accessible and affordable to the poor as well as the HD sector priority of addressing inequalities in delivery. The Primary Education for Disadvantaged Children project (PEDC), with its focus on girls and ethnic minorities, is also contributing to and is well aligned with the CAS sub-themes of promoting gender equality and raising the living standards of ethnic minorities.

There are several co-financing TFs supporting the implementation of primary education projects, as well as a JSDF grant to support early childhood care and development. These TFs are similarly all well-aligned with the CPRGS, CAS sub-themes and sector priorities.

Primary Teacher Training, Material and Methods. Improving education quality is a focus of all three primary education projects. This is well-aligned with the CPRGS objectives for education, but less so with the CAS sub-theme and the sector priorities which do not explicitly mention improving quality as a priority.

Higher Education. Support to building a strong higher education system is well-aligned with the CPRGS objective of building higher quality

education system. It is also clearly linked with the HD sector priority of modernizing the education network to better meet the needs of the market economy. However, there is no CAS sub-theme to which higher education initiatives can be easily mapped, even though strengthening the quality of research and graduate students will contribute to the CAS sub-theme of Private Sector Development.

GOV Capacity Development. In addition to several stand-alone technical assistance grants, all education sector projects contain components to strengthen education sector governance. This is aligned with the focus of the CPRGS and the CAS sub-themes of Public Administration Reform, as well as the sector priority to modernize the education system. The Targeted Budget Support, approved during the CAS period, is taking capacity development one step further by directly contributing to the National Program for Education For All.

1.4 Partnerships and Harmonization

The CAS also identifies areas of strategic priority for the Bank program, including building partnerships and harmonization. The education sector is doing well in this regard and all three primary education projects are co-financed. Steps are also being taken towards harmonizing procedures and developing sector-wide approaches.

The EFA is implemented by a broad donor partnership with Belgium, Canada, EC, New Zealand, and UK. In terms of using the so-called “new aid modalities”, the EFA is one of the most advanced. Donors are providing targeted budget support directly to the Government program and largely relying on the Government’s systems to implement the program.

The sector has effectively mobilized other donors’ support for Bank projects and has one of the biggest TF portfolios with a range of TFs including IDF, ASEM, PHRD and JSDF, as well as one co-financing grant from UK, one technical assistance grant from Canada, and one of the biggest multi-donor grants bank-wide (US$51.5


million) to support the Primary Education for Disadvantaged Children project. The Education sector portfolio also contains one grant executed by an international Non-Government Organization (NGO).

1.5 Looking Ahead – Strengthening Strategic Alignment

Ensure a Consistent Strategic Framework in the Next CAS. To avoid the situation of the current CAS, with multiple objectives that are not fully consistent, the next CAS should express priorities for the education sector more clearly and comprehensively. Links between sector objectives and cross-sectoral themes of the CAS/SEDP should be made more explicit to ensure consistency in priority setting.

Developing a WB Sectoral Results Framework. To address the absence of a clear results framework linking project level results with the overall CAS themes and Government objectives, a sectoral results framework could be developed. Based on the strategic priorities outlined in the Bank’s current and proposed interventions, a possible sectoral results framework has been prepared. This could serve as an input into the CAS development, and help to ensure a higher degree of consistency between sector priorities, project objectives and the key themes of the CAS. It would also be important to link expectations of results during the next CAS period directly to what the current and planned education portfolio is set up to achieve.

Prioritize the Pipeline based on the Focus of the Next CAS. The current pipeline for Vietnam exceeds the available IDA resources and there is a need to prioritize the pipeline in line with the criteria that is being established for the next CAS.

It would be prudent to prioritize future initiatives based on performance and not on a first-come first-served basis, as in the past. Six general principles could be considered to guide the priorities:

� Contribution to the CAS and SEDP; � Past implementation experience in the

sector; � The Bank’s comparative advantage in

undertaking the intervention; � Complementarity with other donors and

possibility to leverage other investment sources;

� Use of country systems; � Historical preparation costs in the

sector; Surely other criteria can be included, but this could be the basis of a first discussion. Based on the discussion, guidelines providing additional clarity to these principles could be prepared.

Strategic Planning for TF. It would be useful for the sector to prepare a TF strategic plan which would be reflected in the CAS. Not only will this help the Government effectively coordinate grant resources for the education sector, but also help the CMU have a better strategic planning framework which prioritizes the use of TFs.

Box 1.2. Education Sector Pipeline

� Higher Education II

� Education Quality Workforce (TBS II)

� Science and Technology: Policy Development & Key Research Institutes

� Education Full SWAp

� Education for the Knowledge Economy


Possible Education Sector Results Framework

… by investing in education infrastructure improvements and implementing education initiatives targeting vulnerable groups including ethnic minorities, girls, working children, street children and children with disabilities. � Primary Education for

Disadvantaged Children

� Education for All � JSDF TF – Early

Childhood Care and Development

… by investing in renovation of curriculum and textbooks/teaching methods and improving teacher training and qualification. � Primary Teacher

Development � Primary Education for


� Education for All � Education Workforce

Quality

Overarching CAS Goals

Ensure access to affordable quality basic education for all children…

Enhance primary school

student achievement ...

Improve the institutional

effectiveness of education agencies …

Increase the number of graduate

students with relevant skills..

… by strengthening the capacity at different Government levels to plan and manage the education sector. � Primary Teacher

Development � Primary Education for


� TF - Result-based Management for VN Education Managers

� ASEM II TF –Poverty Reduction Focus in the Education

� CIDA TF – Education Sector Budget Processes

� Education for All � Education Workforce

Quality

… to assist in the transition to a market economy by supporting higher education reform, improving the quality of higher education, encouraging research and improving the cost-efficiency and equity in the higher education system. � Higher Education � Higher Education II

Bank-Supported Sector Goals… …

… and strategy

Gross intake in grade 1 Net primary enrollment Primary completion rate

Per-student spending on non-salary items Drop-out and repetition ratio Pupil -teacher ratio Student achievement in grade 5 in mathematics and Vietnamese language

Quality of Education Management Information System Quality of Education Quality Assurance System (requires subjective judgment on the part of donors)

> 85% of university graduates gain employment within 12 months of graduation

… with KPIs


1.6 Results Achieved in the Education Sector

The Bank support to the education sector has resulted in improvements in access to education and quality. However, as illustrated below, the current reporting provides a fragmented picture of achievements. Information on results is dispersed in different reports and similar objectives are measured by different indicators across projects. Some of the results achieved during the CAS period (taken mainly from ISRs, ICRs and ICMs) are summarized below.

� Primary Education Infrastructure and Services. The Primary Education project was closed during the CAS period and some of the results are summarized in Box 1.3. The Primary Education for Disadvantaged Children (PEDC) project has constructed 531 classrooms at 173 sites so far. These sites all achieve the Fundamental School Quality Standards (FSQL). Enrollment and completion rates are up, while repetition rates are down in districts participating in the PEDC (although the baselines are from 1999 – 4 years before the project started, so it is difficult to assess the project’s contribution to these results). The Education For All program is just starting, with no results to report yet.

� Primary Teacher Training, Material and Methods. Under the Primary Teacher Development Project, new teacher standards and an accreditation program have been developed and piloted. Seven teacher-training modules have been completed and disseminated by MOET.

� Higher Education. The latest Graduate Tracer Survey and Education Information Monitoring were conducted in 2002. These surveys showed a 10 percent increase in the number of graduates and a 20 percent increase in the proportion of teaching staff with postgraduate qualifications.

� GOV Capacity Strengthening. All projects include components to strengthen capacity to manage the education sector. However, few concrete indicators are in place to measure actual progress and it is difficult to find evidence of concrete results. A policy matrix has been agreed for the Education For All program that outlines a few milestones, such as adoption of the MTEF and size of the education budget. This would facilitate monitoring and reporting.

Box 1.3. OED Evaluation of Primary Education

The OED evaluation of the Primary Education project (closed in December 2003) rated the outcomes of the project moderately satisfactory, the institutional development impact as modest and sustainability as likely. Both the Bank’s and the Borrower’s performance were rated satisfactory.

The overall objectives of the project were to improve the quality and relevance of primary education, rehabilitate primary education infrastructure and strengthen management of the primary education system. Under the project 7,000 classrooms were built, quality of textbooks and teaching aids were improved. During the 10 year project lifetime, net enrollment rates increased by 10%, completion rates improved significantly and triple shift schools were eliminated. According to OED, the ICR was not able to clearly document a link between these improvements and the Bank intervention.

The scope of the project was reduced, thereof the moderately satisfactory rating by OED. OED concurred with the QAG review opinion that the design was overly complex and this resulted in slow progress in the early years of implementation.


Table 1.3: Current and Expected Results in the Education Sector

Sector Goals Current and Expected Results (As reported in latest ISR/GRM, as of December 2005) By When

� 173 schools constructed to achieve FSQL (PEDC) To Date

� Provincial EFA Plans by 2007 (CIDA Grant to support Basic Education) 2007

JSDF – Early Childhood Care Grant � Children, parents and community members in 150 communities report and

demonstrate increased understanding of and support for their young children’s overall health and development

� 95% of children enrolled in primary school with ECCD experience who demonstrate learning readiness

� 6-8% decrease in malnutrition rates

2008

1. Ensure access to affordable quality education for all children

� 4,272 core primary school sites and 14,902 satellite sites in 189 project districts will have achieved Fundamental School Quality Level (FSQL) (PEDC)

� For districts participating in the PEDC: � Primary net enrollment improved 81% in 1999 to 96 %, with gender

parity � Primary student completion increased from 72% in 1999 to 86%, with

gender parity � Primary repetition rate fallen from 8% in 1999 to 3%, with gender parity � Primary school drop out reduced from 12% in 1999 to less than 4%,

with gender parity � Number of disabled children in school will rise

2009

� Professional teaching standards for primary teachers introduced– trial application with over 2000 teachers (Primary Teacher Development)

� 7 teacher training modules have been completed and disseminated (Primary Teacher Development)

To Date

� 24 teaching modules developed and 25,000 teachers trained (Primary Teacher Development) 2007

2. Improve primary school student achievement

� Student achievement as measured by Grade 5 tests in Mathematics and Vietnamese show an upward trend (PEDC) 2009

IDF TF - Result-Based Management for Education Managers: � A training needs assessment and a competency map for education

managers � A guide on result based management for education managers

2007

� Adoption of Education Medium Term Expenditure Framework (EFA/ASEM) 2007

� Education budget amounts to 19.1% of national budget (EFA) � Achieving benchmarks in the agreed policy matrix (EFA)

2008

3. Improve the institutional effectiveness of education agencies

Expected results from PEDC, Primary Teacher Development

4. Increase the number and quality of graduate students

� 10% increase in average size of Higher Education Institutions (Higher Education)

� 76% of Higher Education Graduates gaining employment within 12 months of graduation date (Higher Education)

To Date



� 85% of Higher Education graduates gaining employment within 12 months of graduation date (Higher Education)

� 70% of social scholarships awarded to students from the lowest three income quintiles (Higher Education)

� Improvements in student drop out and repetition rates (Higher Education)

2006

Expected results from Higher Education II

1.7 Managing for Results in the Education Sector

Project Level Results Framework. The quality of the results framework of projects in the education sector varies – from fairly robust in the PEDC and the Higher Education Project to weak in the Primary Teacher Development Project.

Box 1.4 outlines what a satisfactory project results framework should contain. Regardless of age, all projects have been assessed against the same standard to ensure a consistent overall picture of the status of results management in the portfolio. It is however recognized that many projects were designed prior to the Bank’s focus on results management and using different formats. This may partly explain some of the weaknesses identified when a comparison is made against the latest definitions of a satisfactory results management system.

The below assessments are based on the PADs and the latest ISR as of December 2005.

Quality of Project Development Objectives (PDOs). The PDOs for Higher Education and PEDC are generally satisfactory. The PDOs of Primary Teacher Development and EFA lack clarity (“lay the foundation of a program” and “assist in the implementation of a program”, respectively), do not identify the target group, and do not explain the change needed. The draft PDOs of the Higher Education-II pipeline project as stated in the PCN requires further work in order to clarify the expected outcomes and the targeted change in the beneficiary. This appears to have been addressed in the Pre-Appraisal AM.

Grant Development Objectives (GDOs). It is still common that the GDOs are too broadly defined at a high level e.g. “to enhance the capacity of MOET in providing leadership on results-based management”. More attention needs to be paid to defining GDOs that clearly specify the expected change in the target beneficiary. Given that the grants usually provide limited funds, it would be important to set the objectives at a realistic level where it is feasible to demonstrate a link between the outputs and outcomes of the project and the achievement of the GDO. Currently, it is often hard for task teams to confirm attainment of the intended objectives upon grant completion.

Quality of Project Key Performance Indicators (KPIs). With the exception of the Primary Teacher Development Project, all education projects have good indicators that are connected to the national/sector system monitoring. Unlike some other sectors, the transition to the new reporting format (ISR) has not weakened

Box 1.4. A satisfactory project results management system contains:

(i) PDO defining the outcome (changes in behavior) of the target beneficiary;

(ii) Manageable number of Specific, Measurable, Attributable, Results-focused and Time-bound (SMART) KPIs that measure results ;

(iii) Baselines and targets for all KPIs; and (iv) Updated progress information on KPIs,

used to inform decision making.


reporting. However, the Primary Teacher Development project could use the opportunity of a new ISR format to strengthen its KPIs.

Quality of TF KPIs. Among the education sector grants, the JSDF for Early Childhood Care and Development has a solid set of KPIs including indicators on changes in behavior of parents and children, improved access to services, as well as data on outcomes such as decrease in malnutrition. For the technical assistance grants, it is more difficult to identify SMART KPIs. This is partly because it is costly to monitor and collect data. It may also be difficult to define good indicators apart from outputs, such as workshops and reports which are currently the most common KPIs in the education grant portfolio. However, if the GDOs are well-defined to cover realistic changes in behavior of the target beneficiary that can be attributed to the grant, it is usually possible to identify simple measures/milestones to demonstrate progress and results achieved. For example, the new system is used by the Government, or strategy and its action plans are endorsed by the Government. KPIs for all new grants in the education sector would need to be defined so that convincing reporting on results can be achieved.

Indicators Used. Currently, progress in the education credit and TF portfolio is monitored by more than 40 different KPIs. Some of these KPIs are monitoring project inputs/outputs, such as number of people trained or number of schools built. Others are measuring education outcomes, e.g. student performance in different subjects and standard educational indicators such as enrolment, completion and drop out rates.

Some examples where there are opportunities to develop consistency and synergy across projects (and sectors) are noted below:

� Primary Education Access and Student Achievement. The EFA and the PEDC projects include standard educational indicators such as enrollment, repetition, drop-out, completion rates and student

achievement in grade 5. The Primary Teacher Development Project is not using any of these indicators. Northern Mountain Poverty Reduction Project has a PDO indicator to “increase access to and use of health and education facilities”. The Second Rural Transport has as PDO indicator: “Increase in high school attendance”. Ideally, a common set of indicators in line with the Government’s monitoring system should be used to measure access and student achievement, across projects in all sectors.

� Higher Education. The indicator currently used to monitor student employment is “number of graduate students gaining employment within 12 months”. In order to support the argument that this is contributing to domestic private sector development, it may be useful to break down the data by employer (state or private).

� Institutional Effectiveness. More effort should go into identifying suitable indicators/milestones of improvement in institutional effectiveness for the education sector that can be monitored across the portfolio. The EFA policy matrix may be a good starting point.

Quality of Monitoring and Evaluation. A satisfactory M&E system should contain baselines and targets for all KPIs. The monitoring of the project should be based on updated progress information on these KPIs. The PEDC project has a good M&E system with baselines (albeit some from 1999 – four years before the project start) and targets, as well as progress updates. The Higher Education project also has a solid M&E system with baselines, targets and some updates. The Primary Teacher project baselines and targets are available, but are too descriptive to be used for efficient monitoring. The EFA has excellent baseline data, but no targets are established in the PAD.


Table 1.4: M&E in Education Projects

Project Baselines? Targets?

Higher Education Partly Yes

Primary Teacher Yes, but not clear

Yes, but not clear

PEDC Yes Yes

Education for All Yes No

1.8 Summary of Project Results Framework

Table 1.5: Assessment of the Results Frameworks of Education Projects

Results Framework

Project Clarity of PDO

Quality of KPIs

Quality of M & E

Overall Quality

Higher Education MU S S S

Primary Teacher Development U U MU U

Primary Education for Disadvantaged Children HS S HS HS

Education for All MS HS MU MS

Higher Education II S - - -

Note: The migration to ISR significantly changed the KPIs, compared to the original set in the PAD. The rating is based on PAD/restructuring memo indicators.

Table 1.5 summarizes the assessments of individual results frameworks in the education sector. A summary of identified strengths and weaknesses for each project follow:

Higher Education. The overall results framework for this project is conceptually robust. The PDO focuses on strengthening higher education institutions, but does not clearly express the outcome and expected change for the beneficiary e.g. to prepare graduates with the skills to compete in a market economy. This reduces the clarity/quality of the PDO. Indicators include both the impact on graduates (proportion of graduates gaining employment within 12 months of graduation) and institutional development of

universities. Overall, the indicators are specific, measurable, attributable and time-bound. Baselines, however, were only partially provided, reducing the quality of the M&E framework. The ISR contains partial updates, based on surveys conducted, but some of these are vague such as “many universities reported using survey results in revising their strategic plans”.

Primary Teacher Development. The overall results framework for this project is weak. The PDO is vague: i.e. “lay the foundation for a nationwide program to upgrade the quality of the primary teaching force”. The outcome indicators are descriptive and not measurable: e.g. “The capacity to improve teacher performance by


developing competency standards, providing high quality training and revising performance incentive is developed within MOET, provinces, TTIs and schools.” No mention is made of the changes in the beneficiaries – the teachers (e.g. improved skills as demonstrated through accreditation schemes) or the children attending primary school. The results framework for this project needs to be strengthened and the task team is working on doing so.

Primary Education for Disadvantaged Children. The results framework for this project is robust. The PDO is clear and focuses on the outcome of improving access and quality of education for disadvantaged children. Indicators reflect the PDO and are generally specific, measurable and targeted. The ISR contains updates on progress. However, the intermediate outcome indicators could be strengthened to provide clearer milestones against which to measure institutional progress.

Education for All. The PDO for this project is “to assist the Government to implement a program”. This is not clear and does not identify the target beneficiaries and the expected changes in educational outcomes. However, the KPIs are focused on outcomes and developed according to the SMART principles. The data collection is based on the Government’s own system and appears realistic. Baselines are established, but no targets are set in the PAD, which reduces the overall quality of the M&E framework. The task team needs to ensure that targets for all indicators are established as early as possible.

1.9 Looking Ahead - Strengthening Results Management

Simplifying and Identifying Common KPIs. There is scope for simplifying and improving the M&E framework by focusing project monitoring on a few, common indicators directly related to fulfilling the sector objectives. In the proposed sectoral results framework, a reduced number of possible common KPIs are presented for consideration. Among them, it is proposed to establish a standard set of outcome

indicators/milestones for institutional performance in the sector.

Collecting Education Data. The data collection on standard education indicators for the primary education projects (as well as other projects in the portfolio contributing to primary education) could be included as part of the establishment of the Education Management Information System, supported by the EFA program.

Strengthening the Project Level Results Frameworks. Some suggestions to strengthen the results frameworks for individual projects are provided above. In general recommending:

� PDOs for of all pipeline projects need to clearly focus on outcomes.

� KPIs. All parts of the PDO should be monitored by SMART KPIs.

� M&E. Ensure that all projects have baselines and targets for all indicators.

� ISRs. Improve Reporting on Results in ISRs.

Strengthening TF Results Frameworks and Reporting. It will be much easier to have a stronger TF result framework if attention to this is paid at the time of the grant design. This could be done if in the grant proposal format, the TTL is requested to select realistic KPIs to monitor the grant outcomes. The TF committee screening the TF applications should review the GDO and results framework carefully. An example of the variable quality could be seen from the difference in quality of TF results framework between JSDF and IDF. In GRM or other grant progress reports, it will be easier for the management to get the right message on the grant achievement if the TTL does not only illustrate progress with qualitative assessments.

VN COUNTRY PROGRAM REVIEW 2005 EDUCATION SECTOR

19

1.10 Portfolio Implementation

Table 1.6: Education Sector Portfolio (as of December 2005)

Project Name Age DO Rating

IP Rating

Net Comm. ($mln)

Cum. Disb.

($mln)

Disb. Lag

Higher Education 7.4 S S 83.3 49.6 40%

Primary Teacher Development 4.0 S S 138.8 7.3 62%

Primary Education for Disadvantaged Children 2.7 S S 19.8 8.1 80%

Education for All 0.5 - - 50.0 0 n.a.

Sub-total 3.7 292.0 63.8 61%

1.11 Facts

Education Portfolio. IDA support for the education sector has focused on primary and higher education (while the ADB took the lead in supporting secondary education). The current education sector portfolio comprises four active projects, three focused on primary education and one on higher education. Total commitments are US$ 292 million, representing about 7.5 percent of the active Bank program in Vietnam. Two projects, Higher Education and Primary Teacher Development, were developed under the previous CAS. Two projects are scheduled to close in FY07 and one new project (US$ 72 million) is expected to be approved.

TFs in the Education Portfolio. The Education sector is the biggest user of trust funds with US$65 million in FY04 and US$70 million in FY05. This includes one of the largest co-financing grants bank-wide of more than US$50 million in multi-donor support to the PEDC. Almost all types of available grant resources have been utilized from IDF, ASEM, PHRD, and JSDF to multi-donor and bilateral grants.

Figure 1.2: Education TF Portfolio

0

20

40

60

80

US

D m

illion

FY01 FY02 FY03 FY04 FY05

Vietnam: Education Sector - TF Portfolio

Undisb FY Disb Disb in previous FYs

1.12 Overall Credit Portfolio Performance

Progress towards Meeting Development Outcomes. All projects in the education sector are rated satisfactory on progress towards achieving DO. Information on indicators collected generally support the assessment of satisfactory progress.

Slow Implementation Progress. A common characteristic of the education sector portfolio performance is slow implementation. The Vietnam education program continues to lag the regional and Bank-wide disbursement profiles. After almost 7.5 years of implementation, the Higher Education project has disbursed only 60 percent. Six months before the original closing date, the Primary Teacher Development project had disbursed only 20 percent. During the first two and a half years of implementation, the PEDC project disbursed only 5 percent.

This poor implementation performance is reflected in the numbers. The FY05 disbursement ratio was only 6.9 percent compared to the average EAP HD sector ratio of 19.8 percent. The disbursement ratio was also far below the country average of 13.2 percent. The performance in FY06 does not seem to be improving. The FY06 disbursement target for the education projects is US$59 million, but after six months only US$11.5 million has been disbursed. The disbursement ratio is 4.5 percent – not much better than the last fiscal year.

VN COUNTRY PROGRAM REVIEW 2005 ENERGY SECTOR

20

Figure 1.3: Education Disbursement Performance

Disbursement PerformanceEducation Sector

0.02.04.06.08.0

10.012.014.016.018.0


Dis

bu

rsem

ent

Rat

io

Education Sector Country Portfolio

Implementation Issues. All education projects are implemented as part of national programs that are accorded a high priority by the Government. Despite strong Government commitment, implementation has been sluggish suffering from: (i) poor project planning and design with subsequent delays in project implementation; (ii) weak capacity of PMUs; (iii) lack of experience and continuity of PMU staff working from project preparation to project implementation; and (iv) lack of counterpart funds. Other common issues affecting education projects are the complicated approval processes slowing down procurement processes and decision-making.

1.13 Project Level Performance

Higher Education. This project has been under implementation for more than 7 years. Almost 80 percent of the implementation time has elapsed but only 60 percent of the funds have been disbursed. The closing date has been extended to December 2006 due to continued delays in implementation of the key project components. Although the implementation progress has been picking up in FY06, the disbursement lag is still close to 40 percent.

There are delays in preparation and approval of bid documents at the PCU and the ministry level, reducing the time available for installation and trial run of school equipment. There are also a number of contracts that remain under preparation by individual universities, which may not be completed before the closing date. Close monitoring of procurement and contract implementation would be critical to ensure a timely completion of the remaining works. The task team is closely following up on these issues. Given the delays and other related issues, the

team should reconsider its optimistic rating on implementation progress, project management, and procurement.

Primary Teacher Development. This project has been under implementation for almost four years. Due to implementation delays, the closing date was recently extended by 18 months to June 2007. So far only 37 percent of the funds have been disbursed. Since a majority of the project procurement activities will be undertaken during the project extension period, close supervision will be necessary to ensure that the project can be completed on time. The task team should consider uses for the unallocated (and possible savings) amounts. If the scope needs to be changed, an amendment of the DCA and the Government’s approval would be required. The task team would need to start working on this immediately to avoid further delays. Given the slow implementation progress, and delays in procurement, the team would do well to reconsider some of the satisfactory ratings.

Primary Education for Disadvantaged Children. This project has been under implementation for close to three years, but only 6 percent of the funds have been disbursed. The disbursement lag is now 80 percent. The project continues to face significant issues with counterpart funds and slow approval processes. This will become even more critical as the construction of schools is carried out on a large-scale in 2006 and 2007. These large-scale construction activities would also require significant counterpart funds and the team needs to ensure the timely availability of these funds at the beginning of 2006. This project was previously rated MS on Implementation Progress, but was recently upgraded. Given the continued slow disbursements (only US$1.3 million by end of Q2 FY06), this should be reconsidered. The Mid-Term review, scheduled for December 2006, would provide a good opportunity to restructure and simplify the review and approval processes to allow for a more rapid implementation.

Education for All. This project was approved in June 2005. All effectiveness conditions were completed in January 2006.


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1.14 Realism of Ratings

Table 1.7: Realism of Rating of the Education Portfolio

Education (Active Projects) DO IP

Project Managem

ent

Financial Managem

ent

Counter-part

Funding

Procurement M&E Safeguard

Higher Education S S (MS) S (MS) S S S (MS) MS Na

Primary Teacher S S (MS) S (MS) S S S (MS) S Na

PEDC S S (MU) MS (MU) S(MS) MS (MU) S S S

Education for All - - - - - - - -

Note: The table summarizes current ratings of active education projects. In light of the slow implementation progress of some of the projects, it is suggested that the highlighted ratings be reviewed. Suggested ratings by the CPR panel are presented within parenthesis.

Project Management. Projects in the education sector are managed by inter-ministerial management committees and Project Coordination Units (PCUs). The PCU is a project-based organization, staffed by personnel from various functional departments of MOET and external consultants. The organization is dismantled after the project is completed. As a result, valuable experience and lessons learned from other completed projects are not transferred to new projects. PCU staff spends the first two years learning about project management, which is one reason for the slow start-up. The latest ISRs rated one of four active operations MS on project management, as compared to one of two projects rated U in the last CPPR. Given the implementation issues facing the projects, the current ratings would however merit further review.

Financial Management. All projects were rated S in financial management. However, the existing procedures in preparation of the annual financial planning and budgeting of MOET needs to be reviewed e.g. financial planning and budgeting requested by MOET to the Government does not separate counterpart funds required for ODA projects and MOET’s administration fees. In addition, disbursement procedures on the Government side have adversely impacted disbursements e.g. the payment processing time for a single payment requires 2-3 months at the local treasury. Particularly, the PEDC rating on FM should be reviewed.

Counterpart Funding. As a result of poor financial planning and budgeting, insufficient counterpart funds cause significant implementation delays. Two projects have had

counterpart-funding issues during the past. The problem was resolved for the Higher Education by the beginning of FY05, while the problem is likely to worsen for the Primary Education for Disadvantaged Children.

Procurement Management. In general, procurement capacity of PCU staff is weak. This has seriously affected implementation progress. The procurement function has been decentralized to lower levels, and thus the projects suffer from multiple layers of review and approval. In some cases, it has taken 20 – 25 months to complete procurement of a single ICB contract. It is suggested that the team review the satisfactory ratings on procurement for Higher Education and Primary Teacher Development.

Monitoring and Evaluation. See previous section for a discussion on the strengths and weaknesses of the project level results management systems.

Safeguards. Safeguards are not applicable in three out of the four active operations. For the PEDC, safeguards is rated S reflecting that agreed mitigation/development plans are being adequately implemented.

1.15 Project Closure

None of the four active operations have closing dates in FY06. Two projects have been extended, and are expected to close in FY07. Given the low cumulative disbursements of these two projects, the task teams should closely monitor implementation. No more extensions should be granted.


22

1.16 Project Readiness

Two projects were approved during the CAS period (Primary Education for Disadvantaged Children - PEDC) and Targeted Budget Support: Education for All (TBS-EFA). PEDC took more than five months from approval to effectiveness and TBS-EFA took almost seven months. Both projects are beyond the Bank standard of four months from approval to effectiveness.

Though the elapsed time from approval to effectiveness of education projects is shorter than in some of the other sectors, the pace of project implementation in year 1 and year 2 is slow, indicating a lack of readiness to start implementation.

1.17 Quality at Entry

No QAG assessment has been done of the Quality at Entry of recent education projects.

1.18 Program Design

The three primary education projects are a gradual progression to the current stage of directly supporting the Government’s National Targeted Program for primary education through the Education for All operation. This suggests a close alignment with the Government’s programs and objectives. In addition, the introduction of the Fundamental School Quality Level (FSQL) standards, currently used in the Government programs, is a direct result of IDA involvement.

At the implementation level, however, the coexistence of the PEDC, still largely undisbursed and following a complicated set of implementation procedures, with the new, and smaller targeted budget support for EFA appears inconsistent. As part of the Mid-Term Review for the PEDC, it would be important to learn from the experiences of the TBS in terms of using country systems for implementation and simplify procedures.

1.19 Use of Country Systems

The EFA is the first Bank initiative that makes a serious move towards using GOV systems. Experience will provide valuable lessons and guide future interventions not only in the education, but other sectors.

1.20 TF Portfolio Performance

Slow Disbursements. For the last four fiscal years, the disbursement ratio of the education TF portfolio has not been above 5 percent mainly due to the slow disbursement of two jumbo co-financing grants. Since the education TF portfolio is the largest if excluding PRSC co-financing grants in PREM, its disbursement ratio seriously impacts the country overall TF disbursement performance. Greater attention needs to be paid to these education grants, especially the two jumbo co-financing grants to improve the disbursement performance of not only the education sector but also of the entire TF portfolio for Vietnam.

Figure 1.4: Education TF Disbursement Performance

Vietnam: Education Sector - TF Disbursement Ratio

0%

5%

10%

15%

20%

25%

30%

35%


Sector Disb Ratio Country Disb Ratio

Slowest Grant Activation. The average grant activation period in the education sector is 11.7 months which is the slowest for the Vietnam TF portfolio. Apart from the Government’s complicated approval process, this slowness is also attributable to the nature of temporary PMU structures in MOET.

1.21 Looking Ahead – Strengthening Project Implementation

Ensure Timely Closure. There are two projects scheduled to close in FY07. The task teams should ensure that all activities are completed to allow the PEDC and HE projects to be completed on time.

Reduce Start Up Delays. Average elapsed time from Board approval to effectiveness of education projects is 6.7 months. It is recommended that for pipeline projects, the Vietnam Readiness filter be rigorously applied to avoid start-up delays. To reduce the activation period for grants, it is


23

recommended that there should be at least one experienced staff appointed during the preparation period to closely follow-up with the Bank and Government agencies on the substance and the approval process.

Review Project Implementation Arrangements. It is clear that the current implementation arrangements where experienced PMU staff is not utilized for the next project is not the best. Lessons from the implementation arrangements in other sectors where PMU staff is stable and PMUs implement both ODA and Government financed project are good examples to emulate.

Improve Realism of Ratings. As suggested in the text and tables above, the ratings of Higher Education, Primary Teacher Development and Primary Education for Disadvantaged Children should be reviewed.

Restructure PEDC to ensure a simpler implementation mechanism, informed by lessons learned from the EFA.

Early Training to TF PMU. While waiting for the grant countersignature, the task team is recommended to organize training on procurement, disbursement, and TF procedures for core staff in PMU.


24

Investment Project Progress Energy Sector

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

Elapsed Times (%)D

isb

urs

emen

t (%

)Targeted disbursementActual Disbursement

TD2 RE2

SEIER

RE1

TD1

Chapter 2 Energy Sector

2.1 Energy Portfolio at a Glance

The Energy Portfolio Since FY94: • Cumulative Net Commitments of US$ 1,327 million • Cumulative Disbursements of US$ 602 million (Dec.05) • 22% of cumulative IDA commitments for Vietnam

The Active Energy Portfolio (as of December 2005): • 5 active credits (US$ 994 million – 26% of VN portfolio) • 1 guarantee operation • 4 active grants (US$ 15.8 million - 6.5% of VN TF

portfolio) • Average project age of 3.7 years

Energy Portfolio Performance: • 100% of portfolio rated satisfactory on DO and IP • OED – 2 projects rated satisfactory on outcomes. • Grant ICM: 100% rated satisfactory or above • Average disbursement lag: 58%


FY01 7.9 MUS$ FY02 11.6 % 35 MUS$ 52% 1.2 MUS$ FY03 16.7% 87 MUS$ 18% 1.6 MUS$ FY04 16.3% 75 MUS$ 12% 1.5 MUS$ FY05 15.5% 63 MUS$ 14% 2.2 MUS$

(EAP FY05: 19.9%.% for projects and 18.3% for grants )

Figure 2.1: Use of IDA funds in the Energy Sector

FYIDA

Credit

CAS Theme 1.2

State Enterprise Reform

CAS Theme 2.1

Narrowing the Development Gap

CAS Theme 2.5

Mitigating Impacts of Disasters

Infrastructure to promote growth

Transmission, Distribution

1998 199.0

Rural Energy 2000 150.0

SEIER 2002 225.0

Rural Energy II 2005 220.0

Transmission, Distribution II

2006 200.0

Rural Distribution or Renewables

2007 (planned)

170.0

Power Generation 2008 (planned)

150.0

Total On-Going Projects

MUSD (%) 994.0 55 (6%) 448 (45%) 10 (1%) 481 (48%)

Total All Projects MUSD (%) 1,314.0 55 (4%) 669 (51%) 10 (1%) 631 (51%)

1473

1158327

218

18910

17723

150

170

Note: Each project component has been mapped to the one CAS sub-theme to which the major contribution is expected. It is recognized that components could contribute indirectly or directly to more than one sub-theme. This is not captured in the chart above.

IDA Commitments & Disbursements Energy Sector

0

200

400

600

800

1000

1200


MU

SD


Annual Commitments


25

2.2 Strategic Alignment of the Energy Sector Portfolio


Energy Sector Initiatives. Initiatives in the energy sector cover mainly four areas: (i) rural electrification; (ii) power generation,

transmission and distribution; (iii) energy sector reform and (iv) promoting renewable energy and energy efficiency.

The table below maps these areas of intervention against the various relevant objectives outlined in the CAS and illustrates the varying degrees of alignment. The different sets of objectives presented in the CAS do not provide a consistent framework of priorities. This complicates a review of alignment of the various types of energy interventions, as illustrated below.

Table 2.1: Alignment of Energy Sector Portfolio to CAS Objectives

Areas of Energy

Intervention


CAS sub-themes CAS Sector Priorities for Infrastructure

Rural Electrification

Develop infrastructure and create opportunities for the poor to access public services

Narrowing the development gap of disadvantaged and lagging areas – providing basic services to lagging regions

Improve access to services among poor communities in rural and remote areas

Support for Domestic Private Sector

Improve management and maintenance of investments

Power Generation,

Transmission and

Distribution

Develop large-scale infrastructure services for growth and poverty reduction Promoting Open Trade Mobilize private sector

involvement

Energy Sector Reform

Reform SOEs to strengthen their efficiency and competitiveness

State Enterprise Reform Public Administration Reform

Improve management and maintenance of investments

Strengthen environmental protection and ensure a healthy environment

Enhancing environmental sustainability

Improve management and maintenance of investments Promoting

Renewables and Energy Efficiency


Narrowing the development gap of disadvantaged and lagging areas – providing basic services to lagging regions

Strong Alignment Weak Alightment

Overall Assessment of Alignment. All projects in the portfolio, regardless of approval date, are well-aligned to at least one of the three sets of priorities. A detailed assessment indicates that the alignment is strongest with the CPRGS

objectives. This is possibly a consequence of the CPRGS objectives being the broadest and most comprehensive. The alignment to the CAS sub-themes and CAS sector priorities is generally satisfactory, but weaker than the CPRGS partly

VN COUNTRY PROGRAM REVIEW 2005 ENERGY SECTOR 26

due to the absence of large-scale infrastructure in the CAS sub-themes. The alignment to the CAS sector priorities is satisfactory. However, some interventions, such as promoting renewable energy and energy efficiency are not covered directly but contribute to the priority of

improving management of investments. The energy portfolio also contributes to the Vietnam Development Goal 11 of ensuring pro-poor infrastructure development – Target 2 “Expand the national transmission grid to 900 poor commune centres by 2005”.

Table 2.2: Alignment of the Energy Sector Portfolio

Alignment CPR Panel Assessment

Energy Projects FY

Project Development Objective

(abbreviated) CPRGS CAS Sub-

Themes

CAS Sector

Priorities

Transmission and Distribution 98

� Strengthen transmission network; rehabilitate and expand distribution and support sector reform HS MS MS

Rural Energy 00 � Expand rural access to electricity; develop rural

electrification strategy and implementation mechanism and promote renewable energy sources

HS HS HS

SEIER 02 � Improve system efficiency and reduce investment

needs; enhance rural access to electricity, sustain power sector reform and reduce GHG emissions

HS S S

Rural Energy II 05 � Improve access to good quality, affordable electricity

services to rural communities in an efficient and sustainable manner

HS HS HS

Transmission and Distribution II

06

� Efficient development of the transmission and distribution system through investment in the transmission system, dispatch and control system and reform and restructuring of EVN

HS MS MS


2.3 Alignment of Different Types of Energy Sector Interventions

As noted above, the different sets of objectives presented in the CAS do not provide a fully consistent framework of priorities. Below the various types of energy sector interventions found in the portfolio are reviewed in terms of alignment to (i) CPRGS objectives; (ii) CAS Sub-themes; and (iii) CAS Sector Priorities.

Rural Electrification. On-going rural distribution initiatives amount to US$ 448 million or 45 percent of the active energy portfolio. In addition, the Community Based Rural Infrastructure Project provides support to rural electrification. Provision of infrastructure services to lagging regions is a priority in all three sets of objectives.

The portfolio is thus strongly aligned. There are also several pipeline interventions supporting rural electrification.

Power Generation, Transmission and Distribution. The largest part of energy sector operations, accounting for US$ 481 million or 48 percent of the active portfolio are large-scale infrastructure investments to improve power generation, transmission and distribution. With a large transmission and distribution project recently approved and a power generation project in the pipeline, this will remain the mainstay of the energy portfolio in the future CAS period. This area is clearly aligned to the CPRGS goal of developing large-scale infrastructure services for growth and poverty reduction. The CAS does not contain a similar sub-theme, although the CAS update underscores the importance of infrastructure for development.


27

Alignment to the CAS sub-themes is thus considered weaker, with only indirect links to the themes of domestic private sector development and promoting open trade.

The sector priorities outlined in the CAS for infrastructure do not explicitly mention investments in large-scale infrastructure. However, the sector strategy has a focus on management of assets and the energy program is aligned to the sector priority of improving management and maintenance with all recently designed projects reflecting this emphasis through a focus on improving system efficiency.

Mobilizing private sector involvement is stated as another infrastructure sector priority in the CAS. The Phu My complex is a good example of IDA support to further this objective. IDA’s involvement supported the first Phu My Generation Project with a credit and subsequent Bank participation was gradually reduced to a partial risk guarantee followed by a MIGA guarantee. The focus on promoting private sector involvement in other projects is mainly indirect, via support to the energy sector reform.

Energy Sector Reform. Four of the five on-going lending projects have significant components dedicated to energy sector reform. Components to strengthen the institutional, regulatory and legal framework amount to US$ 55 million or 6 percent of the current portfolio. Good progress has been made in these components, which are aligned to the CPRGS objectives and CAS sub-themes of SOE Reform and Public Administration Reform, as well as the CAS sector priorities of improved management and maintenance of investments.

Promoting Renewables and Energy Efficiency is part of the implementation strategy for several projects with co-financing from GEF to reduce Greenhouse Gas Emissions through demand-side management and other energy efficiency measures, as well as use of renewable sources for electricity generation. This is aligned to the CPRGS and CAS theme of enhancing environmental sustainability. However, neither promoting renewables nor energy efficiency are identified as sector priorities for infrastructure in

the CAS, although there is a link to the priority of improving management of investments (particularly true for energy efficiency and demand side management).


The CAS also identifies areas of strategic priority for the Bank’s program, including building partnerships and harmonization. The main sources of co-financing in the energy portfolio are GEF and PHRD. A $1.4 million co-financing grant to support demand-side management from Sida was closed in FY04. The Bank is also actively working together with JBIC, ADB and AFD (France) on the reform agenda, especially the tariffs, financial sustainability of EVN and the development of the regulator.


Ensure a Consistent Strategic Framework in the next CAS. To avoid the situation of the current CAS, with multiple objectives that are not fully consistent, the next CAS should express priorities for the energy sector more clearly and comprehensively. Links between sector objectives and cross-sectoral themes of the CAS/SEDP should be made more explicit to ensure consistency in the priority setting including investments to improve infrastructure services and efficiency, renewable energy and demand-side management.

Developing a WB Sectoral Results Framework. To address the absence of a clear results framework linking project level results with the overall CAS themes and Government objectives, a sectoral results framework could be developed. Based on the strategic priorities outlined in the Bank’s energy sector business plan, as well as the current and proposed interventions, a possible sectoral results framework has been prepared. This could serve as input into the CAS development, and help to ensure a higher degree of consistency between sector priorities, project objectives and the key


Box 2.1. Energy Sector Pipeline

� Rural Distribution � Renewable Energy � Rural Energy III � Hydroelectric Power � Guarantee Operation � Carbon Finance Operation � Transmission III

themes of the CAS. It would also be important to link expectations of results during the next CAS period directly to what the current and planned energy portfolio is set up to achieve.

Strategic Planning for TF. It is suggested that a TF strategic plan be prepared and reflected in the new CAS. Not only will this help the Government to effectively coordinate grant resources for the sector but also improve the planning and prioritization of trust funds. The GEF strategy under preparation with MONRE may provide useful guidance in this regard.

Prioritize the Pipeline based on the Focus of the Next CAS. The current pipeline for Vietnam exceeds the available IDA resources and there is a need to prioritize between projects in line with the criteria that are being established for the next CAS.









29

Possible Energy Sector Results Framework

Bank Supported Sector Goals …

… and strategy … by investing in

distribution, rehabilitation and expansion of low/medium voltage supply to 2000 communes by 2010 � Rural Energy � SEIER (incl. GEF TF) � Rural Energy II (incl.

GEF TF) � CBRIP (?) � Rural Distribution

…by investing in rehabilitation and expansion of power generation, transmission and distribution � SEIER (incl. GEF TF) � Transmission and

Distribution � Transmission and

Distribution II � Power Generation � Renewable Energy


Provide rural access to

reliable and affordable

electricity…

Meet demand for reliable, high quality least cost power…

Improve commercial and

financial efficiency of the power sector…

Reduce Social and

Enviornmental Impact at local

and global level

…by providing support to legal, institutional and regulatory reforms and investing in market transformation � Rural Energy � Transmission and

Distribution � SEIER (incl. GEF TF) � Rural Energy II (incl.

GEF TF) � Transmission and

Distribution II � Guarantee ? � Renewable Energy � GEF Grant – Demand

Side Management and Energy Efficiency

… by developing renewable energy sources, improving energy efficiency and demand side management � Rural Energy � SEIER (incl. GEF TF) � Rural Energy II(incl.

GEF TF) � Renewable Energy � Carbon Finance

Operations � GEF Grant – Demand

Side Management and Energy Efficiency

� Power Generation

Additional rural households/communes with electricity

Reduction in transmission and distribution losses Reduction in number and duration of transmission interruptions Measures of reliability (e.g. outages or costs associated with black outs) Lower cost of power

Performance improvements in EVN, affiliated power companies and local distribution companies measured on utility balanced scorecard Milestones on the energy reform road map achieved

Percentage of electricity from renewables (excl. large hydro) Reduction in green-house gas emissions Reduction in energy consumption and peak power demand

… with KPIs


2.6 Results Achieved in the Energy Sector

The Bank support to the energy sector has resulted in significant improvements in rural access to electricity and strengthening of the transmission and distribution network. As in other sectors, the current reporting provides a fragmented picture of achievements with information and data on results dispersed in different reports and similar objectives measured by different indicators across projects. Some of the results achieved during the CAS period (taken mainly from ISRs) are summarized below.

� Rural Electrification. Under the Rural Energy project 767 communes in 34 provinces have been electrified providing more than 2.5 million people (5 percent of the rural households) with access to electricity.

� Transmission and Distribution. The Transmission and Distribution project has strengthened the backbone transmission line and increased the capacity and reliability of the national transmission system. The power supply capacity for HCMC and the central region has been increased and the distribution components of the project have benefited HCMC, Vung Tau, Halong and Vinh, where overall power losses have been reduced. This has helped to meet the growing energy demand of local industries

and tourism. The transmission component of SEIER has helped to further reduce transmission losses and remove system bottlenecks.

� Energy Sector Reform. Although energy sector reform is a key objective of all projects in the portfolio, few indicators are in place to measure actual progress and it is difficult to find concrete examples of reform progress in the ISRs (beyond the number of people trained). Some ISRs note regulatory reforms underway and the steps taken by EVN to establish a power market, revising the legal framework, as well as equitizing a provincial power distribution company and two hydropower stations. In other ISRs, progress in implementing institutional and reform activities are not described as well as progress in physical investments.

� Renewable Energy and Energy Efficiency. The co-financing grant on Demand Side-Management (DSM) developed substantial capacity within EVN and line ministries to develop and implement DSM measures in order to reduce electricity demand. Several pilot activities were implemented, paving the way for larger investments. The development of energy efficiency standards and codes were also supported.


31

Table 2.3: Current and Expected Results in the Energy Sector

Sector Goals Current and Expected Results (As reported in latest ISR, as of December 2005) By When

� 767 communes electrified - benefitting 2.5 million people (RE I) To Date

� 904 communes electrified (RE I) 2006

� 10,000 additional households in remote areas with access to electricity from renewable energy (SEIER) 2007

� Access to electricity for about 2 million new households (representing more than 50 percent of the households currently without access) (RE II)

� 34,000 km of LV and MV lines installed (RE II) � 900 MVA transformer capacity installed (RE II)

2011

1. Provide access to affordable electricity

Expected results from CBRIP

� Reduction in number of transmission line faults (times/year/100km) (SEIER): � 500kV: from 0.34 (2002) to 0.33 � 220 kV: from 0.61 (2002) to 0.596 � 110 kV: from 3.4 (2002) to 3.32

� Reduction in number of transmission line faults (times/year/100km) (TD): � 500kV: from 0.02 (1997) to 0.005 � 220 kV: from 0.22 (1997) to 0.22

� High voltage transmission line expanded from 1,480 km to 2,660 km (TD) � Transformer capacity expanded from 2,700 MVA to 4,400 MVA (TD)

To Date

� Reduction in number of transmission line faults (times/year/100km) (SEIER): � 500kV: from 0.34 (2002) to 0.321 � 220 kV: from 0.61 (2002) to 0.578 � 110 kV: from 3.4 (2002) to 3.221

2007

� 1,200 MW of new generation capacity connected via the project financed transmission links

� 5% reduction in number and duration of interruptions in the transmission and distribution system

� Peak hour voltage at known system weak points increase by 5-10% (TD II)

2010

2. Meet demand for reliable, high quality least cost power

Expected results from Power Generation

3. Improve the commercial and financial efficiency of the power sector

� Reform plan of EVN (2003-2005) under implementation, including equitization of one provincial power distribution company (SEIER)

� Regulatory reforms are under implementation including first step to establishment of a power market and equitization of two hydro-power stations (TD)

To Date



� Development of a single transmission subsidiary � Development of a functioning internal power market � New market and transmission system information and control systems in

place (TD II)

2010

� Average distribution losses in project LDUs reduced from 30% to 10% (RE II)

� Improvements in the commercial efficiency of LDUs (index from 0 to 100) (RE II)

� 1,200 communes with LDUs with legal status (RE II)

2011

Expected results from RE, SEIER and TD.

� 10,000 additional households in remote areas with access to electricity from renewable energy (SEIER)

� Peak load reduction of 120 MW and 496 GWh saved due to Demand Side Management (SEIER)

� 210,000 tons of GHG emissions reduced (SEIER)

2007 4. Reduce Green House

Gas emissions

� 259,000 tons of GHG emission reduced (RE II) 2011

2.7 Managing for Results in the Energy Sector

Project Level Results Framework. Energy projects have relatively well developed results frameworks. Project indicators are mainly focused on operational efficiency (e.g. transmission losses and supply interruptions) and access to electricity. Institutional development indicators are less well developed. As part of the restructuring of TDI and SEIER in June 2005, the results frameworks were revised and targets and baselines were updated and harmonized.


The below assessments are based on the PADs and the latest ISRs as of December 2005.

Quality of Project Development Objectives (PDOs). Admittedly, it is difficult to identify the specific beneficiaries of several of the energy interventions since the improvements intended are at an overall system level. However, most of the PDOs could be clearer in specifying the targeted changes e.g. efficiency improvements




(iii) Baselines and targets for all KPIs; and (iv) Updated progress information on KPIs, used

to inform decision making.


33

and where possible also the beneficiary. Several of the PDOs describe in detail the technical outputs and activities under the projects. This reduces the clarity of the PDO.

Quality of Key Performance Indicators (KPIs). The transition to the new reporting format, ISR, has weakened the coverage of the KPIs for the Transmission and Distribution Project, Rural Energy and SEIER. Parts of the objectives such as progress on sector reforms are no longer being reported. Simplification is encouraged but there is a need to ensure consistency with the PAD and that all aspects of the project objectives are monitored and reported. This is currently being addressed by the team and where this is no longer the case, the ISR should be revised.

Indicators Used. Currently, progress on the energy portfolio is monitored by almost 50 KPIs. Some of these KPIs are monitoring project inputs/outputs, such as number of persons trained or kms of distribution lines. Although the energy projects contribute to similar objectives, when these indicators are aggregated on a portfolio level, they do not support a consistent story of the results being achieved. The restructuring of SEIER and TD, included a commendable effort to improve consistency across the project indicators. Below are some examples of areas where there are additional opportunities to develop consistency and synergies across projects, as well as alignment with the Government targets:

� Access of Rural Communes to Electricity. There are three projects in the portfolio expanding electricity to rural areas. These projects measure progress on this objective in slightly different ways: (i) increase in the number of rural households with electricity and increased number of communes electrified; and (ii) rural communities with electricity on average in provinces and percentage of households with access. The CPRGS goal is

to expand the rural grid to 900 poor commune centers by 2005.

� Institutional Effectiveness. All projects include objectives to reform and strengthen EVN and affiliated power sector companies. It is recommended to develop a common score card, that can be used to monitor utility performance across the energy sector and possibly for other infrastructure services, such as water utilities. This idea is being used in the Rural Energy 2 project, where the Local Distribution Companies are assessed against an index of performance indicators. It would also be useful to clearly identify the key milestones on the energy reform agenda and link these to project KPIs.

Quality of the Project M&E System. The baselines and targets for the energy portfolio are nearly complete. As part of the recent restructuring of SEIER and TDI, special attention was paid to updating the results frameworks. Rural Energy also has baselines and targets, but not all targets are updated (some refer to 2003). The monitoring relies to a high degree on EVN’s current data collection system, which is positive.

Table 2.4: M&E in Energy Projects

Energy Projects Baselines? Targets?

Transmission and Distribution Yes Yes

Rural Energy Yes Partly

SEIER Yes Yes

Rural Energy II Yes Yes

Transmission and Distribution II Yes Yes



Table 2.5: Assessment of the Results Frameworks of Energy Projects

Results Framework


Quality of KPIs

Quality of M & E

Overall Quality

Transmission and Distribution MU MS* S MS

Rural Energy MS MS* MS MS

SEIER MU MS* S MS

Rural Energy II S S S S

Transmission and Distribution II MS MS S MS

* The migration to ISR significantly changed the KPIs, compared to the original set in the PAD. The rating is based on PAD/restructuring memo indicators.

Table 2.5 summarizes the assessments of individual project results frameworks in the energy portfolio. A summary of identified strengths and weaknesses for each project is shown below:

Transmission and Distribution. The PDO of this project is fairly long and complex with five sub-objectives. The restructuring left the PDO and the main KPIs basically the same, while increasing the number of sub-projects. In line with the new PAD format for results frameworks, intermediate results indicators for the revised sub-components were added. These were mainly in the form of physical outputs such as construction of sub-stations and transmission lines. Baselines (data as of restructuring date) and revised targets were also included. The targets for institutional strengthening (passage of electricity law and operation of transmission as a separate cost center) have already been met and no new ones were added as part of the restructuring. The latest ISR has only one indicator “transmission reliability”. This may not be enough to measure all aspects of the PDO and the ISR should thus be updated to reflect the restructured results framework.

Rural Energy. The PDO for this project indicates the targeted change for the beneficiary; however, it is long and complex which reduces the clarity. The objective in terms of rural electrification was met at a lower than anticipated cost and new communes are therefore being included. The indicators in the PAD focus on rural households with access to electricity, reform progress, policy reforms for renewables and utility performance. In the latest ISR, these indicators were reduced to only one: “access to electricity” and policy and reform indicators were dropped. It is important not to oversimplify the results framework and ensure that all aspects of the PDO are being monitored. Some of the targets are not updated to the revised closing date, which confuses the interpretation of the ISR.

System Efficiency Improvements, Equitization and Renewables. The PDO is long and complex and includes many technical details, which reduces the clarity. The restructuring exercise left the PDO and the main KPIs virtually unchanged. As with TD-I, in line with the new PAD format for results framework, intermediate results indicators for the revised sub-components


35

were added. These focus on physical outputs, increased access to electricity and reform progress. Baselines and targets were also updated, although some remain vague – e.g. “financially sustainable companies”, “significant improvement in reduction of time and complexity for SPPs to get approved”. The ISR has yet to be updated to reflect the restructured results framework.

Rural Energy II. The PDO is brief and clear and focuses on the outcome for the rural communities, i.e. good quality, affordable electricity delivered in an efficient and sustainable manner. The indicators cover most aspects of the PDO, particularly the efficiency angle. It is not clear how the aspects of good quality and affordability are being measured. The project has established an index to measure commercial efficiency – this is a good practice that may be useful for other projects. Baselines and targets are established and data collection arrangements are in place.

Transmission and Distribution II. The PDO is clear, but focuses narrowly on the technical improvements in efficiency and not on the outcomes and changes for the target beneficiary (industry, population and/or EVN). To define good outcome indicators for this type of project is challenging and the team’s effort to work with the results secretariat in EAP is commendable. However, there may be ways of strengthening the indicators such as the ones on the project component “market transition support” which are currently vague e.g. “substantial evidence of development of a functioning internal power market”. Also, for the component on electricity markets and systems modernization, only an output indicator (i.e. commissioning of an information and control system) is provided.


Simplifying and Identifying Common KPIs. There is scope for simplifying and improving M&E by focusing project monitoring on a few, common indicators directly related to fulfilling the

sector objectives (as exemplified above) and the team is currently working on doing so. In the proposed sectoral results framework, a reduced number of possible common KPIs are presented. Among them, it is proposed to establish a more systematic set of indicators for institutional performance in the sector.

Measuring Higher-level Outcomes. Higher-level outcomes should still be monitored, but not necessarily as part of individual projects. Impacts of rural electrification could be measured by household surveys spanning both villages with and without access to electricity as is currently being done as part of a multi-year survey. Business and investment climate surveys could provide information on the consumer satisfaction of energy services.

Strengthen the Project Level Results Frameworks. Some suggestions for individual projects are provided above, in general recommending:

� PDOs. Ensure that the PDO of all pipeline projects clearly focuses on outcomes.

� KPIs. All parts of the PDO should be monitored by SMART KPIs. Particularly on the institutional strengthening side, there is a need to identify better indicators. The ISRs should be consistent with the PAD KPI framework.


� Improve Reporting on Results in ISRs


36


Table 2.6: Energy Sector Portfolio (as of December 2005)

Project Name Age (Yrs)

DO Rating

IP Rating

Net Comm. ($mln)

Cum. Disb.

($mln)

Disb. Lag

Transmission and Distribution 8.0 S S 199 111 44%

Rural Energy 5.6 S S 150 119 21%

SEIER 3.5 S S 225 64 68%

Rural Energy II 1.1 S S 220 0 100%

Transmission and Distribution II 0.4 - - 200 0 na

Sub-total 3.7 994 294 58%

2.11 Facts

Energy Portfolio. The energy portfolio consists of five active credits (US$ 994 million) accounting for 26 percent of the total portfolio. With two large projects approved in FY05 and FY06, the energy sector has become the largest sector portfolio in Vietnam. With two projects expected to close in FY07 and one in the pipeline for FY08, the size of the portfolio relative to the country portfolio, is however set to decrease slightly in the medium term.

Figure 2.2: Energy TF Portfolio

1.9 1.2

1.6

1.5

2.2

0

5

10

15

20

US

$ m

illion


Vietnam: Energy Sector - TF Portfolio


TFs in the Energy Portfolio. The TF portfolio of the energy sector has steadily increased over the past few years and amounts to US$17 million, or 5 percent of the total Vietnam TF portfolio in FY05. The sector’s TF portfolio includes 3 GEF grants and 2 PHRD grants for project preparation. One co-financing grant from Sweden (US$1.4 million) on Demand-side Management was closed in FY04.


Progress towards Meeting Development Outcomes. All energy projects are rated satisfactory on DO. The desired development outcomes of these projects are already visible and includes improved access to good quality, affordable electricity services to rural communities and strengthened transmission and distribution systems with reduced losses and fewer bottlenecks.

Slow Implementation Progress. The last three years has seen a slow down in the pace of implementation for the energy portfolio. This is partly due to the comprehensive restructuring process undertaken for the TD-I and SEIER, which was necessary to identify further sub-projects, since some of the sub-projects intended for financing were completed by the Government without Bank support. The lengthy process of identifying and preparing new sub-projects has slowed down the overall implementation performance of the energy portfolio.

Table 2.7: Disbursements in Energy Portfolio

FY Disb.Ratio Disbursement FY03 16.7% 87 MUS$ FY04 16.3% 75 MUS$ FY05 15.5% 63 MUS$

The disbursement ratio of the energy portfolio over the past five years is higher than the average for Vietnam, but still lower than the regional average. As can be seen from Figure 2.3 and Table 2.7, the disbursement ratio, as well as absolute disbursements, have declined in recent years. The decline in the disbursement ratio is partly due to the entry of the large Rural Energy II


37

project (US$ 220 million) approved in FY05. The slower than normal pace of implementation which was linked to the restructuring is also to blame.

Figure 2.3: Energy Disbursement Performance

Disbursement PerformanceEnergy Sector

0.0

5.0

10.0

15.0

20.0


Dis

bu

rsem

ent

Rat

io

Energy Sector Country Portfolio

The disbursement target for FY06 is a modest US$53 million of the undisbursed balance of US$562 million at the beginning of the FY. This would lead to a disbursement ratio of less than 10 percent, which is below historical averages and far lower than the regional average.

Main Implementation Issues. There are a number of issues contributing to the low disbursement ratio. These include delays in internal payment processing, as well as weak capacity of the local contractors. One of the causes for delay in internal payment processing is the involvement/clearing function of the Development Assistance Fund (DAF). One key problem that the energy projects have been facing is the over estimation of costs (due partly to the fact of falling prices after the Asian Financial Crisis). This led to significant project savings (US$90 million from SEIER and more than US$60 million from TD-I) which also contributed to implementation delays.


Transmission and Distribution. This project has been under implementation for 8 years. The closing date was recently extended a third time to December 2006. The project achieved most of its objectives with significantly less funding and the extension is meant to accommodate implementation of new sub-project components using credit savings of $96million. There is a large undisbursed balance and the team may wish to review the implementation schedule and cancel any funds not likely to be utilized by December 2006. The project should not be extended again. Based on the recent implementation delays, the team may wish to review downward the satisfactory ratings of this project.

Rural Energy. This project has been under implementation for more than 5 and a half years. The closing date has been recently extended a second time to December 2006 to complete the physical works of project communes and accommodate implementation of the credit savings of US$18 million. Almost 80 percent of the funds have been disbursed. There are a large number of small contracts under the project and it is important to ensure that all are completed on time.

System Efficiency Improvements, Equitization and Renewables. This project has been under implementation for more than three years. Close to 60 percent of the implementation time has elapsed while only 30 percent of the funds have been disbursed. The project disbursement lag of 68 percent is mainly due to the high level of cost savings and withdrawal of a project component. Though preparation of the new sub-projects is well advanced, the project has only two years remaining. Given the large undisbursed amount and limited implementation time, the preparation of new sub-projects should be completed as soon as possible to provide a clear picture of the total project funding requirements. Any credit savings should be cancelled at an early stage. Also, the team may wish to consider a review of the ratings on implementation progress and procurement management.

Rural Energy II. This project has been under implementation for one year. More than 10 percent of implementation time has elapsed but no disbursements have been made yet. The task team may wish to review the satisfactory ratings for this project.

Second Transmission & Distribution. This project was approved in July 2005. Elapsed time since board approval is more than 5 months. The credit signing is scheduled for March 2006 (8 months after approval). The project should be declared effective by May 2006. This would mean that the project would receive an effectiveness flag (with 10 months from approval to effectiveness).


Based on slow implementation performance, as reported in ISRs and Aide Memoires, the CPR team would like to suggest a review of the following project ratings, as highlighted in the table below.


38

Table 2.8: Realism of Rating of the Energy Portfolio

Energy (Active Projects) DO IP

Project Managem

ent

Financial Managem

ent

Counter-part

Funding


T&D S S (MU) S (MU) S (MS) S S (MS) S S

Rural Energy S S S S (MS) S S S S

SEIER S S (MS) S S (MS) S S (MS) S S

Rural Energy II S S (MS) S (MS) S S S (MS) S S

T&D 2 - - - - - - - -

Note: The table summarizes current ratings of active energy projects. In light of the slow implementation progress of some of the projects, it is suggested that the highlighted ratings be reviewed. Suggested ratings by the CPR panel are presented within parenthesis.

Project Management. Generally, most PMUs of energy projects have adequate capacity in project management, procurement and financial management given their long established organization and availability of qualified staff with experience from IDA-financed projects. All energy projects have been rated satisfactory on project management. However, there have been slippages in the management of some projects, most notably TD-I. Despite the restructuring, it is likely that a large amount will need to be cancelled because of poor management of this project.

Financial Management. In general, financial management by EVN and the PCs fulfill the requirements of the Bank. All projects are rated satisfactory on financial management. In May 2001 EVN issued official guidance on Financial Management and Accounting specifically designed for World Bank-funded projects, which has contributed to improving financial management of its implementing agencies. Despite this, slow and bureaucratic handling of funds in energy projects resulted in significant delays in disbursements. The team should thus consider reviewing its generous FM ratings for TD-I, SEIER and Rural Energy. Counterpart Funding. Energy projects have high levels of counterpart funding requirements, but counterpart funds have not been an issue.

Procurement Management. Overall, the central management units of energy projects (PMBs of the PCs) have adequate procurement capacity. However, some provincial project management units (PPMUs) under Rural Energy II have inadequate capacity to conduct Bank-funded

procurement, including preparation of bidding documents and evaluation of bids. All energy projects are rated satisfactory in procurement management and no issues are reported in the ISRs. As noted above, the procurement management for some of the components under TD-I, SEIER and REII has been less than “satisfactory”, and the team may wish to reconsider the ratings.

Safeguards. Three common safeguard policies that apply to energy projects are environmental assessment, indigenous people and involuntary resettlement. All energy projects are rated satisfactory in safeguard management indicating that agreed mitigation and development plans are being adequately implemented.

Monitoring and Evaluation. The ISRs rated all projects satisfactory on M&E. See previous section for a further discussion on the strengths and weaknesses of the project level results management systems.


Two projects accounting for 35 percent of the energy portfolio have closing dates in FY07. Each of the projects has been extended in the past. Although the project implementation period of the two projects is over 80 percent, the disbursements are only at 60 percent. The task team is well aware that no further extensions will be granted and the teams are working to ensure that all activities can be completed on time and that funds which cannot be used before the closing date are cancelled before June 2006.


39


Delays in recently approved projects raise concerns on the readiness for implementation. RE-II was approved in November 2004 and not declared effective until a year later (with an effectiveness flag). Similarly, TD-II was approved in July 2005 and has yet to be signed. This project also risks receiving an effectiveness flag. Although some of the delays may be related to external factors, such as the changes in Decree 16, in view of the delays in effectiveness, it is likely that the readiness filter was not rigorously applied.

2.17 Program Design

Strategic Direction and Challenges. Overall, the strategic direction of Bank interventions in the sector has been appropriate. The strategy for encouraging private sector participation and gradually playing a background role in the Phu My complex is particularly noteworthy. Similarly, policy reforms in general have been successful. Finally, the focus on providing access to power in the rural areas is prudent and strongly aligned with Government priorities. The challenge for the future with respect to program design will be to manage the growing power demand and supporting the transition to a reformed sector and the Bank’s intervention in generation. There are key issues with respect to safeguard policies which need to be resolved at the highest levels before the Bank program involvement in power generation can be finalized. Mind the Financing Gap. The financing necessary for achieving the goals in the sector are huge. More than US$ 2.4 - 2.5 billion is required annually, which is far beyond the investments during the previous decade. Since the gestation period for developing energy projects is long, it may be helpful to examine if IBRD financing can be utilized. The ADB has begun using its non-concessional window for financing energy projects. Assessing Demand and Willingness to Pay. Several “willingness to pay” surveys are conducted at city/provincial and project level. In Vietnam, these have been conducted most recently by the urban and energy sectors. However, it would be useful if these surveys could be conducted jointly and focus not only on the willingness aspects, but also the ability to pay for various infrastructure services.


Piloting the Harmonized Reporting Tool. The energy sector is the first that has embraced the pilot of a harmonized reporting tool for all of its projects. This reporting tool is expected to be formally adopted by the Government with amendments to the legislation within a few months. Once formally adopted, the Government and donors (Five Banks) will roll out this system through-out the portfolio.

Integrated PMUs. The PMU structure used for implementation of Bank projects is sound. EVN fulfills the role both from an organizational as well as an individual skills perspective. The project management structures are permanent, the staff are mostly from the parent agency, it is well integrated and the same structure manages projects from different sources, including the Government. This is perhaps the best project implementation structure within Vietnam.


Slow Grant Activation. The activation period of grants in the energy sector (average 9.3 months) is one of the longest in the portfolio. It takes the Bank between 3 and 6 months to get the Grant Agreement signed and sent to the Government, who subsequently spends a similar period to countersign the Grant Agreement.

Figure 2.4: TF Disbursement Performance

Vietnam: Energy Sector - TF Disbursement Ratio

0%

10%

20%

30%

40%

50%

60%


Disb Ratio Country Disb Ratio

Slow Disbursement. The disbursement ratio in FY05 was low (14 percent), mainly due to the entry of a jumbo GEF grant at the end of FY05.

2.20 Looking Ahead - Strengthening Project Implementation

Ensure Timely Closure. There are two projects scheduled for closure in FY07. The task teams should intensify the current effort to ensure that all


40

activities are completed to allow the TD-I and Rural Energy projects to be completed without further extensions and that any necessary cancellations be completed by June 2006.

Reduce Start Up Delays. Average elapsed time from Board approval to effectiveness of energy projects is ten months. It is recommended that for pipeline projects, the Vietnam Readiness filter be more rigorously applied to avoid start-up delays. Also, in many energy projects, the first year after board approval is spent on designing civil works contracts, with construction starting only in year two. It would be important to ensure that the design of components in the first Annual Work Plan be completed during project preparation so that civil works construction can start early.

Improve Realism of Ratings. As suggested in the text and tables above, in light of implementation progress, the optimistic ratings for TD-I, RE-II and SEIER should be reviewed.

Avoid the DAF. Disbursement arrangements in all the energy projects have been structured in a manner that involves the DAF. While the disbursement review process in the DAF is time-consuming, the value-added it provides is unclear. The team is working on improving the mechanisms for expenditure checking of DAF and should continue to do so as a matter of priority.

41 VN COUNTRY PROGRAM REVIEW 2005

HEALTH SECTOR

IDA Commitments & Disbursements Health Sector

0

50

100

150

200

250


MU

SD


Annual Commitments

Investment Project Progress

Health Sector

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

Elapsed Times (%)

Dis

bur

sem

ent

(%)


NHS

RBTCsHIV/AIDS

Chapter 3 Health Sector

3.1 Health Portfolio at a Glance

The Health Credit Portfolio since FY94: • Cumulative Net Commitments of US$ 222 million • Cumulative Disbursements of US$ 114million (Dec 05) • 3.6% of total IDA commitments for Vietnam

The Active Health Portfolio (as of December 2005):

• 3 active credits (US$ 172 million – 4.4% of VN portfolio) • 8 active grants (US$ 6.1 million) – 2.5% of VN TF portfolio) • Average project age of 4.8 years

Health Portfolio Performance:

• 100% of portfolio rated satisfactory on DO • 77% of portfolio rated satisfactory on IP • OED – 1 projects evaluated by OED. 100% S outcome • Average disbursement lag: 13%

Disbursement Ratio below Regional Average for Credits: IDA Projects Grants

FY01 18.3% 13 MUS$ 16% 1.0 MUS$ FY02 21.2% 16 MUS$ 36% 2.0 MUS$ FY03 25.1% 26 MUS$ 61% 2.3 MUS$ FY04 25.6% 20 MUS$ 33% 0.8 MUS$ FY05 3.3% 2 MUS$ 34% 0.7 MUS$

(EAP FY05: 19.9% for projects and 18.3% for grants)

Figure 3.1: Use of IDA funds in the Health Sector

FYIDA

Credit

CAS Theme 2.4


Poor

CAS Theme 3.3


Reform

PMU

Population and Family Health

1996(closed)

44.6

National Health Support 1998 98.8

Blood Transfusion Centers 2002 38.2

HIV/AIDs Prevention 2005 35.0

Mekong Health Support2006

(planned)70.0

Health Fund for the Poor 2008(planned)

60.0

Central Region Health Support

2009 (planned)

100.0

Total On-Going Projects MUSD (%) 172.0 153.0 (89%) 7.0 (4%) 11.0 (6%)

Total All Projects MUSD (%) 446.6 420.0 (94%) 8.0 (2%) 17.0 (4%)

36

5

22 7

8

60

100

95

53

45



42

3.2 Strategic Alignment of the Health Portfolio

CAS Strategy. The current Vietnam CAS contains multiple sets of objectives: (i) the Government strategy as expressed in the CPRGS; (ii) the overall three CAS themes divided into 16 sub-themes; (iii) specific sector priorities; (iv) the Vietnam Development Goals and Targets and (iv) program goals such as strengthening partnerships and harmonization.

Health Sector Interventions. Bank initiatives in the health sector cover mainly five areas: (i) health care infrastructure; (ii) prevention of

spread of infectious diseases; (iii) health insurance for the poor; (iv) reducing malnutrition; (v) capacity development.

The table below maps these areas of intervention against the various relevant objectives outlined in the CAS and illustrates the varying degrees of alignment. The different sets of objectives presented in the CAS do not provide a consistent framework of priorities. This complicates a review of alignment of the various types of health interventions, as illustrated below.

Table 3.1: Alignment of the Health Portfolio to CAS Objectives



CAS sub-themes CAS Sector Priorities for Infrastructure

Health Care Infrastructure

Improve the quality of health services and increase the equity and efficiency of the health system (particularly of basic/community health care)

Making basic social services accessible and affordable to the poor

Address inequalities in service delivery across provinces, resulting from the increased decentralization in public provision of health services

Making basic social services accessible and affordable to the poor Infectious

Disease Prevention

Improve the quality of health services and increase the equity and efficiency of the health system (particularly of basic/community health care)

Mitigate impacts of natural disasters and other shocks

Support modernization of health provider networks in line with pressures of globalization, a market-oriented economy and a greater role for the private sector


Health Insurance for

the Poor

Improve the quality of health services and increase the equity and efficiency of the health system (particularly of basic/community health care) Public Administration Reform

Reduce the burden of poor people in financing basic social services

Reducing Malnutrition

VDG – Reduce Child Malnutrition


Address inequalities in service delivery across provinces, resulting from the increased decentralization in public provision of health services

Capacity Development

Accelerate the reform of public administration Public Administration Reform

Support modernization of health provider networks in line with pressures of globalization, a market-oriented economy and a greater role for the private sector


VN COUNTRY PROGRAM REVIEW 2005 HEALTH SECTOR

43

Overall Assessment of Alignment. All three active credits directly support the CPRGS objective to improve quality of health services, increase the equity and efficiency of the health care system, concentrating on developing basic health care and community health care. The health sector portfolio is also associated with the CAS sub-theme “Making basic social services available and affordable for the poor”, but the link is strong only in the National Health Support Project (NHSRP) which focuses on fifteen of the poorer provinces and interestingly is the oldest in the portfolio. In the case of the other projects, the link is indirect and there is no clear focus on the poor. The HIV/AIDs Prevention project contributes to reducing HIV/AIDS infection among vulnerable groups which are not necessarily poor, while the Regional Blood

Transfusion Centers is too specialized to establish the contribution to the overall objective of making basic health care accessible and affordable to the poor.

All three projects, and especially HIV/AIDS Prevention, also contribute to the CAS sub-theme of “Public Administration Reform”. Two of the three on-going projects in the health portfolio (National Health Support and Blood Transfusion Centers) are aligned with the CAS health sector priorities of modernizing the health system.

The health portfolio also contributes to the achievement of the Vietnam Development Goals (4) Reduce Child Mortality, child malnutrition and reduce the birth rate; (5) Improve Maternal Health and (6) Reduce HIV/AIDs infection and eradicate other major diseases.

Table 3.2: Alignment of the Health Sector Portfolio

Alignment CPR Panel Assessment Health

Projects FY Project Development Objective


CAS Sector Priorities

National Health Support 98 � Improve the health of the rural population in the poorer areas HS HS HS

Blood Transfusion 00 � Secure health benefits of safe blood transfusions for the population in four regions S MS MS

HIV/Aids Prevention 05 � Support programs to halt transmission of HIV/Aids among vulnerable groups S MS MS

Mekong Health 06 � Improve health services in the Mekong region and enhance access to and coverage of these services

S S S


3.3 Alignment of Different Health Interventions

As noted above, the different sets of objectives presented in the CAS do not provide a fully consistent framework of priorities. Below the various types of health sector interventions found in the portfolio are reviewed in terms of alignment to (i) CPRGS objectives; (ii) CAS Sub-themes; and (iii) CAS Sector Priorities.

Health Care Infrastructure. There are large disparities in health indicators by urban-rural, regional and income groups, reflecting differences in access to health services and out-

of-pocket contributions to health care costs. Thus, the CAS focuses on supporting the Government objective of making basic health services accessible and affordable for the poor. In addition, the health sector priorities outlined in the CAS include support for the modernization of the overall health system. The NHSP is well-aligned to all these priorities. Many other Bank initiatives in community based rural development and the rural transportation projects are targeted to less developed part of the country. They contribute directly to the CAS sub-theme of making basic health services accessible and available for the poor by providing health facilities

VN COUNTRY PROGRAM REVIEW 2005 HEALTH SECTOR 44

and/or improving access to health facilities in other areas.

The health sector strategy is currently expected to shift from national, supply driven operations, to regional projects focused on regional needs with increased attention to the demand aspects. The strategic rationale for the Mekong Health Regional Support and the other proposed pipeline projects is better aligned with this new approach, including greater attention to decentralization and regional needs.

Infectious Disease Prevention. The portfolio is actively supporting the prevention of the spread of infectious diseases. The HIV/AIDS Prevention project was not listed in the CAS, but was developed as an IDA grant in response to increasing concerns about HIV/AIDs development in Vietnam. The NHSP was recently extended to allow for additional support to prepare for a potential outbreak of the avian influenza. There is also a JSDF-TF to support the prevention and control of SARS. Preventing infectious diseases is not explicitly mentioned as a strategic priority in any of the three sets of CAS objectives. There is however a VDG specifically for the reduction of HIV/Aids.

Health Insurance for the Poor. The pipeline projects has an increased focus on demand driven interventions and support to developing the system for ensuring access of the poor to adequate health services. This is well-aligned to the CPRGS and CAS sub-themes of focusing on the poor, as well as the CAS sector priority of reducing the financial burden for the poor to health services.

Reducing Malnutrition. There is one grant financed by GAIN on Food Fortification. This grant aims to reduce the prevalence of iron deficiency anemia by making affordable iron-fortified fish sauce available for the population at risk. It is found well aligned with CPRGS and VDG to reduce child malnutrition. However, this intervention is weakly linked with the CAS sub-themes and the HD Sector Priorities, since these do not mention nutrition.

Capacity Development. All health projects involve capacity strengthening components to develop human resources within the health care system and within the Government to manage the sector. There is also an IDF TF that aims to improve the health sector expenditure management. This is well-aligned with the CPRGS, the CAS sub-themes and the sector priorities which all highlight the need for public administration reform and modernization of the health care network.


The CAS also identifies areas of strategic priority for the Bank program, including building partnerships and harmonization. The health sector has only had one co-financing grant during the CAS period from Sweden for the National Health Support Project (closed in FY04). There is one co-financing grant in the pipeline with Japan (through PHRD) to provide health support in Mekong region and one free-standing grant with EC on health care support to the poor in Northern Uplands and Central Highlands.

Some donors are currently developing a SWAp-like intervention in the health sector, but the WB is not participating actively in this process.


Ensure a Consistent Strategic Framework in the next CAS. To avoid the situation of the current CAS, with multiple objectives that are not fully consistent, the next CAS should express priorities for the health sector more clearly and comprehensively. Links between sector objectives and cross-sectoral themes of the CAS/SEDP should be made more explicit to ensure consistency in the priority setting.

Developing a WB Sectoral Results Framework. To address the absence of a clear results framework linking project level results with the overall CAS themes and Government objectives, a sectoral results framework could be


45

developed. Based on the strategic priorities outlined in the Bank’s current and proposed interventions, a possible sectoral results framework has been prepared. This could serve as an input into the CAS development, and help to ensure a higher degree of consistency between sector priorities, project objectives and the key themes of the CAS. It would also be important to link expectations of results during the next CAS period directly to what the current and planned health portfolio is set up to achieve.

Prioritize the Pipeline based on the Criteria of the Next CAS. The current pipeline for Vietnam exceeds the available IDA resources and there is a need to prioritize the pipeline in line with the criteria that is being established for the next CAS.



sector;

� The Bank’s comparative advantage in undertaking the intervention;

� Complementarity with other donors and possibility to leverage other investment sources;


sector;

Surely other criteria can be included, but this could be the basis of a first discussion. Based on the discussion, guidelines providing additional clarity to these principles could be prepared.

Strategic Planning for TF. The sector would benefit from thinking through uses of TFs. Not only will this help the Government to effectively coordinate grant resources for the health sector but the strategy would also help prioritize TF use.

Box 3.1. Health Sector Pipeline

o Mekong Health Support o Health Fund for the Poor o Central Regional Health Support o Northern Upland Health Suppport


Possible Health Sector Results Framework

… by supporting the demand especially the poor and near-poor through appropriate health insurance packages. � Mekong Health Support � Northern Upland Project � Central Region Health

Support

… by investing in preventive and curative health care improvements in selected regions and provinces. � National Health Support � Mekong Health Support � Northern Upland Project � Central Region Health

Support � TF- Iron Fortified Fish

Sauce Project


Improve access to health care services at different levels, especially for the

poor and near poor

Improve quality of preventive and

curative health care services, in part to

respond to increasing NDC prevalence

Reduce mortality and morbidity due to infectious diseases

incl. new threats (e.g. HIV/AIDS,

SARS, Avian Flu)

… by supporting appropriate division of roles and responsibilities between central and lower levels, and between public and private sectors. � National Health Support � Regional blood transfusion � HIV/AIDS Prevention � IDF TF – Health Sector

Expenditures and FM � TF JSDF – Prevention and

Control of SARs � Mekong Health Support � Prevention and Control of

SARS � Avian Flu AAA work


… and strategy

Proportion of population with access to adequate health services (poor, near-poor, overall) Reduced level of out-of-pocket health expenditure for the poor and near-poor

Proportion of population with access to primary health care (poor, others) Proportion of population with access to hospital care including emergency care (poor, near-poor, overall) Proportion of at-risk population (e.g., pregnant women and children) with access to iron fortified fish sauce (poor and non-poor) Mortality rate due to NCDs including injuries and accidents.

Malaria prevalence /fatality rate TB case finding/cure rate Incidence of blood transmitted infections Percent of vulnerable groups reporting safer injection and sexual practices Incidence of other common infectious diseases (e.g., dengue, ARI, diarrhea) Incidence/outbreak of SARS and case finding Incidence/outbreak of Avian flu and case finding/cure rate

… with KPIs


47

3.6 Results Achieved in the Health Sector

The Bank support to the health sector has resulted in improvements in health care access, family and population health and reduction the spread of communicable diseases. However, as illustrated below, the current reporting provides a fragmented picture of achievements with information and data on results dispersed in different reports and similar objectives measured by different indicators across projects. Some of the results achieved during the CAS period (taken mainly from ISRs, ICRs and ICMs) are summarized below.

� Family Planning and Population Health. The closed Population and Family Health project contributed to an increase in the utilization of family planning and related health services: the percentage of women receiving antenatal care rose from 62 to 79%; the proportion of children fully immunized during the first year of life rose from 50.4 to 58.1% and both fertility and infant mortality rate have fallen. The project supported the upgrading/construction of 15 family planning centers and 138 operating theatres.

� National Health Support Project. Impacts observed by the final project evaluation (Oct 03) include: (i) improved morale and professionalism of CHC workers; (ii) improved community perception of CHC quality; (iii)

utilization rates in CHCs on average 10% higher for both in-patient and outpatient services compared with non-project communes; and (iv) a higher quality of preventive services by the national health programs and actually accessed by the population. There was no baseline data collected and no progress measured against outcome indicators, so the impacts are difficult to quantify.

� HIV/Aids. The project is just getting started and no results are yet achieved.

� Health Sector Expenditure and Financial Management Improvement (IDF TF). As a result of the grant support, MOH’s is more effectively participating in various policy formulation processes such as PER 2005, SEDP 2006-2010, and the MTEF in health. Health officers in central agencies and in 43 provinces have acquired a better understanding of provincial funding and spending practices.

� Prevention and Control of SARs (JSDF TF). The readiness of the health system and the public awareness to cope with SARs has been put in place. Several health promotion interventions were developed and are now in use; and guidelines and procedures on SARs surveillance and reporting systems were issued. Systems established under this grant would also serve as a good example in the event of other emerging diseases.

Box 3.2 OED Evaluation of Population and Family Health Project

The OED evaluation of the Population and Family Health project (closed in Sept 2003) rated the outcomes of the project satisfactory, with a substantial institutional development impact and likely sustainability. Both the Bank’s and the Borrower’s performance were rated satisfactory. The quality of the ICR was also rated satisfactory by OED.

The overall objectives of the project were to increase utilization of family planning and improve the quality and range of family planning health services. The project objectives were achieved with few shortcomings.


Table 3.3: Current and Expected Results in the Health Sector


1. Improve access to health care services at different levels, especially for the poor and near-poor

Mekong Health Support (MHSP): baselines and targets will be established prior to effectiveness. Northern Upland Project: preparation will start soon (2nd quarter of FY06) Central Region Health Support: PHRD just approved

National Health Support: there was no baseline data collected and no progress measured against outcome indicators. Impacts observed by the final project evaluation (Oct 03) include: � Improved morale and professionalism of CHC workers; � Raised community perceptions of CHC quality; � Utilization rates in CHCs that are on average 10% higher for both in-patient

and outpatient services compared with non-project communes; and � A higher quality of preventive services supplied by the national health

programs and actually accessed by the population.

To Date

2. Improve quality of preventive and curative health care services, in part to respond to NCD prevalence

MHSP, NUP, Central Region Health, Iron Fortified Fish Sauce

National Health Support: see above To Date

Regional Blood Transfusion: � Adequate blood supply to meet the clinical transfusion needs of 3 central

and regional hospitals and 180 provincial and district hospitals servicing a population of 30 million

� 100,000 units of blood collected each year � 70% of blood collection comes from voluntary unpaid contributions HIV/Aids Prevention: � An increased percentage of vulnerable groups (from an estimate 10% at

baseline to 50%) are reached by provincial services � Percent of vulnerable groups in participating provinces reporting safer

injection practices (from an estimated 20% at baseline to 50%) � Percent of vulnerable groups in participating provinces reporting condom

use in sexual intercourse (from an estimated 40% at baseline to 60%)

2008

SARS Original Grant (Apr 04 – Mar 05): � Training of community health workers completed � Improved SARS surveillance and reporting system � Increased public awareness

SARS Supplement Grant (Apr 05 – Jun 07): � 80% of people in targeted areas have sufficient knowledge on SARS

prevention and control � 80% of preventive health staff are capable in carrying out surveillance

activities and responding to SARS outbreaks, if any � Preventive medicine centers and border health quarantine centers/units

are provided with additional disposal uniforms and chloramines disinfectant for use in SARS outbreaks.

2007

HIV/AIDS Prevention � Percent of vulnerable groups in participating provinces reporting safer

injection practices (from an estimated 20% at baseline to 70%) () � Percent of vulnerable groups in participating provinces reporting condom

use in sexual intercourse (from an estimated 40% at baseline to 80%)

2011

3. Reduce mortality and morbidity due to infectious diseases including new health threats (e.g., HIV/AIDS, Avian Flu)

Avian Flu (tbd)


49

3.7 Managing for Results in the Health Sector

The Project Results Frameworks. The results frameworks of the health sector projects are quite different, and there is no obvious common theme among them. Their quality varies too -- with the HIV-AIDS Prevention being among the best in the Vietnam program, while the one for Blood Transfusion Centers needs to be strengthened.



Quality of Project Development Objectives (PDOs). The PDOs of the health projects were found to be generally satisfactory, with target beneficiaries and changes needed identified in all three active projects. The PDOs of Regional Blood Transfusion Centers and HIV/AIDS Prevention are brief and clear, while the one of National Health Support is very broad. The PDO of the Mekong Health project is good, with a focus on the outcomes for the beneficiaries.

Grant Development Objective (GDO). It is still common that the GDOs are too broadly defined at a high level such as “to assist the Recipient to engage more effectively in the medium-term expenditure framework exercise in respect of the health sector, and thereby improve the design, coherence and impact of the budgetary and financial management reforms in the sector”. More attention needs to be paid to defining GDOs that clearly specify the expected change in the target beneficiary. Given that the grants usually only provide a few hundred thousand USD in support, it would also be important to set the objectives at a realistic level where it is feasible to demonstrate a link between the outputs and outcomes of the project and the achievement of the GDO. Currently, it is often hard for task teams to convincingly prove the achievement of the intended objectives upon grant completion.

Quality of Key Performance Indicators (KPIs). The quality of the KPIs is good. In general, the projects have well-designed indicators that are relevant to measuring progress on the project objectives. Currently, progress on the health sector is monitored by more than 20 different KPIs. Many of these are related to NHSP and may no longer be actively monitored, given the completion of most activities. These include common health indicators such as disease prevalence and mortality rates, proportion of the population with access to health care services and changes in risk behavior. The move to the ISR, significantly reduced the quality of the results framework for the Regional Blood Transfusion project and this needs to be revisited. The ISR results framework for the NHSP also needs to be further clarified.

Quality of TF KPIs. Among the health sector grants, the JSDF Grant on Prevention and Control of SARS, especially the second phase of the grant, has verifiable indicators to measure progress at different levels (activities, outputs, and outcomes). Links from activities (e.g ...printing 2,500 books on SARS....) to outputs (e.g ...80% of people at targeted areas provided

Box 3.3 A satisfactory project results management system contains:



(iii) Baselines and targets for all KPIs; and (iv) Updated progress information on KPIs, used to

inform decision making.


with sufficient knowledge on SARS...) to outcome (e.g a SARS surveillance and reporting system is in place to enable the Government and poor communities to cope with potential risks of SARs epidemics in border provinces and big cities...) are strong.

For the technical assistance grants, admittedly it is more difficult to identify SMART KPIs. Partly this is because it is costly to monitor and collect data. It may also be difficult to define good indicators apart from outputs, such as workshops and reports which is currently the most common KPIs in the health grant portfolio. However, if the GDOs are well-defined to cover realistic changes in behavior of the target beneficiary, it is usually possible to identify simple measures/milestones to demonstrate progress and results achieved. KPIs for all new grants in the Health sector would need to be defined so that meaningful reporting on results can be achieved.

Quality of Monitoring and Evaluation. The quality and use of the project monitoring and evaluation (M&E) systems vary. As can be seen

from the Table 4, The HIV/AIDS Prevention is the only project in the health sector portfolio that contains proper baseline and target information. The Regional Blood Transfusion Centers has some targets, but no baselines. These issues need to be addressed as part of the review of the overall results framework. The Mekong Health Support Project has made the establishment of baselines and targets a condition for project effectiveness, rather than completing this prior to Board Approval.

Table 3.4: M&E in Health Projects

Health Projects Baselines? Targets?

National Health Support No No

Blood Transfusion Centers Partly Partly

HIV/AIDS Prevention Yes Yes

Mekong Health Support No No


Table 3.5: Assessment of the Project Results Framework in the Health Portfolio

Results Framework


Quality of KPIs

Quality of M & E

Overall Quality

National Health Support S S* MU MS

Blood Transfusion Centers S S* MU MS

HIV/AIDS Prevention HS HS S HS

Mekong Health Support (pipeline) S S MU MS

* The migration to ISR significantly changed the KPIs as compared to the original set in the PAD. The rating is based on PAD indicators.


51

National Health Support. The project is nearing completion with part of the project related to the spread of infectious diseases extended to allow for support to Avian Influenza preparedness. The most recent ISR contains only a partial results framework (the original project had a much more comprehensive set of KPIs), with no clear baselines and targets, or progress updates. Some information on results was collected in October 2003 in the final report. It would be important to ensure that relevant results information is available for the ICR.

Regional Blood Transfusion Centers. The PDO of this project is brief and clear and identifies the targeted outcome. The original logframe was solid and included measures both of utilization (e.g. % of required hospital blood stock met by RBTC) and impact (e.g. decrease in incidence of blood transmitted infections). However the original indicators do not appear to have been utilized, as the PSR did not include baselines or updates. The results framework for this project was further weakened during the transition from the PSR to the ISR. The ISR now includes only one PDO indicator “the percentage share of total blood collection by the RTBC drawn from voluntary donors” which does not adequately measure the key aspects of the PDO. It is recommended that the results framework in the ISR be revisited to establish a set of effective indicators with baselines and targets.

HIV/AIDS Prevention. The PDO of this project is brief and clearly identifies the expected outcome. The results framework and monitoring arrangements follow the revised PAD format and is well developed. The PDO outcome indicators focus on behavior change in the target beneficiary group and are specific, measurable, attributable, and targeted. The intention to link indicators to the national system is excellent. Baselines and targets are available for all KPIs.

Mekong Health Support Project. The PDO is clear and focused on the expected changes for the target beneficiaries in terms of improving access and quality of health services in the Mekong region. The results framework contains a wide range of indicators to measure outcomes and intermediate results, perhaps even too many. Targets and baselines for these indicators have not yet been established. This has been made a condition for effectiveness, rather than Board approval as envisaged in the VN readiness filter.

3.9 Trust Fund Results Management

Quality of TF Results Framework. As part of the CPR, detailed reviews of the results framework of a selected number of projects were conducted. In the health sector, the $282,000 IDF TF051825 – Health Sector Expenditure and Financial Management Improvement was selected. The GDO of this grant is too broad (...enable MOH to participate more fully in and benefit to an increased extent from the planned MTEF and other MOF-led efforts to modernize public finance management). The IDF independent evaluation FY02-05 also points out that “the objectives are so intangible and nonfinite that it is hard to tell the extent to which they have been achieved”. While its outputs are clearly defined in the grant (reports, case studies...), its expected outcomes are too vague to support the intended objectives (invigorated partnership, revised thinking, or closer connection...). Although it is difficult for technical assistance grants to have measurable indicators, the GDOs and KPIs could be strengthened by focusing on achievable and monitorable goals and targets.


Simplifying and Identifying Common KPIs. There is scope for simplifying and improving M&E by focusing project monitoring on a few, common indicators directly related to fulfilling the sector objectives (as exemplified above). In the proposed sectoral results framework, a number of possible common KPIs are presented.

Strengthen the Project Level Results Frameworks. Some suggestions to strengthen the results frameworks for individual projects are provided above. In general recommending:




� ISR. Improve reporting on results in ISRs.

Improve Reporting on Results. It would be important, particularly for the National Health Support project which has completed many


activities to ensure that information on the results achieved are available for the ICR.

Improve TF Results Framework and Reporting. The design of TFs should follow the rigor of projects with respect to the design. It will be much easier to have a stronger TF result framework if attention to this is paid at the time of the grant design. This could be done if in the grant proposal, the TTL is requested to select appropriate KPIs to monitor the grant outcomes.

The TF committee screening the TF applications should review the GDO and results framework carefully. An example of the variable quality could be seen from the difference in quality of TF results framework between JSDF and IDF. In GRM or other grant progress reports, it would be easier for the management to get the right message on grant performance towards the objective achievement if the TTL does not only illustrate this in terms of qualitative assessments.

3.11 Portfolio Implementation Table 3.6: Health Sector Portfolio (as of December 2005)


IP Rating

Net Comm. ($mln)

Cum. Disb.

($mln)

Disb. Lag

National Health Support 10.0 S S 98.8 74.3 24%

Blood Transfusion Center 3.7 MS U 38.2 4.1 86%

HIV/AIDS Prevention 0.8 S S 35.0 1.5 -72%

Sub-total 4.8 172.0 79.9 12.67%

3.12 Facts

Portfolio Facts. IDA’s assistance to the health sector includes one completed project (Population and Family Health, closed in FY04, rated fully satisfactory by OED on development outcomes), a 10 year old project (National Health Support) just extended, and two newer projects Blood Transfusion Centers (FY02) and HIV/AIDS Prevention (FY05).

The three active projects in the health portfolio with commitments of US$ 172 million represent about 4 percent of the current Bank program in Vietnam. The pipeline, based on the evolving strategy of addressing regional needs, includes Mekong Health Support (FY06), Health Fund for the Poor (FY07), and Central Region Health Project (FY09) with a tentative total amount of US$ 207 million.

Recipient-executed TF Portfolio. The health sector accounts for a modest amount of the country TF portfolio, with 5 active grants (US$ 2.5 million) in FY05. Most available grant resources from IDF, ASEM, PHRD, and JSDF to a co-financing grant with Sweden have been used in the sector. The health TF portfolio has been shrinking during the past five years, but is expected to increase significantly since there are EC and Japan (through PHRD) co-financing

grants in the pipeline to provide support in Central and Mekong regions, respectively.

Figure 3.2: Health Sector TF Portfolio

0

2

4

6

8

10

USD

milli

on


Vietnam: Health Sector - TF Portfolio



Progress towards meeting Development Objectives. The NHSP is rated satisfactory on DO. Unfortunately, only limited information on results is available for this project, which makes the assessment difficult. Due to the slow implementation, some of targets established in the PAD for the Regional Blood Transfusion project have not been reached yet and it is rated “MS” on DO, which is fair. The HIV/Aids Prevention project has just become effective.

Significant Delays in Implementation. A common factor for the health projects is the slow pace of implementation. The NHSP is the oldest


53

project in the portfolio with 10 years of implementation. The Regional Blood Transfusion project has struggled with implementation issues and has disbursed only 10 percent of the credit in almost 4 years. This project was identified for restructuring in the 2003 CPPR and was recently downgraded to Unsatisfactory due to continued poor progress despite intensive efforts from the task team.

The current average disbursement lag for health credits is only 13 percent, helped by the fact that the HIV/Aids Prevention is significantly ahead of the disbursement projections at an early stage of implementation. Disbursements have declined since FY05 with the disbursement ratio falling from 25.6 percent in FY04 to only 3.3 percent in FY05. Both NHSP and RBTC have disbursement delay flags.

Figure 3.3: Disbursement Performance

Disbursement PerformanceHealth Sector

0.0

5.0

10.0

15.0

20.0

25.0

30.0


Dis

burs

emen

t Rat

io

Health Sector Country Portfolio

Main Implementation Issues. Common issues reported in ISRs include slow procurement, low implementation capacity, problems with land allocation, cost estimates and construction designs, and complex approval procedures. In addition, collaboration between MOH and the local provinces and departments within MOH needs to be improved. The lack of national construction standards and cost norms, as well as technical specifications for the construction and purchase of equipment for health projects, creates a need for a multi-layer review /approval process with many agencies involved causing delays. For example, the standards required for blood transfusion centers has been mired in complex approval processes involving WHO, MOH, MOC and MPI. The Bank (or the task team) can do little to expedite the approvals.


National Health Support. After almost ten years of implementation, this project has been extended a third time to allow project savings (US$13.5 million) to help GOV efforts to prepare for a potential avian flu outbreak. This extension was granted under exceptional circumstances. Given the close links with the ongoing Avian Influenza Emergency project (under MARD management), MOH needs to closely collaborate with MARD in designing the scope of the new project component. The scope needs to be agreed on quickly and a realistic implementation plan finalized to ensure that planned activities can be completed within the extension time.

Regional Blood Transfusion Centers. This project has been under implementation for four years but only 10% of the funds have been disbursed. The project faces implementation issues on physical works and institutional capacity. These include delays in review/approval for the construction drawings, technical specifications and bidding documents on the blood transfusion centers in Hanoi, Hue and Can Tho. In addition, the site in HCMC has only recently been confirmed – after almost 4 years and much debate. The project was recently downgraded to unsatisfactory, which is fair. It would be difficult to complete the project by March 2008 given that the construction of RBTC of Hanoi, Hue and Cantho will not start until mid 2006. The task team needs to ensure rapid implementation of agreed actions and close monitoring of procurement and approval processes.

HIV/AIDS Prevention. This project was approved in March 2005 and took almost seven months for effectiveness. Despite the initial delay, more than half the project provinces have already approved action plans to be implemented with funding from the project. The team should focus on further strengthening the capacity of the central and local project management units through training on financial planning, budgeting and procurement.


Based on implementation performance, as reported in the ISRs and the Aide Memoires, the CPR team would like to suggest a review of the following project ratings, as highlighted in the Table below.

VN COUNTRY PROGRAM REVIEW 2005 PREM/CITPO/COSU SECTOR 54

Table 3.7: Realism of Ratings in the Health Projects

Health Sector (Active Projects) DO IP

Project Managem

ent

Financial Managem

ent

Counter-part

Funding


National Health Support S S S S S S S (MS) S

Regional Blood Transfusion S U U MS MS U S (MS) MS (MU)

HIV/AIDS Prevention S S S S S S S S

Note: The table summarizes current ratings of active health projects. In light of the slow implementation progress of some of the projects, it is suggested that the highlighted ratings be reviewed. Suggested ratings by the CPR panel are presented within parenthesis. Project Management. Projects in the health sector are managed by Project Coordination Units (PCUs). The PCU is a project-based organization, staffed by personnel from various functional departments of MOH working part time and external consultants. The organization is dismantled after the project completed. As a result, valuable experiences and lessons learned from other completed projects are not transferred to the new projects. PCU staff spends the first two years learning about project management, which is one reason for the slow start-up. Experienced staff may not be interested to work for temporary PMUs as career opportunities are limited. Lack of experienced staff in turn leads to serious delays in project implementation. The Regional Blood Transfusion Centers project is rated “Unsatisfactory” on project management as a result of weaknesses in overall project management, particularly in collaboration with other ministries, departments within MOH and the local project management units.

Financial Management. No major shortcomings have been identified in the ISRs related to the financial management systems.

Counterpart Funding. MOH allocates counterpart funds to projects from its annual budget package approved by the Government, which includes project counterpart funds and MOH’s administrative fees. The allocation process often holds up project implementation,

as sufficient funding is not provided on a timely basis.

Procurement. Long delays in reviewing technical design, technical specifications and bidding documents at the central level have been found in two of the three projects. If MOH does not improve review/approval procedures, it will continue to affect the implementation of all projects in the health sector. Task teams need to work with MOH to streamline procurement process.

Monitoring and Evaluation. All projects are rated “S” on M&E. However, as discussed in the previous section, both the Regional Blood Transfusion and the National Health Support project require further strengthening.

Safeguard Management. Health projects deal with three common safeguard policies: environmental assessment, indigenous people and involuntary resettlement. Only one project is rated “MS” in this indicator due to the involuntary resettlement issue. However, given the protracted delays in addressing this issue, the team could consider a further downgrade to this rating.


NHSP has a closing date in FY07. This project has been extended three times to December 2006 to support the Government efforts to


55

prepare for a possible avian flu outbreak. Given the very long implementation period, the task team needs to quickly agree with MOH on the scope of the project, no more extension should be given.


No QAG assessment has been done of the Quality at Entry of the HIV/Aids project.


Average elapsed time from Board Approval to Effectiveness of the health projects is at 5.4 months which is quicker than the average. The HIV/Aids prevention project had 6 effectiveness conditions and took 6.7 months from Board Approval to Effectiveness. Although beyond the Bank standard, this is below the average for FY04/05 of 8.0 months.

3.19 Program Design

The sector needs to decide on a long-term strategy on how best to deliver within the new mechanisms. Lessons from other decentralized projects indicate slower implementation initially. However, this can be compensated by building implementation capacity early. This would increase the lead-time for preparation, but ease subsequent implementation pressure. Depending upon the experience of TBS in the education sector, the health sector may want to consider increased use of country systems for ease of delivery. However, this is a medium-long term vision. In the interim, simple project designs with tested implementation mechanisms may be appropriate.


The Mekong Health Project is designed as a stand-alone WB financed project, requiring establishment of a number of separate PMUs to implement with limited use of existing systems.

The sector team is encouraged to take bolder steps towards using country systems and directly supporting Government programs through

SWAp-like approaches, maybe on a regional basis.

3.21 TF Performance

Good Disbursement. Although the Grant disbursement ratios in FY04 (33%) and FY05 (34%) in the health sector were lower than in previous years, they are still much higher than the country average (17%). One reason may be that about half of the total grants of the health sector are coming to a close in FY05.

Figure 3.4 TF Disbursement Performance

Vietnam: Health Sector - TF Disbursement Ratio

0%

10%

20%

30%

40%

50%

60%

70%


Sector Disb Country Disb

Slow Grant Activation. The average grant activation period in the health sector is 8.7 months. The slowest to be activated is a PHRD grant to prepare for the Health Fund for the Poor projects (12.9 months). This unarguably needs to improve.


Agree on the Scope of the New Component under NHSP. The project is now operating in its third (and final) extension period. It is crucial to agree on the project scope immediately and prepare a realistic implementation plan with MOH. Close coordination with the Avian Influenza project is also required.

Accelerating Implementation of RBTCs. MOH needs to speed up the review process for the construction drawings, technical specifications and bidding documents on the blood transfusion


centers in Hanoi, Hue and Can Tho and approve reallocation of funds under the project. An implementation assessment by MOH together with the other ministries (especially with the appraisal department of MPI) is needed. This implementation assessment will provide basic evidence for future amendment of the DCA.

Strengthen Project Management Capacity. Capacity in existing departments of MOH is normally weak. It is crucial for the coming projects (Mekong Health Support, Health Fund

for the Poor .etc) to have a professional PMU that can implement ODA funded projects at MOH. For new projects, the Bank should avoid creating a large number of Provincial PMUs outside the Government structure, which would require large capacity building efforts and may not contribute to sustainable capacity strengthening.

VN COUNTRY PROGRAM REVIEW 2005 PREM/CITPO/COSU SECTOR

57

Chapter 4 PREM Sector (incl. CITPO & COSU)

4.1 PREM, CITPO and COSU Portfolio at a Glance

The PREM Portfolio (as of December 2005): • Total Commitments of US$ 365 million since FY94 • 6.2% of cumulative IDA commitments for Vietnam since FY94 • Total Disbursements of US$41 million (Dec.05) • 3 active investment credits (US$ 324 m. – 8.3% of VN portfolio) • 24 active grants (US$ 40.5 million – 16.7% of TF portfolio) • Average project age of 1.2 years

The CITPO Portfolio (as of December 2005):

• Total Commitments of US$93.7 million since FY94 • 1.6% of cumulative IDA commitments for Vietnam since FY94 • Total Disbursements of 0 US$ million (Dec.05) • 1 active credit (US$93.7 million – 2.4% of VN portfolio) • 1 active grant (US$ 0.6 million) • Average project age of 0.3 year

The COSU Portfolio (as of December 2005):

• 8 active grants (US$ 4.8 million) • Grant ICM rated satisfactory or above

PREM Portfolio Performance: • 100% of portfolio rated satisfactory on DO • 100% of portfolio rated satisfactory on IP • OED – 1 projects evaluated by OED. 100% S outcome • Grant ICM: 100% rated satisfactory or above • Average disbursement lag: 97%

Credit Disbursement Ratio below Regional Average: IDA Projects Grants (managed by EASPR) Grants (managed by EASFP)

FY01 24.2% 7.7 MUS$ 0% 0 MUS$ 52% 2.2 MUS$ FY02 0.5% 1.5 MUS$ 14% 0.1 MUS$ 12% 1.7 MUS$ FY03 26.2% 8.1 MUS$ 8% 1.2 MUS$ 20% 3.4 MUS$ FY04 25.9% 20.8 MUS$ 11% 2.0 MUS$ 30% 4.1 MUS$ FY05 0 % 0.02 MUS$ 20% 3.5 MUS$ 41% 5.1 MUS$


Fig.1 IDA Commitments & Disbursements PREM and CITPO Sector

0

50

100

150

200

250


MU

SD


Annual Commitments

Investment Project Progress PREM and CITPO Sector

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

Elapsed Times (%)

Dis

bur

sem

ent (

%)



Figure 4.1: Use of IDA funds for investment projects in the PREM/CITPO Sectors

FYIDA

Credit

CAS Theme 1.1

Financial Sector Development

CAS Theme 1.2


CAS Theme 3.1 Transparency

and Public Financial

Management

CAS Theme 3.3


Reform

CAS Theme 3.4

ICT and E-Government

PMU

Bank Modernization1996

(closed)43.5

Public Financial Management

2003 54.3

Payment System and Bank Modernization

2005 105.0

Customs Modernization 2006 72.0

Financial Sector Modernization

2008 115.0

Tax Administration Reform 2008 100.0

Total On-Going Projects MUSD (%) 231.3 80 (35%) 25 (11%) 54 (23%) 70 (30%) 3.4 (1%)

Total All Projects MUSD (%) 489.8 239 (50%) 25 (51%) 154 (31%) 70 (14%) 3.4 (1%)

ICT Development 2006 93.7

Total On-Going Projects MUSD (%) 93.7 93.7 (100%)

54

80 25

70

115

100

94

44


4.2 Strategic Alignment

CAS Strategy. The current Vietnam CAS contains multiple sets of objectives: (i) the Government strategy as expressed in the CPRGS; (ii) the overall three CAS themes divided into 16 sub-themes; (iii) specific sector priorities; (iv) the Vietnam Development Goals and Targets and (iv) program goals such as strengthening partnerships and harmonization.

PREM Initatives. Investment credits and Trust Fund initiatives managed by PREM are mainly in five areas: (i) Financial and Banking Sector Modernization; (ii) Public Financial Management;

(iii) Public Administration Reform; (iv) Reform of State Owned Enterprises; (v) Social security and Insurance Systems; (v) Customs Modernization and Promoting Trade. As advised during the concept review meeting, the CPR assessment does not include the PRSCs or AAA work.

The table below maps these areas of intervention against the various relevant objectives outlined in the CAS and illustrates the degree of alignment.

VN COUNTRY PROGRAM REVIEW 2005 PREM/CITPO/COSU SECTOR

59

Table 4.1: Alignment of the PREM Investment and TF Portfolio to CAS Objectives

CPRGS objectives

(Policy matrix in CAS Annex) CAS sub-themes

CAS Sector Priorities (none listed for PREM)

Financial and Banking Sector

Modernization

Reform Banking sector and financial organizations to mobilize domestic capital

Financial Sector Development -

Public Financial

Management

Increase budget transparency and improve the information base for decision making and target setting

Improving Transparency and Public Financial Management -


Reform

Accelerate the reform of the public administration Public Administration Reform -

SOE Reform Reform SOEs to strengthen their efficiency and competitiveness

SOE Reform -

Social Security and

Insurance

Develop the Social Safety Net to support poor and vulnerable people

-

Adopt measures to open trade, promote exports and international integration and strengthen the country’s competitiveness

Promoting Trade - Customs

Modernization and Promoting

Trade Create a fair business environment and increase transparency of regulations and policies

Support for the Domestic Private Sector -


Overall Assessment of Alignment. All investment credits and TF projects in the PREM portfolio, regardless of approval date, are strongly aligned to the CPRGS. The links with the CAS sub-themes are strong, with the title of several CAS sub-themes corresponding directly to the titles of projects. The only exception is the support to developing the social security net. This is an objective in the CPRGS, but not directly covered by the sub-themes in the CAS. Social security initiatives contribute to SOE reform, but the links are not as explicit.

For the Urban, Infrastructure, HD and RD sectors, specific priorities were listed in the CAS. Given the strong focus in the CAS on traditional PREM areas of intervention, this was not necessary and no specific PREM priorities were listed.

The PREM portfolio also contributes to the achievement of the Vietnam Development Goal 9 of “Improving Governance for Poverty Reduction”.


Table 4.2: Alignment of PREM/CITPO Investment Credit Portfolio

Alignment CPR Panel Assessment PREM/CITPO

Projects FY Project Development Objective


CAS Sector Priorities*

Public Financial Management 03

� Strengthen budget planning, execution, reporting and accountability HS HS -

Payment System and Banking Modernization II

05

� Meet the economy’s demand for fast reliable and safe payment services; broaden access to finance and improve the operations of participating banks

S S -

Customs Modernization 06

� Facilitate trade, increase revenue collection by improving the effectiveness, efficiency, accountability and transparency of Customs Administration

HS HS -

ICT Development (CITPO) 06

� Facilitate implementation of GOV National ICT strategy, strengthen regulatory capacity of ICT sector, enhance ICT awareness and build models for replicable on-line public service delivery

S HS -

* No separate sector priorities were listed in the CAS for the PREM portfolio HS- Highly Satisfactory, S-Satisfactory, MS- Moderately Satisfactory, MU-Moderately Unsatisfactory, U-Unsatisfactory, HU- Highly Unsatisfactory

4.3 Alignment of Different PREM Interventions

The PREM sector portfolio covers a wide range of Trust Funds and investment lending interventions. Assessment of alignment of these interventions is straight-forward. The CAS sub-themes and the CPRGS mostly provide a consistent framework of objectives to which the projects are closely linked, as further illustrated below.

Financial and Banking Sector Modernization. There are seven grants (US$ 7.4 million) to support reforms in the financial and banking sector. These comprise one grant from the Netherlands to assist Vietcombank in a technical twinning program and ASEM grants to promote strengthened financial and banking systems. These ASEM grants cover different themes of the reform process such as Bank Restructuring, Bank Supervision, Bank Regulatory Framework, Reforming Policy Lending and Accounting, and Capital Market Development. Reforming the financial and banking system is a priority both in the CPRGS and the CAS-sub themes and the TF portfolio is thus well-aligned.

The recently approved Payment System and Banking Modernization II project (US$ 105 million) is also well-aligned. With another large lending operation in the pipeline this area promises to remain a main-stay of the PREM credit portfolio over the coming years.

In addition, there are lending operations such as the Rural Finance II managed by other sectors that support reform of the financial sector, as well as a large number of micro-finance components under urban and rural projects. Ensuring a consistent approach towards financial sector modernization across the portfolio may thus be a challenge.

Public Financial Management. This is an area of intervention that commands its own CAS sub-theme and the alignment of the Public Financial Management project (US$ 54 million) and the two grants on PFM is thus direct and strong. The CPRGS contains a similar objective to increase budget transparency and the alignment is equally strong in this regard.

Public Administration Reform. Public Administration Reform is an explicit objective of both the CPRGS and the CAS sub-themes. There are five grants (US$ 3.6 million) to support

VN COUNTRY PROGRAM REVIEW 2005

PREM/CITPO/COSU SECTOR

61

reform through capacity building and pro-poor good governance promotion.

The ICT Development project (US$ 94 million) is directly supporting the CAS sub-theme of ICT and e-government. A similar objective is not expressed in the CPRGS, but the project is directly contributing to the CPRGS objective of reforming public administration. This project was prepared with a PHRD grant (US$ 0.6 million).

The PREM portfolio also contains an IDF grant to enhance the capacity of the Ho Chi Minh Political Academy. The links with the CPRGS and CAS themes for this project is less clear, but it was mapped to the theme of Public Administration Reform.

The grants managed by COSU to strengthen the public procurement and FM system and improve ODA management are found well aligned with both CPRGS and CAS objectives.

Reform of State Owned Enterprises. There are four grants (US$ 13.2 million) managed by PREM to support the reform of SOEs. This part of the portfolio is directly and strongly aligned to the objectives in the CPRGS and the CAS sub-theme of improving the efficiency and competitiveness of SOEs. No lending operations have yet been approved to support the reform SOEs and not much progress has been seen on the preparation of the pipeline project “Reform of Transport SOEs” managed by the transport sector.

Social Security and Insurance Systems. Two ASEM grants (US$ 0.8 million) on Social Security Law and Social Safety Net for redundant workers are being implemented. Development of social safety nets is one of the key areas in the CPRGS, but not explicitly covered in the CAS sub-themes. However, these projects contribute to the CAS sub-theme of SOE reform as they provide assistance on social safety nets for redundant workers under the SOE restructuring programs.

Customs Modernization and Promoting Trade. During the CAS period, a lending operation to support the modernization of the Customs

Service (US$ 72 million) was approved. This intervention is aligned with the CPRGS and CAS sub-theme of promoting open trade and improving the business environment, as well as the Public Administration Reform objectives. To support the preparation of the Customs Modernization project, a PHRD grant of nearly US$ 1 million was implemented.


The CAS also identifies areas of strategic priority for the Bank program, including building partnerships and harmonization. PREM is not only leading the multi-donor partnership around the PRSCs, but has built strong partnerships with the donor community, especially DfID, EC, and Netherlands in a number of areas.

In addition to several co-financing grants to support SOE Reform and Public Financial Management Reform, a multi-donor Trust Fund has been established to support Public Financial Management Modernization. None of the other investment lending operations are co-financed by other donors.

Although Bank-executed grants are not covered in this CPR, it is noted that 6 seconded staff financed by multi-donors, DfID, Denmark, and Netherlands are working in the Bank office to support a wide range of work in poverty reduction, financial sector development, SOE Reform, and public financial management reform.


Ensure a Consistent Strategic Framework in the Next CAS. In order to provide a consistent strategic framework, the next CAS should continue to express priorities for the PREM sector clearly and comprehensively.

Developing a WB Sectoral Results Framework. To link the project level results with the overall CAS themes and Government objectives, a sector-results framework could be


developed. Based on the strategic priorities outlined in the Bank’s current and proposed investment lending and TF interventions, a possible sector-results framework has been prepared. This could serve as an input into the CAS development, and help ensure a continued high degree of consistency between sector priorities, project objectives and the key themes of the CAS. It would also be important to link expectations of results during the next CAS period directly to what the current and planned PREM portfolio is set up to achieve.

Prioritize the Pipeline based on the Criteria of the Next CAS. The current pipeline for Vietnam exceeds the available IDA resources and there is a need to prioritize the pipeline in line with the criteria that is being established for the next CAS.




undertaking the intervention;

� Complementarity with other donors and possibility to leverage other investment sources;


sector;


Strategic Planning for TF. The sector would also benefit from thinking through strategic uses of TFs, especially given the large number of TFs used by PREM. Not only will this help the Government to effectively coordinate grant resources but the strategy would also help the Bank to prioritize TF use. Furthermore, this could also facilitate a dialogue on partnership with donors with common interests.

Box 4.1. PREM/CITPO Inv. Lending Pipeline

� Tax Administration Reform � Remote Connectivity and Information

System � ICT for Business and Trade

Facilitation



63

Possible PREM++ Sector Results Framework

Bank Supported Sector Goals…

… and strategy

Milestones on roadmap for reform of banking and financial sector Indicators on financial sector efficiency

… with KPIs


Develop an efficient banking sector…

… by improving access to financial services, strengthening banking and payment systems. Second Payment System and Banking Modernization. � ASEM TF– Mekong

Housing Bank Diagnostic Review

� ASEM TF– BIDV Restructuring

� ASEM TF–Improving Banking Sector Transparency

� ASEM TF– SBV’s Road Mapping

� ASEM TF – Vietcombank Technical Twinning Program

� ASEM TF – Banking Sector Regulation, Supervision, and Development

� ASEM TF – SOCB Audit & Basel Core Principles Assessment

� Banking Sector Modernization

… by restructuring and equitizing SOEs, and building capacity on corporate governance � TF – Pilot

Restructuring of 3 GCs

� PHRD TF – Diagnostic Audits of SOEs

� ASEM TF – Monitoring of SOE New Establishment & Transformations

� ASEM TF –Resolution of Non-performing debts and assets of SOEs

� ASEM TF– Training on Corporate Governance

� Transport Sector SOE reform

… by strengthening public financial management and procurement systems, reforming public administration and strengthening policy making � Public Financial

Management Modernization

� Custom Modernization

� ICT Development � IDF TF –Int’l Public

Sector Accounting Stnds

� ASEM TF –Evidence-based Pro-poor Policy

� IDF TF – Public Procurement Reform

� IDF TF –Financial Accountability

� IDF/PHRD – ODA management

� Tax Admin. Reform

… by supporting customs modernization, assisting in WTO accession and addressing impacts of WTO. � Custom

Modernization

Number of SOEs and their workers supported by SSN Number of Gov staff trained to managed the social security system

Milestones on roadmap for SOE reform Number of transformations completed by SOE reform category

Milestones on Public Procurement and FM Reform Road Map Increase in user satisfaction for e-Government services

Improvement in Client perception Reductions in mean clearance times Increase in revenue generation from customs intervention

Develop an efficient non-

banking sector…

Improve GOV effectiveness, transparency

and accountability

….

Create a vibrant

domestic private sector

...

Facilitate trade and integration into the world

economy ... ….

… by strengthening capital markets, pension, social security and insurance systems � ASEM TF -Social

Security Law � ASEM TF - Operation

and Monitoring of Social Security Net

� ASEM TF– Accelerating Capital Markets Development


4.6 Results Achieved in the PREM Sector

The Bank support to the economic management, public administration reform and financial sector modernization has achieved good results. However, as illustrated below, the current reporting of the TF and investment lending portfolio provides a fragmented picture of achievements with information and data regarding results dispersed in different reports. Some of the results achieved during the CAS period (taken from ISRs, ICRs and ICMs) are summarized below. As noted earlier, an assessment of the PRSC and AAA work is beyond the scope of the CPR.

� Financial and Banking Sector Reform. The Banking System Modernization Project contributed to improving the speed of transactions processing of the inter-bank clearing and settlement system, surpassing initial estimates of transaction volume. The project also contributed to improving the systems of six participating banks (215 branches). Vietcombank’s Technical Twinning Program was rated satisfactory in terms of achievements. The grant raised awareness among Vietcombank staff on the

restructuring program, proposed a new organizational structure and put in place a process to implement the new organizational structure once approved.

� Public Financial Management. There has been some important achievements in this area including the joint Government-donor Public Expenditure Review-Integrated Fiduciary Assessment (PER-IFA), the establishment of a Medium-Term Fiscal Framework and piloting the four sectoral Medium-Term Expenditure Frameworks. Also, a new Unified Chart of Accounts and a new strategy for Government Financial Management Information has been developed.

The IDF grant on Improvement of Financial Accountability was rated Highly Satisfactory on overall implementation. No rating on the achievement of objectives was provided. The grant enabled the Government to develop an institutional framework for the accounting and auditing profession consistent with international best practices: (i) The Accounting Law was passed by the National Assembly and 65 Vietnamese Accounting and Auditing Standards were issued; (ii) A draft document and operating framework for the Vietnam Accounting Association were completed, leading to the establishment of the Vietnamese Association of Certified Public Accountant; and (iii) The International Public Sector Accounting Standards (IPSAS) were introduced in Vietnam and an IPSAS Development Strategy was developed.

� SOE Reform. The grant to conduct Diagnostic Audits of SOEs was rated Highly Satisfactory. The grant implemented 24 diagnostics of the largest SOEs in the country. Each of these SOEs was then provided with recommendations and action plans for performance improvement in 10 main areas of business activity. Private sector development options and various

Box 4.2. OED Evaluation of Banking System Modernization

The OED evaluation of the Banking System Modernization project (closed in Dec 2003) rated the outcomes of the project satisfactory, although the outcomes were achieved later than envisioned. The institutional development impact was rated as substantial and project results as likely to be sustainable. Both the Bank’s and the Borrower’s performance were rated satisfactory, although the Quality at Entry was unsatisfactory since readiness for implementation was inadequate.

The overall objectives of the project were to assist in developing a modern banking sector. The project resulted in a reduced need in participating banks for manual operations and significantly improved customer service.



65

divesture options were also included in the recommendations. The figures below show the responses to the project

recommendations, as well as the implementation status of proposed recommendations.

Figure 4.2: SOE Responses to Recommendations

Responses to Recommendations

611

1510

4 29

15 139

14 1216

11 12

34 36

24

4955

36

13 16 15 148 6 8 11 8

0

10

20

30

40

50

60

70

Bapaco

Tan Mai

Donaruco

Doruco

Phuoc Hoa

Tay Ninh

VSCSSC

TISCO

HCMMVNCC

Bim Son

Hoang Thach

Ha Tien 1

Ha Tien 2

Hanosimex

Nha Trang

Phong Phu

Phuoc Long

Thanh Cong

Viet Thang

Dong Thap

Long An

Vinafood II

Vinh Long

Vinasugar II

Hiep Hoa

Sai Gon Port

Seaprodex Sai G

on

Seaprodex Hanoi

Company Name

Num

ber

of R

espo

nses

DisagreePartly AgreeAgree

Figure 4.3: SOE Implementation of Recommendations Implementation (Those Agreeing)

59

16 8

2 16

13 13

28 7

8 79

2431

13

32

23

25

8

9

147 6

46 7

70

10

20

30

40

50

60

70

Bapac

o

Tan M

ai

Donaru

co

Doruc

o

Phuoc

Hoa

Tay N

inh VSCSSC

TISCO

HCMMVNCC

Bim S

on

Hoang

Tha

ch

Ha Tien

1

Ha Tien

2

Hanos

imex

Nha T

rang

Phong

Phu

Phuoc

Long

Thanh

Con

g

Viet T

hang

Dong T

hap

Long

An

Vinafoo

d II

Vinh Lo

ng

Vinasu

gar I

I

Hiep H

oa

Sai Gon

Por

t

Seapr

odex

Sai

Gon

Seapr

odex

Han

oi

Company Name

Num

ber

of R

espo

nses

Not YetImplementingImplemented


Table 4.3: Current and Expected Results in the PREM Sector by Investment Credits and TFs


ASEM TF – Mekong Housing Bank: Diagnostic Review and Preparation for Strategic Partnering/Equitization � A diagnostic review on deposit profile and loan portfolio � A Transaction Strategy

June 2006

TF - Vietcombank’s Technical Twinning Program � VCB audited in 2001, 2002, and 2003 based on international accounting

standards to identify weakness in organization and process. � A pilot program for the revised credit rating process for corporate banking

operation, as well as a similar program for applying a credit limit approval process to its corporate customer borrowings

� VCB has completed drafting samples for credit activities, instructions on credit analyses, loan monitoring and NPLs identifications, and Know Your Customer (KYC), etc. for corporate customers

� VCB has piloted Corporate Banking Department (front office functions) at 4 major branches to separate front-office and back-office functions

� VCB has completed a great deal of preparatory work in anticipation of the approval and adoption of its new management model.

� Consultant’s recommendations have been incorporated into VCB’s new Treasury/Payments system

� VCB has prepared an Operations Manual for the Assets & Liabilities Committee (ALCO) and related department (treasury, market risk management, ALCO support, etc.)

� The management information system on financial accounting is available.

2006

ASEM TF – Banking Sector SOCB Audit and Basel Core Principle (BCP) Assessment � The International Accounting Standard (IAS) audits of Industrial and

Commercial Bank of Vietnam (ICB) for 2003-2004 (completed).

June 2006

ASEM TF - Banking Sector Regulation, Supervision and Development � A new prudential regulatory framework for banks developed by SBV � New Standards for Asset Classification and Loan Loss Provisioning � An assessment of the Basel Core Principles for Effective Banking

Supervision conducted � A supervision development roadmap � Bank Examination Process through the CAMELS ratings system

implemented.

June 2006

ASEM TF – Improving Banking Sector Transparency and Reforming Policy Lending � An assessment of the differences between Vietnamese and International

Accounting Standards for banks. However, it is not likely SBV will immediately use it.

� Assessments on the two large policy lending institutions [Vietnam Bank for Social Policies and the Development Assistance Fund]

� Capacity of these two institutions will be strengthened

June 2006

1. Develop an efficient banking sector…

ASEM TF – SBV’s Roadmapping /Master Planning Technical Assistances to Support of the Implementation of the International Economic Integration Strategy for the Banking Sector � SBV’s Roadmap/Strategy developed. SBV trained on technical and

policy making to manage and update the roadmap as required.

June 2006



67


Payment System and Bank Modernization II � Average annual increase of 10-20% in institutions covered by IBPS and

CBS � Transaction volume annual increase by 20% (Payment System and Bank

Modernization II) � Continuing high level of performance of the expanded systems in terms of

speed, certainty, reliability and convenience; � Continuous growth in the use of non-cash payment instruments and

widened range of banking products and services; and � Improved financial accounting and operational reporting in the participating

banks

2010

ASEM TF – Support for the Operation and Monitoring of the Social Safety Net for Redundant Workers

� 910 SOEs and 45,000 displaced workers received compensation from the SSN Fund

� 6 trainings for about 1,000 officials and experts of ministries, people committees and enterprises on redundant labor issues were conducted

� A Database of 1,080 restructured SOEs and 54,500 redundant workers has been updated.

� A Survey on 200 SOEs and 2,800 workers receiving subsidies from the SSN Fund were done

June 2006

ASEM TF – Support Development of Social Security Law in Vietnam � Complex and Simplified multi-cohort simulation models set up � A Survey on Voluntary Social Security Expansion completed � A analysis report on social security reform completed

2006

2. Develop an efficient non-banking sector …

ASEM TF – Accelerating Capital Markets Development � Advice and Manuals for SSC on regulation will be issued � Training on investor awareness will be conducted

2006

3. Create a vibrant domestic private sector...

PHRD TF – Diagnostic Audits of SOEs � 24 diagnostic of the largest SOEs in 5 industrial sectors implemented � 47 reviewed SOEs benefited from free professional advice on their

operations � 770 Recommendations and Action Plans on performance improvement for

SOEs, GCs, and policy level introduced. See Charts above on the implementation of recommendations.

� Private Development Options were fully explored and various divesture options were carefully analyzed for recommendations

� 5 workshops attended by 500 participants. Agreement was reached to put key conclusions of some of 25 reports on the MOF website.

2005



TF – Pilot Restructuring of 3 GCs � Change plans in 36 SOEs implemented. The aggregate profits of Vinacafe

enterprises improved from a loss in 2003 of VND48 billion to a profit in the first 9 months of 2004 of VND 1billion. At Seaprodex, aggregate turnover has remained the same. This included an increase in export turnover of 7%. The estimated turnover of Vinatex is 30% higher in 2004 than 2002. Its exports have increased from 37% of turnover to 43% and its profitability has increased from 0.1% to 0.8%.

� 1,600 training days for 390 staff in Vinatex, 398 in Vinacafe, and 243 in Seaprodex

� Environmental auditing has been largely completed � 44 SOEs assisted in divesture and equitization. Over the period of 2003-

2005. Vinatex planned 41 transformations including 31 equitizations. Vinacafe planned 54 transformations including 7 equitizations.

� Capacity building at General Corporations � Participatory Poverty Assessment completed at selected SOEs � Lessons report and toolkit will be created at the end of the grant.

2006

ASEM TF – Monitoring of SOE New Establishment & Transformations � A database on information of 5,100 entities was set up and regularly

updated for analysis and decision making.

� Capacity of NSCERD's management and staff to monitor reform measures strengthened.

2006

ASEM TF –Resolution of Non-performing debts and assets of SOEs � A database and report on NPLs of SOEs, including SOCB and National

Corporations 90 and 91 � Manuals on dealing with NPLs for DATC internal use prepared � A mail-in survey of SOE operations after resolving their NPLs will be

conducted

2006

ASEM TF– Training on Corporate Governance � The first-ever comprehensive training needs assessment on corporate

governance has been completed and disseminated. � A benchmarking project to benchmark corporate governance practices in

Vietnam against OECD principles was completed and disseminated (March 2005)

� 21 tutors trained in the two-week special training (November 2005). � Training on "roles and responsibilities of directors", and “control function"

will be conducted (June 2006)

2006

4. Improve GOV effectiveness , transparency and accountability

� Draft 2006-2008 Medium Term Fiscal Framework and four sectoral Medium Term Expenditure Frameworks (to be published in January 2006) (PFM)

� Preparation of a Debt Management and Mobilization Plan initiated. (PFM) � Public Expenditure Review – Integrated Fiduciary Assessment (PFM) � A unified Chart of Accounts (PFM) � A new strategy for Government Financial Management Information (PFM)

To Date



69


IDF TF –Financial Accountability � Accounting Law and Related Decrees issued � 62 Accounting and Auditing Standards issued � 800 people attended training courses on International Accounting

Standards, International Standards on Auditing and International Public Sector Accounting Standards

� Establishment of the Vietnam Association of Certified Public Accountant

To Date

IDF TF –Int’l Public Sector Accounting Standards � A set of international standards translated into local language � A detail report on the status of Vietnamese accounting standards for public

sector and an action plan for adapting and codifying accounting standards for public sector in Vietnam consistent with international best practices

� Phased adoption and application of international standards over time � Practical guidance and self-study training materials in accounting provided

for consistency and quality control of government accounting and processes.

� Public sector accountants and academicians trained in public sector international accounting standards and practices

To Date

IDF TF – Public Procurement Reform � A decree on implementation rules issued � Standard PQ, RFQ and BER – Goods issued � A Public Procurement Bulletin system in place and operational

2006

ASEM TF –Evidence-based Pro-poor Policy Making in Vietnam � Improved analytical skills of Vietnamese researchers and policy analysts

benefiting from several training courses on “Regionalism in Developing Countries: Issues and Implications”, Equilibrium and Econometric modeling”, Macro econometric Modeling with Reviews”, “’Practical Equilibrium Modeling with GAMS”, “Survey design and survey methodology for researchers”, and “Econometric Analysis of survey data”

� Policy dialogues among stakeholders on the theme of pro-poor growth and inclusive development facilitated through several workshops on ““Growth and Poverty Impacts of WTO Accession: International experience and preliminary Findings for Vietnam”, Validation workshops on: Vietnam Poverty Update 2006

2006

IDF TF – Strengthening ODA Management in MPI � WB-financed Project Management Manual � WB-financed Project Database System � Standardized letters and formats for WB-financed projects from MPI to other agencies/PMUs and within Dept of External Economics, MPI � Streamlined appraisal processing

2007



PHRD – Comprehensive Capacity Building Program � Legal documents that streamline ODA management adopted (Decree 17

by 2006) � Guidelines and standard documentation for project cycle management

produced (2007) � Role and capacity of MPI to coordinate ODA management strengthened � Streamlined and revised PMU working procedures developed) � Sustainable improvements in ODA effectiveness, project performance and

disbursement achieved (annual monitoring) � HAP implemented in line with agreed time frame (2008) � Establishment of formal, certifiable courses in project management (2007) � 2500 certified Project Management Specialists annually (2008) � 500 support executives and staff trained annually (2008)

2008

Public Financial Management: � Utilization throughout government of an integrated chart of accounts � Implementation of TABMIS at central and local level � 5 year MTFF prepared as part of 2005 budget cycle, and rolled over,

updated and published as part of each subsequent budget cycle

2009

ICT Project: � Increase in share of ICT sector in GDP by 2% � Increase in ICT capacity and knowledge in respective Government

departments � 15% use ICT for business operations in 2010 and improve productivity � Domestic IT service sector grows by an average of 30% every year � Increase in standardization and improvement in transparency of

administrative processes � Significantly lowered transaction costs for targeted government services

(G2C &G2B) � Increase in user satisfaction for e-Government services and visits to City

portal

2011

5. Facilitate trade and integration into the world economy ...

Customs Modernization Project: � Significant improvements in client perceptions of Customs Administration � 20% decrease in total revenue collection cost over revenue collected � 25% increase of declaration per number of staff � 45% reduction in mean import clearance times for commercial shipments

at ports and airports, 25% reduction at road � 5% reduction/year in mean clearance times for commercial shipment

entering the country by road � 50% reduction in physical inspections � 50% increase in revenue generated and/or infringements detected as a

result of Customs intervention pre or post clearance.

2010



71

4.7 Managing for Results

The Project Results Frameworks. The quality of the results frameworks of PREM/CITPO investment projects vary significantly from solid in the Customs Modernization to the need of further strengthening for the ICT Development, Payment System II and the Public Financial Management projects.

Box 4.3 outlines what a satisfactory project results framework should contain. Regardless of age, all projects have been assessed against the same standard to ensure a consistent overall picture of the status of results management in the portfolio. The below assessments are based on the PADs and the latest ISRs as of December 2005.


The TF Results Frameworks. The quality of the results framework for TFs is also mixed. Large grants such as the Pilot Restructuring of Three GCs or Public Financial Management have a hierarchy of monitorable and verifiable indicators. Small technical assistance grants from IDF and ASEM have weaker result frameworks. Common indicators include reports prepared, number of training sessions conducted, workshops or number of targeted participants trained. Given the lack of appropriate indicators, the evaluation of the grant is normally done based on a

qualitative and subjective assessment of the Task Team Leader. However, it is also noted that as institutional strengthening may take longer than the grant life to yield results and the grant size is often small, it may be difficult to identify and measure tangible outcomes.

Quality of Project Development Objectives. Admittedly, it may be more difficult to identify the outcomes of institutional development and capacity building projects, but it is possible. The PDOs of all pipeline projects should be carefully designed to identify clearly the expected changes in behavior of the institutions being targeted.

Quality of Grant Development Objectives (GDO). In general, grants in the PREM sector have well-defined GDOs which are more focused and easier to attribute than in some other sectors. Across the overall portfolio, it is still common that the GDOs are too broadly defined and aim at a high level, or too ambitious. For all new grants, more attention needs to be paid to defining GDOs that clearly specify the expected change in the target beneficiary. Given that the grants usually provide limited funds, it is important to set the objectives at a realistic level where it is feasible to demonstrate a link between the outputs and outcomes of the project and the achievement of the GDO. Quality of Key Performance Indicators (KPIs). The quality of the KPIs in place to measure progress on the PREM/CITPO/COSU portfolio varies. Currently, the portfolio is monitored by progress on over 70 different KPIs for TFs and investment projects. The Customs Modernization project has a well-designed set of indicators that measure progress on project objectives both in terms of Client perceptions of the Customs administration and efficiency improvements. Both the Public Financial Management and the Payment System and Bank Modernization projects contain indicators that are descriptive and would need to be more specific to be easy and objective measures. The ICT development project contains a number of indicators such as



(ii) Manageable number of Specific, Measurable, Attributable, Results-focused and Time-bound (SMART) KPIs that measure results;




“increase in share of ICT sector in GDP” and “percentage growth of the domestic ICT sector” that would be difficult to attribute to the project. These should thus be reconsidered.

Quality of TF KPIs. Among the PREM sector grants, the larger ones, such as the Pilot Restructuring of three General Corporations and Support to Financial Management Modernization have a solid set of KPIs. For the ASEM grants, it is more difficult to identify appropriate KPIs. This is partly because it is costly to monitor and collect data. It may also be difficult to define good indicators apart from outputs, such as workshops and reports which are currently the most common KPIs in the PREM grant portfolio. However, if the GDOs are well-defined in terms of realistic changes in behavior of the target beneficiary attributable to the grant, it is usually possible to identify simple measures/milestones to demonstrate progress and results achieved. KPIs for all new technical assistance grants in the PREM sector would need to be defined so that convincing reporting on results can be achieved.

Quality of the Project M&E System. The quality and use of the project monitoring and evaluation (M&E) systems vary. As can be seen from Table 4.4, only one of the four active projects has complete monitoring frameworks with baselines and targets. Many baselines and targets are descriptive and difficult to use when assessing progress towards achievement of the PDO.

Table 4.4: M&E in PREM/CITPO Projects

Projects Baselines? Targets?

Public Financial Management

Yes, but not clear

Yes, but not clear

Payment System and Banking Modernization II

Yes, but not clear

Yes, but not clear

Customs Modernization Yes Yes

ICT Development Yes, but not all clear

Yes, but not all clear


Table 4.5 summarizes the assessments of individual results frameworks in the PREM/CITPO development portfolio. Below is a

summary of identified strengths and weaknesses project by project.

Table 4.5: Assessment of the Results Frameworks of PREM / CITPO Projects

Results Framework


Quality of KPIs

Quality of M & E

Overall

Public Financial Management MS MU MU MU

Payment System and Bank Modernization II MS MS MU MS

Customs Modernization S S HS S

ICT Development MS MU MU MU

Public Financial Management. The PDO is brief and clear, but does not refer to a specific target beneficiary (e.g. MOF, Government

agencies, public service users). The KPIs are descriptive and difficult to use as a basis for the assessment of achievements: e.g. “accuracy,



73

timelines, relevance, transparency and compliance with international best practices in budget execution and reporting at each level”. No measurement for this indicator is provided and the baselines and targets are not clear and difficult to monitor progress against. The project has not established any intermediate outcome indicators. The results framework for this project needs to be strengthened, perhaps as part of the up-coming mid-term review, to ensure a set of outcome-oriented, measurable indicators with clear baselines and targets.

Payment System and Bank Modernization II. The PDO contains three aspects (i) meet the economy’s demand for reliable and safe payments; (ii) improve access to finance to facilitate the GOV’s achievement of poverty reduction targets; and (iii) improve operations of participating banks. The PDO could have more clearly focused on the key beneficiaries (financial institutions) and the expected change. This is what is actually being monitored by the KPIs e.g. outputs such as increase in the number of financial institutions connected to the IBPS and the volume processed by IBPS. The outcome indicator of “continued high level performance in terms of speed, certainty, reliability and convenience” contains no indication of measurement and has descriptive baselines and targets. The results framework would need to be strengthened to ensure that a specific, measurable set of indicators is established (with clear baselines/targets) that cover all three aspects of the PDO.

Customs Modernization. The PDO is clear and identifies the expected changes in the target beneficiary, the Customs Administration. The results framework for this project is solid with indicators in place to measure progress on both client perception and efficiency indicators such as clearance times, revenue generated and costs. There are however no indicators to measure some of the overall PDO objectives such as trade facilitation, improved production of statistics and improved community protection/national security. The task team has also developed good component results indicators to measure implementation milestones and outputs, albeit perhaps too many (16).

Baselines and targets are established for all KPIs. The intermediate results indicators in the first ISR are different from the one in the PAD and this should be addressed.

ICT Development. The PDO contains five different aspects. Most of these are not clearly identifying the target beneficiary (Government agencies, businesses and citizens) and the expected change. Some of the KPIs established to measure progress on the PDO cannot be attributed easily to the project (e.g. “increase in the ICT sector in GDP” and “domestic IT service sector grows by an average of 30% every year”). For other indicators such as “increased user satisfaction for e-government services” and “significantly lowered transaction costs”, clear measurements, baselines and targets are not established. The project has a long list of 23 intermediate results indicators. Baselines and targets are established for most of these, but are mainly descriptive. The results framework needs to be reviewed and strengthened to ensure an efficient set of KPIs measuring progress that can be attributed to the project.


Simplify and Identify Common KPIs. There may be opportunities for simplification and synergies among the projects in terms of indicators. For example, given that a large number of projects are supporting financial sector interventions e.g. through micro-credit components, it may be worth looking into establishing a consistent set of indicators to measure performance for micro-credit initiatives.

Strengthen the Project Level Results Frameworks. Some suggestions to strengthen the results frameworks for individual projects are provided above with details in the attached assessments sheets. In general recommending:






Strengthen TF Results Reporting. TFs should follow the rigor of projects with respect to design, though in a simpler version. It will be much easier to have a stronger TF result framework if attention to this is paid at the time of the grant design. This could be done if in the grant

proposal, the TTL is requested to select appropriate KPIs to monitor the grant outcomes. The TF committee screening the TF applications should review the GDO and results framework carefully. An example of the variable quality could be seen from the difference in quality of TF results framework between JSDF and IDF. In GRMs, it will be easier for the management to get the right message on the grant performance in terms of achieving objectives if the TTL does not only illustrate progress with qualitative assessments.


Table 4.6: PREM/CITPO Sector Portfolio (as of December 2005)


IP Rating

Net Comm. ($mln)

Cum. Disb.

($mln)

Disb. Lag

Public Financial Management 2.6 S S 54.3 1.1 95%

Payment System & Bank Modern. 0.8 S S 105.0 0 100%

Custom Modernization 0.1 S S 65.9 0

PREM Sub-total 1.2 225.2 1.1 98% ICT Development 0.3 - - 93.7 0

CITPO Sub-total 0.3 93.7 0

4.11 Facts

PREM Portfolio. The PREM portfolio consists of three active investment credits (US$ 225 million) accounting for 6 percent of the total portfolio. The PREM portfolio continues to grow with one investment project approved in FY05 and one approved in FY06. The average age of the portfolio is only 1.2 years, the youngest in the Vietnam portfolio.

CITPO Portfolio. The CITPO portfolio consists of only one active credit (US$ 93.7 million), approved in FY06.

PREM TFs. With the significant increase in donor co-financing of the PRSC, the TF portfolio of PREM has soared to 40 percent of the country TF portfolio (FY05), by far the largest sector and almost three times the size in the previous year.

The contribution to PRSC2 (FY04) was US$ 30 million and to PRSC3 (FY05) was US$ 85.3 million.

The sector has a strong partnership with several donors and uses a variety of grant sources. Key sources are ASEM and co-financing trust funds. The PREM TF Portfolio will continue to increase in the next FY, when more than ten donors have committed to join the PRSC4. The co-financing grant amount to PRSC4 is also expected to be more than US$100 million.

CITPO TFs. There is only one PHRD grant (US$ 0.6 million) to prepare the ICT Development project. This grant has disbursed half of the total amount and has just been extended to March 2006.



75

COSU TFs. There are four grants managed by COSU. Total portfolio amount is US$3.5 million, equivalent to 1.4 percent of the total Vietnam TF portfolio. Except one special PHRD grant to support the Comprehensive Capacity Building Program, all three are IDF grants which are to support building capacity for MPI in ODA management, and public procurement, and helping MOF to introduce international public sector accounting standards.

Figure 4.4: PREM EASPR TF Portfolio

0.50 0.70.1

13.5

1.2

15.1

2.0

13.6

3.5

0

5

10

15

20

US

$ m

illion


Vietnam: PREM - EASPR - TF Portfolio (excl. PRSC Grants)


Figure 4.5: PREM EASFP TF Portfolio

2.2

1.73.4

4.15.1

0

5

10

15

20

US

$ m

illion


Vietnam: PREM - EASFP- TF Portfolio


4.12 Overall Investment Credit Portfolio Performance

Progress towards meeting Development Objectives. The average age of the portfolio is only 1.2 years and thus progress towards achieving development objectives are still limited. The implementation of the Public Financial Management project has been delayed, but it is assessed to be on track to achieve its objectives.

Slow Start-up and Project Implementation. All projects are rated satisfactory on Implementation Progress. However, the Public Financial Management project, approved in May 2003, has after becoming effective quickly had a slow start,

with little progress being made so far and only US$ 1.1 million disbursed in 2.6 years of implementation. The Second Payment and Bank Modernization System received an effectiveness flag as it took 9.3 months from Board Approval to Effectiveness. In FY05, there were no disbursements under the PREM portfolio. With the major contract signed under the Public Financial Management Project, it is hoped that disbursements for FY06 will pick up and reach the target of US$ 10 million.

Main Implementation Issues. PREM projects face the following implementation issues: (i) delays in procurement process due to complicated nature of the contract packages; (ii) unfamiliarity of project management staff in procurement and financial managements requirements of World Bank funded projects; and (iii) lack of readiness for implementation.


Disbursement PerformancePREM and CITPO Sector

0.0

5.0

10.0

15.0

20.0

25.0

30.0


Dis

bur

sem

ent R

atio

PREM Sector Country Portfolio


Public Financial Management. This project has been under implementation for more than two and a half years. More than 40 percent of project implementation period elapsed, but only 2 percent of the funds have been disbursed. The project has faced serious delays in procurement of the key contract under component 1, which accounts for 90 percent of the project funds. The turnkey contract under component 1 has now been signed and contract implementation is expected to start in early 2006. On the other project components, progress has been made in strengthening budget planning and debt management.


Payment System and Bank Modernization II. This project was approved in March 2005. Due to long delays in fulfilling effectiveness conditions, this project has a flag on effectiveness delay. The credit became effective in December 2005, with the condition of engagement of procurement consultants waived. This long delay puts into question the readiness for implementation of this project. The project was taken to the Board on the basis of Pre-FS and there have been significant delays in approval of the FS. The latest cost estimates for the VBARD component diverge substantially from the original ones, and the difference will have to be financed by VBARD. The team may wish to review the ratings on project management and M&E.

Custom Modernization. This project was approved in November 2005. The project seems to be off to a good start with the signing completed and most of the effectiveness conditions already fulfilled.

ICT Development. This project was approved in September 2005. Like the Payment System and Bank Modernization-II project, this project was approved by the Board based on the Pre-FS. After Board approval, this project has been facing

several issues related to the approval of the FS of the five subprojects. So far, only three of the five FSs were approved. For the remaining FSs, the project scope and budgeting mechanism are being discussed by Hanoi and Ho Chi Minh Cities. The other remaining signing and effectiveness conditions are adoption of a financial management manual and software and engagement of procurement consultants. The effectiveness condition on establishment of the PCU and three PIUs has been met. Concern remains on establishment of the two remaining PIUs and this is now set as a condition for disbursement. Ho Chi Minh city proposes to reduce the project scope and therefore reduce a large portion of the project budget. It is crucial for the team to reach a conclusion with HCMC on this subject. A cancellation option needs to be discussed with concerned government agencies.



Table 4.7: Realism of Ratings

PREM (Active Projects) DO IP Project Management

Financial Management

Counter-part

Funding


Public Financial Management S S S S S S S

(MS) Na

Payment System & Bank Modernization S S S (MS) S S MS S

(MS) Na

Custom Modernization S S S S S S S Na

ICT Development - - - - - - - -

Note: The table summarizes current ratings of active PREM/CITPO projects. In light of the slow implementation progress of some of the projects, it is suggested that the highlighted ratings be reviewed. Suggested ratings by the CPR panel are presented within parenthesis. Project Management. Three of the four projects are managed centrally by a singly ministry while the last one is jointly managed by two ministries and three provinces. The project management units in PREM projects are normally established

based on the existing departments of a ministry and therefore capacity of PMU staff on project management, procurement and financial management is usually inadequate. All projects are rated “satisfactory” on this indicator. Due to



77

significant delays in project implementation of the Payment System and Bank Modernization II projects, the task teams may however wish to review the rating on this indicator.

Financial Management. All projects are rated satisfactory in this indicator. In the three newly approved projects (Payment system and Bank Modernization, ICT Development, and Custom Modernization) capacity of PMUs on financial management is “weak”. Training on financial management is required and adoption of a financial management manual was set as a condition for project effectiveness. This effectiveness condition has been fulfilled in two projects (Payment system and Bank Modernization, and Custom Modernization). ICT project is still under selection of consulting firm to prepare the FM manual and software.

Counterpart Funding. Counterpart funding has not been causing any problems for the covered projects and all of them are rated “satisfactory” on this indicator.

Procurement. Given the complicated nature of contract packages and weak procurement capacity of the PMUs, procurement delays in are affecting all projects in PREM sector.

Monitoring and Evaluation. All projects are rated “S” in this indicator. However, by reviewing the ISRs, CPR team found that the M&E systems should be strengthened to ensure that measurable indicators with clear baselines and targets are established. See further previous section.

Safeguard Management. This indicator is not applicable to PREM projects.


None of the PREM projects have closing date in FY06 and FY07.

Two PHRD grants were closed and six grants of different types were extended in FY05.


No QAG assessment has been done of the Quality at Entry of recent PREM projects.


PREM projects lack implementation readiness. This is partly due to the complicated nature of projects of this type - all projects are dealing with system design and installation and weak capacity of project management units. Two projects suffered from not having the FS approval prior to Board approval and subsequent time-consuming changes of project design and scope during the start-up period.


Grant Activation Period Shorter than Average. Although the grant activation period in PREM (6.8 months for grants managed by EASPR, and 6.5 months for grants managed by EASFP) is one month shorter than the country’s average (7.8 months), the sector still needs to pay attention to shortening the grant activation period to minimize the extension need.

Good Disbursement. For grants managed by EASPR, excluding the quick disbursing co-financing grants to PRSC III, the disbursement performance was still good in FY05 (20%). The disbursed amount in FY05 ($3.5 million) was almost double that in FY04 ($2 million). For grants managed by EASFP, the disbursement performance is robust (41%) with $5.1 million in FY05. One of the reasons of this remarkable disbursement performance is that two-third of these grants were planned to close during the FY.


Figure 4.7 TF Disbursement Performance

Vietnam: PREM - EASPR - TF Disbursement Ratio(excl. PRSC Grants)

0%

5%

10%

15%

20%

25%



Vietnam: PREM - EASFP - TF Disbursement Ratio

0%

10%

20%

30%

40%

50%

60%



Banking Sector Grants. Mid-FY05 GRMs of five ASEM grants on banking sector are rated moderately satisfactory on project management. All of them are executed by SBV. The common reason of this rating is because of the slow procurement processing. However, once the delayed procurement is finished, those grants are back on track. End-FY05 GRMs of these grants are then upgraded to satisfactory.


Undertake Negotiations based on FS. Two of the three newly approved projects in PREM sector have not been signed yet. The main problem for getting DCA signing of these projects concerns with a condition on Feasibility Study Report approval by the government. Due to the complicated nature in project design of the PREM projects, it is recommended that negotiations should not be initiated unless the FS is approved.

Strengthen Project Management Capacity. Capacity built in existing departments of MOF, SBV and MPT/DPTs is weak. Therefore it is crucial for the PMUs of the newly approved project (Payment System and Bank Modernization, ICT Development and Custom Modernization) to have ad hoc trainings on these subjects.

Simple and Focused Design. Given the common small size of grant and the need for restructuring of some ASEM grants, it is recommended that the grant should not be designed with complex components and unnecessary activities. This would help speed up the implementation progress and avoid restructuring components later on. Capacity of the recipient to absorb new knowledge and their readiness for changes should be also taken into account.

Realistic Planning. 100% of grants need extension. Disbursement is always behind the schedule. TTLs are therefore recommended to make a more realistic planning to for better grant implementation and to avoid extension in the later phase. Delays in Government’s approval processing for grant activation should be also expected.

Procurement. Most of PREM grants face a problem of slow procurement. Attention should be paid to this at the beginning of the grant. PMU staff also needs to get adequate training on procurement before or at least when the grant starts up.

VN COUNTRY PROGRAM REVIEW 2005 RURAL DEVELOPMENT SECTOR 79

Investment Project Progress Rural Development Sector

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

Elapsed Times (%)

Dis

bu

rsem

ent

(%)


VWARDPFSDNDRM

AIER

NM PR

RFII

CBRIP

M DWDI

FPICWI

ADP

Chapter 5 Rural Development Sector

5.1 Rural Development Portfolio at a Glance

INCLUDES ONLY RURAL PROJECTS TASK MANAGED BY EASRD The Rural Credit Portfolio Since FY94:

• Cumulative Net Commitments of US$ 1,229 million • Cumulative Disbursements of US$ 688 million (Dec.05) • 21% of total IDA cumulative commitments for Vietnam

The Active Rural Portfolio (as of December 2005):

• 11 active credits (US$ 923 million – 24% of VN portfolio) • 16 active grants (US$ 59 million) – 24% of VN portfolio) • Average project age of 3.7 years

Rural Portfolio Performance:

• 100% of portfolio rated satisfactory on DO and IP • OED – all 3 projects rated satisfactory on outcomes • Grant ICM: 100% rated satisfactory or above • Average disbursement lag: 26%

FY05 Disbursement Ratio above Regional Average: IDA Projects Grants

FY01 14% 29 MUS$ 10% 1.8 MUS$ FY02 17.7% 61 MUS$ 8% 2.5 MUS$ FY03 10.9% 64 MUS$ 12% 3.4 MUS$ FY04 18.2% 111 MUS$ 18% 4.5 MUS$ FY05 21.2% 140 MUS$ 15% 6.3 MUS$


IDA Commitments & Disbursements Rural Development Sector

0

200

400

600

800

1000

1200


MU

SD


Annual Commitments


Figure 5.1. Use of IDA funds in the Rural Development Sector

FYIDA

Credit (MUSD)

CAS Theme 1.1

Financial Sector Development

CAS Theme 1.2


CAS Theme 2.1

Narrowing the Development

Gap

CAS Theme 2.2

Support to Ethnic Minorities

CAS Theme 2.4


Poor

CAS Theme 2.5

Mitigating Natural Disasters

CAS Theme 2.6

Enhancing Environmental Sustainability

CAS Theme 3.3


Reform

Agriculture Diversification

/Irrigation

Project Management

Forest Protection and Rural Development

1998 21.5

Agriculture Diversification 1998 66.9

Mekong Delta Water Resources

1999 101.8

Coastal Wetlands 2000 31.8

Community Based Rural Infrastructure

2001 102.8

Northern Mountains Poverty Reduction

2002 110.0

Rural Finance II 2002 200.0

Water Resources Assistance

2004 157.8

Forest Sector Development 2005 39.5

Avian Influenza Emergency Recovery

2005 5.0

Natural Disasters Mitigation 2006 86.0

Agriculture Services 2007 65.0

Poor Commune Infrastructure

2007 100.0

Agriculture Diversification II 2007 55.0

Land Administration 2008 50.0

Rural Finance III 2009 100.0

Total On-Going Projects MUSD (%)

923.1 95 (10%) 5 (0.5%) 18.9 (2.0%) 97.3 (10.5%) 70.1 (8%) 8.2 (1%) 403.4 (33%) 25.9 (3%)Total All Projects MUSD

(%)1,293.1 95 (7%) 5 (0.4%) 18.9 (1.5%) 97.3 (8%) 70.1 (6%) 8.2 (0.6%) 683.4 (52%) 28.9 (2%)

199.3 (22%)

296.3 (23%)

2

60 5

29

94

86 16

595

89 141

38

5

97

14 3

5

8

84

55

100

50

65

3

4 22

2

3

3

3

95

100

Note: Each project component has been mapped to the one CAS sub-theme to which the major contribution is expected. It is recognized that components could contribute indirectly or directly to more than one sub-theme. This is particularly the case for the objective of supporting ethnic minorities which is often a second objective of rural projects. This is only partially captured in the chart above.


5.2 Strategic Alignment of the Rural Development Portfolio

CAS Strategy. The current Vietnam CAS contains multiple sets of objectives: (i) the Government strategy as expressed in the CPRGS; (ii) the overall three CAS themes divided into 16 sub-themes; (iii) specific sector priorities; (iv) the Vietnam Development Goals (VDGs) and (v) program goals such as strengthening partnerships and harmonization.

Rural Development Sector Initiatives. Bank credits and Trust Funds in the Rural Development (RD) sector cover mainly six areas: (i) agricultural development and diversification; (ii) access to infrastructure services and community driven development; (iii) forest sector

development and biodiversity protection; (iv) water resources management; (v) natural disaster management; and (vi) rural finance.

The table below maps these areas of intervention against the various relevant objectives outlined in the CAS and illustrates the varying degrees of alignment. The different sets of objectives presented in the CAS do not provide a consistent framework of priorities. This complicates a review of alignment of the various types of Rural Development interventions, as illustrated below.

Table 5.1: Alignment of the Rural Development Portfolio to CAS Objectives

CPRGS objectives

(Policy matrix in CAS Annex) CAS sub-themes CAS Sector Priorities for

Rural Development

Narrowing the development gap of disadvantaged areas

Agricultural Development

and Diversification

Develop agriculture and the rural economy to reduce widely poverty Raising the living standards of ethnic

minorities

Intensifying and diversifying agricultural production Expanding off-farm employment


Narrowing the development gap through community based infrastructure projects

Develop agriculture and the rural economy to reduce widely poverty

Raising the living standards of ethnic minorities

Ensuring that benefits of rural growth are shared equitably

Access to Infrastructure

Services

Community Based

Development Accelerate Public Administration Reform Public Administration Reform -

Strengthen the sustainability of using natural resources


Improving sustainable management of natural resources

Develop agriculture and the rural economy to reduce widely poverty

Narrowing the development gap of disadvantaged areas

Intensifying and diversifying agricultural production

Forest Sector Development

and Biodiversity Protection

Reform SOEs State Enterprise Reform -

Water Resources

Management

Strengthen environmental protection and ensure a healthy environment for poor


Improving sustainable management of natural resources

Reform banking sector and financial organizations Financial Sector Development -

Rural Finance Develop agriculture and the rural economy to reduce widely poverty

Narrowing the development gap of disadvantaged and lagging areas

Expanding off-farm employment

Natural Disaster

Management

Minimize the impacts of natural disasters on the poor

Mitigate the impacts of natural disasters and other shocks -



Overall Assessment of Alignment. All projects and grants in the rural portfolio, regardless of approval date, are well-aligned to at least one of the three sets of priorities outlined in the CAS. As with other sectors, alignment is strongest with the CPRGS objectives. This is possibly a consequence of the CPRGS objectives being the broadest and most comprehensive. The CPRGS puts a strong focus on agricultural development as does the portfolio and the role of agricultural development in the steady decline in the share of rural households living in poverty is recognized. The alignment of the RD portfolio to the CAS sub-themes is also reasonably strong, but weaker than the CPRGS due to the absence of an explicit focus on agricultural development in the CAS sub-themes.

In terms of alignment to the CAS rural sector priorities, it is reasonable as agricultural diversification and intensification is given high priority. However, the priorities for the rural sector outlined in the CAS do not explicitly mention access to infrastructure services, community driven development, natural disaster management and rural finance, which are some of the key areas of intervention of the RD portfolio.

The RD portfolio also contributes directly or indirectly to the achievement of almost all of the Vietnam Development Goals.

Table 5.2: Alignment of the Rural Development Sector Portfolio


Rural Development Projects FY



Themes

CAS Sector

Priorities

Forest Protection and Rural Dev 98

� Assist the GOV to protect and manage natural forests with high biodiversity. S S S

Agriculture Diversification 98

� Diversify and intensify agricultural production and thereby increase and stabilize farmers’ incomes in the poor central coastal and highland region.

S MU HS

Mekong Delta Water Resources 99

� Increase agricultural production, improve living conditions and improve water resources management HS MS S

Coastal Wetlands 00 � Re-establish and sustainably protect the coastal mangrove

wetland ecosystems S S S

CBRIP 01 � Reduce rural poverty in up to 600 of the poorest provinces in

13 provinces of Central Vietnam S HS MS

Northern Mountains 02 � Poor villagers in the northern mountains use a variety of

improved infrastructure and social services S HS MS

Rural Finance II 02 � Develop the rural economy and living conditions by

encouraging investments, strengthening the banking system and increase access to rural financial services.

HS HS S

Water Resources Assistance 04

� Foster agricultural diversification through improved irrigation, dam safety management and promote sustainable river basin management

HS MS HS

Forest Sector Dev. 05 � Achieve sustainable management of plantation forests and

the conservation of biodiversity S S S

Avian Influenza Emergency Recovery 05 � Support the National Action Plan for Avian Flu S S MS

Natural Disaster Risk Management 06

� Adoption by the Government of a comprehensive risk management framework for natural disaster prevention, preparedness, mitigation and recovery

HS HS MU

PCLIP (pipeline) 07

� Reduce poverty and foster secure and sustainable livelihoods for those living in the poorest communes HS HS MS



5.3 Alignment of Different Rural Development Sector Interventions

The RD portfolio covers a wide range of initiatives, often contributing to several objectives. This, coupled with the fact that different sets of objectives presented in the CAS do not provide a consistent framework of priorities, complicates a review of alignment. Below the various types of rural development interventions in the portfolio are reviewed in terms of alignment to (i) CPRGS objectives; (ii) CAS Sub-themes; and (iii) CAS Sector Priorities.

Agricultural Development and Diversification. 33 percent of the active rural sector portfolio (US$ 303 million) is targeted towards agricultural development (including irrigation infrastructure investments). Agricultural development and diversification are key objectives both in the CPRGS and the sector priorities stated in the CAS. The portfolio is thus well-aligned in this regard. This part of the portfolio is also aligned to the CAS sub-theme of “Narrowing the Development Gap”, but since agriculture development is not particularly mentioned as a priority under this sub-theme, the alignment is not considered as strong.

Access to Infrastructure Services. The rural infrastructure components of active projects in the VN portfolio amount to $US 1.4 billion or 37 percent of the active portfolio (see Table 5.3). Many of these interventions are managed by sectors other than the RD Sector and are discussed in the respective sector notes (i.e. transport, energy, urban, health and education).

The RD sector team manages initiatives that provide access to water supply and irrigation services, as well as community driven development programs focusing on the poorest communes. These interventions are well-aligned to the CPRGS which accords a high priority to providing basic infrastructure services to the poor. Alignment is also strong with the CAS sub-theme of “Narrowing the Development Gap and Providing Services to Lagging Regions”. Since

many of the poorest communes have high ethnic minority populations, the interventions are also well-aligned to the CAS sub-theme of “raising the living standards of ethnic minorities”. Alignment to the RD sector priorities is weaker as they do not mention access to infrastructure as a priority, although it may be seen as a pre-requisite for some sector priorities like equitable rural growth and agricultural development.

Table 5.3:Rural Infrastructure Services in the Vietnam Portfolio

Rural Access to Infrastructure Services

Vietnam Portfolio (US$ million)

Rural Transport 115

Rural Electrification 448

Rural Water Supply 50

Irrigation Infrastructure 230

Community-Based Development 213

Education 161

Health* 153

TOTAL US$ 1,370 million * including investments in regional centers, benefiting but not directly targeting the rural population

Community Driven Development (CDD) projects also contribute to and are aligned with the CPRGS and CAS sub-theme of Public Administration Reform (PAR). However, the rural sector priorities in the CAS do not include CDD or governance/ administration reform.

Forest Sector Development, Biodiversity Protection and Water Resources Management. All three sets of objectives accord priority to enhancing environmental sustainability and managing natural resources. Initiatives supporting sustainable management of forest resources, water resources and biodiversity (around US$70 million) are thus well-aligned to all three -- the CPRGS, CAS sub-theme and CAS sector priorities. Two projects contributing to


these objectives, Forest Sector Development and Vietnam Water Resources Assistance Project were approved during the CAS period. In addition there are a number of grants contributing to this objective e.g. from Denmark to protect the Hon Mun Area, and two GEF initiatives (the Green Corridor Project and the Forest Sector Protection Project). To support the same objectives, the Environment sector team is also managing two GEF grants on conservation of Pu Luong – Cuc Phuong Limestone Landscape and Chu Yang Sin National Park.

State Enterprise Reform is a stated objective of the Forest Sector Development Project. This is an area of high priority in terms of the CAS sub-themes and the CPRGS. However, enterprise reform is not mentioned among the rural sector priorities.

Rural Finance. The portfolio also includes an initiative to provide financing to rural population and enterprises (US$195 million or 22 percent of the rural portfolio). This intervention is well-aligned and contributes directly to the Financial Sector Development objectives of the CPRGS and the CAS sub-themes. It indirectly contributes to the CAS RD sector priorities of ensuring equitable growth and expanding off-farm employment.

Natural Disaster Management. During the current CAS period, one project (US$ 86 million) to mitigate impacts of natural disasters and a smaller operation (US$ 5 million) to prevent and mitigate the impact of avian influenza were approved. Addressing and mitigating shocks and disasters are a focus in the CPRGS and a specific CAS sub-theme. These initiatives are thus well-aligned. However, Natural Disaster Management is not articulated as a focus in the CAS RD sector priorities.

Capacity Building. Activities to strengthen capacity at different levels are integrated into projects. On-going projects provide US$8 million (1 percent) of IDA funds for institutional strengthening of Ministry of Agriculture and Rural Development (MARD) and its agencies. Another US$26 million (3 percent) is to support PMUs. The objectives of capacity strengthening are not

clearly defined in the CAS or in the projects. It is therefore difficult to assess alignment in this area of support.


The CAS also identifies areas of strategic priority for the Bank program, including building partnerships and harmonization. MARD and the RD team has successfully supported donor coordination in the area of rural development. MARD, with support from the World Bank, has developed a rural development five year plan, prepared using a results-based approach, which has been praised as a model both by the Government and the donor community.

Through the Partnership to Assist the Poorest Communes (PAC), the Forest Sector Support Partnership and the Natural Disaster Mitigation Partnership, issues related to harmonization and improving aid effectiveness have and are being addressed. The forest sector is often highlighted as an example where there is good donor coordination and as a potential candidate for a sector-wide approach.

The Bank is leading the development of an innovative approach to strengthen the Government’s targeted poverty reduction program. This SWAp-like initiative is among the first being developed in Vietnam and is supported by a broad donor partnership.

Half of the RD projects are co-financed with a total co-financing amount of US$52.5 million. If grants from JSDF and GEF which directly support projects are included, the co-financing ratio between IDA and co-financing is 0.06. This means that for every US$ 1 of IDA funding, donors provide US$0.06. Donors providing support in the RD sector are Netherlands, Finland, UK, Denmark, EC, and Japan.



Ensure a Consistent Strategic Framework in the next CAS. Based on the last CAS, it is clear that the links, especially between sector objectives and cross-sectoral themes of the CAS/SEDP should be made more explicit to ensure consistency in the priority setting for the rural development sector.

Developing a WB Sectoral Results Framework. To address the absence of a clear results framework linking project level results with the overall CAS themes and Government objectives, a sectoral results framework could be developed. Based on the strategic priorities outlined in the Bank’s current and proposed initiatives, a possible sectoral results framework has been prepared. This could serve as an input into the CAS preparation, and help ensure a higher degree of consistency between sector priorities, project objectives and the key themes of the CAS. It would also be important to link expectations of results during the next CAS period directly to what the current and planned rural development portfolio is set up to achieve.

Prioritize the Pipeline based on the Criteria of the Next CAS. With 16 proposals, the current RD pipeline for Vietnam far exceeds the available IDA resources for the next CAS period. There is

a need to prioritize the pipeline in line with the criteria that is being established for the next CAS.







sector;


Strategic Planning for TF. It would be useful for the sector to prepare a TF strategic plan which would be reflected in the CAS. Not only will this help the Government effectively coordinate grant resources for the rural sector but also help the CMU have a better strategic planning framework which prioritizes the use of TFs.

Box 5.1 RD Sector Pipeline � PCLIP 1 � Agriculture Diversification II

� Livestock Competitiveness and Food Safety � Land Administration

� Avian Influenza Control and Eradication � New Village Models

� Mountain Areas Irrigation � Water Resources 2

� Rural Finance 3 � Fisheries and Aquaculture

� Forest Sector Development (SWAp) � PCLIP 2 (SWAp)

� Integrated Rural Development � Agriculture Technology

� Natural Disaster Mitigation (APL 2) � Rural Services



… and strategy

No of incremental jobs created Improved farmer income (VND/person/yr) and distribution Improved agricultural productivity (VND/ha and VND/worker) Service coverage and farmer satisfaction rates

… with KPIs


Improve rural access to

basic services and

infrastructure..

Increase farm income and

off-farm employment

…

… by investing in agricultural infrastructure and support services, including research, extension and access to rural finance, strengthening food safety/agricultural health and promoting agricultural diversification. � Rural Finance II � Agricultural

Diversification � Mekong Delta

Water Resources � Vietnam Water

Resources Assistance Project

� Agricultural Diversification II

� Livestock Competitiveness and Food Safety

� Rural Finance III � GEF- TF Livestock

Waste Managmnt in East Asia

… by creating an enabling environment for market-oriented reforms and service development, furthering trade integration and pursuing SOE reform. � Rural Finance II � Forest Sector

Development � IMC reforms � Livestock

Competitiveness and Food Safety

� Land Administration

� Rural Finance III

… by promoting sustainable water resources management, sustainable forest development and biodiversity protection, preventing and mitigating natural disasters, and strengthening food safety/ agricultural health. � Water Res. Ass. � Mekong Delta Water � Forest Sector Dev. � Forest Protection � Coastal Wetlands � Natural Disaster � Avian Influenza � Land Admin. � GEF TF – Green

Corridor Project � GEF TF- Forest

Sector Development � TF – Hon Mun

Protected Area Pilot � GEF TF – Pu

Luong/Cuc Phuong � GEF TF – CYS

National Park � GEF- TF Livestock

Waste Managmnt

… by mainstreaming poverty reduction, pursuing participatory approaches to resource planning and management and providing access to basic infrastructure services and agricultural support services. � Northern Mountains

Poverty Reduction � CBRIP � Natural Disaster

Mitigation � ASEM TF –

Strengthening CDD � IDF TF – M&E of

CPRGS implementation

� PCLIP

… by investing in rural water and sanitation infrastructure. (other rural interventions covered under energy, transport and HD sectors) � Rural Water

Supply (UD) � Water Resources

Assistance � Mekong Delta

Water

Growth of agr GDP and exports Increased number of private SMEs created and their share in total inv. in rural economy % of HHs and agr land with LUC granted Improved performance of PFIs, ICMs and SFEs

Increased forest coverage/capacity Reduction in forest losses/damages Number of RBOs in operation Natural Disaster? Reduction in planted areas suffering from drought/floods

Reduction in rural head count poverty rate and acc poverty gaps Reduction in number of communes without basic infrastructure Improved peoples participation in P135 rural infrastructure

Number of additional people with access to safe water supplies/sanitation and the percentage of these that are poor

Pillar III: Reduce Rural Poverty and Improve Livelihoods

Pillar I: Accelerate Agricultural Sector Growth

Pillar II: Nat. Resources

Management

Promote market-oriented

reforms …

Managing water,

forestry and risks ...

Reduce poverty in the poorest

and most marginalized rural areas …


5.6 Results Achieved in the Rural Development Sector

Bank support to the RD sector has contributed to the steady decline in the share of rural households living in poverty and resulted in improvements in agricultural productivity, improved living conditions, increased rural access to infrastructure services, and enhanced natural resource management. However, as illustrated below, the current reporting provides a fragmented picture of achievements with information and data on results dispersed in different reports. Moreover, different indicators measure similar objectives across projects. Some of the results achieved during the CAS period (taken mainly from ISRs and ICRs) are summarized below.

� Agricultural Development. The Irrigation Rehabilitation project (closed in June 2003) irrigated an area of 134,000 ha, more than twice the project target. This resulted in an increase in rice productivity from 3.0 to 4.8 ton/ha. The project benefited 338,000 families and was evaluated by OED as having achieved the objectives (see further Box 5.2). The Mekong Delta Water Resources Project has so far contributed to 30 irrigation systems. The Agriculture Diversification Project has helped establish 17,213 ha of new rubber smallholdings and 10,645 ha of existing rubber smallholdings have been rehabilitated. This project has also assisted 26,500 farmers to adopt cattle fattening techniques and 30,700 farmers to adopt pig intensification techniques.

� Improved Rural Access to Infrastructure Services. 420,000 persons have received clean drinking water supply and improved sanitation through the Mekong Delta Water project. The Northern Mountains Poverty Reduction Project supported 1,922 construction sub-projects resulting in 949 km of roads, 40,000 people served by upgraded markets, 6,400 households using new clean water supplies, 4,620 sq km area irrigated benefiting 43,227 households, 421 schools and classrooms upgraded/built and 154 commune health centers upgraded to

acceptable standard. The Community Based Rural Infrastructure Project has supported 543 communes in organizing village meetings to select sub-projects and 1,113 communal infrastructure sub-projects have been constructed and handed over benefiting 3 million persons in project communes.

� Natural Resources Management. A River Basin Organization has been established for the Mekong Delta supported by the Mekong Delta Water project. The Forest Protection and Rural Development project helped reduce illegal harvesting from 700 violations in 1999 to 146 in 2004 in the Cat Tien and Chu Mom Ray National Parks. Under the same project, barren land decreased by 30 percent through plantations/perennial crops in buffer zones. The coastal wetlands project has contributed to the plantation of 2,438 ha of mangrove and preparation of a long-term management plan for Mui Ca Mau National Park.

� The completed Hon Mun Marine Protected Area Pilot GEF Grant helped document and

Box 5.2. OED Evaluation of Irrigation Rehabilitation Project

The OED evaluation of the Irrigation Rehabilitation project (closed in June 2003) rated the project satisfactory on outcomes, with substantial institutional development impact and likely sustainability. Both the Bank’s and the Borrower’s performance were rated satisfactory. The good quality of the ICR was also highlighted by OED.

The overall objectives of the project were to increase agricultural production and farmers’ income. Agricultural outputs exceeded project targets, while increases in income varied substantially between the seven sub-projects. Results exceeded targets in three sub-projects, while for three other sub-projects there were shortfalls (for one project, no data is available).


raise awareness of the importance of conserving marine biodiversity of Khanh Hoa PC and guidance on how to better develop the Nha Trang Bay area, through an integrated coastal zoning planning and management framework. Under the grant 2 hectares of mangroves were planted in Dam Bay on Hon Tre. A Conservation Fee is now collected for user, such as scuba divers and swimmers in the protected. These fees have been earmarked for use by the NTBMPA for its management activities and maintenance activities and needs.

� Rural Finance. The Rural Finance-II project has granted more than 100,000 loans and thus increased the penetration of financial services in rural areas. For more than 30 percent of the end-borrowers, it was the first relationship with a formal banking institution and 60 percent of these borrowers also opened a savings account for the first time. As a result of these sub-loans 200,000 incremental jobs have been created.


Table 5.4: Current and Expected Results in the Rural Development Sector

Sector Goals Current and Expected Results (As reported in latest ISRs/GRMs, as of December 2005) By When

PILLAR I: ACCELERATING AGRICULTURAL SECTOR GROWTH

� 30 irrigation/drainage systems completed (Mekong Delta Water) � Increased penetration of financial services in rural areas by granting more

than 100,000 sub-loans (Rural Finance II) � For more than 30% of the end-borrowers, it is the first time to have a credit

relationship with a formal banking institution (Rural Finance II) � 60% of the project end-borrowers opened a savings account for the first

time after being granted the project sub-loan (Rural Finance II) � 200,000 incremental jobs created (Rural Finance II) � 17,213 ha of new rubber smallholdings established (57% of revised target)

(Ag. Diversification) � 10,645 ha of existing rubber smallholdings rehabilitated (63% of target)

(Ag. Diversification) � 26,500 farmers have adopted cattle fattening techniques (71% of target)

(Ag. Diversification) � 30,700 farmers pig intensification techniques (82% of target) (Ag.

Diversification) � Land use rights issued to 38,720 households (including 6,729 ethnic

minority households) (35% of target) (Ag. Diversification)

To Date 1. (a) Increase farm

income and off-farm employment

� 30,000 ha new rubber smallholdings (Ag. Diversification) � 17,000 ha of existing rubber smallholdings rehabilitated (Ag.

Diversification) � 37,500 farmers have adopted cattle fattening techniques (Ag.

Diversification) � 37,500 farmers have adopted pig intensification techniques (Ag.

Diversification) � 22,000 additional ha of triple rice crop and 30,000 ha of additional double

rice plus upland (Mekong Delta Water) � Irrigation and drainage areas improved – 75 systems in place (Mekong

Delta Water) � 90,000 RDF sub-loans and 85,000 Micro-finance Loan Fund Sub-Loans

(Rural Finance II) � Balance of Outstanding RDF II Loans: 2,400 billion VND (Rural Finance II) � Institutional strengthening (Rural Finance II)

� Max 2% RDF loans past due � BIDV IAS & Loan Classification system in place � Equity to Risk Assets (CAR) to exceed 8%

2006



� BIDV- Proportion State Planning Loans less than 6% � BIDV- Profit in real terms (ROE) of 5% � BIDV – Real Net Profit as % of Earning Assets to exceed (ROA)

0.9% � VBARD – Net Past due to equity to be less than 15% � VBARD – net real profit as % of equity (ROE) 3%

2007

� 10 irrigation schemes completed with IMC collection area of each scheme to reach 75% of the design command area and with water use groups covering 25% of each scheme area with volumetric contracts (VWRAP)

� National irrigation modernization training program implemented (VWRAP)

2011

1. (b) Promote Market-Oriented Reforms � Expected results from Forest Sector Development, Agricultural Services

PILLAR II: MANAGING NATURAL RESOURCES SUSTAINABLY

� River Basin Organization established for Mekong Delta (Mekong Delta Water) To Date

� Establishment of a Thu Bon Basin Coordination Committee (VWRAP) 2007

2. (a) Water Resources Management

� River Flows to Danang City restored (VWRAP) 2011

2. (b) Sustainable Forestry Management and Biodiversity Protection

� Illegal harvesting reduced from 700 violations in 1999 to 146 in 2004 in the Cat Tien National Park and Chu Mom Ray Nature Reserve (Forest Protection)

� Barren land decreased by 30% through plantations/perennial crops in buffer zones (Forest Protection)

� Proportion of households that are poor in the buffer zone reduced from 33% to 28%. (Forest Protection)

� 2,438 ha of mangrove planted (Coastal Wetlands) � Long-term management plan for Mui Ca Mau National Park established

(Coastal Wetlands) � 3,506 ha of mangrove planted (Coastal Wetlands) � Improved management and protection of special use forests and fish

sanctuaries (Coastal Wetlands) � XX% reduction in the incidence of absolute poverty in the vulnerable

communes (Coastal Wetlands) � Illegal harvesting of project forest approaching zero (Forest Protection) � Unwarranted fire incidence reduced by 50% (Forest Protection) � Increase of forest cover by 10% i.e. by 32,000 ha (Forest Protection) � Violations of conservation agreements less than 5% (Forest Protection)

To Date



� Initial conservation needs assessments and PA effectiveness scorecards are completed for 30 Special Use Forests (Forest Sector Development) 2007

GEF TF - Hon Mun Marine Protected Area Pilot Project � 2 hectares of mangroves were planted in Dam Bay on Hon Tre � The Conservation Fee is now being collected for users of the MPA with

VND30,000 charged for scuba divers and VND5,000 for swimmers in the Marine Park. These fees have been earmarked for use by the NTBMPA for its management activities and maintenance needs;

� The Visitor’s Center on Hon Mun is completed and the educational displays are constructed

� The waste management and clean-up activity has been extended to Hon Mot village in addition to the ongoing activity at Tri Nguyen Village

� Establishment of the Scientific Advisory Committee and the National Marine Protected Area Steering Commitee

� The Nha Trang Bay Marine Protected Area Management Plan awaiting for Khanh Hoa PC’s approval

� The Gender Action Plan has been completed and a micro-credit (Hon Mun) program has been provided for the Vinh Nguyen’s Womens Union.

2006

� 950 local Farm Forestry Groups formed/operational; extension provided to at least 759 FFG (Forest Sector Development)

� Plantation design completed for 66,000 ha in accordance with approved plantation models (Forest Sector Development)

2008

� Institutional/financial arrangements for promoting smallholder plantation forestry successfully demonstrated (Forest Sector Development)

� Transparent forest land classification and allocation procedures integrated into the Forest Sector Support Program. (Forest Sector Development)

� 53,000 ha land allocated and land use certificates issues to approximately 19,000 households (Forest Sector Development)

2011

� MARD Dam safety unit established (VWRAP) 2005 2.(c) Risk Management � Early warning response and turn around for diagnosis within 1 week of

outbreak (Avian Flu) � Restocking of GP poultry farms (Avian Flu) � National Emergency Contingency Plan for HPAI accepted by Government

(Avian Flu) � NVDC and 4 regional veterinary centers upgraded (Avian Flu) � Strategic studies on compensation policy and contingency containment

plans completed (Avian Flu) � Community based reporting system effective (Avian Flu)

2006



� Natural Disaster Mitigation Investment Plans completed in 10 Provinces (Natural Disaster Management)

� 30% of people in targeted communities reporting improved early warning of floods and storms (Natural Disaster Management)

� 40 safer commune plans prepared (Natural Disaster Management) � Government speed and efficiency in the allocation and disbursement of

post-disaster resources is strengthened

2009

� At least nine dams have dam safety inspection reports approved by MARD Dam Safety Unit (VWRAP)

� Improved dam safety instrumentation for Hoa Binh reservoir (VWRAP)

2011

PILLAR III: REDUCING RURAL POVERTY AND IMPROVING LIVELIHOODS

3 (a) Reduce poverty in the poorest and most marginalized areas

Northern Mountains: � 1,922 construction sub-projects supported � 949 km of roads � 40,000 people served by upgraded markets � 6,400 households using new clean water supplies � 4,620 sq km irrigated benefiting 43,227 households � 421 schools and classrooms upgraded and built � 154 commune health centers upgraded to acceptable standard In Northern Mountains Poverty project communes (average/commune) compared to 2001: � Travel time per market visit reduced by 15% � Households with access to clean water increased by 68% � Number of school-aged children not attending school reduced by 44% � 89% survey respondents reporting higher quality health services � Mean income per household 8,300,000 VND compared to 4,300,000

VND in 2001 CBRIP: � 543 communes organized village meetings to select sub-projects � 543 O&M groups established � 1,113 communal infrastructure sub-projects have been constructed and

handed over benefiting 3,035,410 persons in project communes (transport 23%, clean water supply 9%, irrigation and flood control 9%, schools and kindergarten 15%, commune houses 32%)

To Date



Northern Mountains: � 1,282 km commune to village roads upgraded � 18,350 ha land newly irrigated � 4,222 wells constructed � 161,000 people with access to improved health care facilities and 178

commune health stations equipped � 307,000 people with access to improved school facilities � 87,639 households participating in agriculture extension � Over 1 million direct project beneficiaries

(85% ethnic minority people)

2007

� Establishment of the Gov-Donor Partnership to Assist Poor Communes (PAC)

� 18 reports and formal publications summarizing CDD experiences in Vietnam

� 1,000 people participated in 11 major events including regional and national consultation workshops and conference. 40% of them came from localities, 30% from central government agencies, 22% from donors and NGOs

2005

Expected results from PCLIP, CBRIP

� 420,000 persons have received clean drinking water supply and improved sanitation (Mekong Delta Water)

� 124 Rural water systems completed (Mekong Delta Water) To Date

� At least 300,000 additional people (51,000 poor) with access to safe water supplies (Rural Water Supply)

� At least 225,000 additional people with access to sanitation and drainage facilities (Rural Water Supply)

� 40% of consumers served satisfied by the quality of the water supply and sanitation services (Rural Water Supply)

� 70% of costs of Rural Water Supply and Sanitation Companies covered by tariff revenue (Rural Water Supply)

2008

3 (b) Improve access to basic services and infrastructure rural water and household level sanitation services – other services covered under respective sector)

� At least 800,000 additional people (160,000 poor) with access to safe water supplies (Rural Water Supply)

� At least 600,000 additional people with access to sanitation and drainage facilities (Rural Water Supply)

� 70% of consumers served satisfied by the quality of the water supply and sanitation services (Rural Water Supply)

� 100% of costs of Rural Water Supply and Sanitation Companies covered by tariff revenue (Rural Water Supply)

2011


5.7 Managing for Results in the Rural Development Sector

The Project Results Frameworks. The quality of the results frameworks of RD projects vary significantly from robust in the Northern Mountains Poverty Reduction, Forest Protection and Rural Development and Rural Finance II to weak in the Water Resources Assistance project and CBRIP.


The below assessments are based on the PADs and the latest ISR as of December 2005.

Quality of Project Development Objectives. The PDOs for most RD projects are moderately satisfactory. To meaningfully assess progress on PDOs, these would need to be strengthened to more clearly identify the direct outcome (i.e the expected change for target beneficiaries). Currently, many PDOs focus on high-level outcomes such as poverty reduction and

improving living standards, against which it is difficult to assess the project contribution. Grant Development Objective (GDO). The GDOs of grants in the Rural Sector have not fully defined what the grant will achieve but rather what the grant will do, e.g. “to assist the most vulnerable smallholders” or “to monitor the implementation of the CPRGS”. It is therefore very difficult for the task teams to translate those GDOs into a good set of KPIs. Also, it is common for the GDOs to be broadly defined and at a high level e.g. “to protect and maintain the high global conservation value”. More attention needs to be paid to defining GDOs that clearly specify the expected change in the target beneficiary. Given that the grants usually provide limited funds, it would be important to set the objectives at a realistic level where it is feasible to demonstrate a link between the outputs and outcomes of the project and the achievement of the GDO. Currently, it is often hard for task teams to confirm attainment of the intended objectives upon grant completion.

Quality of Key Performance Indicators (KPIs). The quality of KPIs to measure progress on the RD sector varies considerably. Some projects have well-designed indicators that are relevant to measuring progress on project objectives. These include access to improved infrastructure services, improvements in agricultural productivity and employment creation. Others would need to refine the results framework to better reflect the PDOs. Many rural projects have multiple objectives and it is important that all aspects are measured.

Quality of KPIs for TFs. Among the RD grants, the GEF grant on Green Corridor development (which was selected for review during the CPR) has a well-defined set of indicators measuring results on different levels. An M&E system is also established to monitor the performance in a timely manner. However, there are too many KPIs for this grant (61KPIs) and no indication of critical KPIs which directly track the grant achievement. It should be noted that KPIs should



(ii) Manageable number of Specific, Measurable, Attributable, Results-focused and Time-bound (SMART) KPIs that measure results;


used to inform decision-making.


be highly selective to ensure effective monitoring at reasonable costs.

For the technical assistance grants, it is more difficult to identify SMART KPIs. This is partly because it is costly to monitor and collect data. It may also be difficult to define good indicators apart from outputs, such as workshops and reports which are currently the most common KPIs in the RD grant portfolio. However, if the GDOs are well-defined to cover realistic changes in behavior of the target beneficiary (that can be attributed to the grant), it is usually possible to identify simple measures/milestones to demonstrate progress and results achieved. Monitorable KPIs for all new grants in the RD sector would need to be defined so that convincing reporting on results can be achieved.

Indicators Used. Currently, progress in the RD credit portfolio is monitored by over 90 different KPIs. Some of these KPIs are monitoring project inputs/outputs, such as number of persons trained, ha of land irrigated, number of farmers using pig-fattening techniques etc. Others are measuring progress on higher-level outcomes such as increased job creation and satisfaction with infrastructure services. Although all RD projects contribute to similar objectives, when these indicators are aggregated, they do not support a consistent story of the results being achieved.

Some examples where there are opportunities to develop consistency and synergy across projects (and sectors) are noted below. This may also facilitate alignment with Government monitoring and targets, including the VDGs:

� Rural Access to Infrastructure Services. Many projects in the RD portfolio as well as in other sectors contribute to improving rural access to infrastructure services. The indicators measuring access differ between projects e.g. in terms of rural access to roads (reduction in number of days communities are cut off from district centers, decrease in travel times in dry and rainy seasons, percentage of people living within 2 kms of an all weather road and reductions in travel times to markets), as well as to

schools (PEDC measures schools constructed to FSQL standards and educational outcomes, while Northern Mountains is measuring increased access to and use of education services).

It would be good to have a consistent set of indicators across the portfolio to measure access numbers. Also, developing a systematic approach to collect information on impact on households of access to infrastructure services that would cut across projects in several sectors would be beneficial.

� Community Driven Development. In addition to providing access to infrastructure services for the most marginalized rural areas, the objective of CDD projects are to improve the institutional capacity for planning, selecting and implementing projects. Currently, the indicators for measuring progress in this regard are vague and differ between the Northern Mountains and the CBRIP projects (e.g. “institutional capacity at district and commune level increased” and “number of village meetings held”). It may be worthwhile identifying a good common outcome indicator to measure progress in this regard.

� Institutional Effectiveness. The monitoring and reporting on capacity building is not well developed with few indicators to support progress assessments. Output measures such as “number of people trained” or input measures such as “disbursement percentages” are common. There appears to be no systematic way of measuring progress on institutional strengthening activities. Reform of Irrigation Management Companies could for example be measured with a standard set of utility indicators across the portfolio of projects supporting strengthening of water resources management.

Quality of the Project M&E System. The quality and use of the project monitoring and evaluation (M&E) systems vary. As can be seen from Table 5.5, only five of the eleven active


projects have complete monitoring frameworks with baselines and targets. Although, on-going for long periods, several projects such as

Agricultural Diversification, Coastal Wetlands, and CBRIP do not have complete baselines and targets

Table 5.5: M&E in Rural Development Projects

* AIERP is an Emergency Recovery Loan using BP 8.50


Table 5.6 on the next page summarizes the assessment of the results framework for each project in the RD portfolio. A summary of identified strengths and weaknesses for each project is shown below.

Forest Protection and Rural Development. The results framework for this project is solid. The PDO is to protect and manage natural forests with high biodiversity. It is clear, but could have focused more on the outcomes i.e. expected changes in the behavior of residents, management organizations etc. Notwithstanding this, the KPIs measure outcomes well e.g. the reduced incidence of illegal harvesting, and reduced proportion of people facing food security

problems. The KPIs changed slightly with the move to the ISR and the indicator on “Government incorporating pioneering initiatives into policies and programs for forest protection” was dropped. There was no explanation for this in the ISR and the team may want to reinstate this indicator to ensure full coverage of key aspects of the PDO.

Baselines and targets are established for all KPIs and progress updates are available. Despite serious delays in implementation of the rural infrastructure component (which accounts for more than one third of the project budget), most KPIs show positive developments with e.g. reductions in barren land, lower proportion of

Rural development Projects Baselines? Targets?

Forest Protection Yes Yes

Ag. Diversification No Partly

Mekong Delta Water Yes? Yes?

Coastal Wetlands Partly No

CBRIP No No

Northern Mountains Yes Partly

Rural Finance II Yes Yes

Water Resources Ass. Yes Yes

Forest Sector Dev. Partly Partly

Avian Influenza Emergency Recovery* No No

Natural Disaster Yes Yes


poor households and fewer forest protection violation. It will be important to collect all the relevant data to deliver a high quality ICR by December 2006.

Table 5.6: Assessment of the Results Frameworks of Rural Development Projects

Results Framework


Quality of KPIs

Quality of M & E Overall

Forest Protection and Rural Dev MS S S S

Agriculture Diversification S MS MS MS

Mekong Delta Water Resources MS MS* MS MS

Coastal Wetlands S MS MS MS

CBRIP MS MS U MU

Northern Mountains S HS S S

Rural Finance II MS S S S

Water Resources Assistance MS U MS MU

Forest Sector Dev. MS MU MU MU

Avian Influenza Emergency Recovery S S U MS

Natural Disaster Mitigation MS MS S MS

* The migration to ISR significantly changed the KPIs, compared to the original set in the PAD. The rating is based on PAD indicators. AIERP is an Emergency Recovery Loan using BP 8.50

Agriculture Diversification. The PDO expresses the outcomes clearly: “increased and stabilized farmer income and rural employment”. However, the KPIs for this project focus on the objective of agricultural diversification and mainly measure project outputs (e.g. ha of rubber holdings established/rehabilitated, number of farmers adopting pig-fattening techniques). There are no indicators covering employment of farmers or increase in incomes, which are key aspects of the PDO. Baselines are not available in the latest ISR, although a baseline survey was finally carried out in 2004 (after six years of implementation). Targets are partly available and progress updates have been made on the project

outputs. The recent impact assessment of the project conducted by FAO/CP confirms positive economic and social impacts, but these are based mainly on anticipated benefits rather than actually measured impacts. It would be important to ensure that data on employment and farmers’ incomes are available for the ICR to help justify a possible follow-up intervention.

Mekong Delta Water Resources. The PDO for this project is expressed in general terms: “to improve agricultural production, reduce rural poverty, improve living conditions and facilitate sustainable water resources development”. The PDO could have more specifically identified the


beneficiaries and the expected change. Interestingly, the PDO in the ISR is different from the PAD and does clearly specify the outcomes intended such as: (i) improved irrigation and drainage; (ii) increased cropping intensity; (iii) provision of clean water; (iv) flood mitigation; (v) improved sanitation facilities, and (vi) sustainable water resources development and management.

The original log-frame in the PAD covered many of these key aspects of the PDO, but not all. The change to the ISR format further weakened the results framework and important KPIs on agricultural productivity, rural employment, institutional development and water fee collection are now missing. It is necessary to review the results framework to ensure that all aspects of the PDO are covered. Baselines and targets are available for the project outputs e.g. number of irrigation and rural water supply systems.

Coastal Wetlands Protection. The PDO is brief and clear, focusing on the environmental benefits of the project. Outcomes for the people living in the coastal wetlands area are not explicitly mentioned in the PDO. The PDO was left unchanged after the project restructuring. The PAD contains a solid results framework with specific, measurable, and results-focused KPIs that are in line with the PDO. However, these have been changed during implementation and the current set of KPIs is weaker than the original. For example, original indicators on coastal productivity, coastal erosion and accretion rates, and reduction in shrimp pond surface have been dropped. It is recognized that some of the original KPIs may have been difficult to measure. However, many of the current indicators focus on inputs/outputs such as “number of farmers trained in appropriate technologies” and “disbursements of social support program”. Baselines and targets are partly available, but some are vague such as “farmers’ livelihood improved through sustainable farming systems”. It would be useful if the team could review the results framework and ensure that a SMART set of indicators, with clear baselines and targets, measuring all aspects of the PDO is established.

Community Based Rural Infrastructure Project. The PDO is to reduce rural poverty. This is brief and clear, but at a very high level. The intended changes for the beneficiaries could have been more clearly specified. The original results framework in the PAD included KPIs which were specific, measurable, and results-focused. In the ISR, these were changed and the results framework is now less clear. For example, originally there was an indicator on households gaining access to new or improved infrastructure. This has been changed to measure only the number of sub-projects implemented. The original indicator to measure improvements in living standards as assessed by beneficiaries has also been dropped. After 4.5 years of implementation, targets and baselines are still not available. The results framework for this project needs to be strengthened. The Northern Mountains project provides a good example that could be emulated.

Northern Mountains Poverty Reduction Project. The PDO is clear and focuses on the changes for the beneficiaries i.e. increased use of a variety of infrastructure services. The project has a solid results framework with KPIs that meet the SMART principles and cover many aspects including access to various infrastructure services, but also perceived service quality. The M&E system is working well and progress updates are readily available. Baselines are established for all KPIs. The team should ensure that targets for all KPIs also are in place.

Rural Finance II. The PDO is clear but could have directly stated the problem to be addressed (access to financial services) and the expected change for beneficiaries rather than focusing on developing the rural economy and improving living conditions which are at a much higher level. The original log-frame included conceptual descriptions for KPIs, which were not necessarily measurable. The results framework has since been strengthened and is now solid, with specific, measurable and results-focused indicators that measure progress on all aspects of the PDO, including both financial indicators and impact, such as jobs created. There may however be too many KPIs and some may be more appropriate as intermediate outcome


indicators. Baselines and targets are established for all KPIs and progress updates are available.

Water Resources Assistance Project. The PDO has three parts: agricultural diversification; dam safety management and Thu Bon River Basin management. The PDO is clear but does not express the objective in relation to project beneficiaries. The results framework for this project is weak with only process or output indicators, such as establishment of Dam Safety Unit, and 100 people trained in irrigation modernization. In addition, many aspects of the PDO are not being measured. This includes agricultural diversification; increases in agricultural productivity; increased farm income; and sustainable management of the Thu Bon River Basin. This needs to be addressed and the results framework revisited.

Forest Sector Development. The PDO of this project is not clear and does not focus on the change needed for the target beneficiaries. The “benefit section” of the PAD explains more adequately the expected outcomes of the project. The original results framework as expressed in the PAD needed further strengthening. The KPIs were subsequently changed in the ISR, but remain descriptive such as “institutional and financial arrangements for promoting smallholder plantation forestry developed and available for replication”. They focus mainly on lower level outputs/inputs such as ha of land allocated, conservation needs assessment completed, trained staff and funds disbursed. Baselines are set to zero, even for institutional indicators such as management effectiveness of special use forests. Targets are partly available, but some are vague (e.g. management effectiveness improved). The results framework should be revisited to identify a few SMART indicators that would measure outcomes and intermediate outcomes of the project. Clear targets and baselines also need to be established.

Avian Influenza Emergency Recovery. The PDO supports implementation of the Government’s National Action Plan for Avian Influenza Epidemic. The PDO is brief and clear but could have more clearly focused on the outcome e.g. safeguarding human health and

incomes of poor households. The results framework for the project is solid with specific, measurable, attributable and results-focused KPIs measuring all aspects of the PDO. However, baselines, targets and progress updates in the ISR are not clear and need to be strengthened.

Natural Disaster Risk Management Project. The PDO is brief and clear (“to establish a comprehensive framework for natural disaster management and preparedness”), but could have been better defined in terms of the expected change/results of the target beneficiary e.g. enhanced effectiveness of national and participating institutions, evidence of reduced vulnerability of poor communes. KPIs focus on output achievement (such as completion of FS for sub-projects), rather than the intended outcomes such as improved institutional effectiveness in responding to disasters, reduced vulnerability, better safeguarding of economic assets etc. The indicators for strengthening of the Central Committee for Flood and Storm Control have yet to be specified. Baselines are set to 0 and targets for expected increases of the KPIs are established. Although it is recognized that it is a challenging exercise for this type of project, it is proposed to review the results framework to ensure a way of measuring the outcomes/results of the project in a more comprehensive manner.


Simplify and Identify Common KPIs. There is scope for simplifying and improving M&E by focusing project monitoring on a few, common indicators directly related to fulfilling the sector objectives. In the proposed sectoral results framework, a reduced number of possible common KPIs are presented. Among them, it is proposed to establish a standard set of outcome indicators/milestones for institutional performance in the sector.

Strengthen the Project Level Results Frameworks. Some suggestions to strengthen


the results frameworks for individual projects are provided above. In genera recommending that:





Strengthening TF Results Frameworks and Reporting. Like in other sectors, the TF result frameworks in the RD sector also needs to be

strengthened. The TFs should follow the rigor of projects with respect to the design. It will be much easier to have a stronger TF result framework if attention to this is paid at the time of the grant design. Grant objectives should not be too broad or ambitious, given the size of the intervention. The GDO should target a level of change that can be realistically achieved and attributed to the grant. KPIs should be selective, time-bound, and monitorable. They should be frequently updated in GRMs and aggregated in the final report. Current GRMs focus heavily on reporting on implementation progress in terms of process and outputs, while results are not adequately reflected.


Table 5.7: Rural Development Sector Portfolio (as of December 2005)


IP Rating

Net Comm. ($mln)

Cum. Disb.

($mln)

Disb. Lag

Forest Protection 8.2 S S 21.5 14.3 32%

Agriculture Diversification 7.5 S S 66.9 49.6 26%

Mekong Delta Water Resource 6.7 S S 101.8 54.2 46%

Coastal Wetlands 6.1 S S 31.8 19.1 38%

Community Based Rural Infras. 4.5 S S 102.8 44.6 41%

Northern Mountain Poverty Red. 4.2 S S 110.0 56.1 28%

Rural Finance II 3.6 S S 200.0 151.3 -49%

Water Resources Assistance 1.8 S S 157.8 5.3 48%

Forest Sector Development 1.5 S MS 39.5 1.5 -16%

Avian Influenza Emergency 1.4 S S 5.0 1.0 65%

Natural Disaster Risk Management 0.3 S S 86.0 0.0

Sub-total 4.2 923.0 396.9 26%

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5.11 Facts

Rural Development Portfolio. The RD portfolio consists of 11 active credits (US$ 923 million) accounting for 24 percent of the total portfolio. With five projects expected to close in FY06/FY07 (US$ 227 million) and three projects (US$ 220 million) to be approved in FY06/FY07, RD will remain one of the largest sectors in the Vietnam portfolio.

Recipient-executed TFs in the Rural Development Portfolio. The RD TF Portfolio is the third largest with 16 percent of the total TF portfolio in FY05. The approval of three large TFs to support Forest Sector Development resulted in a sharp increase in new commitments to US$ 22.9 million in FY05. The RD sector has a diversity of co-financing grants with UK, Netherlands, Denmark, and Japan (through PHRD and JSDF). It also uses many other available TF sources such as ASEM, IDF, JSDF, PHRD, and GEF.

Figure 5.2: Rural Development TF Portfolio

010

20304050

60

US

$ m

illion


Vietnam: Rural Sector - TF Portfolio



Progress towards meeting Development Objectives. All RD projects are rated satisfactory on DO. As discussed in the previous section, results of many projects under implementation are already visible. These include improved access to infrastructure services in poor communes, increased agricultural productivity, improved access to financing opportunities, strengthening forest and biodiversity protection.

Implementation Progress is Improving, but Concerns Remain. All projects in the RD sector are rated “satisfactory” for IP, except for the Forest Sector Development project which is rated MS. Coastal Wetlands and Northern Mountains were previously rated Unsatisfactory, but both have now been upgraded. Concerns remain on the implementation progress of three “older” projects

(Forest Protection, Agricultural Diversification, and Mekong Delta Water) and one “younger” project (Water Resources Assistance). In view of project implementation delays and issues, it is suggested that the task teams review the optimistic ratings on implementation progress of these projects.

Disbursements have been improving over the last three years as reflected in the disbursement ratio which increased from 10.2 percent in FY03 to 21.2 percent in FY05. The disbursements have doubled since FY03 and in FY05 and reached US$ 142 million (46 percent of the total disbursements of the country portfolio). However, a large amount (40-50 percent) of these disbursements came from one single project (Rural Finance II).

Figure 5.3:Disbursement Performance

Disbursement PerformanceRural Development Sector

0.0

5.0

10.0

15.0

20.0

25.0


Dis

bu

rsem

ent

Rat

io

Rural Development SectorCountry Portfolio

Implementation Issues. Common implementation issues in RD projects include (i) delays in review/approval process at the central level; (ii) weak capacity of the central and provincial PMUs in contract administration; (iii) poor project planning and budgeting; (iv) rigid cost norm systems with often low estimates and (v) slow RAP implementation by local provinces. Delays in project implementation are sometimes also caused by the need to adjust the technical design during project implementation. E.g. in Mekong Delta Water design changes were necessary due to rapid changes in cropping patterns, cultivating models as well as socio-economic development in rural areas. The fact that project preparation at the central level is often done by a team other than the project implementation team, makes it difficult to train people prior to project approval and contributes to the delay.


Forest Protection. After more than eight years of implementation, this project is finally coming to a close in June 2006. More than 30 percent of the funds remain undisbursed, with a large number of small contracts still under implementation. The rural infrastructure component has suffered significant


delays. There are also concerns regarding the quality of design and construction under this component. The task team needs to monitor implementation closely to ensure timely completion of remaining activities as there is a significant risk that the project may not be fully completed by June 2006. Given the slow pace of implementation, the task team may wish to review the satisfactory ratings on implementation progress and project management.

Agricultural Diversification. This project has been under implementation for more than seven years. Despite this, about 25 percent of the funds remain to be disbursed before the project is closed in December 2006. Implementation has improved over the last few months, but there are still concerns regarding the slow pace of the long-term credits for small rubber plantations and the quality of the new rubber plantings. It is encouraging to note that recommendations made to VBARD are consistent with the advice provided by the financial sector team. Given the delays in implementation of the key project component, the task team may wish to reconsider the upgrading of IP to satisfactory and review also the ratings on project management and financial management.

Mekong Delta Water Resource. This project has seen significant improvements in implementation recently. However, the disbursement lag is still close to 50 percent and special attention is needed to RAP implementation by SIO/Provincial authorities to ensure that all compensation and resettlement will be completed by February 2006. Also, the CPO and SIO need to strengthen contract management capacity, and apply early cancellation for poor performing contract packages. There is a potential saving of about US$ 5 million. If implementation of the existing works does not improve, MARD should consider canceling this amount. Due to the delays in the irrigation component, the task team may wish to review the ratings on project management, procurement and IP.

Coastal Wetlands. This project has seen considerable improvements in implementation since the mid-term review in 2004. Disbursements have been picking up and more than US$ 10 million has been disbursed so far during FY06. However, the project is scheduled to close in September 2006 and 40 percent of the funds remain to be disbursed. This will require close monitoring of remaining activities and implementation of Resettlement Action Plan (RAP) in Ca Mau province remains a concern. It may be useful for the team to consider

preparing an MOU with a detailed working schedule on the remaining works for each PPMU with commitment of MARD and PPCs who would help monitor the progress.

Community Based Rural Infrastructure. This project has been under implementation for more than four years and about 40 percent of the funds have been disbursed. Implementation of most project components is substantially in compliance with the original plan and there are no major shortcomings in project performance. The team has been proactive in addressing collusion. Project management needs further strengthening especially on results reporting and documentation of small land acquisition/donation. The team may wish to look for ways to reduce delays in the processing of community sub-projects.

Northern Mountains Poverty Reduction. Implementation of this project has improved considerably since last CPPR. Around 50 percent of the funds have been disbursed over four years of implementation. Progress has been steady over the last year and is expected to continue to be so. Allocation of counterpart funds at the provincial level continues to hamper progress in one of the six provinces (Phu Tho) and requires the team’s attention. The team may want to consider the use of the new country financing parameters to help resolve this problem. It would be important to incorporate lessons learnt from this project into the design of the PCLIP.

Rural Finance II. This is the only project in the Vietnam portfolio where implementation is ahead of original schedule. More than 75 percent of the funds have been disbursed after 3 years of implementation. However, there are some key policy issues with respect to BIDV and VBARD which are not being addressed. BIDV’s capital adequacy ratio, which is a legal and dated covenant is in non-compliance. VBARD’s financial performance is poor and it has been recording losses (based on IAS) for the last seven years. The team needs to continue to focus on strengthening the financial and operational performance through TA, which has not been utilized as quickly.

Water Resources Assistance. This project has been under implementation for almost two years. More than 20 percent of the implementation time has elapsed but only 3 percent of the funds have been disbursed. The project has a disbursement lag of close to 50 percent. One critical issue affecting the entire project is the delay in mobilizing of Project TA consultants. Although the Project


Management Office (PMO) has completed all the necessary work including negotiations with the first ranked consulting firm, the contract has not yet been signed. Similarly, engineering design for the canal modernization has not progressed. The team needs to refocus its efforts on the upfront work -- ensure the consultants can begin quickly and work on the dam safety design is completed soon.

Forest Sector Development. This project experienced a slow start-up due to delays in meeting the effectiveness conditions, including in the establishment of the project management units. The project has an effectiveness flag. More than 20 percent of implementation time has elapsed but only 4 percent of the funds have been disbursed. Issues encountered relate to late provision of counterpart funds, limited project management capacity and weak procurement functions. The project was recently downgraded to MS on IP, and the task team has reached agreement with MARD on appropriate measures to help address ongoing implementation problems.

Avian Influenza Emergency Recovery. This emergency project has been under implementation

for more than 1.5 years. The project experienced slow start-up and therefore has an effectiveness flag. With more then half of the project implementation time elapsed, only 20 percent of the funds have been disbursed. The main focus areas for improving project implementation are: (i) Accelerate procurement activities; (ii) Strengthen animal disease surveillance and initiate implementation of community-based animal disease surveillance and early warning activities under the JSDF Grant; and (iii) Training and Capacity building activities are lagging behind (Component C) and need particular attention.

Natural Disaster Risk Management. This project was approved in September 2005. The effectiveness conditions have been partly met and the DCA signing is expected in February 2006.



Table 5.8: Realism of Ratings in the Rural Development Projects

Rural Development (Active Projects) DO IP

Project Managem

ent

Financial Managem

ent

Counter-part

Funding


Forest Protection S S (MS) S (MS) S S S S S

Ag. Diversification S S (MS) S (MS) S (MS) S S MS S

Mekong Delta Water S S (MS) S (MS) S S S (MU) S S

Coastal Wetlands S S S S S MS MS S

CBRIP S S MS S S S U S

Northern Mountains S S S S MS S S S

Rural Finance II S S S S HS S S S

Water Resources Ass. S S (MS) MS S S MU S S

Forest Sector Dev. S MS MS MS MS MS S S

Avian Influenza S S S S S S MS NR

Natural Disaster S S s S S S S S

Note: The table summarizes current ratings of active rural development projects. In light of the slow implementation progress of some of the projects, it is suggested that the highlighted ratings be reviewed. Suggested ratings by the CPR panel are presented within parenthesis.

104


One project has a closing date in FY06 (Forest Protection) and another four are expected to close in FY07 (Coastal Wetlands, Agricultural Diversification, Mekong Delta Water Resources, and Avian Influenza). For these closing projects, there are significant concerns regarding the ability to complete all the remaining activities on time. Extensions should only be provided in exceptional cases and funds that cannot be used should be cancelled early.


No QAG assessment has been done of the Quality at Entry of recent rural development projects.


Four projects were approved during the CAS period (Rural Finance II, Water Resources Assistance, Avian Influenza, and Natural Disaster Risk Management). Two of them received a flag for effectiveness delay. Forest Sector Development that took 12 months from approval to effectiveness and Avian Influenza, an emergency operation. The Water Resource Assistance narrowly escaped receiving a flag with 8.8 months from Board approval.

Most rural development projects are slow to start-up. The large number of effectiveness conditions (13 in case of Forest Sector Development and 7 each in the other two projects) invariably takes its toll in terms of elapsed time. Disbursements also suffer -- total disbursements during the first three years are consistently less than 10 percent of total project budgets. This raises questions of readiness for implementation. The Vietnam Readiness filter should be strictly applied to the pipeline projects.


Overall, the RD sector is taking steps in moving towards greater use of country systems, especially in CDD type of operations. One of the pipeline project (PCLIP) is being designed to directly support the Government’s program for rural poverty alleviation.

The forest sector partnership group is working towards developing a SWAp. Progress so far has been slower than earlier anticipated. The next forest

project is however intended to be part of a sector-wide approach.


Slow Grant Activation. The grant activation period during the last five years in the RD sector is 8.4 months which is slower than the average of the country portfolio (7.8 months). The two grants with the longest activation times (nearly 1.5 years) are the GEF Grant on Forest Sector Development and the IDF Grant on Monitoring and Evaluation of CPRGS Implementation in the RD Sector. The two quickest are co-financing grants: DFID co-financing to Northern Mountain Poverty Reduction Project (2.2 months) and DANIDA co-financing to Hon Mun Marine Protected Area Pilot Project (3.1 months). Apart from Government’s complicated approval procedures, one of the reasons for slow activation in the RD sector may be the changes in senior leadership in MARD during recent years.

Slow Disbursement. Grant disbursement during the last two years was rather slow in RD (FY05 - 15 percent). The reasons are mixed. The GEF Grant on Green Corridor Project recorded no disbursements for the whole FY05 due to a different disbursement process. This has now been addressed. Three new jumbo grants on Forest Sector Development and one long-awaited PHRD preparation grant for PCLIP also pulled the ratio down because of their late entries in FY05 without any disbursement before the end of the FY.

Figure 5.4: TF Disbursement Performance

Vietnam: Rural Sector - TF Disbursement Ratio

0%

5%

10%

15%

20%




Eliminate Effectiveness Delays. The average elapsed time from Board Approval to Effectiveness of the three projects approved during this CAS period is 8.0 months. Remedial measures would include: reducing the number of effectiveness conditions to a minimum, approval of Feasibility Study by the Government prior to negotiations,


adaptation of a standard financial management manual, and establishing of the project management units prior to negotiations.

Focus on Closure of Old Projects. Five projects are scheduled for closure in FY06 and FY07. Current completion rates for these projects are low and there is a need to focus on accelerating implementation to ensure that all activities can be completed on time.

Maintain the Implementation Speed of “Middle-Age” Projects including Northern Mountains Poverty Reduction, CBRIP, and Rural Finance II. These projects are expected to be completed within the original time-frame.

Restructure Implementation Mechanisms. The central management units in MARD are overloaded with ODA funded projects, and as a result there are

serious delays in project review/approval at the central level. Decentralized management to local provinces would help to improve the situation. As a first step it would be helpful to learn from examples of other ministries and restructure the mechanism to expedite implementation.

TF Disbursements a Challenge. The TF portfolio of the RD sector is expected to grow at a faster rate in the next FY. There is a risk that the TF Portfolio may become stagnant when the in-flow is larger than the out-flow. The in-flow as of mid-FY06 (US$ 12.5 million) is double the total amount disbursed within FY05 (US$ 6.3 million). New grants normally do not disburse well in the first year, thus the RD sector may face a challenge in ensuring a good disbursement ratio.

VN COUNTRY PROGRAM REVIEW 2005 TRANSPORT SECTOR

106

IDA Commitments & Disbursements Transport Sector

0

200

400

600

800

1000

1200


MU

SD


Annual Commitments

Chapter 6 Transport Sector

6.1 Transport Portfolio at a Glance

The Transport Portfolio Since FY94: • Cumulative Net Commitments of US$ 952 million • Cumulative Disbursements of US$ 607 million (Dec 05) • 16% of total IDA commitments for Vietnam

The Active Transport Portfolio (as of December 2005): • 5 active credits (US$ 544 million – 14% of VN portfolio) • 5 active grants (US$ 33.8 million) – 14% of VN TF portfolio) • Average project age of 4.4 years

Transport Portfolio Performance: • 100% of portfolio rated satisfactory on DO and IP • OED – All 3 projects rated satisfactory on outcomes. • Average disbursement lag: 41%.


FY01 78 MUS$ 0.3% 0.9 MUS$ FY02 21.4% 88 MUS$ 17% 5.8 MUS$ FY03 24.3% 79 MUS$ 16% 4.5 MUS$ FY04 17.1% 59 MUS$ 17% 4.0 MUS$ FY05 12.2% 52 MUS$ 33% 7.0 MUS$


Figure 6.1: Use of IDA funds in the Transport Sector

FYIDA

Credit

CAS Theme 1.3 Support for the

Domestic Private Sector

CAS Theme 2.1 Narrowing the Development

Gap

CAS Theme 2.5

Mitigating Impacts of Disasters &

Shocks

CAS Theme 3.3


Reform

Infrastructure to promote growth

Infrastructure to promote urban

growthPMUs

Highway Rehabilitation II1997

(closed)173.6

Urban Transport1999

(closed)34.6

Inland Waterways & Port Rehabilitation

199873.0

(62.7)

Rural Transport II 2000 103.9

Mekong Transport 2001 110.0

Road Network Improvement 2004 225.3

Road Safety 2005 31.7

Rural Transport III2006

(planned)106.2

Hanoi Urban Transport2007

(planned)150.0

Mekong Transport Infrastructure II

2007 (planned)

200.0

Northern Delta Transport2008

(planned)200.0

Total On-Going Projects MUSD (%) 543.9 (534) 8 (1 %) 115 (21 %) 35 (6 %) 40 (7 %) 337 (62 %) 0.0 6.5 (1 %)

Total All Projects MUSD (%) 1,408.3 (1,398)

8 (0.6 %) 330 (23 %) 35 (3 %) 78 (6 %) 790 (56 %) 173 (12 %) 6.5 (0.5%)

5610

751515 5

19812

820 6

100

339

8

100

3020

95 10

17020 10

8

1684.5

100

95


Investment Project Progress Transport Sector

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

Elapsed Times (%)D

isb

urse

men

t (%

)Targeted disbursementActual Disbursement

RS

IW

RNI

MTFP

RT2UT


107

6.2 Strategic Alignment of the Transport Sector Portfolio


Transport Sector Initiatives. Current and planned Bank initiatives in the transport sector are mainly in five areas: (i) strengthening the transport network; (ii) rural transport; (iii) road safety; (iv) urban transport; and (v) strengthening

capacity to plan, manage and maintain transport investments.

The table below maps these areas of intervention against the various relevant objectives outlined in the CAS and illustrates the varying degrees of alignment. The different sets of objectives presented in the CAS do not provide a consistent framework of priorities. This complicates a review of alignment of the various types of transport interventions, as illustrated below.

Table 6.1: Alignment of Transport Sector Portfolio to CAS objectives

CPRGS objectives

(Policy matrix in CAS annex) CAS sub-themes

CAS Sector Priorities for Infrastructure &

Urban Development

Support for Domestic Private Sector

Improve management and maintenance of investments Strengthening

Transport Network

Develop large-scale infrastructure services for growth and poverty reduction Promoting Open Trade Mobilize private sector

involvement

Rural Transport


Narrowing the development gap of disadvantaged and lagging areas

Improve access to services among poor communities in rural and remote areas

Road Safety Mitigate the impacts of natural disasters on the poor

Mitigating impact of natural disasters and shocks -

Develop industry and urban areas to create jobs and improve living conditions for the poor

Addressing the needs of the urban poor

Address deficiencies in basic service provision in urban areas Urban

Transport Strengthen environmental protection and ensure a healthy environment

Enhancing environmental sustainability -

Capacity Strengthening Public Administration Reform

Public Administration Reform Improving public financial management

Support planning for the coming urban expansion


Overall Assessment of Alignment. All projects in the portfolio, regardless of approval date, are well-aligned to at least one of the three sets of CAS priorities. Alignment is strongest with the

CPRGS objective which is possibly a consequence of the CPRGS objectives being the broadest and most comprehensive. The alignment to the CAS sub-themes is generally


108

satisfactory, but weaker than the CPRGS partly due to the absence of a focus on large-scale infrastructure in the CAS sub-themes.

Alignment to the CAS sector priorities is stronger than to the CAS sub-themes. However, some areas of interventions, such as road safety, are not included in the sector priorities. The portfolio contribution to enhancing private sector

participation, which is one of the three sector priorities for infrastructure, is not so prominent.

The transport portfolio also contributes to the achievement of Vietnam Development Goal (VDG) 11 “Ensuring Pro-Poor Infrastructure Development” and to the targets of providing basic infrastructure to 80% of poor communes by 2005 and 100% by 2010.

Table 6.2: Alignment of the Transport Sector Projects


Transport Projects FY



Themes

CAS Sector

Priorities

Inland Waterways 98 � Enhance capacity, efficiency and safety of inland waterway transport in Mekong Delta HS MS MS

Urban Transport (recently closed)

99 � Increase efficiency and safety in selected road corridors in HCMC and Hanoi MS MU MS

Rural Transport II

00 � Improve access of rural communities, improve and sustain the road network and foster private contractor development.

HS HS HS

Mekong Transport 01 � Stimulate commercial use, improve rural access and ensure permanent access in flood-prone areas in Mekong Delta

HS MS MS

Road Network Improvement

04 � Improve the national road network through increased preventive maintenance, selective upgrading and capacity building

HS MS HS

Road Safety 05 � Reduce accidents, injury and death from road transport MS S MU

Rural Transport III

06 � Improve rural access in Northern and Central provinces HS HS HS

Hanoi Urban Transport

07 � Support urban transport improvements that meet Hanoi’s growth needs while providing priority to public transport.

MS MU MS

Mekong Transport Infra.

08 � Reduce transport costs and raise efficiency of logistics services HS MS MS

Northern Delta Transport

08 � Reduce transport costs and improve service quality, raise the efficiency of logistics across modes and build capacity of VIWA and PDT

HS MS MS


6.3 Alignment of Different Transport Sector Interventions

As noted above, the different sets of objectives presented in the CAS do not provide a fully consistent framework of priorities. Below the various types of transport sector interventions

found in the portfolio are reviewed in terms of alignment to (i) CPRGS objectives; (ii) CAS Sub-themes; and (iii) CAS Sector Priorities.

Strengthening the Transport Network. The largest part of transport sector operations, accounting for US$ 337 million or 62 percent of the active portfolio, are large-scale infrastructure investment to improve major roads and


109

waterways. With two sizeable projects to improve freight efficiency in the Northern and Mekong Deltas in the pipeline, this will continue to be the mainstay of the transport portfolio over the coming CAS period. This area is clearly aligned to the CPRGS goal of developing large-scale infrastructure services for growth and poverty reduction. The CAS does not contain a similar sub-theme, but the CAS update underscores the importance of infrastructure for development. Alignment to the CAS sub-themes is thus considered weaker, although strengthening the transport network indirectly contributes to the CAS sub-themes to support the domestic private sector and promote open trade.

The transport program is strongly aligned to the sector priority of improving management and maintenance with all recently designed projects reflecting this emphasis. One of the two projects approved during the CAS period, Road Network Improvement, has a large component to improve road maintenance. Mobilizing private sector involvement is also stated as a sector priority in the CAS. Rural Transport projects provide contracting opportunities to small-scale private contractors and thus improve private sector involvement. However, the focus on private sector involvement in other projects in the portfolio is less clear.

Rural Transport. On-going rural access initiatives amount to US$ 115 million or more than 20 percent of the active transport portfolio. In addition, projects in the Rural Development portfolio (Northern Mountains and CBRIP) provide more than US$ 50 million to improve commune roads. Since enhancing rural access is a priority in all three sets of CAS objectives and there are several current and pipeline interventions supporting this objective, the alignment is strong.

Road Safety. The recently approved project on improving road safety (US$ 31.7 million or 5.7 percent of the portfolio) is in line with the CAS sub-theme to mitigate adverse impacts of shocks and disasters. However, road safety is not articulated as a focus in the CPRGS. It is also not among the sector priorities stated in the CAS.

Urban Transport. The portfolio also addresses transport issues in urban areas, with one recently closed project focusing on Hanoi and HCMC and proposed interventions in Hanoi and Danang. Improving the efficiency of the urban transport system is aligned with the CPRGS objective of developing industry and urban areas. It is also aligned with the Bank urban sector priority to improve basic services in urban areas. The CAS sub-theme is focused narrowly on addressing the needs of urban poor. As projects improving transport efficiency in urban areas only have an indirect impact on the poor, alignment of these interventions to the CAS sub-themes is weaker as there is no CAS sub-theme to which urban growth interventions can be easily mapped. The Hanoi Urban Transport project will have a component on Air Quality Management which would be aligned to the CAS sub-theme of “Enhancing Environmental Sustainability”.

Capacity Strengthening. Activities to strengthen capacity at different levels are integrated into the projects. On-going projects provide US$ 40 million (7 percent) of the IDA funds for institutional strengthening of Ministry of Transport (MOT) and its agencies and another US$ 6.5 million to support PMUs. Except for PPIAF grants to study options for a bus system in HCMC city and multimodal transport regulations, there are no stand-alone TFs to support the Transport Sector portfolio.1 The objectives of capacity strengthening are not clearly defined in the CAS or in the projects. It is therefore difficult to assess alignment in this area of support.


The CAS also identifies areas of strategic priority for the Bank’s program, including building partnerships and harmonization. In the past, there have been concerns regarding overlaps between donors in the transport sector, particularly in terms of technical assistance and

1 One ASEM Grant to support the Ministry of Transport to accelerate equitization and commercialization of the State-owned-Enterprises in the transport sector. This grant was closed in FY02. There is also a GEF grant to support preparation of the Hanoi Urban Transport project.


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systems development. However, a stronger partnership group is now being led by JBIC and there is an improved mechanism for coordination.

The Bank transport sector team has developed a strong partnership with DfID through a co-financing grant in Rural Transport II. This is expected to continue with co-financing for Rural Transport III, as well as a secondment of a DfID staff to the Bank’s office to manage this new project.

Even though only one of the projects in the transport portfolio is co-financed, given the size of this co-financing, the IDA vs. Co-financing ratio for the transport sector is the same as the country average i.e. for every IDA US$ 1 in a transport project, US$0.06 of co-financing is mobilized.


Ensure a Consistent Strategic Framework in the next CAS. In order to provide a more consistent strategic framework, the next CAS should express priorities for the transport sector more clearly and comprehensively. Links between sector objectives and cross-sectoral themes of the CAS/SEDP should be made more explicit to ensure consistency in setting priorities.

Developing a WB Sectoral Results Framework. To address the absence of a clear results framework linking project level results with the overall CAS themes and Government objectives, a sectoral results framework could be developed. Based on the strategic priorities outlined in the Bank’s transport sector business plan, as well as the current and proposed interventions, a possible sectoral results framework has been prepared. This could serve as an input into the CAS preparation, and help to ensure a higher degree of consistency between sector priorities, project objectives and the key themes of the CAS. It would also be important to link expectations of results during the next CAS period directly to what the current and planned transport portfolio is set up to achieve.

Prioritize the Pipeline based on the Focus of the Next CAS. The current pipeline for Vietnam exceeds the available IDA resources and there is a need to prioritize the pipeline in line with the criteria that is being established for the next CAS.








Strategic Planning for TF. It would be useful for the sector to prepare a TF strategic plan which would be reflected in the new CAS. Not only will this help the Government effectively coordinate grant resources for the transport sector but also help the CMU have a better strategic planning framework which prioritizes the use of TFs. In addition, it also helps the sector to effectively coordinate and gain support from other donors.

Box 6.1. Transport Sector Pipeline � Mekong Transport Infrastructure � Northern Delta Transport Development � Hanoi Urban Transport � Road Network Improvement Project II � Road Safety II � Provincial Transport Support Program (RT

IV) � Expressway Development – PPP advice � HCMC Urban Transport � Central Area Development


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Possible Transport Sector Results Framework

Bank Sector

Goals…

… and strategy

Additional Households provided with access to an all weather road within 2 kms

… with KPIs


Improve Effectiveness of Transport

Sector Institutions…

Reduce Costs and Improve

Transport Efficiency…

Improve Mobility of People and Goods in

Urban Areas ..

Reduce Traffic

Accidents and Fatalities …

Improve Mobility of People and Goods in

Rural Areas …

Improve Transport

Services …

… by investing in and maintaining all-year round access to poor communes in the North, West, Mekong and Red River Delta � Mekong

Transport � Rural

Transport II � Rural

Transport III � Mekong

Transport II � Northern Delta

Transport

… by investing in expansion and maintenance of main roads, canal networks, provincial connecting roads and feeder ways. � Inland

Waterways � Mekong

Transport � Road Network

Improvement � Mekong


Transport

… by supporting urban strategic planning, traffic management, public transport and investments in urban roads in major cities. � Urban

Transport � Hanoi Urban

Transport � Danang

Priority Infrastructure

… by strengthening the National Traffic Safety Committee and implementing road safety programs � Mekong

Transport � Urban

Transport � Road Safety

Improvement � Hanoi Urban

Transport

… by building capacity to plan, manage and maintain transport system investments. � Inland

Waterways � Rural Transport

II & III � Road Network

Improvement � Hanoi Urban

Transport � Mekong


Transport

… by improving the regulatory framework for transport and logistics, developing private sector contracting, consulting services, private sector passenger and freight � Rural

Transport II � Rural

Transport III � Road Network

Improvement � Transport

SOE reform ?

Reduced travel time on improved national and provincial roads Reduced passenger and freight tariffs Increase in volume of freight Reduction in overloading

Travel time on improved urban roads Outcome indicator on public transport

Reduced number of accidents, injury and fatalities in project corridors Performance targets for National Road Safety Strategy achieved

% of national and rural roads meeting standards for maintenance Improved performance of MOT, PDOTs, VRA, VIWA against targets

Increase in number of multi-modal transport providers Reduction in time/cost of moving goods across modes Milestones in strengthening regulations



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6.6 Results Achieved in the Transport Sector

The Bank support to the transport sector has resulted in significant improvements in rural access and strengthening of the national transport network. However, as illustrated below, the current reporting provides a fragmented picture of achievements. Information and data on results is dispersed in different reports and similar objectives are measured by different indicators across projects. Some of the results achieved during the CAS period (taken mainly from ISRs and ICRs) are summarized below.

� Strengthened Transport Network. The Highway Rehabilitation II project closed during the CAS period. About 300 km of the National Highway 1 was reconstructed leading to reductions in bus travel time by 35 percent and in freight rates by 4 percent. Also, over 1000 km of road received periodic maintenance and targets for road roughness on these roads were met (see further Box 6.2). The Inland Waterways Project has rehabilitated over 500 km of waterways and helped improve management of the Can Tho port as well as rapid increases of cargo volumes in Can Tho. The physical investments under the Mekong Transport project are delayed and therefore most of the results of the project have yet to materialize.

� Improved Rural Access. Under the Rural Transport project 1,299 roads (4,629 kms) have been rehabilitated. Based on a survey conducted in 2002-2003, this has resulted in a 20 percent increase in the roads passable all year round in the 24 provinces surveyed. The average travel time from communes to district centers have been reduced by 20 percent. The survey also looked at higher-level outcomes such as visits to health clinics and school attendance and found significant increases.

� Road Safety. The Road Safety project has not yet commenced implementation. However,

several other projects have components to improve road safety. For example the number of fatalities from motorized vehicles in HCMC has been reduced from 80 in year 2000 to 51 in 2003 in the corridors upgraded by the Urban Transport Project.

� Urban Transport. The Urban Transport project is complete and has improved 59 km of roads and over 200 junctions in Hanoi and HCMC. This helped reduce travel time by 8-17 percent in the project corridors in HCMC city. Similar improvements are expected in Hanoi.

� Capacity to Plan, Manage and Maintain Transport Investments. Most projects include components to strengthen capacity to manage transport investments. However, few indicators are in place to measure actual progress and it is difficult to quantify concrete results beyond low-level outputs such as number of people trained. The Road Network Improvement Project, which has a set of indicators related to maintenance performance, has just started implementation so no information on results is available yet.

Box 6.2. OED Evaluation for Highway II

The OED evaluation rated the quality of the ICR for Second Highway Rehabilitation Project as satisfactory, but indicated that the ICR ratings were too generous.

OED rated the outcomes of the project as moderately satisfactory, while the ICR rated the outcomes as S. The OED evaluation concluded that the objective of reducing transport costs and promoting economic development was substantially achieved. But two other project objectives (enhance the efficiency of road maintenance and strengthening capacity to conduct EIAs) were only partially achieved and the road safety objective was not achieved.

Bank performance was rated as satisfactory, but a number of shortcomings were identified including overestimation of Vietnam Road Administration’s capacity and SOE participation in bidding.


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Table 6.3: Current and Expected Results in the Transport Sector


� 20% increase in roads passable all year around (in 24 provinces surveyed) (RT II)

� Average 20% reduction in travel time to district centers (in 24 provinces surveyed) (RT II)

� Visits to health clinics and school attendance increased by 3-40% in areas with project roads (RT II)

� 4,692 km of road (1,299 road links) and 676 bridges rehabilitated in 40 provinces (RT II)

To Date

� Reduction in travel time between Nam Can and Ca Mau by 66% (Mekong Transport) From 2005

(RT II -targets not fully available): � Reduction in the number of days communities are cut off from the district

centers � Increase in traffic volume and change in traffic composition � Decrease in time needed to get to district centers in the dry and rainy seasons � Increase in the visits to health clinics and hospitals in the project areas � Increase in the number of people who have off-farm jobs � Increase in high school attendance � Increase in quality of life

2006

� 300 communes provided with all weather access (81% of the population within 2 km of all weather road) (RT III)

� 3150 km of rural roads and 250 rural bridges rehabilitated (RT III) � Reduction in percentage of transportation time to nearest schools/markets

(RT III – target not established)

2012

1. Improve mobility of people and goods in rural areas

Expected results from Northern Delta Transport, Mekong Transport II

� 9% increase in freight volume between Can Tho and HCMC (Mekong Transport)

� Cargo volumes in Can Tho have increased rapidly exceeding project targets by 7 to 60% (Inland Waterways)

� Throughput in Can Tho port was 600,000 tons in 2003 (an increase by over 300% compared to 1996) (Inland Waterways)

� 4 bridges constructed and 546 km of waterways dredged (Inland Waterways)

To Date

2. Reduce transport costs and improve the efficiency of freight mobility

(Mekong Transport) � Increase in volume of freight measured through increase in truck traffic to Can

Tho and Ho Chi Minh City by 6% annually � Reduction in freight tariffs in real terms between Can Tho and Ca Mau by 3% � Reduction in travel time by bus between Can Tho and Ca Mau by 10% � Reduction in travel time between Nam Cam and Ca Mau by 66% � Reduction in the aggregate annual overloading recorded at each of the 3

permanent weight stations by 10% annually � Reduction in annual duration of road closures in each of the 4 flooded

sections along Dong Ha and Quang Ngai by 50% average per section

From 2005


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(Road Network Improvement) � 1,100 kms of national roads repaired � Rehabilitation and widening of 600 km of national roads in the North

of Vietnam � 15% reduction in travel times on improved project roads � 10% reduction of passenger and freight rates on improved project

roads

2008

Expected results from Northern Delta Transport, Mekong Transport II

� Travel time reductions in HCMC project corridors by 8-9% and 17% in central area (Urban Transport)

� 23 km of corridors and 78 junctions improved in Hanoi (Urban Transport) � 36 km of corridors and 135 junctions improved in HCMC (Urban Transport)

To Date

� Average travel time in Hanoi project corridors reduced by 10% 2005

3. Improve mobility of people and goods in urban areas

Expected results from Danang Priority Infrastructure, Hanoi Urban Transport

� Fatalities from motorized vehicles reduced from 80 to 51 per year in HCMC project corridors (Urban Transport) To Date

� Reduction in the total number of accidents on black spot locations upgraded under the project by 40% (Mekong Transport) 2005

4. Reduce road accidents, injury and death

(Road Safety) � Rates of accident reduced by 30%, injury and fatalities by more than 50% on

project road corridors � Development and government approval of a national road safety strategy

specifying achievable performance targets and a financing plan � Driver behavior and compliance with vehicle and licensing standards on project

corridors improved (no target) � M&E framework implemented in project corridors and used to prioritize road

safety interventions and National Road Accident Database System established and updated regularly

2009

� 193 Maintenance training courses with involvement of 5,600 communes, 300 districts and 59 provinces (RT II)

� Financial performance of the Can Tho port has improved (Inland Waterways) To Date

(Rural Transport II) � Enhanced capacity of MOT-PMU18 to support delivery of rural transport

services � Enhanced capacity of the PDOTs and districts to support the development of

rural transport � Program for rural road maintenance implemented � Program for core rural road network rehabilitation implemented

2006

5. Improve the institutional effectiveness of MOT/VIWA/VRA (LTUs, Provinces, City Authorities)

(Road Network Improvement) � Preventive maintenance undertaken on national roads increased

2008


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� Reduction in average road roughness on project roads from 5.5 to 3.6 (ISR) � National road asset database created and used for network monitoring and

reparation of annual budgets � Annual reports on national road performance published and disseminated (Rural Transport III) � 40% of district roads in good/fair condition � 6% of overall provincial plan allocated to maintenance � 20,000 km of district roads maintained � 20 provinces with prioritized provincial transport plans � 40 provinces provide current road condition data in VRA-LTU database � 14,000 people trained on management and maintenance of rural roads

network

2012

Expected results from Inland Waterways

� Training provided to 636 winning contractors on procurement and financial management, as well as on maintenance (RT II) To Date

6. Improve transport services

� Expected results from other projects

6.7 Managing for Results in the Transport Sector

The Project Results Frameworks. The results frameworks of transport sector projects are in general satisfactory. Most projects have clear Project Development Objectives (PDOs) and good Key Performance Indicators (KPIs) to measure progress. The Road Safety project has an excellent results framework. The Mekong Transport and the Road Network Improvement project also have sound overall results frameworks. Some projects, however, do not have complete baselines and targets for all indicators, reducing the overall quality of the monitoring framework.



Quality of Project Development Objectives. The PDOs of most transport projects are satisfactory. However, some PDOs focus on higher level objectives such as reducing poverty, improve growth and strengthen capacity and it is difficult to attribute project contribution against such goals. To ensure meaningful assessments of progress against PDOs, many PDOs would need to be strengthened to more clearly identify




(iii) Baselines and targets for all KPIs; and (iv) Updated progress information on KPIs, used

to inform decision making.


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the direct outcome (i.e the expected change for target beneficiaries) such as improved and safe mobility of people and goods in a specific area. All future projects should ensure that PDOs focus on outcomes that can be attributed to the project.

Quality of Key Performance Indicators. In general, the transport projects have well-designed indicators that are relevant to measuring progress on the project objectives. These include reduction in transport times, increase in year-round all-weather access and reduction of traffic accidents and fatalities. The transition to the new reporting format in the ISR, has however weakened the results framework for some projects such as the Road Network Improvement Project, Road Safety and the Rural Transport II. It is important to ensure that all key aspects of the project objectives are being monitored. Where this is no longer the case, the ISR should be revised.

Indicators Used. Currently, progress on the transport portfolio is monitored by almost 40 different KPIs. Some of these KPIs are monitoring project inputs/outputs, such as number of persons trained or kms of bridges and roads built. Others are measuring progress on higher-level outcomes such as increased number of visits to health clinics. Although the transport projects all contribute to similar objectives, when these indicators are aggregated on a transport portfolio level, they do not support a consistent story of the results being achieved.

Also, KPIs for relatively similar projects vary. Below are some examples of areas where there are opportunities to develop greater consistency across projects. This may also facilitate alignment with Government monitoring and targets, including the VDGs:

� Transport Efficiency Indicators. Currently, different projects use variations of similar standard transport indicators to measure transport efficiency e.g. reduced travel time, passenger and freight rates, traffic level, traffic composition. These could clearly be rationalized.

� Rural Access. The projects are measuring rural access in different ways e.g reduction

in number of days communities are cut off from district centers, decrease in travel times in dry and rainy seasons and percentage of people living within 2 kms of an all weather road. The Northern Mountains project is measuring reductions in travel times to markets. Ideally, projects with rural access components should measure rural access in the same way, linking up with the GOV/CPRGS target of year-round access on 70 percent of rural roads by 2005 and 90 percent by 2010.

� Institutional Effectiveness. The monitoring and reporting on capacity building is currently not well developed with few indicators to support progress assessments. Output measurements such as “number of people trained” or input measures such as “number of courses delivered” are common. Although many projects target the same beneficiaries, there appears to be no systematic way of measuring progress on institutional strengthening activities.

Quality of the Project M&E System. The quality and use of the project monitoring and evaluation (M&E) systems vary. As can be seen from Table 6.4, only two of the six active projects have complete monitoring frameworks with baselines and targets. Although, on-going for long periods, several projects such as the Inland Waterways, Rural Transport II, and Urban Transport do not have complete baselines and targets.

Table 6.4: M&E in Transport Projects

Transport Projects Baselines? Targets?

Inland Waterways Partly Partly

Urban Transport Partly Partly

Rural Transport II No No

Mekong Transport Yes Yes

Road Network Yes Yes

Road Safety Partly Partly

Rural Transport III (pipeline FY06) Partly Partly


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Table 6.5 summarizes the assessments of individual results frameworks in the transport portfolio. A summary of identified strengths and weaknesses for each project is shown below.

Inland Waterways and Ports Rehabilitation. The project objective clearly defines the outcomes to be achieved and the project has a sound performance monitoring framework. However, some aspects of the PDO such as safety improvements and transport efficiency are not being measured. The indicator for institutional strengthening (currently an output measure: “number of staff trained”) could be strengthened by focusing on improvements in the planning, operation and maintenance of the waterways. The ISR attempts to update information, but baselines are lacking and the targets are not clear (some are for year 2000). Progress information is vague e.g. “financial

performance of Can Tho port has improved” with no reference to specific data.

Urban Transport Improvement. The PDO focuses on the outcomes i.e. the improvements in safety and mobility of the urban population/goods. The project logframe includes indicators in line with the PDO. After strong efforts from the task team, baselines and targets are now partly established. The ISR introduced changes to KPIs which have weakened the results reporting framework. For example, the original KPI of “increased awareness about traffic management practices among TMD & TPD” would be a better measure of the results, than the KPI currently reported in the ISR: “no of staff trained”. The project was recently downgraded to MS for the DO. It would be important to collect all the necessary information to complete the ICR and justify ratings appropriately before the end of FY06.

Table 6.5: Assessment of the Results Frameworks of Transport Projects

Results Framework Project Clarity of

PDO Quality of

KPIs Quality of

M & E Overall

Inland Waterways S MS MU MS

Urban Transport S MS* MS MS

Rural Transport II S MS* MU MS

Mekong Transport MS HS MS S

Road Network MS S* S S

Road Safety HS HS S HS

Rural Transport III S HS HS HS

Hanoi Urban Transport MU - - -

Northern Delta Transport MU - - -

Mekong Transport II MU * The migration to ISR significantly changed the KPIs, compared to the original set in the PAD. The rating is based on PAD indicators.

Rural Transport II. The PDO is clear and focuses on increasing flows of people and goods in rural areas. The KPIs include standard

transport indicators that are specific to the PDO, attributable and time-bound. However, the KPIs do not cover all aspects of the stated PDO, e.g.


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there are no indicators on institutional strengthening and private sector development. No baselines, nor end of the project targets are given. The ISR has incorporated some outcome measures, but the information is incomplete and inconsistent (e.g. on the indicator “reduction in number of days communities are cut off from district centers” it is reported that “all communes under 40 provinces are connected to district centers”). Outcome indicators such as increase in visits to health facilities and high school attendance may be difficult to directly attribute to the project and could be measured outside the project framework (e.g. through household surveys). The results framework needs to be strengthened in the ISR and all necessary information collected by June 2006 in order to allow a timely completion of the ICR, due by the end of Dec 2006.

Mekong Transport and Flood Protection. The PDO is clear but could have focused more explicitly on the outcome of “safe mobility of people and goods in the Mekong Delta”. The project monitoring framework contains a set of well-defined indicators. While targets were specified, no baseline data was provided in the original logframe. This is one of the few projects where the team has made considerable effort to strengthen the M&E system and baseline data is now available. Most of the indicators show progress in the right direction i.e. shorter travel times, fewer accidents and reduced duration of flooding. The DO rating was however recently downgraded to MS due to lack of progress on the physical implementation side.

Road Network Improvement. The PDO could have more specifically stated the outcomes of the project (improve safety and mobility of people/freight). Although not clearly stated in the PDO, these outcomes are being measured by a well-developed set of indicators, as outlined in the PAD. Baselines and targets are established for all KPIs. Unfortunately, the results reporting framework in the ISR was simplified, reducing KPIs to only one: “reduction in the road roughness”. Indicators on impact, travel time and freight rates were dropped. It is important to ensure that all aspects of the PDO are monitored. This would mean reinstating

reporting on some of the original KPIs in the ISR. Since increasing resources for maintenance is part of the PDO, introducing an indicator on the level of financing for road maintenance might be useful.

Road Safety. The PDO is clear and brief and focuses on outcomes, as well as the means to achieve reduced rates of fatalities and injury on roads. The KPIs are excellent and the results framework in the PAD contains end of the project targets and baselines for the PDO KPIs. However, baselines and targets for the intermediate outcomes are yet to be completed. As in the case of RNIP, reporting on some of the good KPIs in the PAD have been dropped in the ISR e.g. the intermediate outcome indicators on road safety behavior, compliance with vehicle standards, as well as reporting on road safety. To enable an assessment of implementation progress, it is suggested that all relevant intermediate indicators (with targets) are reported in the ISR.

Rural Transport III (pipeline FY06). The proposed PDO is clear and expresses the expected change for the target beneficiaries. The proposed results framework for the project is robust with SMART KPIs that measure project results (outputs, milestones and outcomes). Baselines and targets are established for all but two of the KPIs. Data collection arrangements appear realistic, relying on Vietnam Living Standards Survey and Ministry of Transport data. This project has one of the best results framework in the sector.

Other Pipeline Projects. Only limited information is available on the results frameworks for the proposed Hanoi Urban Transport project, Northern Delta as well as Mekong Transport Infrastructure projects. The CPR team reviewed the draft PDOs and suggests that these be further strengthened to ensure a focus on well-defined outcomes.


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Since there is no stand-alone grant, none of the transport grants were included in the panel review on TF results framework.


Simplifying and Identifying Common KPIs. There is scope for simplifying and improving M&E by focusing project monitoring on a few, common indicators directly related to fulfilling the sector objectives (as exemplified above). In the proposed sectoral results framework in Annex 1, a reduced number of possible common KPIs are presented. Among them, it is proposed to establish a standard set of outcome indicators for institutional performance in the sector.

Collecting Transport Efficiency Data. The data collection on standard transport indicators could be included as part of the establishment of the national road asset database. All projects would however continue to provide transport efficiency data related to specific project

investments that could be checked and compared against the overall database.

Measuring Higher-level Outcomes. Higher-level outcomes should still be monitored, but not necessarily as part of individual projects. A province-wide approach to monitoring of impacts of household and village access to basic services could be used. This would enable comparisons between rural areas with and without access to all-weather roads. The Rural Transport III project will for example rely on Vietnam Household Living Standard Survey for data on impacts.

Strengthen the Project Level Results Frameworks. Some suggestions to strengthen the results frameworks for individual projects are provided above. In general recommending:

� PDOs. for of all pipeline projects need to clearly focus on outcomes.



� ISRs. Improve reporting on results in ISRs.


Table 6.6: Transport Sector Portfolio (as of December 2005)

Project Name Age (Yrs)

DO Rating

IP Rating

Net Comm. ($mln)

Cum. Disb.

($mln)

Disb. Lag

Inland Waterways 8.2 S S 73.0 (62.7) 52.2 24% Rural Transport II 6.0 S S 103.9 86.0 17% Mekong Transport 5.0 MS MS 110.0 57.6 48% Road Network 2.0 S S 225.3 12.5 78% Road Safety 0.6 S S 31.7 0.0

Sub-total 4.4 543.9 (534) 238.0 42%

Urban Transport (closed in Dec 2005) 7.4 MS S 34.6 26.7 38%


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6.12 Facts

Transport Portfolio. The transport portfolio consists of five active credits (US$ 544 million) accounting for 14 percent of the total portfolio. With two projects expected to close and one to be approved before the end of the FY06, the size of the portfolio is set to decrease slightly in the immediate term. However, the FY07-FY08 transport sector pipeline is strong with three large operations under preparation (Hanoi Urban Transport, Mekong Transport Infrastructure Development and Northern Delta Transport).

Recipient-executed TFs in the Transport Sector. The transport sector accounts for a relatively modest 11 percent of the Vietnam TF portfolio (ranked 4th in FY05). All TF resources in the transport sector are used for project preparation or co-financing. There are currently four active grants (US$ 33.8 million), two PHRD and one GEF for project preparation, as well as one large co-financing grant which accounts for more than 90 percent of the transport TF portfolio.

Figure 6.2: Transport Sector TF Portfolio

0.15.8

4.64.0

7.0

0

51015

202530

3540

US

$ m

illion


Vietnam: Transport Sector - TF Portfolio


This large DfID co-financing grant of nearly US$ 33 million for Rural Transport II is coming to an end as the project closes in FY06. This grant is however expected to be followed by DfID support of around US$ 25 million to the planned Rural Transport III Project (FY06), which would ensure that the size of the TF portfolio would remain at current (or higher) levels.


Progress towards Meeting Development Objectives. All transport projects are rated satisfactory in terms of achieving the development objectives. Due to slow implementation progress, the Mekong Transport is rated only moderately satisfactory.

Delays in Implementation. Both the Mekong Transport project and the Road Network Improvement Project are significantly behind schedule. The average disbursement lag for the portfolio is 42 percent. The disbursement ratio of the portfolio has been declining over the recent years and was below the country average in FY05.


Disbursement PerformanceTransport Sector

0.0

5.0

10.0

15.0

20.0

25.0

30.0


Dis

bu

rsem

ent R

atio

Transport Sector Country Portfolio

Main Implementation Issues. The counterpart funding problem which previously affected implementation of most projects in the transport sector (identified in the last CPPR as the major issue) has been resolved. Currently, the main issues arise from weak capacity of contractors to perform agreed work and weak capacity of PMUs to manage these contractors. If PMUs do not strengthen contract management skills, and no enforcements are applied to weak performing contractors, delays will continue.


Inland Waterways and Port Rehabilitation. This project has been under implementation for


121

more than eight years. The closing date has recently been extended a third time to March 2006 due to delays in implementation of key contracts caused by resettlement issues and weak capacity of the contractors. US$ 10.3 million was cancelled at a late stage of project implementation and further savings are proposed to be used for additional works. The project is rated satisfactory by the task team in all areas. Given the slow pace of implementation (8 years of implementation; 46 months of disbursement lag against original; revised disbursement lag of 24 percent) and poor project planning, the task team may wish to review ratings for IP, project management and procurement.

Urban Transport. This project has been under implementation for seven years and was closed in December 2005. The project has faced persistent problems on implementation, especially in one important component. It was recently downgraded to MS on DO. The Implementation Completion Report is due by the end of FY06. The team is encouraged to be candid about the poor IP, project management and procurement performance.

Rural Transport II. After six years of implementation, this project is coming to a close. More than 80 percent of the funds have been disbursed. There are a large number of small contracts under the project and ensuring that all are completed on time will be important. Collusion has been reported in 15 of 41 provinces and measures to ensure more transparent procurement processes were undertaken. However, the results of these efforts are unclear. Procurement is rated unsatisfactory by the Task Team, which is fair.

Mekong Transport. This project has seen considerable improvements in implementation since the mid-term review in 2004. Disbursements have been picking up and more than US$ 24 million has been disbursed so far in

FY06. However, the disbursement lag is still close to 50 percent and concerns related to the performance of contractors for the five main ICB packages remain. Contract management skills need special attention to ensure the quality and timely completion of the large contracts. The ratings on the project are realistic.

Road Network Improvement. This project has been under implementation for two years. Almost 40 percent of implementation time has elapsed but only 6 percent of the funds have been disbursed. Though the implementation progress has been picking up in FY06, the disbursement lag is close to 80 percent. There are delays in the preparation and approval of detailed engineering designs and bidding documents for first year civil works contracts. Given the slow implementation progress, and delays in procurement, the generous ratings should be reconsidered.

Road Safety. This project was approved in June 2005. More than seven months have elapsed since board approval and the project is not yet effective. As per the recent extension of the effectiveness date, the project should be declared effective not later than April 3, 2006. To avoid an effectiveness delay flag, which appears after 9 months, the team should however work to ensure that the remaining four effectiveness conditions are fulfilled latest by the beginning of March. The slow start up of this complex project is concerning and it would be important to accelerate procurement activities for the FM system and expedite the approval of the PIP by MOT to avoid implementation delays.


Based on implementation performance, as reported in ISRs and Aide Memoires, the CPR team would like to suggest a review of the following project ratings, as highlighted in the table below.


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Table 6.7: Realism of Transport Sector Ratings

Transport (Active Projects) DO IP Project

Management Financial

Management

Counter-part

Funding

Procure-ment M&E Safeguard

Inland Waterways S S (MS) S (MS) S S S (MS) S S

Urban Transport MS S (U) S (U) S S S (U) S S

Rural Transport II S S S S S U S S

Mekong Transport MS MS MS MS S S MS MS

Road Network S S (MU) S (MU) S S S (MU) S S

Road Safety S S S S S S S S

Note: The table summarizes current ratings of active transport projects. In light of the slow implementation progress of some of the projects, it is suggested that the highlighted ratings be reviewed. Suggested ratings by the CPR panel are presented within parenthesis. Project Management. All transport projects are managed by permanent PMUs who have considerable experience in managing ODA assisted projects. There are nevertheless weaknesses, for example in the case of the Mekong Transport project where project management deficiencies are resulting in significant delays in project implementation. Although rated satisfactory, the Road Network Improvement Project and the closed Urban Transport Project have also been affected by weak PMU capacity to manage project implementation.

Financial Management. All transport projects are rated satisfactory on financial management, except for Mekong Transport. The ISRs do not indicate any major shortcomings in this regard.

Counterpart Funding. The last CPPR rated three transport projects Unsatisfactory on financial performance,2 mainly reflecting the lack of counterpart funds for RAP implementation (Inland Waterways, Rural Transport II and Mekong Transport & Flood Protection). The Prime Minister issued a directive (No 17 CT/TTg) in May 2004 that requested Ministries, agencies, provinces and cities under Central Authority to conduct a review to ensure the sufficient

2 Since then a new rating for Counterpart Funding has been introduced in the ISR.

counterpart funds for ODA programs and projects. Counterpart funding issues have now largely been resolved.

Procurement. In general transport projects are managed by experienced PMUs with adequate procurement staff who are familiar with the Bank’s procedures and guidelines, the procurement system operates well and needs only moderate supervision and Bank inputs. Only the Rural Transport II project is rated unsatisfactory on procurement efficiency and effectiveness due to the large number of collusion cases identified. This is an improvement over the last CPPR when three projects were rated unsatisfactory on procurement (Inland Waterways, Rural Transport II and Mekong Transport & Flood Protection).

Monitoring and Evaluation. The ISRs rated all projects except Mekong Transport, satisfactory on M&E. See previous section for a further discussion on the strengths and weaknesses of the project level results management systems.

Safeguard Management. Three safeguard policies that commonly apply to transport projects are environmental assessment, indigenous people and involuntary resettlement. All transport projects were rated satisfactory on indigenous people and involuntary resettlement. Yet, issues related to RAP implementation exist


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especially when affected people do not accept the compensation level. In most cases only one or two households are involved but this impedes work in most transport projects. On environmental assessment, the Mekong Transport & Flood Protection Project is rated MS, which is realistic.

6.16 Quality at Entry A QAG assessment was done of the quality at entry of the Road Network Improvement Project. The project was rated Moderately Satisfactory (MS). The strategic relevance, the technical, financial and economic aspects, as well as the risk assessments among other areas were rated satisfactory. Fiduciary aspects, policy and institutional aspects and implementation arrangements were rated MS, as were Bank inputs and processes. The QAG panel observed that there were a number of missed opportunities in designing the operation (e.g. project readiness for implementation and procurement).

6.17 Project Readiness Two projects have been approved so far during the CAS period (Road Network Improvement Project and Road Safety). RNIP took 10 months from approval to effectiveness and received an effectiveness delay flag. Road Safety was approved in July 2005 and has not yet been declared effective. Both projects are beyond the Bank standard of 4 months from approval to effectiveness.

6.18 Project Closure Four projects in the transport sector have closing dates in FY06 (Urban Transport, Inland Waterways, Rural Transport II and Mekong Transport). The Urban Transport project was closed in December 2005 and the Inland Waterways project is expected to close in March 2006. Both these projects have been extended three times. The Rural Transport II project is expected to close in June 2006, without an extension. If this materializes, this would be the first project over the last five years to close without an extension! The Mekong Transport project is expected to seek a first time 18 months extension. Close attention is needed by the task

team to ensure that all activities of these closing projects can be completed on time.

6.19 Use of Country Systems Efforts to ensure that more sustainable systems are created and supported through the Bank transport portfolio are underway. Ministry of Transport has a reliable, well-established PMU system and additional institutional arrangements are usually not necessary. An integral part of the Rural Transport III design is focused on strengthening the country systems and gradually increasing the use.

6.20 TF Portfolio Performance High TF Disbursements. The FY05 disbursement rate for the transport sector TF portfolio was 33 percent, nearly twice the overall Vietnam TF portfolio (17 percent). Disbursements in FY05 amounted to US$ 7 million. This was close to twice the amount disbursed in FY04 (US$ 4 million) – an increase that can be attributed to the out-going co-financing grant by DfID for Rural Transport II. The co-financing grant disbursed US$ 6.8 million in FY05.

Slow Grant Start-up. The average start-up period for grants in the transport sector was 7.3 months during the period FY01-05. This is slightly better than the average of the country portfolio (7.8 months), but slower than the regional average of 6.5 months. Since most grants are for project preparation, the slow activation period translates into delays in project preparation.

Figure 6.4 TF Disbursement Perfomance

Vietnam: Transport Sector - TF Disbursement Ratio

0%

5%

10%

15%

20%

25%

30%

35%


US

$ m

illion



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6.21 Looking Ahead - Strengthening Project Implementation

Ensure Timely Closure. There are three projects expected to close in FY06. The task teams should ensure that all activities are completed to allow the Inland Waterways project and Rural Transport project to be completed on time. Should the Mekong Transport and Flood Protection seek an extension, the approval of such a request should be reviewed based on the performance under the main contracts.

Reduce Start Up Delays. Average elapsed time from Board approval to effectiveness of transport projects is 6.5 months. The Road Network Improvement Project took 10 months and seven months have elapsed since the approval of the Road Safety project. It is recommended that for pipeline projects, the Vietnam Readiness filter be rigorously applied to avoid start-up delays. Also, in many transport projects, the first year after board approval is spent on designing civil works contracts, with construction starting only in year two. It would be important to ensure that the design of components in the first Annual Work Plan be completed during project preparation so that civil works construction can start early.

Early Cancellation of Credit Savings. In some cases, implementation progress of the main contracts has been slow, but new proposals using credit savings are still considered. The CPR team recommends that both the Bank and the Government focus efforts on existing works and consider new proposals only if the progress of existing works is satisfactory.

Strengthening Contract Management. Many contracts in transport projects have been extended multiple times. There are several big contracts in transport projects where implementation was delayed due to weak financial capacity of contractors, neglecting constant requests of the Bank to mobilize resources to the site. The CPR team suggests establishing a black-list of weak performing contractors to limit the access of those contractors to Bank assisted projects.

Improve Realism of Ratings. As suggested in the text and tables above, in light of implementation progress, the ratings of Road Network Improvement Project, and Inland Waterways should be reviewed.

Accelerate Grant Start-up. There is still room for improving the start up of grants. For example, after the Prime Minister’s authorization to approve the PHRD grant for Mekong Transport Infrastructure Development Project, it took the Ministry of Transport nearly two months to issue an Approval Decision. Given greater decentralization of grant approval to line Ministries in the forthcoming revised Decree 17, the sector could help the Ministry of Transport to streamline the approval process for grants.

State-Owned Enterprises. The transport sector has experienced its share of implementation problems because of the large number of dependent SOEs. While the contracts have been declining, especially for smaller contracts as is evident in RTP-I and II, the larger contracts still face the problem (e.g. in Mekong Transport and Flood Protection). Unfortunately, there is no short-term solution. The MOT has sought the Bank’s support in resolving this issue through a longer-term equitization program. Once this is undertaken, the problems of dependent SOEs and associated issues of conflict of interest and contract enforcement will diminish.

Fiduciary Risks. RTP-II highlights the increased fiduciary risks associated with decentralized implementation. An analysis shows the risks of collusion are greater with small-value contracts in remote provinces. The teams have undertaken actions to mitigate these risks. For example, RT-III includes an action plan to mitigate these risks, while the on-going RT-II has received increased vigilance from the team. Additional actions (as specified in the Fiduciary Approach paper) could be taken. These will raise the bar further and make collusion increasingly difficult.

VN COUNTRY PROGRAM REVIEW 2005 URBAN DEVELOPMENT SECTOR

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IDA Commitments & Disbursements Urban Development Sector

0

100

200

300

400

500

600

700


MU

SD


Annual Commitments

Chapter 7 Urban Development Sector

7.1 Urban Portfolio at a Glance

The Urban Portfolio Since FY94 (as of December 2005): • Cumulative Net Commitments of US$ 695 million • Cumulative Disbursements of US$ 135 million • 12 % of total IDA commitments for Vietnam

The Active Urban Portfolio (as of December 2005):

• 5 active credits (US$ 628 million – 16% of VN portfolio) • 8 active grants (US$ 14 million – 5.9% of VN TF portfolio) • Average project age of 2.9 years

The Urban Portfolio Performance:

• 100 % of portfolio rated satisfactory on DO, 73% rated satisfactory on IP

• Average disbursement lag: 67%


FY01 6.8% 12 MUS$ 49% 2.4MUS$ FY02 6.4% 18 MUS$ 8% 0.6MUS$ FY03 9.7% 25 MUS$ 12% 0.9MUS$ FY04 9.0% 23 MUS$ 27% 1.8MUS$ FY05 6.9% 32 MUS$ 28% 3.1MUS$


Figure 7.1: Use of IDA funds for Urban Development

FYIDA

Credit (MUSD)

CAS Theme 1.1 Financial Sector

Development

CAS Themes 1.2 SOE Reform /

3.3 Public Admin Reform

CAS Theme 2.1 (iv)

Addressing Needs of the Urban Poor

CAS Theme 2.5


Infrastructure to promote urban

growth

PMUs

Water Supply 1997closed

60.3

3 Cities Sanitation 1999 80.5

HCMC Env Sanitation 2001 166.3

Urban Upgrading 2004 222.5

Urban Water Supply Development

2005 112.6

Coastal Cities Sanitation 2007 120.0

Danang Priority Infrastructure

2007 150.0

Municipal Infrastructure Fund

2008 150.0

Urban Water Supply Development II

2009 100.0

Rural Water Supply 2006 45.9

Total On-Going ProjectsMUSD

(%)627.8 29 (4 %) 15 (2%)

105 (17 %)38 (6%)

379 (65 %) 47 (7.5%) 10 (2 %)

Total All ProjectsMUSD

(%)1,117.2 92 (8 %) 28 (2 %) 197 (16 %) 535 (44 %) 285 (26 %) 14 (1 %)

CAS Theme 2.1 (ii) Services for lagging regions

15 135

38

67

38

7

38 537

75

60

53

164

103

75

47

50 50

75


Investment Project Progress Urban Development Sector

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

Elapsed Times (%)D

isbu

rsem

ent

(%)


3CS

HCM CESUrU

WSDRRWSS


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7.2 Strategic Alignment of the Urban Portfolio

CAS Strategy. The current Vietnam CAS contains multiple sets of objectives: (i) the Government strategy as expressed in the CPRGS; (ii) the overall three CAS themes divided into 16 sub-themes; (iii) specific sector priorities; (iv) the Vietnam Development Goals and (v) program goals such as strengthening partnerships and harmonization

Urban Development Sector Initiatives. Current and planned Bank investments in the urban development sector cover mainly seven areas: (i) urban access to water supply and sanitation; (ii) drainage/sewerage systems; (iii) waste water treatment; (iv) solid waste management; (v) urban growth promotion; (vi) utility reform and

capacity building and (vii) micro-finance for housing and sanitation improvements. The urban development team also manages one project to improve rural access to water supply and sanitation.

The table below maps these areas of intervention against the various relevant objectives outlined in the CAS and illustrates the varying degrees of alignment. The different sets of objectives presented in the CAS do not provide a consistent framework of priorities. This complicates a review of alignment of the various types of urban interventions, as illustrated below.

Rural water supply is mapped against the priorities of the Rural Development sector.

Table 7.1: Alignment of Urban Development Portfolio to CAS Objectives

Areas of Intervention CPRGS objectives

(Policy matrix in CAS Annex)

CAS sub-themes CAS Sector Priorities for Urban Development

Urban Access to Water Supply and

Sanitation

Drainage/ Sewerage Systems

Develop industry and urban areas to create jobs and to improve living conditions for the poor

Narrowing the development gap of disadvantaged and lagging areas – Addressing the needs of the urban poor

Address deficiencies in basic service provision in urban areas

Waste water Treatment

Solid Waste Management

Strengthen environmental protection and ensure a healthy environment



Urban Growth Promotion

Develop large-scale infrastructure services for growth and poverty reduction

Narrowing the development gap of disadvantaged and lagging areas – Addressing the needs of the urban poor


Utility Reform / Capacity Building

Reform SOEs to strengthen their efficiency and competitiveness

State Enterprise Reform Support planning for the coming urban expansion

Micro-Finance

Reform banking sector and financial organizations to mobilize domestic capital resources

Financial Sector Development Address deficiencies in basic service provision in urban areas



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Table 7.1: Alignment of Urban Development Portfolio to CAS Objectives (continued)



CAS sub-themes CAS Sector Priorities for Rural Development

Rural Access to Water

Supply and Sanitation


Narrow the development gap- improve services to lagging regions

Expand off farm employment Ensure equitable growth


Overall Assessment of Alignment. Most of the projects in the urban development portfolio have multiple objectives: (i) improve access to basic services; (ii) contribute to urban economic growth; (iii) improve environmental and health conditions; and (iv) strengthen utility performance. As such, all projects are well-aligned to at least one or two of the priorities under each of the three sets of CAS objectives.

The CPRGS contains a broad objective of developing industry and urban areas to create jobs and improve living conditions for the poor. All urban projects contribute to and are aligned to these broad objectives. The CAS sub-themes do not include a similar broad focus on developing urban areas, but most interventions are aligned to the CAS sub-theme of improving environmental sustainability and also support directly or indirectly the sub-sub theme of “addressing the needs of the urban poor”.

The alignment to the CAS sector priorities is generally satisfactory since they focus on basic service delivery to urban population and planning

for urban expansion. However, the sector priorities do not mention environmental sustainability and utility reform.

The Urban Portfolio also contributes to the achievement of the Vietnam Development Goal 7 Enhance Environmental and the associated targets outlined in Box 7.1.

Table 7.2: Alignment of the Urban Development Portfolio

Alignment CPR Panel Assessment Urban

Development Projects

FY Project Development Objective


Themes

CAS Sector

Priorities

3 Cities Sanitation 99

� Sustained improvements to public health, increased economic development by reducing flooding, upgrading urban environment and developing sustainable URENCOs

S S S

HCMC Env. Sanitation 01

� Sustained improvements in public health and well-being of 1.2 million residents in HCMC particularly the poor and promote increased economic development

S S S

Urban Upgrading 04 � Alleviate poverty in urban areas by improving the living

conditions for the urban poor using participatory planning methods and influencing planning processes

S HS S

Box 7.1. Vietnam Development Goals

Vietnam Development Goal 7: “Ensure Environmental Sustainability”

(vi) Ensure that 60% of urban population has access to clean and safe water by 2005 and 85% in 2010. This should be the case for 80% of urban people in 2005;

(vii)Ensure that there are no slums and temporary houses in all towns and cities by 2010;

(viii) Ensure that all waste-water in towns and cities is treated by 2010;

(ix) Ensure that all solid waste is collected and disposed of safely in all towns and cities by 2010;

(x) Air and water pollution must attain national standards by 2005


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Urban Water Supply 05

� Improve water and household sanitation services in district towns and large urban centers in ways that are financially and environmentally sustainable

S MS S

Rural Water Supply * 06

� Improve water and household level sanitation services in rural communities in four provinces in the Red River Delta in a financially, technically and environmentally sustainable way

HS HS MS

Coastal Cities Sanitation 07

� Sustain improvements in environmental conditions in Nha Trang, Quy Nhon and Dong Hoi. S S S

Danang Priority Infrastructure 07

� Improve living conditions and productivity of low income households, promote economic growth and improve city and district level management

S MS S

Municipal Dev. Fund 07

� Develop municipal finance system, improve efficiency of municipal infrastructure finance and enhance the role of the private sector

- - -

HS- Highly Satisfactory, S-Satisfactory, MS- Moderately Satisfactory, MU-Moderately Unsatisfactory, U-Unsatisfactory, HU- Highly Unsatisfactory * Alignment assessed against Rural Development priorities and objectives

7.3 Alignment of Different Urban Interventions

As noted above, the different sets of objectives presented in the CAS do not provide a fully consistent framework of priorities. Below the various types of urban sector interventions found in the portfolio are reviewed in terms of alignment to (i) CPRGS objectives; (ii) CAS Sub-themes; and (iii) CAS Sector Priorities.

Urban Access to Water Supply and Sanitation Services. Providing access to water supply and sanitation services for the current and expanding population in urban areas is a key objective of the urban sector portfolio. On-going initiatives in this area account for US$ 105 million or 18 percent of the current urban development portfolio. This is well aligned to the CAS sector priority of “addressing deficiencies in service provision in urban areas”. These initiatives are also aligned to the CAS sub-sub theme of “addressing the needs of the urban poor” and the CPRGS objective of “developing urban areas and industry to improve living conditions for the poor”, although project beneficiaries are not exclusively the urban poor.

Drainage and Sewerage Systems. To improve services for the urban poor, upgrading of the backbone infrastructure is necessary. These large-scale investments bring benefits of reduced flooding and improved sanitation more broadly to urban residents and businesses. For example, of

the US$ 220 million allocated for the Urban Upgrading project, US$ 80 million are investments to upgrade infrastructure which would directly benefit the urban poor. US$ 135 million are necessary complementary investments in primary and secondary drainage and sewerage systems which would benefit the entire urban population.

Waste Water and Solid Waste Collection and Treatment. Investments in waste water and solid waste collection and treatment account for US$ 379 million or 65 percent of the current portfolio. These interventions are strongly aligned to the CPRGS and CAS theme of enhancing environmental sustainability. Environmental protection is however not stated as an explicit objective in the CAS sector priorities for urban development and the alignment is thus weaker.

The PDOs of many of the urban projects include references not only to the expected environmental improvements, but also the associated health benefits. The CPRGS links the objective of environmental protection and health improvements, and thus the portfolio is well aligned in this regard. The CAS contains one sub-theme focusing on environmental sustainability and a separate sub-theme on health. The health sub-theme focuses on making basic social services accessible and affordable to poor people, without references to expected health benefits of environmental improvements. There is thus no direct link between the urban


129

portfolio and the CAS sub-theme on health. The CAS sector priorities for Urban and HD sectors do not include any reference to environmental related health issues.

Urban Growth Interventions. Investments in urban infrastructure to promote economic growth (e.g. Danang Priority Infrastructure Development Project) are well aligned to the CPRGS objective to “develop large-scale infrastructure for growth and poverty reduction”. There is no CAS sub-theme to which these investments can be easily aligned. (See the Transport Sector Chapter for further discussion on alignment of urban transport interventions).

Utility Reform. Strengthening municipal utility companies is a key focus of the urban portfolio and part of the implementation strategy for all projects. The Urban Water Supply development project, approved in 2005 established a mechanism to link Bank financing to utility performance. Several urban projects also include direct capacity building support to strengthen utility management. This is well aligned to the CPRGS objective and CAS sub-theme of State-owned Enterprise Reform. The CAS sector priorities for urban development do not specifically mention utility reform, but states improving urban planning as a priority.

Micro-Finance. All urban interventions contain sub-components targeting the poorer segments of the urban population through micro-finance or direct infrastructure upgrading. This contributes to the CAS theme of Financial Sector Development. While it is important to address the urban population’s need for housing and sanitation financing, it is not clear whether these services are best provided through integrated components in large infrastructure projects. In order to ensure that the credit mechanisms are consistent with the overall financial sector development strategy, a study is currently being undertaken of the Bank’s line of credit interventions. It may be useful to review the on-lending terms, including channels and ensure these are consistent with the financial sector strategy. Alignment of this area of intervention to all three (CPRGS, sub-theme, sector strategy) is not as strong.

Access to Rural Water Supply and Sanitation is assessed against the priorities for Rural Development (RD) outlined in the CAS. The Rural Water Supply project ($46 million), approved during the CAS period, is well aligned to the CPRGS objective of developing infrastructure and creating opportunities for the rural poor to access public services. The project is also well aligned to the CAS sub-theme of “narrowing the development gap”. About 20 percent of the households to be served are considered poor. The RD sector priorities do not mention improving access to infrastructure services, but the project will contribute to ensuring that the benefits of growth are shared equitably which is one of the priorities. In the RD portfolio there are a number of projects that also contribute to improving water and sanitation services in rural areas.


The CAS also identifies areas of strategic priority for the Bank‘s program, including building partnerships and harmonization. The Bank is the primary donor in the 15 donor strong Urban Forum, which works with MOC and other ministries on urban initiatives and is actively participating in the Rural Water Supply and Sanitation Partnership.

Several bilaterals have changed their focus away from urban interventions to rural programs and it has been increasingly difficult for the Bank to attract co-financing for recent urban projects. Currently, only the Three Cities Sanitation Project is supported by donor co-financing from Denmark (US$ 5.3 million), who also co-financed the preparation of the Red River Rural Water Supply.

Partnerships with Finland and Switzerland are being strengthened through two new grants. There is one PHRD co-financing grant of US$ 4.8 million in the portfolio, as well as a GEF grant to promote innovative wastewater treatment technologies in Quy Nhon. The portfolio also includes a Trust Fund initiative to pilot Output Based Aid in HCMC to promote connections to poor households, as well as several PPIAF grants and support from Cities Alliance.


130


Ensure a Consistent Strategic Framework in the next CAS. In order to provide a more consistent strategic framework, the next CAS should express priorities for the urban development sector more clearly and comprehensively. Links between sector objectives and cross-sectoral themes of the CAS/SEDP should be made more explicit to ensure consistency in setting priorities.

Developing a WB Sectoral Results Framework. To address the absence of a clear results framework linking project level results with the overall CAS themes and Government objectives, a sectoral results framework could be developed. Based on the strategic priorities outlined in the Bank’s urban development business plan, as well as the current and proposed interventions, a possible sectoral results framework has been prepared. This could serve as an input into the CAS preparation and help ensure a higher degree of consistency between sector priorities, project objectives and the key themes of the CAS. It would also be important to link expectations of results during the next CAS period directly to what the current and planned urban development portfolio is set up to achieve.

Prioritize the Pipeline Based on the Focus of the Next CAS. The current pipeline for Vietnam exceeds the available IDA resources and there is a need to prioritize the pipeline in line with the criteria that is being established for the next CAS.








Strategic Planning for TF. It would be useful for the sector to prepare a TF strategic plan which would be reflected in the CAS. Not only would this help the Government effectively coordinate grant resources for the urban sector but also to have a better strategic planning framework which prioritizes the use of TFs.

Box 7.2. Urban Sector Pipeline o Coastal Cities Sanitation o Danang Infrastructure o Municipal Infrastructure Development Fund o Urban Water Sector Dev II o National Urban Upgrading Program o Environmental Sanitation Program o Can Tho and Halong Development

Program o Rural Water Supply II


131

Possible Urban Development Sector Results Framework

…for the urban population, particularly the Urban Poor

… by investing in water supply, sanitation, drainage, sewerage systems and other basic services etc.

� Urban Upgrading � Urban Water Supply � 3 Cities Sanitation � HCMC Env. Sanitation � Coastal Cities

Sanitation � Danang Priority Infra � Urban Water Supply II

… by investing in wastewater collection and treatment, solid waste management and measures to reduce air pollution (?). � 3 Cities Sanitation � Urban Upgrading � HCMC Environmental

Sanitation � Coastal Cities

Sanitation � Danang Priority

Infrastructure � Hanoi Urban Transport � GEF TF – WW

technology Quy Nhon


Improve access to

basic infrastructure

services…

Reduce Environmental

Degradation in Major Cities…

Improve the Institutional

Effectiveness of Municipal

Utilities…

Improve Access to

Financing for Municipal

Infrastructure...

…by building capacity to plan, manage and maintain urban infrastructure investments. � 3 Cities Sanitation � Urban Upgrading � HCMC Environmental

Sanitation � Urban Water Supply � Coastal Cities Sanitation � Danang Priority

Infrastructure � Urban Water Supply II � PPIAF Water Sector � Cities Alliance - City

Development Strategy

…by developing municipal financing markets and establishing non-subsidized lending facilities. � Urban Water Supply � Danang Priority

Infrastructure � Municipal

Development Fund � Urban Water Supply II


… and strategy

No of people with new or improved access to basic services (water supply, sanitation etc.) Percentage of poor households with access to basic services Reduction in the frequency, duration and area of flooding at key locations

Percentage of wastewater per catchment collected and treated to agreed standards Percentage of waste collected Percentage of waste disposed of safely

Improved performance on balanced scorecard for utilities participating in Bank projects

An outcome indicator to measure improved access to financing (?)

… with KPIs


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7.6 Results Achieved in the Urban Development Sector

The Bank support to urban development has resulted in improved access to water supply, reduction in flooding, improved solid waste management and strengthened utility performance. However, as illustrated below, the current reporting provides a fragmented picture of achievements. Information and data on results is dispersed in different reports and similar objectives are measured by different indicators across projects. Some of the results achieved during the CAS period (taken mainly from ISRs and ICRs) are summarized below.

� Urban Access to Basic Infrastructure. Service improvements in Hanoi, Haiphong and Quang Ninh supported by the recently completed Water Supply Project exceeded expectations. The project enabled an additional 1.7 million people to benefit from the supply of reliable, treated piped water. In total, around 2.8 million residents benefited through better quality services. As a result of improved drainage systems under the 3 Cities Sanitation project, the duration and depth of flooding have been significantly reduced at key locations in the three cities.

� Enhancing Environmental Sustainability. The implementation of two key projects (3 Cities Sanitation and HCMC Environment and Sanitation) addressing water pollution in urban areas has been slow and therefore most of the results are yet to materialize. However, some results are evident. Project components focusing on solid waste management has started to yield results with significantly expanded waste collection in Danang, Halong and Cam Pha, exceeding project targets.

� Utility Reform. In the project cities supported by the closed Water Supply Project, efficiency and management of the utility companies improved substantially. The level of non-revenue water declined on average from 64 to 31 percent reflecting improvements in the physical conditions of the network, as well as better management (as evidenced for example by the halving of the number of staff hours per thousand connections). Computerized billing and collection systems were installed reducing the days of account receivable from an average of 57 to 24 days - a level at par with water utilities in industrialized countries. Water billing increased by 112 percent (compared to an anticipated 87 percent) and collection levels exceeded 95 percent, but financial indicators showed a less satisfactory performance with tariff increases less than targeted.

Companies participating in the 3 Cities Sanitation project recover a much higher percentage of operating costs from user charges than similar utility companies in other provinces. The cost-recovery is however still lower than targeted.

� Micro-Finance. The micro-finance components in the portfolio have achieved good results providing more than 30,000 loans for sanitation and housing upgrading with excellent repayment rates.


133

Table 7.3: Current and Expected Results in the Urban Development Sector

Sector Goals Current and Expected Results (As reported in latest ISRs, as of December 2005) By When

� More than 26,000 sanitation loans and 3,600 income generation loans disbursed (3 Cities)

� 98% repayment rate for micro-credit and sanitation facilities build within 2 months in almost all cases (3 Cities)

� 2,000 micro-credits for housing improvements (Urban Upgrading) � Significant reduction in the duration and depth of flooding in Danang, Halong

and Cam Pha (3 Cities)

To Date

� Reduction in frequency, area and duration of serious flooding at five key locations (targets established) (HCMC ES) 2007

� 260,000 households in Can Tho, Hai Phong, HCMC and Nam Dinh with improved access to water supply, sanitation, sewerage, electricity, public lightning upgrading (Urban Upgrading)

� Affordable housing and credits to 50,000 low-income families (UU) � 90% repayment rate of micro-credits (UU)

2008

� 204,000 additional residents of district towns with access to improved water supplies (Urban Water Supply)

� 37,000 additional resident of district towns with access to improved sanitation facilities (UWS)

� 14,400 residents reached by hygiene education program (UWS) � 100% of water samples effectively disinfected at water plants (UWS)

2009

1. Improve access to basic infrastructures services for the Urban Population, with a particular focus on the urban poor

� Expected results of Coastal Cities Sanitation, Danang Priority Infrastructure Project, UWS II

� 246,000 tons of waste collected in Danang, Halong and Cam Pha (an increase by 80% over 1999) (3 Cities) To Date

� Water Quality of the Nhie Loc Thi Nghe Canal at four locations improved (targets established) (HCMC ES) 2007

2. Reduce environmental degradation in major cities

� Coastal Cities Sanitation? Hanoi Urban Tr.? Danang Priority Infrastructure?

� HCMC Urban Drainage Company is recovering 97% of operating, maintenance and depreciation costs (HCMC ES)

� Cost recovery in utility companies : Haiphong 46% (increased compared to baseline), Halong 44% (increased), Cam Pha 22% (decreased), Danang 58% (decreased) (3 Cities)

To Date

� Full cost recovery of operating, maintenance and depreciation of Sanitation and Drainage Companies in Halong, Haiphong and Danang (74% in Cam Pha) (3 Cities)

� 95% cost recovery in HCMC Urban Drainage Company (HCMC ES) � XX% private sector participation in emptying septic tanks and collecting solid

waste (targets established) (3 Cities) � 244,000 tons of waste collected and properly disposed in Danang, Halong and

Cam Pha (an increase by 80% over 1999) (3 Cities)

2007

� Land administration improved in processes in project cities improved (UU) 2008

3. Improve the institutional effectiveness of URENCOs, Water Supply Companies, City authorities

� Improved net operating income of sub-project (6203 VND million) (UWS) 2009

4. Improve access to financing for municipal infrastructure

� Expected results of Municipal Infrastructure Development Funds, Urban Water Supply II


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7.7 Managing for Results in the Urban Development Sector

Project Level Results Framework. The results framework of the urban sector projects are among the best in the portfolio. Most projects have specific, measurable and results-oriented KPIs and satisfactory M&E frameworks with targets, baselines and progress updates.



Quality of Project Development Objectives (PDOs). The PDOs of the urban projects were found to be generally satisfactory. The objectives of some of the initiatives such as the HCMC Environmental Sanitation and Three Cities Sanitation focus on health outcomes and increased economic potential of the beneficiary household or city. From an outcome perspective, this is good and indicators in line with these objectives have been established in the PAD.

However, it may not be practical to measure the success of the interventions against such high-level outcomes. The PSRs and ISRs do not include the KPIs measuring health and economic benefits and no progress updates are provided.

If the health and economic growth outcomes are indeed the primary objectives of the projects, then eliminating their measurement from the monitoring and reporting is not appropriate. Since health outcomes are influenced by many other factors than just the project intervention, an alternative would be to restate the project objectives to focus on a lower level in the results-chain, such as improving the environment or the performance of the utility companies. Progress on these outcomes should then be monitored under the project, while health and economic impacts could be assessed outside the project framework as part of city-wide surveys or impact studies.

All future projects should ensure that PDOs focus on outcomes that can be attributed to the project. The draft PDOs of two pipeline projects were found to be unclear and should be reformulated.

Quality of Key Performance Indicators (KPIs). In general, the urban projects have well-designed indicators that are relevant to measuring progress on the project objectives. These include improvements in water quality, number of new connections and utility performance indicators. However, the transition to the new reporting format in the ISR, has weakened the results framework for some projects. It is suggested that the revised KPIs for 3 Cities Sanitation, HCMC Environmental Sanitation and Urban Upgrading be reviewed to ensure consistency with the PDOs. Simplification is encouraged, but it is important to ensure that all key aspects of the project objectives are monitored. Where this is no longer the case, the ISR should be revised.

Indicators Used. Currently, progress in the urban portfolio is monitored on almost 30 different KPIs. Some of these KPIs are monitoring project outputs, such as number of







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people reached by the hygiene education program. Others are measuring progress on higher-level outcomes such as health benefits and economic impact. Although the urban projects all contribute to similar objectives, when these indicators are aggregated on a portfolio level, they do not support a consistent story of the results being achieved.

Also, KPIs for relatively similar projects vary. Below are some examples of areas where there are opportunities to develop greater consistency across projects. This may also facilitate alignment with Government monitoring systems and targets, including the VDGs:

� Access to Basic Services. One of the key indicators in the portfolio is access to basic urban services. For this, the Government and the Urban Upgrading Project monitors the number of households (e.g. with access to water and sanitation), while the Urban Water Supply Development Project counts the number of people. The CPRGS also monitors the percentage of poor households with access (e.g. to basic water supply).

The definition of “access” for different services should also be clarified. The Government and the Bank may be using different definitions of “access” which could significantly impact the percentage of access

achieved in the population. For all new operations, reporting regarding the IDA 14 indicator “population with sustainable access to an improved water source” is mandatory.

� Targeting the Urban Poor. Several projects benefit the urban poor, however, the definition of “poor” in the PAD is not clear (e.g. HCMC Env. Sanitation, Urban Upgrading, Coastal Cities Sanitation). To address this, the Bank could distinguish the income level of households benefiting from the project; although it is recognized that lack of access to basic services is an indicator of relative poverty. It may also be useful to distinguish between the direct and indirect beneficiaries of the project. Conformity between Bank and Government definition and monitoring of “urban poor” should be pursued during SEDP and CAS preparation.

� Solid Waste Collection and Disposal. The 3 Cities Sanitation Project measures the amount (tons) of solid waste collected. The CPRGS monitors the percentage of solid waste collected and disposed safely. It may be useful to align to the CPRGS and universally use percentage of waste collected and disposed safely, as part of project monitoring.

� Waste Water Treatment and Water Quality. The HCMC Environmental Sanitation Project and Coastal Cities Sanitation monitor the pollution in the recipient water. To the extent possible, the indicators should monitor progress towards the CPRGS goal of attaining national standards for water and air pollution. Given the high national standards, it may however be more appropriate to measure percentage of waste water per catchment collected and treated to agreed standards.

� Utility Performance. All projects include components to reform and strengthen utility companies. The indicators to measure progress are however not consistent across the projects. It is recommended to develop a common score card, that can be used to

Box 7.5. World Bank Global Definitions: Access to Improved Water Supply: "Improved" water supply technologies are: household connection, public standpipe, borehole, protected dug well, protected spring, rainwater collection. Availability includes at least 20 liters per person per day from a source within one kilometer of the user's dwelling. Access to Improved Sanitation: "Improved" sanitation technologies are: connection to a public sewer, connection to septic system, pour-flush latrine, simple pit latrine, ventilated improved pit latrine. The excreta disposal system is considered adequate if it is private or shared (but not public) and if it hygienically separates human excreta from human contact.


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monitor utility performance across the water and sanitation sector and possibly also for other infrastructure services such as power utilities.

Table 7.4: M&E in Urban Development Projects

Urban Projects Baselines? Targets?

3 Cities Sanitation Yes Partly

HCMC Env. Sanitation Yes Yes

Urban Upgrading Partly? Partly?

Urban Water Supply Yes Yes

Rural Water Supply Yes Yes

Quality of Monitoring and Evaluation. The M&E systems for the projects in urban development are among the best in the Vietnam portfolio, with complete baselines and targets established for nearly all projects. The KPIs are even used to some extent to monitor progress of the project, as in the case of 3 Cities Sanitation.

The latest ISR for the Urban Upgrading project reported baselines and targets for a reduced number of KPIs. It is not clear whether baselines and targets were established for the full set of indicators.

The KPIs have changed over the implementation of the projects and the attainment of project objectives such as health, property values, tourism and economic impacts are no longer being monitored. Although it is recognized that focusing on lower-level results such as utility performance, waste-water collection and water quality is a better approach, it may be worth considering establishing mechanisms outside the project to collect and report on data on these higher-level outcomes that still remain part of the PDOs. Household surveys may be a useful instrument to collect this information.


Since there are no stand-alone grants active in FY04 and FY05 in the sector, none of the urban sector grants were included in the panel review on TF results framework.


Table 7.5 summarizes the assessments of individual results frameworks in the urban development portfolio. A summary of identified strengths and weaknesses for each project is shown below.

Three Cities Sanitation. The PDO of the project is to improve health and increase economic development in the cities of Danang, Hai Phong, Halong and Cam Pha. In the PAD, indicators to measure progress on the incidence of water-related diseases and tourism income were included. These were later dropped presumably because it is difficult to attribute achievements on these higher-level outcomes to the project. The

PDO also refers to the specific objectives to: (i) reduce the incidence of flooding; (ii) upgrade the urban environment; and (iii) develop more efficient URENCOs. The latest ISR made the utility performance the key PDO indicator, supported by intermediate indicators measuring solid waste collected, number of micro-finance loans for toilets and septic tanks and private sector participation. It is suggested that the team review the results framework to ensure that it does not oversimplify the monitoring needs. It would be useful to include indicators for reduced flooding and environmental improvements. These are referred to however in the excellent explanation of the PDO rating.


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Table 7.5: Assessment of the Results Frameworks of Urban Development Projects

Results Framework CPR Panel Assessment Urban Development Projects Clarity of

PDO Quality of

KPIs Quality of

M & E Overall Quality

3 Cities Sanitation S S* S S

HCMC Env. Sanitation S S* S S

Urban Upgrading MS S* MS MS

Urban Water Supply MS HS S S

Rural Water Supply S S S S

Coastal Cities Sanitation MS - - -

Danang Priority Infrastructure U - - -

Municipal Development Fund U - - - * The migration to ISR significantly changed the KPIs, compared to the original set in the PAD. The rating is based on PAD indicators.

HCMC Environmental Sanitation. The PDO of the project is to sustain improvements in public health and well-being of 1.2 million residents in HCMC particularly the poor and promote increased economic development. The original project logframe included outcome indicators to monitor these objectives. As with the Three Cities Sanitation project, these were later dropped and the latest ISR includes indicators on water quality, utility performance and reduced flooding. These indicators are specific, measurable and attributable and thus the change is appropriate. The PDO refers to improving the livelihoods of the urban poor, but it is not clear what the outcome for the poor will be and how this will be measured.

Urban Upgrading. The PDO is to alleviate poverty in urban areas by improving living and environmental conditions of the urban poor using participatory and pro-poor planning processes. The PDO could have more clearly stated the target beneficiary and the expected outcome e.g. 1 million poor households in four cities with access to basic services or improved water quality. The indicators established in the PAD to

monitor progress are specific, measurable and attributable and cover key aspects such as improved service coverage, reduction in flooding, and increased property values. The ISR simplified the monitoring framework and made “operational sustainability of micro-credit institutions” one of the two PDO indicators, with the other one being service coverage. It is suggested that the team review the results framework to ensure that all key results areas are adequately reflected and that relevant intermediate indicators are identified. The PAD indicators provide a good starting point. Adding an indicator/milestone to measure improvements in planning processes may be worthwhile, as well as an indicator on utility performance.

Urban Water Supply Development. The PDO is to improve water and household sanitation services in district towns and large urban centers. The PDO could have more clearly specified the target beneficiaries (utilities, urban citizens, urban poor) and the expected changes. The expected outcomes are however being measured through a clear and comprehensive set of


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indicators. Targets are established for all indicators. Baselines are also provided – since all indicators are incremental, they are set to zero. The challenge will be to implement the monitoring system which is expected to cover a large number of small system operators.

Red River Delta Rural Water Supply Development. The PDO is to improve water and household level sanitation services in a sustainable way in rural communes in four provinces in the Red River Delta. The expected results of the projects are measured through a solid set of indicators on access, customer satisfaction, utility performance and changes in hygiene behavior. Baselines and targets have been established for four of the KPIs in the PAD. There are some additional indicators mentioned in other parts of the PAD. It is not clear whether these will be used as intermediate outcome indicators during monitoring and whether baselines and targets for these have been established. This needs to be clarified in the initial ISR.


Simplifying and Developing Common KPIs. There is scope for simplifying and improving M&E by focusing project monitoring on a few, common indicators directly related to fulfilling the sector objectives (as suggested above). Among them, the team should consider establishing a standard set of indicators for utility performance that could be used not only consistently across projects, but also across sectors. When

establishing targets for these indicators, it is necessary to take into consideration the lumpy nature of urban infrastructure investments and long implementation periods. Intermediate indicators, other than for institutional reform, are difficult to identify.

Measuring Higher-Level Outcomes. Higher-level outcomes should still be monitored, but not necessarily as part of the individual project monitoring framework. A citywide approach to monitoring property values, tourism, health outcomes and impacts on households would provide more consistent data. This data collection could also be included as part of the regular (Bank/Government) household surveys. It is important that the projects continue to provide access data (no. of households connected, etc) which can be cross-checked against city data.

Strengthen the Project Level Results Frameworks. Project by project suggestions are provided in the attached. In general recommending the following:

� PDOs. For all pipeline projects ensure that the PDO clearly focuses on outcomes that can be attributed to the project intervention.



Reporting on Results. Ensure the quality of the ISR reporting on results.


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Table 7.6: Urban Development Portfolio (as of December 2005)

Project Name Age (Year)

DO Rating

IP Rating

Net Comm. ($mln)

Cum. Disb.

($mln)

Disb. Lag

3 Cities Sanitation 6.6 S MS 80.5 37.8 53%

HCMC Env. Sanitation 4.8 S U 166.3 25.4 74%

Urban Upgrading 1.7 S S 222.5 11.0 8%

Urban Water Supply 1.0 S MS 112.6 0.0 100%

Rural Water Supply 0.3 - - 45.9 0.0 100%

Sub-total 2.9 627.8 74.3 67% 7.12 Facts

Urban Development Portfolio. The urban development portfolio has grown rapidly with three new projects (US$ 381 million in new commitments) over the last two years. The portfolio contains five active projects with total commitments of US$ 628 million. With another four projects at different stages of preparation and proposed additional commitments of US$ 520 million, the sector promises to become a much larger part of the overall portfolio.

Figure 7.2: Urban TF Portfolio

2.4

0.6 0.91.8

3.1

02468

101214

US

$ m

illion


Vietnam: Urban Sector - TF Portfolio


Recipient-executed TFs in the Urban Development Portfolio. The urban development sector accounts for only a small portion of the country TF portfolio (4 percent; ranked 7th in FY05). In FY05, there were three PHRD grants for project preparation, one PHRD co-financing

grant, and one co-financing grant from Denmark. There are also PPIAF, Cities Alliance support and some recent TA grants in the portfolio.


Progress Towards Meeting Development Outcomes. As discussed in the previous section, results of urban development projects tend to materialize only towards the end of the project implementation due to the nature of the investment. All urban projects are rated satisfactory on DO and even though implementation progress is slow in many cases, there is no concern expressed regarding achieving the targeted results.

The completed Water Supply Project is rated Satisfactory on outcomes in the draft ICR. Although limited to supporting three cities, the project leveraged benefits throughout the water supply sector in Vietnam with institutional best practices established in the participating water utilities being replicated throughout the country. The importance put on cost recovery in the dialogue with the Government resulted in MOF/MOC issuing a circular in 2005 guiding provinces and cities to raise tariffs. Although, utilities participating in urban projects are recovering a higher percentage of the costs than


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other utilities in the country, the cost-recovery rates still fall far short of the project targets.

Slow Implementation Progress. Disbursement in the urban portfolio has increased by almost 25 percent over the last year. This is the highest percentage increase in the portfolio, albeit from a small base. However, the Vietnam urban program continues to lag the regional and Bank-wide disbursement profiles. Unfortunately, this has not shown much improvement over the last three years. The FY05 disbursement ratio was 6.3 percent compared to the average EAP Urban sector ratio of almost 14 percent. This is also one of the lowest rates for the Vietnam portfolio. The average disbursement lag for the portfolio is 67 percent. The HCMC Environmental Sanitation project was recently downgraded to unsatisfactory on implementation progress and both Three Cities Sanitation and Urban Water Supply are rated MS.

Figure 7.3 Disbursement Performance

Disbursement PerformanceUrban Development Sector

0.0

5.0

10.0

15.0

20.0


Dis

bu

rsem

ent

Rat

io

Urban Dev. Sector Country Portfolio

Implementation Issues. Urban Development projects are highly decentralized and therefore suffer from additional layers of approval and local Governments taking responsibility for new functions. In several cases, due to procedural constraints the local Government has been unable or reluctant to take decisions with significant impacts on the speed of implementation of the projects. Weak capacity of the project management units cause delays particularly during the early years of project implementation.

Weaknesses in project design, lack of competition and low cost estimates also contribute to subsequent delays in the procurement process. In HCMC, for example, a number of bids have exceeded the approved cost estimates in the

bidding plan. This is a major issue under the current regulations that requires detailed reviews and re-approvals of higher levels. The introduction of Decree 16 to support the implementation of the new Construction Law also resulted in confusion and delays across projects relating to civil works.

With the revisions to the land law, land allocation and counterpart funding may re-emerge as an issue. In the Urban Upgrading project in Haiphong, the decision to adopt close to market prices for compensating involuntary land acquisition increased the counterpart funding requirements by a factor of 5 and consequently project components and resettlement sites had to be redesigned leading to delays.


Three Cities Sanitation. This project has been under implementation for almost seven years. The closing date has recently been extended a first time to June 2007 due to delays in procurement of key contracts. More than 50 percent of the credit still remains to be disbursed and the disbursement lag is 53 percent. Overall, reasonable implementation progress has been made in the last few months, but centered mainly in Danang. Progress in Haiphong and Quang Ninh is not yet forthcoming. The task team is monitoring implementation closely, but partial cancellation may be necessary if the project is to close on time in June 2007.

HCMC Environmental Sanitation. This project has been under implementation for almost 5 years, but only 15 percent of the funds have been disbursed. Main issues causing concern is the capacity of the PMU in procurement planning and contract management, and complicated approval processes. Weak capacity of the main Chinese contractor in site management of the key contracts and poor communication between local and central agencies has delayed a large contract. The project is rated unsatisfactory by the task team in Implementation Progress, project management and procurement management. Given the impending closing date and the large undisbursed balance and continued issues with award of contracts, it may


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be necessary to cancel a large portion of the balance.

Urban Upgrading. Only 5 percent of the funds have been disbursed after close to two years of implementation. Inadequate counterpart funds have been one issue. In addition, the lack of clear guidelines on technical design and cost estimates as required by the new construction decree has affected the preparation of technical designs and cost estimates. The pace of project implementation differs between the participating cities with HCMC being the most advanced and less progress in the other cities. It would be important to learn from the problems encountered in the HCMC Environmental Sanitation project regarding cost estimates and procurement planning to avoid similar needs for reapprovals. The project is rated U in counterpart funding and MS in procurement, which is fair.

Urban Water Supply. The start-up of this project has been slow. The project has an effectiveness delay flag given that it took almost 11 months from approval to effectiveness. The project is rated MS in implementation progress in the latest ISR due to unclear approval authority affecting some of the components which could further

delay the project. More importantly, this risks undermining the project concept which envisaged increased local ownership and accountability. This situation will require close follow-up by the task team to ensure that clear and efficient procedures are established. The task team may wish to also review the rating on project management.

Red River Delta Rural Water Supply Development. This project was approved in September 2005. All effectiveness conditions except the legal opinion have been met and the DCA signing is planned in February followed by project effectiveness by April 2006 (8 months after approval – close to the 9 months threshold for the effectiveness flag).


The realism of ratings in the urban sector is high, with implementation difficulties well reflected in the ratings. Based on implementation performance, as reported in the ISRs and the Aide Memoires, the CPR team would like to suggest a review of the following project ratings, as highlighted in the Table below.

Table 7.7: Realism of Ratings in the Urban Development Projects

Urban (active projects) DO IP Project

Management Financial

Management

Counter-part

Funding

Procure-ment M&E Safegua

rds

3 Cities Sanitation S MS (MU) MS S MS MS S MS

HCMC Env. Sanitation S U U S S U S MS

Urban Upgrading S S S S U MS S S

Urban Water Supply S MS S (MS) S S S S S

Rural Water Supply - - - - - - - -

Note: The table summarizes current ratings of active urban projects. In light of the slow implementation progress of some of the projects, it is suggested that the highlighted ratings be reviewed. Suggested ratings by the CPR panel are presented within parenthesis.

Project Management. The urban development projects are in general being managed by PMUs that are established specifically to implement the projects and are dismantled at the end of the project. Although PMU staff often originate from

the utilities, the capacity of the PMUs is frequently weak during the important early years of implementation contributing to delays in receiving appropriate approvals and undertaking procurement activities. The HCMC


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Environmental & Sanitation project is rated unsatisfactory on project management and the Three Cities Sanitation is rated MS in the latest ISRs reflecting project management weaknesses. Although rated satisfactory, the project management of the Urban Water Supply project is weak with a lack of clarity regarding the degree of delegation of authorities to participating provinces, cities and line agencies. Ratings on project management have been declining over recent years. In the last CPPR, all projects were rated S on project management.

Financial Management. All projects in the urban development sector are rated satisfactory on financial management and no major issues related to FM have been identified in the ISRs. The Urban Upgrading project is suffering from complicated disbursement arrangements which may warrant a downward review of the current ratings.

Counterpart Funding. At the time of the last CPPR, three projects were rated unsatisfactory on counterpart funding. This situation has improved. Currently, only the Urban Upgrading project is rated unsatisfactory as a result of the issuance of the new Land Law, which led to counterpart funds shortages and delays in releasing the counterpart funds necessary for implementation. The Three Cities Sanitation project was recently downgraded to MS because of delays in allocating funds to compensate for land allocation.

Procurement Management. All urban projects are highly decentralized and suffer from serious delays in review and approval of technical design, procurement plans and bid evaluations. HCMC Environment & Sanitation Project is rated unsatisfactory in procurement as a result of delays in procurement actions by both central and local Government. The 3 Cities Sanitation & Urban Upgrading projects were both rated MS on procurement due to procurement delays experienced.

Monitoring and Evaluation. All urban projects were rated satisfactory in M&E in the latest ISRs. See the previous section for a further discussion

on the strengths and weaknesses of the project level results management systems.

Safeguards. Both Three Cities Sanitation and HCMC Environmental Sanitation are rated MS on safeguard management performance, due to slow progress in addressing involuntary resettlement.


The Three Cities Sanitation Project is scheduled to close in June 2007 and the HCMC Environmental Sanitation project in December 2007. The undisbursed amounts for these projects are US$47 million and US$159 million respectively. Procurement of major contracts still remains to be finalized and closing both projects on time would require close monitoring by the task teams and possibly cancellations.


Delays in recently approved projects raise concerns on the readiness for implementation. Average elapsed time from Board approval to effectiveness of urban development projects is close to 9 months, more than twice the Bank’s standard of 4 months. The Urban Water Supply project had 7 effectiveness conditions which took almost 11 months and resulted in an effectiveness flag. The 6 effectiveness conditions for the Rural Water Supply project have been completed and the project is expected to be declared effective in April 2006, eight months after Board Approval.


No QAG assessment has been done of the Quality at Entry of recent urban projects.

7.19 Program Design

Mind the Financing Gap. The financing necessary for achieving the goals in the sector are huge. More than US$ 6 billion is required, while only about US$ 1 billion has been invested over the last decade. The proposed Municipal Infrastructure Fund takes a first step in bridging


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this gap. However, this will not be adequate and it may be useful to consider building markets for municipal finance. Since the gestation period for developing these markets is long, it may be helpful to examine if IBRD financing can be utilized in the interim.

Complexity of Design. In many cases projects are attempting to perform many different activities e.g. Urban Upgrading, Danang Priority Infrastructure Project, Urban Water Supply II. It may be useful to consider ways to reduce both the size and scope of the projects. Is it appropriate to establish micro-finance mechanisms through different projects in the urban portfolio? Should these projects provide housing finance (even if it is for low-cost housing)?

Assessing Demand and Willingness to Pay. Several “willingness to pay” surveys are conducted at city/provincial and project level. In Vietnam, these have been conducted most recently by the urban and energy sectors. However, it would be useful if these surveys could be conducted jointly and focus not only on the willingness aspects, but also the ability to pay for various infrastructure services.


Urban projects usually establish separate PMUs that are not integrated into the existing structures of the utilities and city authorities. Due to capacity constraints, projects rely heavily on Bank procedures.

Currently, a city by city approach is taken to developing the program. Although, some initiatives are under ways such as the development of a National Urban Upgrading Program and development of Local Infrastructure Development Funds, little progress has been made towards using more programmatic approaches to improving urban services in Vietnam.


Small but Growing Portfolio. The sector has a good disbursement ratio: 27 percent in FY04

and 28 percent in FY05. The PHRD preparation grants are completed on average in 2.2 years. Given the small size of the TF portfolio, the disbursed amount is modest with US$1.8 million in FY04 and US$ 3 million in FY05. It is expected that the portfolio will substantially increase in the next FY since there are 6 grants (US$8.6 million) in the pipeline.

Figure 7.4:Urban TF Portfolio Disbursement

Vietnam: Urban and Water SectorTF Disbursement Ratio

0%

10%

20%

30%

40%

50%

60%

FY01 FY02 FY03 FY04 FY05Sector Disb Ratio Country Disb Ratio

Grant Start-up Slowing Down. The urban sector is the best performer in terms of getting grants activated (within 6 months on average). This is faster than the average for the overall TF portfolio in Vietnam (7.8 months). The sector may not continue to champion the fastest grant start-up because there are two grants currently pending for more than 17 months in the pipeline list. The Bank took 10 months to process these grants and the Government would take the same time to countersign the Grant Agreements.


Eliminating Start Up Delays. In addition to the Bank’s condition for credit signing and effectiveness, the Government recently enforces the condition that the Feasibility Study Report must be approved before credit signing. To shorten start-up delays the CPR team suggests that negotiations should be based on the approved FS or 1st year plan FS. FS approval prior to project negotiation would also help to speed up the PMU establishment process.

Timely Completion and Pro-active Cancellation. Both the Three Cities Sanitation


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and the HCMC Environmental Sanitation projects are scheduled to close in 2007. This will require close monitoring by the task teams of the many remaining activities and possibly early cancellations.

Reduce Complexity of Design. Given the slow implementation progress of urban projects, it would be important to ensure that lessons learned on project design, including how to ensure an effective decentralization of the decision making, procurement packaging and complexity and scope of the project are taking into consideration for new projects.

Improve Project Readiness. The Vietnam Readiness filter should be rigorously applied for

all new projects in order to reduce effectiveness and start-up delays.

Active Involvement of PMU from the Grant Proposal Submission. Given the fact that PMUs in the Urban sector are mostly located in other cities, PMUs should have an early and closer follow-up with the central Government agencies on the approval processing of the grant, especially for those grants not associated with projects. Delays in grant activation would then consequently lead to grant extension in the later phase. This has been done for some projects in the pipeline with good result.

CPR Volume II Sector Reports v2

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Transcript of CPR Volume II Sector Reports v2