Contents

Study Background

1. Assessment of Impact on the Vietnamese Macro-Economy

2. Infrastructure Development

2-1. List of Japanese ODA for Infrastructure Development
2-2. Evaluation Results of Infrastructure Development
2-3. Recommendations for Infrastructure Development

3. Human Resource Development and Institutional Building

3-1. List of Japanese ODA for Human Resource Development and Institutional Building
3-2. Evaluation Results of Human Resource Development and Institutional Building
3-3. Recommendations for Human Resource Development and Institutional Building

4. Education Sector

4-1. List of Japanese ODA for Education Sector
4-2. Evaluation Results of Education Sector
4-3. Recommendations for Education Sector

5. Health Sector

5-1. List of Japanese ODA for Health Sector
5-2. Evaluation Results of Health Sector
5-3. Recommendations for Health Sector

6. Agricultural Sector

6-1. List of Japanese ODA for Agricultural and Rural Development
6-2. Evaluation Results of Agricultural and Rural Development
6-2. Recommendations for Agricultural and Rural Development

7. Environmental Sector

7-1. List of Japanese ODA for List of Japanese ODA for
7-2. Evaluation Results of Environmental Sector
7-2. Recommendations for Environmental Sector

8. Impact on Bilateral and International Relationships and on Recognition of Japanese Aid in Vietnam

9. Overall Recommendations for Japanese ODA for Vietnam

Study Background

1. General Description of the study

      The purposes of this evaluation study are to assess the impact of Japanese official development assistance (hereafter 'ODA') for Vietnam, which was re-started in 1992, and to have recommendations for improvement of future Japanese ODA. The evaluation results and recommendations is expected to be utilized for future review and improvement of 'the Country Assistance Program for Vietnam' prepared in 2000 by Ministry of Foreign Affairs of Japan.

2. Study Period

      The study period is October 2000- March 2001. The field studies were conducted in November 2000 and February 2001.

3. Team members

      The team consists of the following three members, and the following two scholars joined this evaluation study and contributed the study report.

Evaluation Team Members ＜Position＞ ＜Name and institution＞ ＜Responsibility＞ Team leader: Ryo SASAKI, Researcher of IDCJ Overall evaluation, education sector Vice leader: Masamichi OGAWA, Senior Researcher of IDCJ Human resource development and institutional building Member: Dr. Naoto JINJI, Researcher of IDCJ (Present Position: Assistant Professor of Hitotsubashi University, Japan) Qualitative Impact Assessment, Infrastructure Development Contributers ＜Name and institution＞ ＜Responsibility＞ Dr. Susumu WAKAI, professor, University of Tokyo, Japan Health Sector Dr. Le Thanh Nghiep KURIKI, Professor, Josai International University, Japan Agriculture and Rural Development, Qualitative Impact Assessment

• Japanese ODA in Vietnam (infrasturucture) Since 1992 （PDF）
• Japanese ODA in Vietnam (Education, Health, Agriclture, and Rural Development, Enviroment) Since 1992（PDF）

- Japan has provided ODA to Vietnam in various areas including: (1) infrastructure development such as ports, railroads, and power plants; (2) human resource development such as dispatch of experts and counterpart training at ministries, universities, institutes and hospitals; (3) health and education sector development such as renovation and development of hospitals, primary schools and universities; (4) rural development such as dispatch of technical experts to agricultural universities; and other important areas. Regarding the amount of ODA, Japan provided 48 % of the total amount of ODA received by Vietnam in 1999.

- The expenditure and the revenue of Vietnamese governmental budget in 1999 were US$ 6,376 million ¹ and US$5,458 million ², respectively ³. Total budget deficit including repayment for the past domestic borrowing of US$ 108 million reached US$1,025 million. Since the amount of ODA provided by Japan at that year was US$680 million, 74.1 % of the total deficit was covered indirectly by Japanese ODA ⁴. Also the ratio of Japanese ODA in the total budget expense of that year reached 10.7 percents. Since Japanese ODA was mainly invested into various infrastructure projects not only economic infrastructure such as national roads, trade ports and large-scale power plants, but also social infrastructure such as schools, hospitals and water pipelines, it is appropriate to evaluate Japanese ODA as indispensable for Vietnamese governmental budget for economic and social development.

- The study team estimated the impacts of Japanese ODA on Vietnamese economy for the last 10 years since Japan re-started its ODA using econometric and simulation techniques. One estimate calculated by the study team is that Japanese ODA pushed up the Vietnamese GDP by 1.57%, capital stock by 4.65%, imports by 5.94% and exports by 3.84% in the year 2000. These numbers are obtained by comparing the macroeconomic conditions of the Vietnamese economy with and without Japanese ODA for 1991-2000 and measure the cumulative impacts of Japanese ODA during the period on Vietnamese macroeconomy.

- The study team also estimated the 'macroeconomic internal rate of return' (hereafter macro-IRR) of the Japanese ODA to Vietnam for 1991-2000. The macro-IRR is the index calculated by applying the idea of the 'internal rate of return' (IRR) that is often used in project appraisal to macroeconomic evaluation of aid. Intuitively, the macro-IRR measures how efficiently ODA fund is used from the recipient's economic (rather than financial) point of view. By considering the total amount of Japanese ODA as 'cost' and the increase in Vietnamese GDP generated by Japanese ODA as 'benefit', the macro-IRR was estimated as 19%. Based on this estimation result, it can be judged that Japanese ODA to Vietnam is so far efficiently implemented and that it has generated enough benefits to Vietnamese economy, compared with its inputs. Roughly speaking, the result can be interpreted in the following way: Even though the Vietnam had borrowed the amount of money that was assisted by Japanese ODA by paying interest, the Vietnam could have paid the interest up to 19% on the borrowing and still made positive benefits to its macroeconomy in terms of an increase in GDP by investing the borrowed money.

- Considering the results of the analysis and quantitative estimations, the study team concluded that Japanese ODA has generated concrete enough impact to satisfy the intention of the investment. On the other hand, the impact of the ODA extended has not been fully realized yet. It is actually observed that just two or three years have passed since1999 when the actual execution remarkably increased. It is usual that economic infrastructures, such as national roads and trade ports, require large scale initial investment and their impact will continue for about 20 - 40 years or more. Expectation is that projects already financed by Japanese ODA loan will be completed in the coming years and their impact on Vietnamese socio-economic conditions will be gradually realized in the long period.





      Japanese ODA projects for Infrastructure development include the followings (1992-2000) ⁵.

＜Transportation＞

●	National Highway No.5 Improvement Project	Loan aid	1993,1995
●	National Highway No.1 Bridge Rehabilitation Project	Loan aid	1993,-98
●	Hanoi - Ho Chi Minh City Railway Bridge Rehabilitation Project	Loan aid	1993-95
●	Hai Phong Port Rehabilitation Project	Loan aid	1993
●	Cai Lan Port Extention Project	Loan aid	1995
●	Hai Van Tunnel Construction Project	Loan aid	1996-
●	National Highway No.10 Rehabilitation Project	Loan aid	1997-99
●	National Highway No.18 Rehabilitation Project	Loan aid	1997-99
●	Transport Infrastructure Development Project in Hanoi	Loan aid	1998
●	Da Hang Port Improvement Project	Loan aid	1998
●	Hai Phong Port Rehabilitation Project (II)	Loan aid	1999
●	Binh Bridge Construction Project	Loan aid	1999
●	Red River Bridge Construction Project	Loan aid	1999-
●	Coast Communication System Project in Southern Viet Nam	Loan aid	1999
●	Saigon East-West Highway Construction Project	Loan aid	1999-
●	National Highway No.1 Bypass Road Construction Project	Loan aid	2000
●	Cuu Long (Can Tho) Bridge Construction Project	Loan aid	2000
●	The Project for Reconstruction of Bridges in the Northern District	Grant aid	1995-98
●	The Project for Strengthening Training Capability for Road Construction Workers in Transport Technical and Professional School No.1 in Viet Nam	Project-type technical cooperation	2000-
●	The Master Plan Study on the Transport Development in the Northern Part of Viet Nam	Development study	1993
●	The Master Plan Study on Coastal Shipping Rehabilitation and Development Project	Development study	1994-96
●	The Study on the Port Development Plan in the Central Region of the Key Area of Vietnam	Development study	1996-97
●	The Study on the National Transport Development Strategy in Vietnam	Development study	1998-
●	Port System Development Study in Southern Part of Viet Nam	Development study	2000
●	Others (development studies (F/S and D/D) for Loan and Grant aids, and grass-root projects (grant aid) including the village-level road improvement project (1996))

＜Electricity＞

●	Phu My Thermal Power Plant Project	Loan aid	1993-98
●	Pha Lai Thermal Power Plant Project	Loan aid	1993-98
●	Ham Thuan-Da Mi Hydropower Project	Loan aid	1993-97
●	Da Nhim Power System Rehabilitation Project	Loan aid	1996-98
●	Hanoi Urban Infrastructure Development Project	Loan aid	1996
●	O Mon Thermal Power Plant Project	Loan aid	1997
●	Dai Ninh Hydropower Project	Loan aid	1998-2000
●	Phu My-Ho Chi Minh City 500kV Transmission Line Project	Loan aid	2000
●	O Mon Thermal Power Plant and Mekong Delta Transmission Network Project (I)	Loan aid	2000
●	Program on the Instructor Training for Electric Power Sector in Viet Nam	Project-type technical cooperation	2000-
●	The Master Plan Study on Electric Power Development	Development study	1995-96
●	The Renewable Energy Master Plan Study in the Northern Part of Socialist Republic of Viet Nam	Development study	2000
●	Others (development studies (F/S and D/D) for loan and grant aids, and grass-root projects (grant aid) including the village-level electrification project (1995))

＜Telecommunication and other sub-sectors＞

●	Rural Infrastructure Development and Living Surrounding Improvement Project	Loan aid	1995-96
●	Coastal Communication System Project	Loan aid	1996
●	Hanoi Urban Infrastructure Development Project	Loan aid	1996
●	Viet nam Television Centre Project	Loan aid	1997
●	Central Region Rural Telecommunication Project	Loan aid	1997
●	The Training Capability Strengthening Project on Post and Telecommunications Training Center No.1, The Socialist Republic of Vietnam	Project-type technical cooperation	1998-
●	Study on Telecommunication Development in the Socialist Republic of Vietnam	Development study	1998-
●	Others (development studies (F/S and D/D) for loan and grant aids)

- Infrastructure development has been the sector which the largest portion of Japanese ODA extended in Vietnam. Japanese Loan Aid to Vietnam in infrastructure development counts 547.71 billion yen from 1991 to 2000 fiscal years, which shares 84% of the total Japanese Loan Aid to Vietnam during the period. Japanese Grant Aid to Vietnam in infrastructure development, on the other hand, counts 6.09 billion yen during the same period, which shares 12% of the total Japanese Grant Aid to Vietnam during the period. In the infrastructure sector, Japan assisted mainly in transportation development and electric power plant construction.

(1) Transportation

- Total approved ODA for transportation sector in Vietnam from 1992 to 1997, according to World Bank's estimation, was US$ 1.5 billion, of which Japanese share was 33 % (US$ 0.492 billion) (see Figure 1).



- Furthermore, officials of the Ministry of Transport commented that those projects in the transportation sector financed by Japanese ODA have effectively contributed to the transportation development in Vietnam, which has also contributed to socio-economic development and poverty reduction in Vietnam.

- The major projects in the transportation sector that are assisted by Japanese ODA include National Highway No. 5 Improvement Project (and also Improvement Projects for Highway No. 1, 10, 18), Hai Phong Port Rehabilitation Project, the Study on the National Transport Development Strategy in Vietnam, and so on. One of the completed projects is National Highway No. 5 Improvement Project. National Highway No. 5 connects Hanoi and Hai Phong Port, which is the largest port in the northern region, and the total length is 106 km. Japanese loan financed the improvement of the existing highway and the extension from two-lane to four-lane highway for the length of 91 km. Before the project, it took more than five hours between Hanoi and Hai Phong by car, now it only takes less than two hours. Other transportation projects include a part of National Highway No.1 (Hanoi-Ho Chi Minh City), East-West Highway in Ho Chi Minh City, but some parts of those projects are still under construction.

- Hai Phong Port is the largest port in the northern area of Vietnam. Its container handling capacity was substantially improved by the Hai　Phong Port Rehabilitation Project. According to the Hai　Phong Port Authority, the container handling capacity of the port was 30,000 - 50,000 TEU per year in 1993.⁶ After the project financed by the Japanese Loan Aid, it has been increased to 220,000 TEU in 2000. The second phase of the Japanese financed project is expected to expand its capacity further.

(2) Electric Power

- Counting only completed projects, Japan has contributed to the construction of 1,865 MW capacity of electric power supply, which counts for 23 % of the current total capacity of electric power supply in Vietnam (see Figure 2). In terms of the increased capacity of electric power supply during the period of 1992 - 2001, Japanese ODA has contributed 38 % of the increased capacity (4,861 MW) (see Figure 3).

- The major projects in the electric power sector that are assisted by Japanese ODA include Phu My Thermal Power Plant Project, Pha Lai Thermal Power Plant Project, Ham Thuan -Da Mi Hydropower Project, Dai Ninh Hydropower Project, and so on.



(3) Overall Evaluation on Infratructure Development

- Since infrastructure development was one of the first priorities both in the Vietnamese five-year development plan and in the Japanese ODA Country Assistance Program for Vietnam, this kind of intensive assistance in infrastructure development is considered to be consistent with both Vietnamese and Japanese objectives.

- However, many of the approved loan assistance projects are behind the schedule and have not been completed yet due to various causes. These causes include both Vietnamese side and Japanese side problems. Improvements for faster implementation of projects will be required for both sides.

- It is important to note that social and economic benefits of infrastructure development are usually very limited until until sometimes after the project is completed. Thus, it is expected that many of the social and economic benefits of the Japanese ODA in infrastructure development are yet to be realized.

- In our interviews with Vietnamese governmental officials, they highly appreciated that Japanese ODA, which focuses on infrastructure development. Certain amount of loans has continuously provided to infrastructure development since Japan restarted its ODA. Many Vietnamese governmental officials also commented that transportation and electricity power infrastructure projects are indispensable to economic growth and requested for a continued assistance in these sectors.



- In Vietnamese 7th five-year national development plan (2001- 2005), the infrastructure development, especially transportation and electric power sectors, is assigned one of the top priorities. Therefore, the study team recommends that it is appropriate for Japan to continue to provide assistance to the transportation and electric power sectors.

- Due to rapid advance in information technology, the telecommunication infrastructure becomes one of the most important infrastructures. Japan should consider increasing aid to telecommunication infrastructure projects.

- Privatization movement in electric power sector and telecommunication sector needs to be carefully monitored and be taken into consideration for future Japanese ODA. It may be clever that those projects of which private firms have incentives to handle are left for private-based assistance and that Japanese ODA is more focused on projects for that private-based assistance is less likely. They target at, infrastructure development in mountainous and rural areas and countermeasures against natural disaster.





      Japanese ODA projects for human resource development and institutional building include the followings (1992-2000).

●	Small and Medium Size Enterprises Finance Project	Loan aid	1998
●	Economic Reform Support Loan	Loan aid	1999
●	Non-Project Grant Aid	Grant aid	1996-98
●	The Project for Construction of Viet Nam-Japan Human Resources Cooperation Center in Ho Chi Minh City	Grant aid	2000-
●	The Vietnam Information Technology Training	Project-type technical cooperation	1996-
●	Viet Nam - Japan Human Resource Cooperation Center	Project-type technical cooperation	2000-
●	The Project for Strengthening Training Capacity for Technical Workers in the Hanoi Industrial College	Project-type technical cooperation	2000-
●	Modernization of Industrial Property Administration Project	Project-type technical cooperation	2000-
●	The Study on the Economic Development Policy in terms of Transition toward Market-oriented Economy (Phase I & II)	Development study	1995-99
●	The Study on the Economic Development Policy in terms of Transition toward Market-oriented Economy (Phase III)	Development study	1999-2001
●	Study on the Promotion of the Small and Medium Scale Industrial Enterprises in Socialist Republic of Vietnam	Development study	1998-99
●	The Master Plan Study on National High Tech Park Project, Hanoi	Development study	1996-97
●	The Study on the Development of Industrial Standardization, Metrology Testing, and Quality Management	Development study	1996-97
●	Expert dispatch and training courses (ex. Technical assistance for legal systems and stock exchange center management.)

- Japanese ODA for Vietnam has two main characteristics. Japan has provided significant amount of loans for the development of economic infrastructures explained above. The other characteristic is that Japan has assisted in human resource and policy development in order to promote market-oriented economic development in Vietnam.

- In addition to general human resource development projects, Japan assisted with 'economic reform support loan' (so-called 'New Miyazawa Initiative' and successive programs) and 'development policy study toward market economy' (so-called 'Ishikawa Project'). These policy-oriented aids were very fresh trials for all of Japanese ODA.

- Regarding the economic reform support loan, Japan requested the Vietnamese government to conduct economic transition toward market economy and set this as the conditionality for the loan. Evaluation by Vietnamese officials shows that this conditional loan helped promote private sector development, reform of state-owned enterprises and reform of trade and tariff systems in Vietnam.

- 'Development policy study toward market economy' was also highly valued by the Vietnamese officials. Policy dialogues have been held between Vietnamese and Japanese experts in various areas and their fruits were reflected in the five-year national development plan (1996-2000). The topics studied and discussed included macro-economy policy, reform of industry structure, industry promotion, reform of the banking system, reform of state-owned enterprises, agriculture and rural development and so on.

- Japan had started providing training courses on legal systems in 1996 before other donor countries conducted them. This was also highly valued by the Vietnamese government officials because of its leading role of similar activities provided afterward in this area.

- Vietnamese officials in respective ministries clearly recognize Japanese ODA and their impacts. The officials have long thought that human resource development and institutional building were the key to national development. The officials commented that Japanese officials and experts understood those needs well and provided effective training courses that matched the requests by the Vietnamese government. On the other hand, other donor representatives commented that not only Japanese policy studies such as Ishikawa Project contributed to the latest five year national development plan, but also other important policy studies and dialogue done by other donors were reflected in the national plan.



- Vietnam is now on track on integration with global economy targeting AFTA (The ASEAN Free Trade Area) and WTO affiliation. To achieve them smoothly, integrated policies and legislations should be developed. Human resource development is the key to formulate necessary laws and policies and to enforce them effectively. Specific areas of cooperation in human resource development would include public administration, law enforcement system, firm management, trade management, machinery industry and information technology.





Japanese ODA projects in education sector include the followings (1992-2000).

●	The Project for improvement of the facilities of Primary Schools (I)	Grant aid	1994
●	The Project for improvement of the facilities of Primary Schools (II)	Grant aid	1995
●	The Project for improvement of the facilities of Primary Schools (III)	Grant aid	1996
●	The Project for improvement of the facilities of Primary Schools (IV)	Grant aid	1997-98
●	The Vietnam Information Technology Training*1	Project-type technical cooperation	1996-
●	The Training Capacity Strengthening Project on the Posts and Telecommunications Training Center No.1, The Socialist Republic of Vietnam*1	Project-type technical cooperation	1999-
●	The Education and Research Capacity Building Project of Hanoi Agricultural University	Project-type technical cooperation	2000-
●	Viet Nam - Japan Human Resource Cooperation Center*1	Project-type technical cooperation	2000-
●	Sector Program on Primary Education Development in the Socialist Republic of Viet Nam	Development study	2000-
●	Others (grass-roots projects (grant aid) including the projects for rehabilitation of elementary school (1991, 97, 98, 99))

*1 Also counted as a project in Human Resource Development and Institutional Building Sector.



- 195 elementary schools have been constructed or are now under construction throughout the country, and the number of classrooms has also been increased by Japanese ODA. The evaluation reveals that this aid has contributed to improvement of the environment for primary education. The schools constructed by Japanese ODA are sturdy and have provided shelters for residents around the schools against typhoons that frequently hit this country.

- Higher-level education and training have been conducted at various sectors and universities with the assistance from Japan. They include 'the Training Capacity Strengthening Project on the Posts and Telecommunications Training Center No.1', 'the Education and Research Capacity Building Project of Hanoi Agricultural University', 'the Vietnam Information Technology Training' and some other technical trainings. It is stated by Vietnamese counter personnel that these projects hasve successfully provided well-trained persons for each sector.

- 'Sector Program on Primary Education' is now being conducted and Japanese government is expected to discuss future cooperation based on the result of this development study.



- Issues to be tackled now on, that ere mentioned by Vietnamese governmental officials and experts in education sector, are as follows.. While school attendant rate is considered to have reached almost 100% in the plain areas, 'threes-shift system', namely one classroom is used by different children by three times in a day at morning, afternoon and evening, is broadly observed in mountainous areas. Increase and consolidation of school facilities in mountainous areas should be promoted . Since primary schools located at Mekong Delta are frequently suffered from flood almost every year, consolidation and renewal at the Delta are also considered important issue in this sector.

- Priorities in future Japanese ODA for education sector are recommended to be given to; (1) on a regional basis, mountainous areas where minority ethnic groups live; (2) on a sub-sector basis ⁷, middle-high and high school education; and (3) consolidation of educational facilities for street children who are expected to increase in the inter-city areas accompanied by economy transition toward market-oriented economy.

- The 7th five-year national development plan (2001-2005) includes seven strategic areas in the education sector. Three areas among the seven have not really been assisted by donors so far and could be considered for priority areas for Japanese ODA, namely; (1) establishment of universities in regional areas, whose standard level should be met the existing ones; (2) promotion of high level education which provides well-qualified labor force for the high technology industry; and (3) development of nationwide vocational education as soon as possible.

- In the field trip, the study team found that the construction of an elementary school contributed to increase in study hours of middle-high school students. It is important to identify the real objectives and needs of the recipient countries in the stage of project preparation.





      Japanese ODA projects in health sector include the followings (1992-2000)

●	The Project for the Rehabilitation of the Cho ray Hospital	Grant aid	1992-94
●	The Project for the Improvement of Medical Equipment in the Hai Ba Trung Hospital	Grant aid	1992
●	The Project for Improvement of Medical Equipment in Hanoi City	Grant aid	1993-94
●	The Project for Improvement of the Bach Mai Hospital	Grant aid	1997-99
●	The Cho Ray Hospital Project	Project-type technical cooperation	1995-97
●	The Reproductive Health Project in Nghe An Province	Project-type technical cooperation	1997-2000
●	The Reproductive Health Project in Nghe An Province (Phase II)	Project-type technical cooperation	2000-
●	The Bach Mai Hospital Project for Functional Enhancement	Project-type technical cooperation	1999-
●	Others (grass-roots projects (grant aid) including the project for provision of health equipment (1993, 95, 96, 97, 98, 99) and the project for rehabilitation of village-level health center (1998))

- Japan has provided ODA in the form of constructing facilities, providing equipment and dispatching experts both at the Bach Mai hospital and at Cho Rai hospital. Those aids have been highly effective. As national-level hospitals, Bach Mai hospital and Cho Rai hospital have achieved the role of major health institutions in northern and southern Vietnam, respectively. These two hospitals also provide training to the staff of the regional- and district-level hospitals, and these two hospitals cooperate with one another, which is rather unique case. The study team confirmed that facility and equipment provided by Japanese ODA are utilized effectively. Japan has provided cooperation in the treatment of HIV/AIDS at these hospitals, and these cooperation have been effective. The importance of cooperation in HIV/AIDS care and prevention has increased recently; It is suggested that Japan provide more assistance in coordination with the international organizations and other donor countries.

- Cho Rai hospital has successfully obtained income operating CT Scan units provided by Japanese ODA and, by investing the accumulated income, bought two more CT scan unitsand a MRIunit. This is a good example of sustainable and self-support management followed by aid provision.

- Additionally the team observed that other equipment provided to Hanoi City Mother and Children hospital, to National Tuberculosis and Respiratory Institute and to Hai Ba Trung Hospital are being effectively utilized.



- Improvement of the health indicators can be achieved by improving health service in rural areas where people do not have access to health institutions located at urban areas. Thus, priorities should be given to strengthening the outreach activities which are already provided by Cho Rai hospital as well as Bach Mai hospital and health service activities based on the primary healthcare strategy. Espcially training for health workers in rural areas will be a key to success.

- On the other hand, it seems that increase in the number of sickbed and establishment of new tertiary level (= national-level) health institution are not necessary except in the country's central region. The unit number of sickbed in Vietnam in 1995 is 380 per capita, which is bigger than that of Thailand.

- However, a national-level health institution should be established in the central region where Da Nang and Hue are located, and it is necessary to choose sites that can promote collaboration with the existing health research institutes like universities.

- As far as public health is concerned, appropriate distribution of limited resources to preventive healthcare of infections is necessary. Priorities should be given totuberculosis, malaria and diarrhea. Additionally, prevalence of HIV/AIDS has became very high in Ho Chi Minh City according to the recent statistics, which requires urgent measures. Thus, dispatch of experts and provision of equipment of preventive activities are indispensable. The project-type technical cooperation on reproductive health in Giang province could be a good example for future cooperation with the city health department and Cho Rai hospital in Ho Chi Minh City.

- Concerning to technical cooperation to Bach Mai hospital, south-south cooperation supported by Japan between Vietnam and Laos to be implemented was dicussed last year among three parties. Japanese assistance to Lao's SETIRATO hospital (grant and project-type technical cooperation) should be promoted for this purpose. It would maximize effect of Japanese ODA.

- Japanese experts dispatched to Vietnam commented that Vietnamese counterparts have high capacity of adoption and utilization of expertise but tend to need a long time to make a certain progress. Some cases revealed that promoting their ownership and awarenesscontributed to make the aid more effective. This comment should be kept in mind for future cooperation.





      Japanese ODA projects in agriculture and rural development sector include the followings (1992-2000).

●	The Project for the Strenghening of Reforestation Program through Agro-Forestry Practice in Dac-Lac Province	Grant aid	1992
●	The Project for the Improvement of the Facilities and Equipment of the Faculty of Agriculture, Can Tho University	Grant aid	1993-95
●	The Project for the Improvement of Equipment for Reforestation Program in North-West Vietnam*1	Grant aid	1995-96
●	The Project for Improvement of Drainage System in Tan Chi Agricultural Area	Grant aid	1997-98
●	The Afforestation Technology Development Project on Acid Sulphate Soil in the Mekong Delta	Project-type Technical Cooperation	1997-99
●	The Education and Research Capacity Building Project of Hanoi Agricultural University	Project-type Technical Cooperation	1998-2003
●	The Model Rural Development in Nam Dan District Nghe An Province	Development Study	1995-97
●	The Study on Agricultural Development Plan in the Dong Thap Muoi Area	Development Study	1998-2000
●	Others (grass-roots projects (grant aid) including the project for village-level agricultural development (1992), the project for rehabilitation and provision of equipment for village-level irrigation (1997, 98, 99) )

*1 Also counted as a project in environmental sector



- The number of Japanese ODA projects in agriculture and rural development sector is limited. However, the study team estimated the impact from transfer of technology and institutional reform had been much larger than the impact generated by expansion of farming land and by increase in labor force. Research cooperation at universities and technical assistance are the main projects provided by Japan, which are the most effective ways for cooperation. The Vietnamese counterparts also note the advantages of this way of cooperation.



- It seems that Vietnamese agricultural export to Japan might increase due to the Japanese ODA, and such increase would have effect on Japanese domestic agricultural sector. To address this concern, the ideal relationship between the Vietnamese agricultural sector and Japanese one should be studied and identified as soon as possible. Then possible concrete assistances, including support for increase in agricultural production for the Vietnamese domestic market and establishment of mutual complementing relationship in agricultural production, should be studied.

- Some ideas for future assistance in the agricultural sector are as follows;(a) support for study, planning, implementation of agriculture and rural development which should be consistent with environmental protection, poverty reduction, sustainable development, creation of employment opportunities, and diversification of agriculture; (b) support for stockbreeding and vegetable production and hygiene; (c) support for the study and conduct of pilot projects seeking prevention of deterioration of Mekong Delta soil; (d) technical cooperation for study and training at agricultural universities and other related research institutions; and (e) technical and financial cooperation and grant aid to develop and strengthen irrigation and drainage.





      Japanese ODA projects in environmental sector include the followings (1992-2000).

●	Hanoi Drainage Project for Environment Improvement	Loan aid	1995,97
●	Dong Nai and Baria-Vung Tau Provinces Water Supply Project	Loan aid	1997
●	Ho Chi Minh City Drainage Project for Environment Improvement	Loan aid	2000
●	Project for the Strengthening of Reforestation Programme through Agroforestry Practice in Dac-Lac Province	Grant aid	1992
●	Project for the Improvement of Water Supply Facilities in Gia Lam Area, Hanoi City (Phase I)	Grant aid	1993
●	Project for the Improvement of Water Supply Facilities in Gia Lam Area, Hanoi City (Phase II)	Grant aid	1993-95
●	Project for Improvement of Equipment for Reforestration in Northwest Viet nam	Grant aid	1995-96
●	Project for Expansion of Water Supply System in Hai Duong City	Grant aid	1998-99
●	The Study on Water Supply Development for Hanoi City	Development study	1994-97
●	The Study on Urban Drainage and Wastewater Disposal Systems in Hanoi City	Development study	1995
●	The Study on Environment Management for Ha Long Bay	Development study	1996-1999
●	The Master Plan Study on Urban Drainage System in Ho-Chi-Minh City	Development study	1998-99
●	Study on Environmental Improvement at Hanoi City in the Socialist Republic of Vietnam	Development study	1998-99
●	Study on Sanitation Improvement Plan for Haiphong City in the Socialist Republic of Vietnam	Development study	1998-
●	The Maser Plan Study for Industrial Pollution Prevention in Viet Nam (Waste Water)	Development study	1999-
●	The Feasibility Study on Forest Management Plan in Central Highland in Viet Nam	Development study	2000-
●	Others (grass-roots projects (grant aid) including the project for provision of equipment for forestation (1995))

- In the environment sector, Japanese ODA has been focused on natural environment conservation, residential (urban) environment improvement and pollution prevention. In particular, Japan extended financial assistance to projects to improve residential (urban) environment, such as water supply, drainage, and sewage system in various cities including Hanoi, Ho Chi Minh City, and Hai Phong. Vietnamese five-year national development plan has also addressed a need in improvement of residential environment as one of the important objectives. Japanese Country Assistance Program for Vietnam has also stated the improvement of residential environment as an important objective. Therefore, Japanese ODA in the environment sector has been consistent with both Vietnamese and Japanese objectives.

- The major projects in the environment sector that are assisted by the Japanese ODA include Hanoi Drainage Project for Environmental Improvement, Ho Chi Minh City Water Environment Improvement Project, the Study on Environmental Management for Ha Long Bay (Development Study), the Master Plan Study for Industrial Pollution.

- The JICA's Study on Environmental Management for Ha Long Bay, which studied the current situation of the environmental and ecological system in Ha Long Bay, was highly appreciated by both Ministry of Science, Technology and Environment and People's Committee of Quang Ninh Province in our interview. As is well known, Ha Long Bay is a World Natural Heritage and one of the most important natural resources in Vietnam. Therefore, Ha Long Bay is one of the first priorities to be conserved. While it is not easy to evaluate quantitatively the contribution of the JICA study, its contribution to facilitate the environmental conservation policy for Ha Long Bay is considered to be significant because the study supplied many important data on the current environmental conditions in Ha Long Bay and provided recommendations on what should be done for the conservation of the environment in Ha Long Bay.

- In terms of the achievement of the objectives, major projects in this sector assisted by Japanese ODA are yet to be completed. Therefore, the achievement in this sector is currently not fully observed.

- On the other hand, regarding natural environment conservation and pollution prevention, the projects that have been conducted so far are highly appreciated, but the number of projects and scale of Japanese assistance in these areas are limited.



- In Vietnamese latest five-year national development plan, Vietnamese government stated improvement of residential environment, pollution prevention, and protection of natural environment as important objectives. Japan should make its assistance to seek these objectives more satisfactory. Moreover, it is important for Japanese ODA to assist in the way that the assistance not only provides framework for environmental conservation and pollution prevention but also is directly linked to actual projects in these fields. Japan's own experience in these fields will be useful for the assistance.

- Additionally if moving of local residents is inevitable as a result of large-scale infrastructure development, the detailed study about the alternative location where they can be resettled should be carefully conducted in order to improve their residential environment.





- The impact of Japanese ODA on private sector investment in the northern region is quite different from that in the southern region. Intensive interviews in the southern region (=Ho Chi Minh City and its surrounding area) revealed that Japanese-affiliated firms started operation in the industrial districts where private sector had invested, before infrastructures were consolidated mainly by Japanese ODA. So these firms did not recognize certain relationships between increase of private sector investment and provision of Japanese ODA. On the other hand, the interviews in the northern region (=Hanoi City and its surrounding area) revealed that the firms decided their investment after they confirmed the consolidation of infrastructure development such as 2 - 4 lane highway (the National Highway No.5) between the industrial district and the trade port, the international trade port (Hai Phong port) equipped with facilities capable of operating 40/20 x 20 inch containers, and stable and large-scale provision of electricity and water. Those infrastructures were mainly consolidated by Japanese ODA.

- Based on the above comments from private firms, the study team concludes that Japanese ODA was appropriate to the needs of the northern region and that of the southern region. In the southern region, the assistance by Japan focused on increasing the capacity of stable electricity provision, while in the northern region, the assistance to develop road and trade port matched the needs of private firms under operation as well as those considering investment. Sometimes, this observed relationship in the north is called 'attracting effect' of public investment on private sector investment. Since most infrastructure projects aided by Japan, except the National Highway No.5 and Phu Mai power plant, has just completed or is still under construction, it is too early to evaluate full impact of those projects.

- In short, Japanese-affiliated firms recognize and pay attentions to Japanese ODA on infrastructure development, human resource development, legal system reform and economic reform to the extent that Vietnamese officials and private sectors often raised Japanese ODA as a topic. The team also observed positive effect on the relationship between the private sectors of the two countries.

BOX: Three out of four surveyed Vietnam's business persons perceive that Japanese ODA projects have impact on their business. 　A survey was conducted by CONCETTI (a Vietnamese consulting and research firm) as a part of this country evaluation study in 2001 - 2002 to understand perceptions of business persons and governmental officials toward the impact of Japanese ODA. 　The survey was targeted two groups: (1) business persons that have import / export activities particularly with Japan's market, and (2) Government officials, directly or indirectly, involved in Japan's ODA. The survey was conducted at mainly in Hanoi and Ho Chi Minh City. Out of 100 questionnaires distributed to each group, 68 and 72 were sent back and analyzed. Firm's legal status that the responding business persons belong to are: State-owned 34.7%, Foreign-invested 24.6%, and Non-state (=Vietnamese private) 40.7%. 　The followings are some findings of the survey. ● Impact on general development of Vietnam: Areas most impacted by Japan's ODA ● Impact on Business: The way Japan's ODA projects benefit surveyed businesses (Multiple choice) ・ Your business is to enjoy better infrastructure 50.0% ・ Your business has more opportunities to supply goods and services to Japan's ODA projects 37.5% ・ Your business is to enjoy more ''open'' policies under the impact of Japanese funded projects on mechanism, policy and institution reforms 25.0% ・ Export to /import from Japan become easier 25.0% ・ Japanese Investment to Vietnam increases 22.9% ・ Others 8.3% ・ Your business receives direct support from Japan's ODA Projects 6.3% ● Funding Areas Recommended by Business Persons Source: CONCETTI, A Survey Report: Perceptions of Japan's ODA Impact in Vietnam, February 2002., Summarized in GRIPS Development Forum, Japan's Development Cooperation in Vietnam, May 2002

- In addition to the above evaluation of respective sectors, the study team tried to get comments and views on Japanese ODA from other countries providing ODA to Vietnam (hereafter called 'donors'). Donors know well representative Japanese ODA such as road projects, power plant projects, the development policy study for economic transition (so called 'Ishikawa project') and economic reform support loan (so called 'New Miyazawa Initiative), and they also know the process of decision-making and administration of Japanese ODA.

- Recently a new movement emerged in the donor community. Representatives of donors and recipient countries get together to have intensive discussions and to try to make development plans, sometimes called development strategies. Vietnam is recognized as one of the front-runners in the new movement. Some donors shift their aid resources from the conventional project-type aid to support for policy and strategy formulation.

- Though Japan is recognized as a newcomer in this movement, the donor community well recognizes and appreciates Japanese contribution to support plan and strategy formulation and donor coordination at infrastructure sector. The study team got one interesting comment from the interview with some donor representatives: If Japan withdraws from project-type aid such as infrastructure development and moves into support for making development plans and strategies just like other donors, who will fill the huge needs gap in infrastructure development in this county? It means that Japan should not choose one of the two positions but pursue both positions, which are provision of project-type aid and support to formulate development policies and strategies. The study team agrees with this comment and recommends this position.

- Another useful comment is that the grassroots-level cooperation conducted by some other donors and NGOs, such as village-level health promotion, and the large-scale cooperation provided by Japan, such as consolidation of national-level hospitals, supplement each other and their effect can be realized more by using each other's function. Therefore Japan does not have to stick to trying the same way that other donors apply to. Furthermore, Japanese ODA should be planned not only based on Vietnamese development plans but also taking into account the strategies and programs of other donors.



- Japanese activities are well known among the people of Vietnam: the national-level hospitals, roads and schools aided by Japan are visible. Not only the direct beneficiaries but also the general public know the existence of Japanese ODA projects, because central and regional governments on Vietnamese side and Japanese Embassy have endeavored to improve public relations so that Japanese ODA projects are frequently introduced on television programs and newspapers.





- In Vietnam, aid coordination has become active in recent years. Aid coordination targets 30 sectors, such as transportation, health and basic education. Led by 'Ownership' of the Vietnamese government, representatives of donors, governmental officials and representatives of general public get together and have intensive dialogue on formulation of development policies and strategies and their implementation in a coordinated manner. At the same time European donors (UK, Netherland, Sweden, Norway, Finland and Switzerland) started the discussion on coordination of aid procedures. Important decisions are frequently made and agreed in those meetings held at local level instead of each donor's headquarters. Though Japanese Embassy and local offices of JICA and JBIC have tried to be more involved in the discussion of those meetings, they feel there are some difficulties because the meetings are so many and the discussions are so specialized. Vietnam is one of the most progressive countries in donor coordination and UK and Scandinavia try actively to make it mainstream. It is necessary for Japan to participate more actively in this activity.

- More specifically, Japan should join donor meetings on formulation of development policy, strategies and plan more frequently. Regarding the sectors and themes on which Japan put priorities, Japan should take a lead on discussion of development of national policies and strategies held between the Vietnamese government and donors. (This does not mean the shift from request-based approach but is more collaborate approach in order to make policies, strategies and plans, which are base of the requests, effective and rational.)

- Even though Japan is duly involved in the policy and strategy discussion with the Vietnamese government and donors, Japan should continue with provision of significant amount of aid to fill the huge development needs in Vietnam. In other word, Japan should seek its 'dual function', consisting of a new role of active participant in policy discussion, and the existing role of leading aid provider.

- In order to achieve 'dual function', the study team recommends even more decentralization in the organizations of MOFA, JICA and JBIC, respectively. It means that local offices of those organizations should have power of decision-making at the locally held donor discussions. Since discussions of the donor meetings are becoming more technical, staffing of the offices should be more strengthened.

- Additional proposals are that yearly action plan should be made by the Embassy based on the Japanese five-year Country Assistance Program and its revision should be drafted by the Embassy, rather than MOFA's head office ⁸.

- It seems that major changes to Japanese ODA policies have not been clearly informed to Embassies. By ensuring notification of major changes of the policies to the development front-line (Embassies and local offices of JICA and JBIC), Japanese common aid objectives and policies should be realized ⁹.

- Some of the approved loan assistance projects are behind schedule and have not been completed yet due to various causes such as delay in portion to which the Vietnamese government is responsible; especially the projects that need large financing such as road and power plant constructions. Japanese government should request the Vietnamese government to complete these projects as soon as possible.



-The study team proposes three priority areas for Japanese ODA to Vietnam.

(1)	Human resource development both in public and private sectors in line with transition from centrally-planned economy to market-oriented economy.
(2)	Vietnam is now on track on integration with global economy. To achieve integration with the mechanism such as AFTA and WTO, necessary legislations and law enforcement system should be developed.
(3)	Demand for infrastructure development is still large to support the continuous increase in expected industry production. Strategic approach is necessary.

- In the coming 10 years, the Vietnamese government has the objective of having the industry sector absorb a larger portion of the labor force and of decreasing the ratio of population in the agricultural sector significantly. According to this economic structural change, the following aid need is expected to emerge in the long run.

(4)	The need to minimize the income disparity between the industrialized city area and farming-dominant rural area. Additionally, it will be the task to avoid the inner-city area slum emerging, even though it has not happened yet.

- Above mentioned needs are recognized by the Vietnamese government and donors, and volume of each need is tremendously large. It is indispensable for continuous growth of Vietnamese economy to address these needs. If Japan just reacts to requests submitted by the Vietnamese government, it cannot provide necessary aid at appropriate timing. Japan should estimate the future direction of Vietnamese economy and the future need of aid and prepare before the formal requests come up. The first step would be to conduct a holistic (overall) development study to understand the future shape of Vietnamese economy and society. On the other hand, it is important for Japan to formulate a clear aid strategy reflecting the result of that study as well.

- Priority areas should be more clearly identified in the revision of the Country Assistance Program prepared in 2000 based on the above proposed areas.

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¹ 88.9 trillion Dong divided by the exchange rate (US$1=13,943Dong) (Data: EIU, Vietnam Country Profile 2001, p50; Original Data: IMF, Vietnam: Request for a Three-Year Arrangement Under the Poverty Reduction and Growth Facility - Staff Report,: Statistical Appendix and Background Note.)

² This figure does not include the amount of Japanese grant aid (US$172 million)

³ Total revenue (78.5billion Dong) minus Japanese grant aid converted (2.4billion Dong) and multiplied by the exchange rate (US$1=13,943Dong)(Data: the sama as above)

⁴ DAC statistics calculated the total amount of aid received as US$1,421 million (Grant : US$460 million, Loan: US$ 961million)and this statistics has difference from the statistics prepared by the Vietnamese government. The reason for this gap, the study team presumes, is the existence of so-called 'off-budget aid', which is a direct grant aid and not through the Vietnamese governmental budget, as well as the difference in the applied exchange rate. If the calculation follows the DAC statistics, the budget deficit is calculated as US$ 1,421million (the budget deficit the government reported of US$ 1,025 million plus DAC's additional estimation of US$ 396 million). Therefore the rate of the budget deficit covered by Japanese aid is calculated as 46.5% and the ratio of Japanese aid in the total budget expenditure is 9.7%

⁵ The years suggested in all project lists indicate Japanese fiscal year.

⁶ TEU (Twenty-footer Equivalent Unit) is a standard unit based on the number of 20 feet-long containers. For example, one 20 ft container is equal to 1 TEU, one 40 ft container is equal to 2 TEU, and so on.

⁷ In Vietnamese 7th five-year national development plan, the rate of entrance for middle-high school attendance is targeted to be raised from the current rate of 49.9% (1999) to 80% in the target year 2005, and also the rate of entrance for high school attendance from 27.3% (1999) to 60% in 2005.

⁸ Recently the decision was made that each Embassy would prepare the draft of Country Assistance Program. So it can be said that this recommendation has already been adopted. (Comment from MOFA)

⁹ Recently the head office of MOFA decided common policies on aid coordination and notified each Embassy. Considering this example, this recommendation has already been realized. (Comment from MOFA)

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