Learning Curves

IED

August2009

EvaluationofADBsSupportfor theTransportSectorinVietNam
Thissectorassistanceprogramevaluationpresentsthefindingsofanindependent assessmentofADBsupportforthetransportsectorinVietNamsince1993. Theevaluation1foundthatADBhashadasuccessfulprogramofinvestmentsintheroads subsector,boththroughnationalandGreaterMekongSubregioninvestments.Theprogram ofsupporttoothertransportsubsectorshasbeenlimited,butsuccessful.Withother developmentpartnerssupportingothersubsectors,theoverallprogramofsupporttothe Governmentforthetransportsectorisholisticandcomprehensive.Overall,thecurrentrapid expansionoffundsfortransportinVietNamneedstobeviewedagainsttherisksinvolved withthosefundsbeingchanneledthroughrelativelyweakinstitutionstocontractorsstill underthecontrolofthestatesector.
assistancetookintoconsiderationstrategicpositioning, valueaddition, and ADBperformance. ADBs strategic Thetransportsectorhascontributedtotheeconomic positioning is rated high. In general, there has been a growthofVietNamoverthepastdecade.Ithashelped close alignment of ADBs transport strategies and reducepovertythroughimprovedlinkstomarkets, programs with the Governments major transport education,andhealthfacilities,andindirectlythrough priorities. Likewise, ADBs strategy in the roads and itscontributiontogrowth.TheGovernmentsinvestment railways subsectors has been consistent with its actual intheroadnetworkappearstohavefocusedonnew lending and nonlending programs. Value addition is construction,withoutfullfundingofsubsequent rated substantial. ADB assistance on institutional maintenancerequirements.Expenditureontheperiodic strengthening made a significant early contribution to androutinemaintenanceofnationalhighwaysbetween policy reform. Asset management and improved 1998and2002waslessthanhalfoftheneedsestimated procurement systems were also introduced. ADB byVietNamRoadAdministration.Akeyissueisthe performance is rated substantial(on the low side) since debtoftheMinistryofTransportarisingfromitsstate it was responsive to Government needs and produced ownedenterprises(SOEs),whichwasrecentlyestimated strategies that were closely aligned with those of the atD19.5trillion($1.1billion),orabout1.5%ofthe Government, thereby fostering good program countrysgrossdomesticproduct.ConstructionSOEs ownership. ADB also developed strong partnerships havehugedebtsandurgentlyneedfinancing.This with development partners. However, this strong forcesthemtosubmitlowsurvivalbidstosecure performancehasbeenmitigatedbydifferencesbetween contracts,apracticethatultimatelyresultsinlowquality funding agency and Government approval processes, constructionanddelayedimplementation. includingprocurementandimplementationprocedures, SummaryofFindings which resulted in implementation delays. Also, ADB The overall rating for Asian Development Banks lacks sufficient operations staff to effectively manage (ADBs) assistance in Viet Nams transport sector is ADBsrapidlygrowingtransportportfolioinVietNam. successful. The topdown assessment of ADBs In terms of topdown assessment, ADBs rating is successful.
Independent Evaluation Department Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 632 4444; Fax +63 2 636 2444; evaluation@adb.org; www.adb.org/evaluation/

Background

The bottomup assessment took into account four completed and three ongoing loans and advisory technical assistance (TA) projects. ADB assistance is rated relevant as it is in line with Viet Nams needs, priorities, and capacities; has been in line with ADBs comparative advantages; has been harmonized with support provided by other development partners; and has largely been appropriately designed to achieve intended outcomes. ADB has consistently designed the loans so that intended civil worksrelated outcomes can beachieved.Thedesignshavebeenlessconsistentwhen it comes to the achievement of institutional strengthening. ADB assistance is rated effective since operations were successful in contributing to outputs (e.g., roads built) and outcomes (e.g., reduced travel times)insupportofVietNamsgoalsandobjectives. ADB assistance is rated efficient with reasonably higheconomicratesofreturnoninvestments.However, it is less efficient in targeting resources to institutional development. ADB assistance is rated less likely sustainable. The Government has been funding maintenance for ADBfinanced roads to a reasonable level,butitisnotagiventhatasimilarleveloffunding will be provided for periodic maintenance overlays, or thatsufficientfundswillbepasseddowntoprovinces. Institutional sustainability is also a concern since the roles and responsibilities of concerned agencies, includingtheprojectmanagementunitshaveyettobe clearlydefined.ADBassistanceisratedashavinghada likelysubstantialimpact.Evaluationshowsthatsixofthe seven loans have had or will have significant direct or indirectbenefitsonthepoor.Thebottomupassessment ispartlysuccessful. TheevaluationofadvisoryTAprojectsshowsthat therehasbeenlittleimpactintermsofimprovingthe institutionalcapabilitiesofimplementationagencies.In particular,GovernmentownershipofTAprojectsis weakandsomeTAprojectstendtobesupplydriven andhavenotreflectedtheGovernmentsneedsor requirements.Paststrategiesandprogramshave providedminimalstrategicdirectionfornonlending assistancetothetransportsector.ADBhashada successfulprogramofinvestmentsintheroads subsector,boththroughnationalandGMSinvestments. Theprogramofsupporttoothertransportsubsectors hasbeensuccessful,albeitlimited.Thedecisiontofocus ontheroadssubsectorhadthebenefitthatADBwas abletouseitsstrengthsinroadsandknowledgeofthe roadssubsectortogoodeffect.Severallessonstaken frompastandongoingprojectsneedtobetakeninto accountifthebroaderfutureprogramistosucceedand

ifsustainabilityistoimprove.Theseincludethe following:(i)standarddesignsmaynotalwaysbe appropriateforvaryinglocalconditions;(ii)timelag betweenprojectidentificationandprojecteffectiveness needstobeshortened;(iii)underbiddinghasleftsome contractorswithinsufficientfundsforsuccessful implementation;(iv)safeguardharmonizationneedsto beimplemented;(v)institutionalstrengtheningneeds moreattention,inlightofpotentiallylargeincreasesin futureinvestmentflows;(vi)useofequitizedSOEsto bidonADBfundedprojectsmayresultinconflictsof interestandhasalsoresultedinsomereportedcasesof underbiddingtosecurecontracts;(vii)notenoughhas beendonetoidentifycapacitybuildingneeds;and(viii) TAcouldbemoredemanddriventoimprove ownership. Recommendations Theevaluationmaderecommendationsinrelationto thefollowingareasofADBsoperations: Inlightofexpandingtransportsectoroperations, developagovernanceplanthatwill comprehensivelyaddresstheinstitutionbuilding andorganizationalchangesrequiredtomitigatethe risksofthecurrentinstitutionalarrangements. Considerprovidingrealtimeadvisorysupportto Governmentfornewareasofintervention,suchas privatesectorparticipationininvestments. Throughclosecooperationwithotherdevelopment partners,improvethesustainabilityofprojectsby gainingGovernmentcommitmenttomaintenance funding. Reviewbiddingarrangementstoensurethat underbiddingdoesnotadverselyaffectproject performanceandthattransparencyismaintainedin contractswiththeequitizedSOEsector. ReassesscurrentstaffingrequirementsatbothADB headquartersandVietNamResidentMissionto ensurethattheexpandingtransportportfoliois appropriatelyresourced. Feedback Atthetimeofthiswriting,thereisnoADB Managementresponseyet.
1

ADB.2009.AsianDevelopmentBankSupportfortheTransport SectorinVietNam.SectorAssistanceProgramEvaluation. Manila.Available: www.adb.org/Documents/Reports/SAPE/VIE/SAPVIE 200928/SAPVIE200928.pdf

Learning Curves available @ www.adb.org/evaluation/

Team Leader: Geoffrey Crooks; Tel +63 2 632 4182; gcrooks@adb.org