A.  Introduction

Public investment in Vietnam, particularly for infrastructure projects, is typically delayed compared with the initial schedules.  This situation applies equally to World Bank and other donor financed investments.  The rate of disbursement on bank financed projects in Vietnam has increased significantly during recent years but has remained substantially less than the rate at which new commitments are being made.  The result has been a continuous increase in undisbursed funds, to about $11 billion at the end of 2008. 

Portfolio performance, had earlier been good.  However it is becoming stagnant and, more recently, a downward trend in disbursement ratios due to slow project start-up, and implementation delays, reduce expected project benefits and increase project costs.

The Project Preparation Technical Assistance Facility will support the Government’s efforts to improve project performance.  This will be achieved by providing assistance with the critical project preparation activities, including the schedule and quality components.  The new project preparation facility can be used to provide assistance to feasibility studies, detailed designs, procurement and other necessary project-preparation activities, across all development sectors. 

The World Bank’s involvement arises from its significant exposure to almost all of Vietnam’s development sectors, from policy support to capacity building and investment operations.  The Bank has extensive global and country knowledge that add considerable value to Vietnam’s project preparation and implementation processes thus effectively supporting the institutional and procedural reforms that these processes require.

B.  Project Development Objective

The Project Development Objective is that Government agencies have increased capacity to plan and prepare public investments efficiently and to international quality standards. Project outcomes will include:

▪      improved quality at entry,

▪      shortened preparation periods,

▪      more rapid realization of project benefits,

▪      increased capacity within government agencies and the national consulting industry to produce project preparation documents of good quality, to an acceptable schedule.

Subproject preparation activities beyond the Feasibility Study stage (detailed engineering design, etc) are contingent upon the viability of the subproject based on the feasibility study findings.  It should be noted that approval of PPTAF financing for subproject preparation activities does not guarantee subsequent World Bank financing of the investment loan.

Costs incurred during the preparation of the PPTAF subprojects will replace the preparation activity costs that otherwise would be incurred during the investment-project.

C.   Project Components

The Project Development Objective will be achieved through the following three components:

Component A: Project Preparation Facility

The project will finance the preparation of a large number of subprojects during the five- year implementation period. These range from large scale infrastructure investments, requiring preparation budgets of up to US$ 20 million, to smaller social sector operations, requiring individual consultant inputs. The scope of this Component will include all tasks required to complete the preparation of the subprojects so that their implementation can commence as soon as investment financing is available.

Component B: Project Preparation Facility Support and Capacity Building

This component provides support to the Ministry of Planning and Investment (MPI), the project’s Executing Agency to assist with project implementation, capacity building for the IAs and broader policy dialogue and studies to improve the country’s overall development program and project performance. There are three sub-components:

Subcomponent B.1: Project Preparation Facility Support Services

These services will provide MPI with the support required to effectively manage the project, through a facility support consultant team with strong project management expertise. The key areas of support to MPI include:

▪      to screen and process sub-project applications,

▪      overall monitoring and evaluation of the project,

▪      consolidated financial management,

▪      procurement and safeguards guidance to the IAs,

▪      portfolio management and monitoring/quality assurance,

▪      preparation of a capacity building program to be implemented under Sub-components B-2 and B-3. 

Subcomponent B.2: Project Preparation Capacity Support Services

These services are designed to support overall capacity building (primarily targeting the IAs) for project preparation.  The capacity support consultants, under the direction of MPI, will provide targeted assistance to:

▪      subproject implementation agencies, both individually and collectively, to increase their capacity to efficiently prepare projects to enhanced quality standards; and

▪      Vietnamese consultants and planning institutes to improve the technical aspects of preparing project documents.

Subcomponent B.3: Policy Support and Institutional Strengthening

These services will provide MPI, and other central government economic agencies (eg Ministry of Finance and State Bank of Vietnam) with specialist support for improving the country’s overall public investment project institutions and procedures, including support that arises from the work of the joint Government-Six Banks initiative.  Activities may include preparing guidelines, workshops, printing and distribution of materials.

Component C: Incremental Operating Costs and Project Management Expenses

Component C includes US$ 0.60 million credit funds to support MPI with:

▪      conducting annual external audits, and

▪      purchasing minor equipment and facilities required to manage the project. 

The GoV has allocated US$3 million in counterpart funds which will cover MPI’s project management expenses.  In addition the IAs must also include their government counterpart funding requirements for management expenses within their PPTAF application.

D.  Eligibility

In order to be eligible for consideration for PPTAF funding a subproject must have either:

▪      be on the Government’s approved list of ODA funded projects,

▪      be consistent with the Bank’s CPS for Vietnam, or

▪      be part of a specific agreement, such as an exchange of letters, between the Bank and MPI. 

Priority for PPTAF assistance will be given to World Bank financed projects.  However subprojects funded by other donors may be considered for support in the future.

E.  Project Operations Manual including the Financial Management Manual (POM/FMM)

For information and reference by potential IAs the PPTAF Project Operations Manual, including the Financial Management Manual, is available to be downloaded below in English and Vietnamese

F.  Sectors of Assistance

PPTAF assistance is available for projects in all sectors including:

▪      Infrastructure,

▪      Education,

▪      Health care,

▪      Agriculture and Fisherie

G. Procurement Procedures

Procurement activities for all World Bank funded PPTAF subprojects are to be carried out in accordance with the following:

▪     World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated January 2011 (the Procurement Guidelines) for Subproject Financing Agreements (SFA) signed after 01 July 2013.  The earlier version of the Procurement Guidelines published in May 2004, revised in October 2006 and May 2010 will be adopted for all SFAs signed before 01 July 2013,

▪   “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated January 2011 (the Consultant Guidelines) for Subproject Financing Agreements (SFA) signed after 01 July 2013.  The earlier version of the Consultant Guidelines published in May 2004, revised in October 2006 and May 2010 will be adopted for all SFAs signed before 01 July 2013,

▪      The provisions stipulated in the Financing Agreement for the PPTAF Project, 

▪      The provisions stipulated in the Subproject Financing Agreement (SFA) for the subproject SPMUs.

Counterpart Funded activities must comply with the Government of Vietnam’s Procedures and Regulations.

H. Social and Environmental Safeguards

PPTAF will finance subproject preparation studies and will therefore have no direct social or environmental impacts. However, there are potential negative impacts associated with the subprojects whose preparation is financed by the Project.  Therefore, in accordance with the Bank’s safeguard policies, the preparation of all subprojects financed by the Project will incorporate appropriate social and environmental considerations to add value to the Project’s benefits and to mitigate any potential negative impacts.

Provided they are well managed and executed, the Project is expected to have positive, albeit indirect, social and environmental impacts on future Bank lending operations through the preparation of Bank compliant, timely and good quality safeguard studies.

The Project will finance the preparation of appropriate safeguard instruments, as part of subproject preparation, to ensure compliance with the Bank’s social safeguard policies.  Screening will be carried out for each subproject to determine the main potential social impacts, whose safeguard policy may be triggered, and the assessment category of the subproject.

The IA’s capacity to prepare the required safeguard instruments will be assessed during the PPTAF application process. Assistance, advice and support will be provided to the IAs if required.

I. Financial Management

Financial Management of the PCU and PPTAF assisted subproject activities must comply with relevant World Bank and Government of Vietnam regulations.

Implementing Agencies, through their subproject PMUs will be responsible and accountable for financial management of the subcomponents.  PCU is not responsible for authorizing or verifying subproject transactions which remain the IA’s responsibility.

The Project Financial Statements will be audited by independent auditors acceptable to the World Bank and procured/managed by PCU.  The cost of financial audits will be funded by the project. In addition, quarterly Interim Financial Reports will be compiled by PCU, using financial inputs provided by the IAs.

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