Evaluation of the Bilateral Development Co-operation between Vietnam and Finland

Evaluation Report
Finnconsult Oy

Evaluation Report 2001:8
Ministry for Foreign Affairs, Department for International Development Co-operation
ISBN 951-724-361-8
ISSN 1235-7618


EXECUTIVE SUMMARY

Objectives and Approach

In 2001, the Finnish Ministry for Foreign Affairs (MFA) is reviewing its overall programme of relations with key partner countries and undertaking a series of seven country programme evaluations.

This evaluation assesses the past and current performance of Finland's development assistance to Vietnam. The assessment of Finnish-Vietnamese development co-operation focuses on issues of policy relevance, effectiveness, efficiency, and sustainability, and consistency of the entire portfolio of interventions. The analysis also considers the coherency, or complementarity, between development co-operation and other Vietnamese-Finnish relations, including trade and diplomatic relations. Recommendations are provided on possible alternatives for the future programme of Finnish-Vietnamese relations.

This evaluation was conducted between May and September 2001. The evaluation included interviews and meetings in Finland and Vietnam, site visits to selected projects in Vietnam, and a review of relevant documentation.

The Context for Development in Vietnam

Vietnam is the most densely populated country in southeast Asia, with close to 80 million people. It classified as one of the less developed countries, with an estimated per capita income of USD 400. After years of war and reunification of northern and southern Vietnam in 1976, the country faced a major task of reconstruction and revitalisation of its economy. In 1986, the Sixth Congress of the Communist Party of Vietnam adopted a policy of doi moi, or renovation, which has involved moving towards a socialist market economy and a state governed by rule of law. Substantialeconomic growth was experienced in Vietnam in the 1990s, until the economic crisis hit southeast Asia.

Vietnam is development policies were confirmed in the April 2001 Ninth Party Congress, which approved the socio-economic strategy for 2001-2010 and five-year plan. Vietnam, which today is predominantly rural agricultural society, aims to become an industrialised society by the year 2020. Already a member of the Association of Southeast Asian Nations (ASEAN), Asia-Pacific Economic Co-operation (APEC), Asia-Europe Meeting (ASEM), Mekong River Basin Programme, and other regional groups, Vietnam seeks to become more integrated into the world economy, and working towards membership in the World Trade Organisation (WTO).

Initially, after the war, Vietnam had relatively little outside development co-operation, apart from the Soviet Union. Among the first donors to support Vietnam's reconstruction and development efforts were Sweden and Finland. In 1993-94, the number of donors - bilateral, multilateral, and non-governmental organisations (NGOs) - increased dramatically. In 1999, an estimated USD 1.6 billion in development aid was disbursed to Vietnam, of which 69 percent was loans vs. 31 percent through grant assistance.

Finnish Development Co-operation with Vietnam

Finland entered into diplomatic relations with Vietnam in 1973, and a Finnish Embassy was established in Hanoi in 1974. The first development co-operation project began in 1979. Today,
Finland has several ongoing bilateral assistance projects in Vietnam, as well as support provided through Finnish non-governmental organisations, multilateral institutions, regional projects, and other mechanisms and instruments, such as concessional credits.

Vietnam is considered to be one of Finland's key partner countries. Between 1986 and 2000, the total Finnish bilateral assistance to Vietnam has amounted to FIM 745 million. Within the past decade, 80 percent of Finnish bilateral assistance has gone to projects and programmes, with the balance of the support being provided to humanitarian assistance, NGOs, concessional credits, and other activities. Since 1979, Finnish support to key bilateral projects has exceeded FIM 1100 million. From 1995 through 2000, Finland has provided FIM 29.8 million in interest subsidy on 4 concessional loans, totalling USD 13.8 million. Finland also indirectly supports Vietnam through regional projects and multilateral institutions, such as the United Nations, multilateral financing institutions (Asian Development Bank, World Bank, and International Monetary Fund). Finland's contribution to official development assistance (ODA) in Vietnam is currently relatively minor, given the number of other donors and the total volume of ODA. During the period 1990-2000, Finnish support averaged FIM 50 million per year, which at current exchange rates is USD 6-7 million per year. In 2000, Finnish aid dropped to FIM 37 million, which represented only an estimated 0.3 percent of total ODA that year to Vietnam. Although Finland's aid is now relatively minor, Vietnam still has great appreciation for Finland's role as one of the first Western donors, and its contributions over the past 28 years. In the Decision-in-Principle on Operationalisation of Development Policy Objectives (2001), the Government of Finland decided that Vietnam is one of the long-term partner countries with which development co-operation will be increased in the coming years. The decision-in-principle lists the criteria for long-term partners. While the Country Programme Evaluation (CPE) team has assessed most of the criteria, such as poverty reduction policies, economic policy, democracy, equality, corruption, and human rights, the team is not aware of the possible comparisons with other countries that may have been used when the GOF has reached the political decision on future co-operation with Vietnam. Therefore, it would appear even more important in the future to monitor and regularly appraise Vietnam's performance with respect to the various points in the criteria and draw then possible conclusions.

Key Areas for Bilateral Support

Finland initially supported one, then a few, major infrastructure projects. In the mid-1990s, however, as Finnish development policies changed, more smaller projects were launched, dealing with forestry, rural development, and capacity-building. In the mid-1990s, Finnish NGOs also became active in Vietnam. Recently, four projects have been supported through concessional credits.

Over the years, Finland has provided bilateral assistance to Vietnam in four key areas: (1) economic and social infrastructure, i.e., transport, power (electricity), water and sanitation; (2) forestry; (3) rural development; and (4) capacity-building for economic and administrative reform. Other projects have been supported in the fields of health and cultural preservation. Infrastructure. The first Finnish-assisted project in Vietnam was the construction of the Pha Rung Repair Shipyard, outside of Haiphong. This major project lasted from 1979 to 1991, and received FIM 272 million in Finnish support. In 1991, it was estimated that the project had cost an estimated USD 100 million, of which Finland had provided USD 60 million and Vietnam USD 40 million. The shipyard is still functional today, providing employment to hundreds of workers and vital link in keeping the maritime fleet, particularly coastal vessels owned by the state, functional. It is operated by a state-owned enterprise, and is in need of additional investment funds to expand its operations.

Subsequently, Finland supported urban infrastructure, in terms of urban water and sanitation systems for Hanoi and Haiphong 1 . The Hanoi water and sanitation systems received major assistance through a series of projects (1985-2001), amounting to over FIM 500 million. Similar projects have supported rehabilitation of water and sanitation systems in Haiphong (1990-2004), for a total of FIM 162 million. Latter phases of these projects have stressed institutional strengthening and management, and were designed as parallel co-financing with World Bank capital investments. Finland also supported development of national urban water and sanitation strategies. Finnish support for urban water and sanitation is widely appreciated, and residential housing equipped with iiFinnish waterli can command higher sale or rental prices. Other infrastructure projects have received both technical assistance grants and credit. Finland provided a grant of FIM 8.5 million for the initial phase for design of Binh Bridge across the Cam River in Haiphong (1997-98). It had been envisioned that the bridge would be built through loans from Finland, the Netherlands, and the United Kingdom, but this financing fell apart due to changes in the U.K. development policies. Subsequently, Vietnam secured credit assistance from Japan, and work is now underway to finalise the design and commence construction. Currently up to FIM 1.58 million in Finnish assistance, 50 percent through EIT funds and 50 percent through private funds, is being provided for a feasibility study for design of a second bridge in Haiphong, for the Cau River.

To date, the total aid for major economic and social infrastructure represents an estimated 87 percent of all Finnish bilateral grant assistance to Vietnam. Almost two-thirds of all grants have gone to urban water and sanitation (social development), and one-quarter to transport infrastructure, i.e., the shipyard and Binh Bridge.

As the international and Vietnamese development climate has changed, support for such major infrastructure investments has shifted. Now in Vietnam it is recognised that such capital investments will need to be financed by loans, rather than grants. The Vietnamese Government, which is keen to develop its infrastructure, has taken four concessional loans from Finland, between 1995 and 2000, to fund projects dealing with water systems and electrical transformers. In the 2001 annual consultations on development co-operation between the two countries, Vietnam proposed five additional infrastructure projects for which they would like Finnish support through credit, or combinations of loans and grants. The proposed projects would be for bridges, solid waste treatment, waste water treatment, and solar energy (in remote ethnic minority villages). Additional infrastructure feasibility and design work, and technology transfer, has received 29 grants from EIT funds.

Rural Development. In the mid-1990s, Finland, Vietnam and the rest of the international community agreed to focus more development assistance on poverty reduction. As the rural areas in Vietnam are home to 80 percent of the population, and the majority of the poorest households, Vietnam asked Finland for assistance with rural development, including health. Several provinces in central Vietnam - among the poorest in the country, heavily affected by the American War (in terms of bombs and land mines) - were proposed for possible projects, including Quang Tri, Thua Thien Hue and Nghe An. Finland agreed to fund a rural development project in Quang Tri Province (1997-2005, FIM 52,4 million), and subsequently another one in neighbouring Thua Thien Hue Province (1999-2003, FIM 24,5 million). Finland also agreed to support a project dealing with a children's hospital in Nghe An Province: Phase I (1997-99) received FIM 4 million, and Phase II has just been approved for a FIM 20 million investment.

Since 1995, Finnish NGOs have been working in Vietnam. Currently five Finnish NGO projects in Vietnam are providing small-scale support to rural development, in terms of education, community health, micro-credit and income-generating activities. These projects are located in various parts of Vietnam, including Hoa Binh, Son La, Phu Vang, and Quang Nam. Embassy funds have also supported the Ministry of Agriculture and Rural Development's (MARD) technical working group on gender.

Forestry. The Vietnam-Finland Forestry Programme (1996-2003, FIM 25,7 million) has activities in two districts in Bac Kan province, a northern mountainous region with a high ethnic minority population, currently considered to be one of Vietnam is poorest provinces. The forestry programme deals not only with sustainable management of allocated forest land, but also broader rural development issues, including agricultural extension and development, land use planning and allocation, and micro-credit. It intends to work on small-scale processing and marketing of forestry products. The programme has also made minor contributions to national policy dialogue, through support to a technical working group dealing with land use planning and allocation, and to recent development of the proposed Forestry Sector Support Programme (FSSP). Other forestry-related assistance has been provided through regional activities. A recent proposal was developed for management of the O Lau River upper catchment (watershed) in central Vietnam. Capacity-Building for Reform. Finland has collaborated with Vietnam on a number of activities to support training and capacity building. A bilateral grant project, with the Ministry of Trade (1997-99; 2000-03, FIM 12 million) is supporting training of Ministry staff on international trade, market economy, negotiation and English language skills. Finnish support to the Asian Institute of Technology (AIT) in Bangkok, Thailand has also included support to AIT's Centre in Vietnam (AITCV). The latter, approximately USD 1 million between 1994 and 2000, provided basic administrative support that helped AITCV to become established and self-supporting. AITCV provides training on language skills, management and technology, both through its long-term and short-term courses, and also provides consultancy services 2 . A small bilateral grant project provided some training and support to the Institute of Fine Arts in Hanoi, for efforts on cataloguing traditional architecture and cultural artefacts. Other support to training has been provided through the NGO funding, with vocational schools in Finland collaborating with vocational schools in Haiphong, Hanoi and Quang Tri. Over the years, the Finnish Government has provided other training for Vietnamese nationals.

The Embassy is supporting a pilot initiative on good governance and training of local officials on implementation of Government's 1998 Decree No. 29, the Grassroots Democracy Decree. This approach will first be piloted in Quang Tri, with the idea of possible future replication in Thua Thien Hue and Bac Kan provinces.

Other Finnish Support. Other Finnish support has been provided for humanitarian assistance, such as resettlement of refugees and the response to the 1999 floods in central Vietnam. In addition, the Finnish Embassy and the Ministry for Foreign Affairs have supported other small-scale projects, studies and training workshops.

Overall Assessment and Conclusions

Programming and Management of Finnish Development Assistance

The programming of Finnish bilateral grant projects in Vietnam is based upon Finnish and Vietnamese development priorities and strategies. The major forum for such programming is the annual consultations for development co-operation. Beginning in 1996, the two countries have also convened a Joint Commission on Economic, Scientific, Industrial, Technological and Trade Co-operation.

The planning of bilateral grant projects generally follows Finnish procedures, which require a project document based upon a logical framework, with a detailed budget and specified monitoring and evaluation procedures. In recent years, various approaches have been undertaken to make project planning a more participatory process, involving not only Vietnamese government and Finnish MFA officials, but also other stakeholders. These participatory planning processes seem like a good way to prepare projects. It would be useful to undertake a comparative analysis, and see how such efforts could be further improved.

Despite efforts to develop more participatory project planning, however, concern has been expressed over many difficulties experienced in actual implementation, where it has become apparent that even if the partners agreed upon a project or programme document, they may not agree upon the actual modalities for implementation. For example, the rural development projects have faced difficulties in reaching agreement on the relative importance of rural infrastructure vs. other activities.

The adequacy of Finnish appraisal procedures for projects needs careful review. In several cases it seems that the institutional capabilities and implementation arrangements have not been adequately analysed, and thus have not been provided adequate support in the project. For example, although there is much overlap in the activities of the three forestry and rural development projects operating in three different provinces, the forestry project works through the Ministry of Agriculture and Rural Development (MARD), whereas the rural development projects work through the Ministry of Planning and Investment. Similarly, it seems that the institutional capabilities were initially overestimated for the Pha Rung Repair Shipyard.

Although the number of bilateral assistance projects in Vietnam has grown over the years, the Finnish Embassy staffing to manage such projects has remained constant, and the staffing levels in the Finnish Ministry for Foreign Affairs has declined. This situation has posed enormous challenges for adequate management. The Embassy staff members are active in commenting on ideas for new projects and monitoring ongoing projects, through participation in quarterly project Steering Committee and annual Supervisory Board meetings. They do not have adequate time, however, to participate in relevant sectoral working groups, ongoing policy analysis, and other activities to see how Finland, in collaboration with other partners, can best support Vietnam&8216;s development.

Growing attention is being focused in Vietnam on developing strategic partnerships between government and donors, in terms of preparing a Comprehensive Development Framework (CDF) and moving towards sector-wide approaches (SWAPs) to replace funding of individual, stand-alone projects. Such trends require greater involvement of Embassy staff in ongoing partnership working groups. Currently, however, the Embassy staff can only actively engage in 2 out of an estimated 20-25 working groups.

The Embassy does not carefully follow the activities of Finnish NGOs nor of Finnish firms working with Vietnamese partners to develop proposals for concessional credit projects. Although these activities are not considered to be part of the country bilateral development co-operation framework, increased familiarity with these activities might nonetheless improve the Ministry&8217;s efforts to promote overall coherence in its relations with Vietnam.

Effectiveness, Efficiency and Sustainability

Overall, the bilateral projects assisted by Finland in Vietnam have been effective in reaching their objectives. Vietnamese officials judge the Pha Rung Repair Shipyard, the urban water and sanitation projects in Hanoi and Haiphong, and the Quang Tri Rural Development Project as the most successful Finnish-assisted projects, in terms of their achievements in line with Vietnamese development priorities.Finnish evaluations of project performance have been more critical, especially with respect to their effectiveness in institutionalisation of good management practices and achievement of key objectives, such as poverty reduction. Efforts are needed to further improve the effectiveness of planning and implementation approaches, and to streamline procedures for monitoring and evaluation. Previous project evaluations have rated the projects as being efficient. The urban water and sanitation projects have been judged as efficient, in terms of having comparable costs with similar projects in other countries.

It has been suggested that the cost-effectiveness of individual projects could be improved through greater collaboration among them. For example, the three rural projects could share consultants, and work together on trials for income-generating models (new products, improved varieties, or improved technologies).

Throughout Vietnam, recent attention has focused on the need to ensure the sustainability of infrastructure investments through greater attention to, and adequate funding for, operations and maintenance. For some projects, such as those dealing with urban water and sanitation, the financial sustainability is contingent upon the local authorities obtaining adequate revenue, through user fees and tariffs, to cover ongoing operations and maintenance costs. It is clear that certain projects - such as Pha Rung Repair Shipyard and the urban water systems - are certainly not able currently to generate enough revenue to fund future capital investments and expansion of the systems.

The sustainability of other investments, such as those in human resource development, training, and capacity building, development of participatory planning systems and extension systems, is variable. It is not clear, for example, the degree to which provincial and district authorities would be able, willing, or allowed to adopt some of the participatory planning or procurement procedures introduced by the rural development projects. Training and human resource development are often seen as inherently useful investments, but the sustainability really depends upon whether the trainees can put their new or improved knowledge and skills to use.

Policy Relevance and Progress Towards Strategic Objectives

Overall Policy Relevance. In general, the bilateral projects have been in accordance with the prevailing development policies of both Vietnam and Finland, at the time that each project was launched and ongoing. From the late 1970s through the early 1990s, grant assistance for large infrastructure construction projects was in line with the Vietnamese government's priority for infrastructure, and with Finnish joint promotion of aid and trade. As Finland considers urban water and sanitation as contributing to social development, the aid portfolio has also reflected the increasing importance of social development in Finland's development policy thinking in the 1980s and early 1990s.

In the mid-1990s, development priorities shifted. Finland has focused on key strategic objectives for development co-operation - poverty reduction, human rights, democracy and governance, including gender equity, environmental protection, economic integration, and global security and regional co-operation. Finland has also increasingly moved towards integration of development co-operation into an overall integrated strategy of relations with key partner countries, including diplomatic and trade relations. Similarly, Vietnam has placed increasing emphasis on poverty reduction and support for rural development, although it still accords infrastructure construction and rehabilitation high priority, given the great need to improve infrastructure. But Vietnam is increasingly willing to fund the latter through loans, preferably on concessional terms. Vietnam is devoting resources to environmental protection, economic interaction and regional co-operation issues.

The overall coherence and compatibility between the Finnish-Vietnamese development co-operation programme and trade relations are relatively limited. The EIT funds and concessional credits have been primarily focused on infrastructure, which is no longer the focus of bilateral grant assistance. While the Finnish-Vietnamese trade relations do not seem to contradict the strategic goals for Finnish development co-operation, neither do they generally focus on promoting such issues as poverty reduction, gender equity, or environmental protection.

Thus, it seems that Finnish and Vietnamese development priorities converge. The actual implementation of projects, however, has underscored the difficulties that may arise - as the two partners may have very different definitions, approaches, or strategies for implementing concepts, such as poverty reduction, or human rights.

Poverty Reduction. The most important of Finland's strategic goals is poverty reduction. Most Finnish-assisted development projects in Vietnam are classified by the Finnish Government as having iapoverty reductionl. as their major purpose, including the projects dealing with urban water and sanitation, forestry, and rural development. Some projects have increased benefits for rural residents in the project areas - through improved rural infrastructure, increased access to forest land, training in agriculture, sustainable resource management, and other income-generating activities, and micro-credit. Other projects have increased access to water and sanitation systems, thereby improving quality of life and health. All of these benefits are potentially important contributions towards poverty reduction, if, in fact, the poor receive these benefits.

Yet to date, no project has undertaken a detailed location-specific poverty analysis, nor adequately developed poverty-sensitive monitoring. Only one project (QTRDP), at the completion of its first phase, has estimated the reduction in poor households in the project communes, as compared with non-project communes. Most projects have had very limited interventions targeted specifically towards poor households.

The general assumption has been that project interventions, such as urban water systems and/or rural infrastructure, will benefit all households. If a project is based in a inpoorll commune or district, i.e., one with a high percentage of poor households, then it is assumed that the poor will benefit. Considerable research worldwide, however, has underscored the importance of actually monitoring such issues, as development benefits often do not iotrickle downlc to the poor, but are captured by better-off members of the population. It is also important, however, to consider the time scale of the project and intended impacts: certain measures may have short-term impacts on rural poverty, whereas other measures are more long-term in nature.

Human Rights, Democracy and Governance. The promotion of human rights, democracy and governance, including gender equity, has been an established goal of Finnish development co-operation during the 1990s. At the same time, it has proved to be most challenging to achieve. The situation is even more problematic in Vietnam, where the Western political thinking on these issues differs substantially from that of Vietnam's one-party state. The Vietnamese approach to promotion of democracy, for example, is based upon top-down mass mobilisation under firm control of the Communist Party, as opposed to promotion of a bottom-up, pluralistic civil society. Vietnam, like many other developing countries, also sees economic development and poverty reduction as a crucial part of human rights, not just political rights.

The issue can be viewed from two perspectives. First, one can ask, given that the two partners often interpret these concepts very differently, is it relevant to try to incorporate them into the development co-operation programme? Will these concepts be implemented by the Vietnamese in accordance with their own interpretations? For example, will Finland's efforts to support implementation of the Grassroots Democracy Decree (Decree No. 29) promote any change, or actually serve to reinforce the existing political system?

A second approach is to look at in what ways possible progress can be seen and be further supported, both through ongoing dialogue and concrete measures. It can be argued that Finnish-assisted projects, especially the more recent ones, have promoted human rights, democracy and governance through a variety of means, including participatory planning, working with ethnic minorities and women, providing support for training regarding economic and administrative reform, and educating villager women and men regarding their legal rights, i.e., land rights, forestry laws, family law. These projects also promote transparency and accountability, which is important for ongoing efforts to reduce corruption. Some of these achievements have been relatively modest, but could be further improved through more careful targeting.

The meaning of the concepts of if "human rights, democracy and governance" to both partners - the Vietnamese and the Finns - must be clarified and made more explicit. Such clarification is needed to achieve any meaningful development co-operation and progress in this area, so that both parties can agree on the scope of their collaboration.

Environmental Protection. Some Finnish development assistance has contributed towards enhanced environmental protection in Vietnam. The Vietnam-Finland Forestry Programme, for example, has supported land use planning and land allocation for forest land, as well as more sustainable land use management practices. The two rural development programmes have made relatively modest contributions towards improved environmental management, such as through tree planting efforts and reduction in pesticide use (through promotion of integrated pest management). The urban water and sanitation programmes in Hanoi and Haiphong have contributed to improvement of the urban environment and provided related health benefits. It is envisaged that the health project will also make modest contributions, i.e., dealing with toxic hospital waste. Finnish bilateral development co-operation with Vietnam has not directly focused on protection of environmental values of global significance. The forestry programme does, however, work with villages in the buffer zone of Ba Bé National Park, thereby contributing indirectly to its efforts to protect globally-important biological diversity. Finland does provide some support for regional environmental initiatives, working with the Asian Development Bank in the Greater Mekong Region, as well as through support to the Mekong River Commission.

Economic Interaction. Finnish-assisted projects in Vietnam have contributed towards the promotion of Vietnam's integration into the larger world and regional economy. This link is most clear with the capacity-building projects, i.e., Ministry of Trade, AITCV. The transport infrastructure projects (shipyard, bridges) also promote economic trade, and in the case of the shipyard, provide employment. In the forestry and rural development projects, efforts have been ongoing to assist farmers to diversify their income sources, and produce products for the market. Small-scale rural industry is also a source of income and employment. Finnish support to the multilateral Mekong Project Development Facility is helping to promote small- and medium-sized private sector enterprises. Other Finnish multilateral support, such as to the ILO project on occupational health and safety, or the Asian Institute of Technology, also further supports Vietnam's economic interaction with its neighbours. On a political level, Finland, along with the rest of the European Union, supports Vietnam's candidacy to eventually join the World Trade Organisation.

In terms of supporting increased economic interaction between Finland and Vietnam, this objective has been pursued through activities of the Joint Commission, concessional credit arrangements, EIT funds for technical assistance and technology transfer, and the Finnish Trade Commissioner based in Bangkok. In recent years, Vietnam's exports to Finland have increased more than Finnish exports to Vietnam.
There is little sign of the potential good will of long aid relations being transformed into economic interaction, partly due to the limited activity of Finnish companies.

Global Security and Regional Co-operation. Given that Finland sees promotion of sustainable development, improved human welfare and ecological security as essential conditions for global security and regional co-operation, it can be argued that Finnish development co-operation with Vietnam contributes to these goals. Finland has provided Vietnam with humanitarian assistance, such as for refugee resettlement and disaster mitigation efforts.

Overall Conclusion
The CPE Mission endorses the proposed meetings later this year between the Governments of Vietnam and Finland to discuss their development co-operation in more depth. It is quite timely and pertinent that the overall scope and programme be carefully considered, and a more deliberate and explicit (written) strategy be developed. The CPE Mission hopes that its analysis, observations and recommendations will be useful contributions to this process.

Summary of Recommendations

General

1. Finland&8217;s development co-operation programme in Vietnam needs more MFA support, both in terms of staffing at the Finnish Embassy in Hanoi and MFA technical advisors.

2. Finnish development policies need to be operationalised, with clear guidelines and indicators. Furthermore, all key project personnel, including consultants, need to be provided with key documentation and held accountable for achieving targets.

3. Operationalisation of Finnish policies should, to the extent possible, be harmonised with those of recipient countries and other donors, and procedures streamlined.

Planning, Programming and Administration

4. An overall ivcountry programmel. and strategy for Finnish-Vietnamese development co-operation needs to be agreed between Finland and Vietnam, specifying modalities and sectors of support, and if possible, also funding levels, for a specified time period, i.e., 5-10 years.

5. A more focused programme is needed, so that Finland can make meaningful contributions to Vietnam's development on policy, sectoral, and strategic levels, rather than just supporting individual projects. From the point of view of aid efficiency - particularly if the aid volume does not increase - and of administrative capacity, future programming should more narrowly focus the bilateral programme to support:
- fewer, larger bilateral projects;
- fewer sectors;
- more geographical concentration of projects;
- greater co-financing with other partners;
- untying of aid (i.e., for greater pooling of support in sectoral programmes, or delegating administration of aid to other partners); and reater efforts to promote synergy among the different elements of Finnish-Vietnamese relations (i.e., among projects, NGOs, and trade).

6. Planning and appraisal of projects and programmes needs careful review and improvement. While a variety of approaches to participatory planning have been used for designing recent projects, their comparative strengths and weaknesses have not been adequately assessed. 7. Efforts should be made to streamline administration of Finnish-assisted projects in Vietnam, such as simplifying the existing two-tiered monitoring system (project Steering Committee and Supervisory Board meetings) and delegating more authority to project management teams.

8. Projects need improved monitoring systems, especially targeted monitoring indicators, to assess their progress towards strategic objectives - such as poverty reduction, human rights, gender equity, democracy, governance, environmental protection, economic integration, and global security.

Sectors

9. The choice of sectors for support needs to be based upon a consideration of:
- development co-operation policies and priorities of Vietnam and Finland;
- areas where Vietnam needs development assistance; and
- areas where Finland has comparative advantage, special expertise, or could play a catalytic
role, given its limited funding levels (compared with other donors).

10. In June 2001, the MFA proposed that three sectors should be the focus of future co-operation between Finland and Vietnam: (1) rural development and forestry; (2) water; and (3) support to reforms (capacity building, administrative developments, support to private sector, etc.). The Vietnamese are in general agreement that they would appreciate assistance from Finland in these three areas, if they are broadly defined, but also indicated a wide range of other areas where they foresee possible Finnish support. The Country Programme Evaluation Mission recommends that careful consideration be given to:
- the advantages and disadvantages of defining rural development and forestry as one sector,
given the three existing rural projects and the ongoing efforts to develop government-donor
partnership in support of the forestry sector;
- the nature and extent of continuing support to urban water and sanitation issues, as a means of
continuing to contribute to poverty reduction in urban areas;
- moving towards more multilateral support for capacity-building for economic and public
administrative reforms; and
- deciding how support to initiatives outside the key sectors, e.g. health, will be considered.

11. More specifically-focused support could be developed to support progress on strategic goals, such as human rights, gender equity, democracy or good governance (including increasing transparency and reduction of corruption). Such support, however, may best be provided through small initiatives, such as the Embassy's local co-operation funds or NGOs.

Aid Modalities

12. Much greater effort should be given to developing partnerships for co-financing projects, and as it becomes feasible, sector-wide approaches to programme support.

13. The use of the current concessional credit scheme in Vietnam needs to be carefully re-examined and clarified, to increase overall coherence and transparency.

14. The Government of Vietnam has expressed its interest in receiving Finnish bilateral assistance through combined grant-credit projects. Finnish policy regarding mixing of credits with grant assistance needs to be clarified.