State Audit of VN notes high pay for foreign specialists in ODA projects
A foreign specialist in an ODA (Official Development Assistance) project can receive VND500-700 million a month, while pay for a Vietnamese specialist is just tens of millions of VND.
In 2018, after inspecting projects using Japanese ODA in the 2018 fiscal year, the Ministry of Finance (MOF) reported to the Prime Minister about pay to foreign specialists.
MOF noted that though providing loans with decreased preferences, the Japanese side had still set relatively high requirements. In loan appraisal, the lender sets regulations which lead to an increase in project costs and loan size, such as regulations on salaries for international consultants and provisions against price decreases.
|The salary the Japan side requires for the projects of the 2018 fiscal year is over $30,000/month/head (+/-10 percent), not including allowances.|
The salary the Japan side requires for the projects of the 2018 fiscal year is over $30,000/month/head (+/-10 percent), not including allowances.
The level is 20-25 percent higher than the average pay to foreign specialists in ODA loan projects, and double the average taxable income of taxpayers with Japanese nationality working in Vietnam in 2016.
JICA (Japan International Cooperation Agency) explained that the wage rates for consultants are determined based on global qualifications and experience, not a fixed unit price. Moreover, during the consultation process, JICA also discusses thoroughly with the Vietnamese side the suitability of this unit price under Vietnam's conditions.
The agency affirmed that the applied price is nearly the same as those in similar projects from other donors in Vietnam.
In the report on projects using ODA and preferential loans released in May 2019, the State Audit also mentioned unfavorable provisions in ODA agreements, under which Vietnam has to use foreign contractors under direct appointment, and use goods and services sourced from lenders.
In the case of the Cat Linh – Ha Dong project, Vietnam had to appoint the Chinese contractor.
The State Audit also pointed out that in foreign funded projects, Vietnam had to use international consultants at costs 8-10 times higher than for domestic consultants.
In the case of the Hanoi – Hai Phong highway connector and Cau Gie – Ninh Binh highway projects, the cost was 8.5 times higher. The figures were 10 times higher for the project on improving the water environment in HCM City in the Tau Hu Canal – Ben Nghe – Doi – Te basin, and 11 times in Lo Te – Rach Soi project.
There is still no specific regulation on the salaries and demands in hiring international consultancy experts. It is very costly to hire consultants - $20,000-25,000 a month, much higher than the $2,000 paid to Vietnamese.
In the case of the Cat Linh – Ha Dong project, it was the loan provider that appointed a supervision consultant who could not be replaced by the Vietnamese side.
There were no new ODA projects signed during March according to a report sent to the Government by the Ministry of Planning and Investment on socio-economic performance during the first quarter of the year.
Akihiko Iwatani, chief representative of Haseko Corporation in Hanoi, believes that Vietnam is the most attractive market in ASEAN for Japanese investors in particular and foreign investors in general.