Development of Large-Scale Infrastructure for Growth and Poverty Reduction
September 25, 2003 (at Sofitel Plaza, Hanoi)


Comments on the draft chapter on Large-Scale Infrastructure for CPRGS

by Martin Rama, World Bank

The main strength of the draft chapter presented at the seminar on the Development of Large-Scale Infrastructure for Growth and Poverty Reduction lies in its description of the accomplishments of Vietnam in terms of developing its infrastructure. The discussion of the mechanisms and channels through which large-scale infrastructure may impact on growth and poverty reduction also provides a useful context.

The main weakness of the draft is the lack of a policy focus. One of the salient characteristics of CPRGS was to combine statistical evidence with the feedback from consultation to identify key policy reforms. The draft chapter, on the other hand, is more focused on listing the most important projects that could be implemented in each sub-sector over the coming years. The project focus seems quite restrictive compared to the policy focus of the rest of PRSC.

The presentations and discussions at the seminar on the Development of Large-Scale Infrastructure for Growth and Poverty Reduction identified at least nine policy areas which deserve attention from the perspective of CPRGS:

  • Master plans. They are the backbone for infrastructure development, but their coordination is problematic at present. A regional perspective, integrating investments in transport, energy, irrigation, and water and sanitation, with appropriate land zoning and provision of social services to accommodate the ensuing economic and social transformations, would be welcome.
  • The role of the State. Not all the development of infrastructure needs to be undertaken by the State, or with public funds. Scarce resources should not be diverted towards investments that could be undertaken by the private sector. Even when State intervention is warranted, it might not involve direct funding, but rather rely on guarantees or regulation (e.g. mandates for universal service).
  • Prioritization. Investment projects of different types might have different impacts on economic growth and poverty reduction. Guidelines to assess those impacts, even if only crudely, could be issued. Projects proposed by ministries and provincial governments would then be classified based on those guidelines and trade-offs (e.g. lower growth impact but higher poverty impact) could be made explicit.
  • Funding. At present, infrastructure projects can be financed by the State in a variety of ways, including resources from ODA, the budget or the issuance of public debt. Clear criteria to identify the appropriate funding for projects of different types could be discussed. The appropriate extent of cost recovery, and the pricing policy for infrastructure services of different types, deserve consideration too.
  • Safeguards. The implementation of large-scale infrastructure projects can have social and environmental implications. A review of current safeguards policies for resettlement would be welcome. Also, the introduction of environmental impact assessments for large projects would be an important step in the direction of environmental sustainability.
  • Implementation. At present implementation of some projects, especially those funded through ODA, is slow. It could be useful to review the reasons for the delays. Decentralized implementation of projects is likely to become more common. But it raises important coordination issues between central and provincial governments. Mechanisms to improve that coordination could be discussed.
  • Maintenance. One of the main weaknesses of the current Public Investment Program is the disconnect between capital expenditures and recurrent expenditures. The integration of these two components of State spending would be a key step towards improved planning. Fully taking into account the maintenance implications of infrastructure projects would be an important step in the right direction.
  • Services. In some key areas, the provision of infrastructure services is as important for efficiency as the physical infrastructure itself. Inefficiencies in the operation of port services, or bus stations, can be as damaging as poor facilities. The regulation of competition and pricing in the provision of infrastructure services might need to be considered as part of the overall approach to large-scale infrastructure.
  • Information. The Public Investment Program involves a few hundred very large projects. It is technically feasible to have a live database of these projects, allowing the monitoring of their implementation as well as the empirical evaluation of their impacts at sectoral and provincial levels. A proper information system could be seen as part of the broader move towards evidence-based policy making.

The World Bank
Hanoi Office
October 7, 2003

[Agenda] [Summary in English] [Summary in Japanese]