Viet Nam: Skills Enhancement Project

Horizontal Tabs

Lessons

Early assessment of the willingness of target borrowers and early decision on who bears the exchange rate and credit risks should be made in Asian Development Bank- (ADB) financed onlending schemes.

Much of the initial delay in implementing the credit line facility established through one of the two ADB loans approved for this project (Loan A for investment, and Loan B for the credit facility) was caused by the unwillingness of private vocational colleges to accept a higher-than-market interest rate for onlending by the Viet Nam Development Bank (VDB). The VDB was charging a higher rate because, initially, it was bearing the exchange rate and credit risks for Loan B. This decision was in part occasioned by VDB’s limited involvement in the design of the project. It was only after the government agreed to assume the exchange rate and credit risks and the subsequent lowering of the onlending rate that the private vocational colleges expressed interest to take loans. As a result, it took more than three years for onlending contracts to be signed. Implementation of the credit line facility would have been greatly facilitated by the adoption of appropriate measures to address the obstacles to target borrowers’ uptake of the facility, which in turn would have been possible only with a thorough assessment of the target borrowers’ interest during the design stage.

Project Cycle Stage:

Preparation

Training implementing agencies (IAs) on ADB disbursement and procurement procedures at project inception is a must.

The IAs’ unfamiliarity and lack of experience in ADB disbursement and procurement procedures caused some of the project delays. This was later addressed for Loan A, with the training of staff at the project management unit. However, no such training was provided to the VDB and the private vocational colleges, which were also involved in the preparation of procurement documents for Loan B. Significant delays consequently persisted throughout Loan B implementation, highlighting the importance of training all relevant stakeholders on pertinent ADB policies and procedures right at project startup.

Project Cycle Stage:

Implementation

Simpler and focused projects are preferable in Viet Nam.

Some of the project activities, such as the development of a vocational training information system, were set aside because of ongoing similar government initiatives. Other activities also overlapped with those in the national target programs. Better review of existing initiatives and careful planning are required to avoid duplications in future projects. Simpler and more tightly focused projects should be preferred in Viet Nam, with due consideration of time-consuming and lengthy government approval and procurement systems, particularly for equipment provision and facility upgrades.

Project Cycle Stage:

Preparation

Monitoring and reporting of projects with multiple IAs may be better implemented through a single mechanism or by tightening inter-agency collaboration.

Despite ADB mission reminders, project monitoring and reporting for Loan B remained weak throughout implementation; while that for Loan A was strong. As the requirements were similar for both loans, one agency could have taken responsibility for project monitoring and reporting, or agencies could have supported each other to meet ADB requirements. These arrangements can be explored to strengthen compliance to monitoring and reporting covenants in future projects.

Project Cycle Stage:

Implementation

Gender participation targets should be realistic.

The project did not achieve some gender participation targets, even with initiatives such as tuition discounts, free lodging, and priority in employment after graduation. Given gender stereotyping and the preponderance of traditionally male-dominated occupations in the project, such as welding, metal cutting, ship engine operation and repair, and automotive technology, the targets were too high and should have been revised at inception or during the project midterm review.

Project Cycle Stage:

Preparation

Implementation

Background

During 1998–2008, the Asian Development Bank (ADB) supported the Vocational and Technical Education Project in Viet Nam to improve the technical skills of students and teachers. Lessons from this project pointed to the need for (i) strengthening school and central level management, and (ii) implementing a training system that will update teachers’ skills and response to new technologies and changing job markets. Building on these lessons, ADB approved two loans for the Skills Enhancement Project in July 2010. Loan A, comprising an investment loan to strengthen the vocational training system and upgrade public training institutes, was approved for $50 million, and Loan B, consisting of a credit line facility to upgrade vocational training in private training institutions through onlending, was approved for $20 million.

The project’s expected impact was the reduction of skills shortages in 15 key occupations and its outcome was the establishment of higher-level skills training in 15 key occupations for males and females. Its intended outputs were: (i) improved quality and management of vocational training; (ii) vocational colleges upgraded to deliver priority occupational training programs; and (iii) strengthened partnerships with the private sector.

At completion, the project supported 18 vocational colleges, 15 under Loan A and 3 under Loan B. A set of agreed criteria, including the delivery of high-priority college-level training programs, location near an economic zone, good facilities, good employment outcomes for students, good institutional quality, and potential for strong enrolment growth, were applied to the selection of both public and private vocational colleges. Of the 15 public institutions selected, 10 were owned by provincial people’s committees, 2 by the Ministry of Transport, 2 by the Ministry of Agriculture and Rural Development, and 1 by the Ministry of Culture, Sports, and Tourism.

While the project initially identified 5 private vocational colleges, only 3 participated, including 2 that were not in the original list. This was because the project design could not address unforeseen changes in the lending environment, specifically the significant increase in interest rates due to the financial crisis in 2008/2009, which led to 4 of the original 5 private vocational colleges failing a re-assessment of financial capacity to pay.

Other specific aspects of the design diminished the relevance of Loan B. For instance, the document requirements and procurement procedures imposed by the government on private vocational colleges were too heavy, considering none had previous experience working on official development assistance-funded projects. In addition, the Vietnam Development Bank (VDB), which onlent the Loan B credit facility, required the private vocational colleges to put up a loan security ─ often the land on which the vocational college is built ─ that reduced their ability to use their own assets for investments

The project also had to be rescoped at midterm because of the decision of the Ministry of Labor, Invalids, and Social Affairs (MOLISA), the executing agency (EA), to introduce skills standards, training programs, and assessment tools ─ collectively called the Victorian model ─ for key occupational areas, including for 9 of the 15 occupational areas covered by the project. ADB and the government agreed to drop the duplicated activities and temporarily suspend the purchase of new equipment until the government completed pending purchases and ADB reviews the new skills standards.

Notwithstanding the scope and implementation adjustments, the project succeeded in achieving its expected outcome of establishing higher-level skills training in 15 key occupations for males and females. A comprehensive national system and plans for college-level vocational education and training was established via the approval of the National Strategy for Vocational Training 2011–2025. The 30% target increase in enrollment in 15 occupational training programs, particularly in public vocational colleges, was exceeded; and so was the 20% target increase in graduates in the priority occupational training programs, by project completion. The targeted 85% of graduates of the training programs gaining employment within six months was also exceeded, with 90% of graduates finding jobs within the stipulated period. However, the 30% target increase in female graduates was not met, as most of the occupations supported by the project were traditionally male-dominated and failed to attract more female enrollees.

By increasing the number of enrollees and graduates in the 15 key occupations in the selected vocational colleges, the project thus had and continues to contribute to achieving its expected impact of reducing skills shortage in the said occupations. Early data on the project’s impact targets, which are due only in 2020, indicate that these targets are most likely to be overachieved.

The project had the MOLISA as EA. The Directorate of Vocational Education and Training in MOLISA was the implementing agency for Loan A, while the VDB was the implementing agency for the onlending facility under Loan B.

Project Information

Project Name:

Skills Enhancement Project

Report Date:

June, 2019

Main Sector:

Education

Country:

Viet Nam

Project Number:

41339-013

Report Type: