ODA is an important source of capital for developing countries, including Vietnam. Follow the article below by TLA Law Firm to learn more about ODA.
What is ODA capital?
Official Development Assistance (ODA) is a form of foreign investment. It’s called “assistance” because these funds often come as low-interest or interest-free loans with long repayment terms, sometimes referred to as aid. “Development” reflects its purpose: economic growth and welfare improvement in recipient countries. “Official” indicates it’s generally lent to governments.
Foreign lenders may include governments, UN-affiliated countries, NGOs, and international financial organizations like the World Bank, IMF, and ADB.
In other words, ODA funds come from governments, official agencies, NGOs, or international organizations, lent to developing countries to promote socio-economic growth
In Viet Nam, according to Article 1 and Clause 19, Article 3 of Decree No. 114/2021/ND-CP, Official Development Assistance is capital provided by foreign donors to the State or Government of Vietnam. This support aims to promote development, welfare and social security.
Classification of ODA Capital
Non-repayable aid: This is a type of loan that the borrowing country does not need to repay, based on the agreement with the donor country.
Repayable aid: This refers to loans with low interest rates and relatively long repayment periods.
Mixed ODA: This is a combination of the two types above, including a portion of non-repayable aid and a portion of repayable aid.
Main features of ODA Capital
ODA capital has three main characteristics as follows:
| Characteristic | Description |
| Capital for cooperation and development | ODA is a preferential loan or non-repayable aid, accompanied by technical transfers and goods support. Recipient countries commit to using the funds for infrastructure development and socio-economic growth. |
| Capital with binding conditions | Conditions related to economics, geography, or politics are imposed. Lender countries require the use of their personnel, services, and equipment at high costs, and there are risks of waste and corruption if mismanagement occurs. |
| Capital with many benefits | Low or zero interest rates (0 to a few percent), long grace periods (over 30 years). Developing or underdeveloped countries use this capital to promote economic, social and infrastructure development. |
Several typical ODA projects in Vietnam
The ODA projects in Vietnam play a crucial role in enhancing infrastructure, boosting economic growth, and improving public services. Many ODA projects have had a positive impact on Vietnam’s economy and society such as:
- North-South Expressway Project
- Ho Chi Minh City Urban Railway Project – Line No. 1: Ben Thanh – Suoi Tien
- Noi Bai International Airport Terminal T2 (Hanoi)
- Cat Linh – Ha Dong Urban Railway Line (Hanoi)
- Thanh Tri Bridge,Nhat Tan Bridge cross the Red River
Moreover, across Vietnam, many projects funded by ODA have been implemented, contributing to improving the quality of life for people and addressing urgent issues such as transportation, pollution and healthcare.
In conclusion, ODA capital has played a vital role in Vietnam’s socio-economic development by funding key infrastructure and public service projects. If you have any further questions, please feel free to contact TLA Law Firm for timely assistance.
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