ỈNTRODUCTION
Background 1 1.2 Research questions and objectives
In Vietnam and globally, road transportation is the predominant mode of inland transport, with its significance expected to grow alongside socio-economic development To meet the rising demand for road transportation, it is essential to invest in new infrastructure while also enhancing the existing road network This includes rehabilitating and upgrading current roads, as effective road management and maintenance are crucial not only for extending the lifespan of the road network but also for ensuring the overall efficiency of transportation infrastructure management.
Over the past two decades, Vietnam's road network has seen remarkable improvements in both quantity and quality The World Bank and Asian Development Bank initiated a comprehensive renovation of the road system in 1993 by funding the National Highway 1 Rehabilitation Project, which serves as the backbone of the country's transportation network, linking the northernmost and southernmost points Following this, the Japanese government also contributed through ODA financing for the upgrade of National Highway 5, a crucial commercial route connecting Hai Phong, the largest northern seaport, to Hanoi As a result, numerous international donors have collaborated with the Vietnamese government to enhance significant road infrastructure projects, facilitating connections between cities, economic regions, airport terminals, seaports, and national border corridors with neighboring countries such as Laos, China, Thailand, and Cambodia.
Developed road transportation has facilitated the circulation of goods across regions and neighboring countries, effectively addressing the travel needs of people This infrastructure supports the exploitation of regional potential, aids in the transition of the economic structure, and plays a crucial role in poverty eradication and the mitigation of hardship in remote and isolated areas.
Effective road maintenance is essential for preserving technical specifications, ensuring traffic safety, and optimizing investment efficiency However, this critical need has often been overlooked due to insufficient state budget allocations, which cover only 30% of the actual requirements for national roads and even less for provincial roads The disparity in funding between road maintenance and capital reserved for rehabilitation and new construction is stark, with maintenance funding representing only 11% of the capital construction budget Consequently, many national roads operate without regular maintenance, receiving attention only during emergencies This neglect leads to rapid deterioration of the road network, affecting even newly constructed roads that were initially upgraded with high-quality materials.
In 2008, the National Assembly passed the Road Acts, laying the groundwork for government investment in road transportation development, which includes the preservation and maintenance of the existing road network The country's socio-economic development strategy for 2011-2020 emphasizes the construction of an infrastructure system aligned with modern structures, particularly focusing on transportation systems and urban infrastructure in major cities as a key breakthrough.
The Prime Minister has approved the transportation development strategy for 2020, with a vision extending to 2030, emphasizing the importance of road maintenance, efficient road operation, and the sustainability of existing road infrastructure This policy reflects the government's commitment to enhancing the overall transportation infrastructure, particularly focusing on road management and maintenance Additionally, the Road Acts advocate for the establishment of a Road Fund to centralize and mobilize various capital sources, which, in conjunction with the state budget, aims to alleviate the financial burden on road infrastructure.
'Decision No.35/2009/QD -TTg dated 3rd March 2009
3 maintenance and later on, gradually strong enough to provide sufficient fund, instead of State budget for road maintenance requirements.
The National Road Maintenance Fund (NRMF) was established by the Vietnamese government, funded primarily through annual road user charges from motorized vehicle operators, supplemented by the state budget and other related revenues This fund is dedicated to the maintenance of the entire road network in Vietnam, marking a significant advancement in the management and upkeep of the country's roads.
After two years of implementing the National Road Maintenance Fund (NRMF), road maintenance activities have transitioned from state budget provisions to the NRMF mechanism A report submitted to the Prime Minister in June 2014 highlighted significant improvements in both the quantity and quality of roads, enhancing transportation services for people and goods This raises the question of whether the NRMF, which manages revenues related to road operations, is essential for ongoing improvements.
Or such revenues should be collected by the Government and then allocated to NRMF via annual
To date, there have been no studies analyzing the effects and impacts of the National Road Maintenance Fund (NRMF) and its necessity for road network maintenance in the transport sector With over 17 years of experience in this field, I believe this is a pivotal time for the transport sector, experiencing significant changes due to renovation policies and lessons learned from developed countries The establishment of the Road Maintenance Fund marks a crucial advancement, prompting policymakers to recognize the importance of road maintenance and alleviating the financial burden on the state budget Consequently, after more than a year of NRMF's operation, I am inspired to conduct a study assessing its effects and contributions to road maintenance in Vietnam.
2 Decree NO 18/2012/ND-CP dated 13 March 2012
This study analyzes real data collected from Vietnam's road network maintenance between 2010 and 2014, focusing on the impact of the National Road Maintenance Fund (NRMF) on the road maintenance sub-sector before and after its establishment.
This study evaluates the significant improvements in Vietnam's road network maintenance following funding from the Road Maintenance Fund (RMF) It highlights how this financial support has enhanced road and bridge preservation, resulting in longer-lasting infrastructure and smoother traffic services, particularly in remote and underfunded areas Additionally, the study examines the RMF's impact on the management practices of government agencies involved in road maintenance.
Science and technology are crucial for road maintenance and enhancing resident awareness The road maintenance fund is essential for the overall development of Vietnam's transportation sector, particularly as it moves towards the gradual privatization of road maintenance activities, which will ultimately reduce reliance on the State budget.
Since its establishment in December 2012, the National Road Maintenance Fund (NRMF) has significantly influenced Vietnam's road maintenance sector by attracting increased investment funding.
The study undertakes on road network maintenance includirm national road and provincial roads (mainly in diffìcult provinces with low State revenue in Vietnam such as Nghe
The study focuses on the road maintenance differences before and after the establishment of the National Road Maintenance Fund (NRMF) in several provinces, including An, Nam Dinh, Hoa Binh, Quang Binh, and Ha Nam It utilizes documents from the Central NRMF Office and the Directorate for Roads of Vietnam under the Ministry of Transport Data collected from 2010 to 2014 has been analyzed to provide a comprehensive assessment of the impact of the NRMF on road maintenance practices.
’ Decree No 18/2012/ND-CP dated 13 March 2012
5 on two phases that are from 2010 to the end of 2012 and from at the beginning of 2013 to the end of 2014.
FRAME OF REFERENCE
Theoretical basis on road network management and maintenance
2.1.1 Concepts of road netvvork maintenance
The 2008 Road Acts define road maintenance as the actions taken to repair and uphold the technical standards of operated roads According to the Ministry of Transport (MOT), road maintenance encompasses a series of actions aimed at preserving the normal operation and ensuring the safe use of road infrastructure.
Road maintenance in Vietnam encompasses comprehensive management actions, including routine and periodic maintenance, as well as emergency repairs when necessary This process is carried out in accordance with technical specifications tailored to each specific type of work.
Examples of ways in which diííerent countries contract road maintenance services, in general, road maintenance activities can be broken into four categories:
Routine works; Periodic works; Special works and Development.
2.1.2 Roles of road netvvork maintenance
Maintaining a construction structure, particularly road infrastructure, is essential for its operational safety and longevity To uphold the original design conditions and ensure compliance with design standards, regular maintenance is mandatory This practice is crucial for extending the design lifecycle of road structures.
Effective road maintenance is essential for ensuring reliable transportation while minimizing costs, as there is a clear connection between road conditions and vehicle operating costs (VOC) Poorly maintained roads not only elevate these costs but also pose significant safety risks, potentially leading to more accidents and resulting in higher human and property costs.
(in clu d in í medium repair and big repaư)
‘ (due to natural disasler works breakdown overloaded problem elc.)
7 (Road M aintenance on W orld Bank document)
Road maintenance is crucial for preserving the original condition of roads, safeguarding adjacent resources, and ensuring user safety Neglecting or improperly performing maintenance can lead to rapid road deterioration and eventual failure due to climate and vehicle impacts Therefore, it is essential to recognize that all roads require ongoing maintenance to remain functional and safe for travel.
Regular and continuous road management and maintenance are essential to ensure safe and smooth operations, addressing damages promptly to prevent congestion, traffic accidents, and emergencies caused by heavy rain, seasonal monsoons, or natural disasters like typhoons and floods Effective maintenance also helps detect and prevent encroachments on road infrastructure and right-of-way (ROW) Neglecting road maintenance can lead to rapid deterioration and unsafe conditions, resulting in costly rehabilitation efforts and reduced efficiency of government and societal investments.
To minimize costs and complications during the operation and maintenance phase, it is crucial to proactively prevent defects, promptly detect damages, and ensure timely repairs Neglecting repairs can lead to worsening conditions, resulting in significantly higher repair expenses and more complex solutions.
Maintaining a safe and functional road network relies heavily on climate and hydrological factors Storms and floods can lead to landslides and slope failures, which compromise road infrastructure In areas with complex groundwater or hydrological conditions, road embankments and pavements are particularly vulnerable to damage Additionally, extreme temperatures and rainfall can accelerate the aging and deterioration of road surfaces.
Overloaded vehicles significantly impact bridge structures and road facilities, leading to accelerated deterioration The presence of these heavy vehicles contributes to road damage and the rapid decline of both national and provincial roadways.
RIn docum ents o f Transport Departm ent o f the US).
As time passed by, road pavement strength decreases; loading capacity of bridges, culverts and other road íacilities also reduce and more damages appear with more seriousness.
Socio-economic development leads to increased transport demand and higher daily traffic volumes, which in turn elevates vehicle loading due to cargo transport pressures and profit motives of transport operators Consequently, effective vehicle-loading control is urgently needed to protect the integrity of road and bridge systems These challenges directly contribute to the deterioration of infrastructure over time, necessitating periodic repairs or significant upgrades as outlined in detailed designs This necessity is widely recognized by both road network managers and experts at national and international levels.
The existing íactors, vvhich are insuffícient in road management and maintenance, in suííìcient in íĩnance and ineffícient use of fund which impact quality o f road maintenance and road inírastructure lifecycle.
Nowadays, preservation and extension of life cycle of road transport infrastructure becomes ơne of the ìmportant contents in.road asset management strategy in many countries.
2.1.3 Kactors affect road maintenance activities
- Management mechanism and implementation method of govemment agencies
- Science and Technology in road maintenance construction
Out of the above factors, policies and fund are the most important ones that affect the whole operation of road maintenance.
Model of Road Maintenance Fund
Governments urgently need effective methods to gather diverse financial resources for road maintenance The Road Maintenance Fund (RMF) model is highly recommended for this purpose According to World Bank statistics, 55 countries worldwide have successfully established their RMFs, including nations from ASEAN, developed regions, and South America, as well as Latin and African countries.
The primary goal of the Road Maintenance Fund (RMF) is to secure financing for the upkeep of road networks Nevertheless, in certain countries, a portion of this fund is allocated for the development of road systems, urban transport initiatives, and urban railway projects.
In countries where Road Maintenance Funds (RMF) are established, such as Japan, a portion of the fund is allocated for capital investments in road system development, while another portion is dedicated to road management, maintenance, and urban transport projects, including urban railways The United States has implemented two RMFs: one for the national road network and another for provincial roads Overall, the establishment of RMFs reflects the government's expectation to create a sufficient, actionable, and sustainable funding source for road maintenance.
A study indicates that the management and operation of a national road network generates revenue comparable to that of one of the world's 500 largest corporations Relying solely on state budget allocations is inadequate for maintaining such a vast infrastructure Therefore, road management organizations should be empowered to oversee the annual maintenance and repair funds from the Road Maintenance Fund (RMF) to effectively manage this significant asset.
Effective road management requires treating the road network as a business enterprise Revenue generated from tolls and related road fees should be allocated to a dedicated road fund, which is essential for ongoing maintenance and repair This fund must be overseen by a committee to ensure proper management and utilization of resources.
Effective road maintenance is essential for road users, as it directly impacts transportation costs When the road network is well-maintained, transportation fees can be reduced, ultimately leading to lower product prices for consumers.
The establishment of a Road Management Fund (RMF) will involve active participation from road users It is essential to supervise the fund management process, ensuring that it meets necessary requirements throughout the road's operational and usage periods Additionally, fostering public consensus and support is crucial for effective road investment and maintenance.
2.2.2 Revenues of Road Maintenance Fund
Each country generates revenue for its Road Maintenance Fund (RMF) through various taxes and fees, including taxes on fuel used by transport vehicles such as gasoline, diesel, and lubricants, which contribute to 85-95% of the total fund revenue Additionally, road user fees, bridge user fees, and ferry user fees further supplement this funding.
The article outlines various fees and charges associated with vehicle use, including an annual vehicle fee that varies by vehicle type, a fuel surcharge for heavy-duty vehicles, and additional fees and fines for oversized or overloaded vehicles It also mentions charges for international transit vehicles, including fees for international vehicle transit permit issuance, as well as taxes on vehicle registration, fees for motorized inspections, parking fees, and fines for violations of road regulations.
The Fund's revenue primarily supports the maintenance of the national road network In countries such as China and India, expressway investment funds have been established, generating revenue through fuel charges and fees based on the number of vehicles using the expressway, which vary by vehicle type and mileage This approach effectively addresses road maintenance demands while also fulfilling investment and rehabilitation needs.
2.2.3 Road Maintenance Fund Management Unit
To ensure the transparent and effective management of the Road Maintenance Fund (RMF), countries have established a Fund Management Council comprising representatives from the Ministry of Transport (MOT), Ministry of Finance (MOF), the business community, and road users, including transport operators and local authorities The Council, led by a chairman elected by its members, aims to advise the Ministers of Transport and Finance on optimal fund management Its operations will include developing regulations for community support for road network expenditures, outlining fund expenditures, defining management modes, and establishing relationships among council members and the MOT.
2.2.4 Fund allocation amongst road management agencies
According to experience of the countries, there are two main ways of RMF allocation as follows:
As per experience from the countries, thcre are two main ways of road maintenance fund allocation as follow: (i) allocatiníỉ basing on a constrain íormula; (ii) allocating basing on real requirement.
Over the past 60 to 80 years, many industrialized, developing, and underdeveloped countries have established road maintenance funds that have evolved through three generations The first generation relied heavily on state budgets, while the second generation is characterized by relative independence and self-management, a model predominantly adopted by developing nations In contrast, developed countries have progressed to the third generation, which features a high degree of independence and self-management in road fund operations.
Vietnam National Road Maintenance Fund
As of March 2012, Vietnam implemented the National Road Maintenance Fund (NRMF) for road upkeep, yet there have been no studies evaluating its effectiveness Given that the NRMF has been operational for nearly two years, it is crucial to assess its impact on the road maintenance system This evaluation will help identify solutions to enhance the NRMF's effectiveness and ensure greater benefits for local residents.
On March 13, 2012, the Prime Minister signed a decree establishing the National Road Maintenance Fund (NRMF) in Vietnam This decree was followed by several circulars that outline the structure and operations of the NRMF Notably, the joint circular No 197/2012/TTLT-BTC, issued on November 15, 2012, provides comprehensive guidance on the management, use, payment, and settlement of the fund, detailing the processes, requirements, and responsibilities for collecting funds from road users and ensuring their effective use for road maintenance in Vietnam.
The National Road Maintenance Fund (NRMF) is designated for the maintenance and management of National Highways by the Directorate for Roads of Vietnam (DRVN), while provincial roads will be managed by the Provincial People's Committees (PPCs) At the central level, Vietnam's Road Maintenance Fund (RMF) is referred to as the NRMF, whereas the Local Road Maintenance Fund (LRMF) operates at the provincial level The Prime Minister is responsible for determining the organizational structure of these funds.
On March 13, 2012, the Vietnamese government issued Decree No 18/2012/ND-CP, establishing regulations for Road Maintenance Funds Following this, Circular No 197/2012/TT-BTC was released on November 15, 2012, providing guidance on the collection, payment, management, and utilization of vehicle charges Additionally, on December 27, 2012, Joint Circular No 230/2012/TTLT-BTC-BGTVT was introduced to outline the management, use, payment, and settlement processes for the Road Maintenance Fund.
The management structure of the National Resource Management Fund (NRMF) is governed by regulations that oversee the operations of its Management Board, which is responsible for controlling disbursements from the fund The Chairman of the Board has the authority to determine the organizational structure and management protocols of the Local Resource Management Fund (LRMF), as well as to establish regulations for the functioning of the Local Resource Management Fund Board (LRMFB).
The management of Vietnam's National Road Maintenance Fund (NRMF) is overseen by the National Road Maintenance Fund Office (NRMFO), which reports to the IRMF Management Board chaired by the Ministry of Transport (MOT) The management board includes various other members, as illustrated in the accompanying chart.
Figure 1: Organization Chart ofV ỉetnam 's RM F
The majority of board members are appointed from the Ministry of Transport (MOT), Ministry of Finance (MOF), and Ministry of Planning and Investment (MPI), with only one member currently coming from outside the government Additionally, the Vietnam Automobile Association provides representation for road users on the board.
The National Road Maintenance Fund (NRMF) is primarily funded through road user registration fees collected from various vehicles, including cars, trucks, trailers, semi-trailers, and motorcycles This budget is further supplemented by annual allocations from the Central State budget or provincial budgets for local road maintenance funds (LRMF) Additionally, the NRMF may generate revenue from other road use-related fees as permitted by Vietnamese law Notably, all fees collected from motorcycles are directed to the LRMF, while other vehicle fees are distributed with 35% allocated to the LRMF and 65% to the NRMF.
Figure 2: Diagram o f Collection and Allocating Financial Fund
The NRMFB is tasked with approving the revenue and expenditure plan of the fund and managing the use of its revenues It ensures that the funds collected are utilized prudently and for their intended purposes, in accordance with the State management functions outlined in the Road Act In collaboration with the Ministry of Finance (MOF), the Ministry of Transport (MOT) can recommend adjustments to the allocation of fees between the NRMF and the LRMF to the Prime Minister The NRMFB also guides the administration and management of these funds.
The NRMF allows funding for various essential expenditures, including routine and periodic maintenance, road management services, and operational costs associated with vehicle weight inspection stations Additionally, it supports the operational expenses of the RMF offices, which are responsible for staffing, special operations, and irregular expenses, as well as the functioning of the NRMFO, including specialized staffing and operational expenditures.
FRM; Other expenses related to road management and maintenance authorized by the NRMFB.
Literature review
Recognizing the critical need for road maintenance, 55 countries have established a Road Maintenance Fund (RMF) to support their national road systems The World Bank has introduced the RMF as an off-budget method to enhance maintenance efforts The effectiveness of National Road Maintenance Funds (NRMF) in both developed and developing countries has garnered significant attention and has been evaluated independently as a viable solution to maintenance challenges.
In 2012, a method for optimal fund allocation for road maintenance was developed using Multi-Criteria Analysis (MCA), which addresses the multivariate priorities of National Road Maintenance Funds (NRM F) This approach was compared to current practices in Ghana to assess which method yields the best performance for the road network Additionally, Malkanthi and Matsumoto (2012) evaluated the effectiveness of the Second Generation Road Fund in addressing Sri Lanka's road maintenance challenges Their study highlighted that inadequate financing for maintenance is a significant issue, with road maintenance expenditures constituting only 0.0031% of the country's GDP Given the budgetary constraints, exploring off-budget financing methods is crucial for improving road maintenance in Sri Lanka.
Many countries with development levels similar to Vietnam have utilized National Road Maintenance Funds (NRMF) for an extended period, leading to numerous studies assessing their impact on road maintenance However, Vietnam only established its NRMF in March 2012, and to date, there have been no evaluations of its effectiveness Given that the NRMF has been operational for nearly two years, it is essential to conduct a study to assess its impact on the road maintenance system and develop solutions to enhance its effectiveness and benefits for residents.
STUDY METHOD
Methods of collecting and analyzing D ata
This study analyzes data from the DRVN, Transport Infrastructure Department of MOT, VSAO, and NRMF, focusing on the implementation of road system maintenance funded by the government budget from 2010 to 2012 and the Fund budget from 2013 to 2014 The objective is to assess the impact of the NRMF, which includes improvements in the road system, enhanced competitiveness among companies due to stable annual financing, the application of science and technology in road maintenance, and increased awareness among residents.
This study employed questionnaires to collect evaluations and feedback from various stakeholders, including government officials from the Ministry of Transport (MOT), Ministry of Finance (MOF), National Road Maintenance Fund Office (NRMFO), and the Directorate for Road and Vehicle Networks (DRVN), who oversee road maintenance management Additionally, insights were gathered from contractors and consulting firms involved in maintenance contracts, as well as representatives from transportation companies and residents in underserved areas who benefit from the road system The aim was to assess stakeholder perceptions and appreciation of the National Road Maintenance Fund (NRMF).
The interviews conducted with key figures from the National Road Maintenance Fund (NRMF) aimed to clarify how changes in management operations and state agency policies affect the road maintenance sub-sector Notably, the author spoke with the permanent Vice President of the NRMF Board, who oversees the management and control of NRMF activities, as well as the Deputy Chief of the NRMF office, responsible for implementing the planning and decisions made by the NRMF Board.
Interviews with two contractors and a supervisor from a consulting company revealed significant impacts of the National Road Maintenance Fund (NRMF) Unlike the previous dominance of state-owned companies, the construction bidding process now includes diverse economic sectors, such as private equity firms, limited liability companies, and joint-stock companies with state capital and private participation This shift, driven by timely and adequate funding, has made the road maintenance sub-sector more appealing to companies, fostering a competitive environment Consequently, managers benefit from improved road quality at lower costs, while construction quality has risen as companies adopt cost-reduction strategies, including the application of science, technology, and innovative management practices.
SWOT A nalysis
The interview targets for group (iii) focus on identifying the profits gained by automobile transportation companies following reductions in fuel costs, vehicle depreciation, and labor savings attributed to an efficiently operating road system Key insights are gathered from the Chairman of the Vietnam Automobile Transportation Association and 50 local residents across various provinces, including Ninh Binh, Nghe An, Quang Binh, Cao Bang, Bac Kan, Yen Bai, Thai Nguyen, Bac Lieu, and An Giang.
S.W.O.T is an acronym that stands for Strengths, VVeaknesses, Opportunities, and
A SWOT analysis is a strategic tool that identifies a business's strengths, weaknesses, opportunities, and threats Strengths and weaknesses are internal factors, such as reputation and patents, that can be modified with effort In contrast, opportunities and threats are external elements, including suppliers and competitors, that exist in the market regardless of the company's preferences.
This study employs the SWOT analysis method to identify the opportunities and challenges facing NRM F The goal is to provide strategic recommendations for management agencies to enhance the future development of NRM F.
DATA ANALYSIS
Analyze secondly data
4.1.1 Effects of Capital investment on the road maintenance sub-sector beíore and after NRMF’s íoundation.
The Audit Report of State13 evaluated the NRMF activities, highlighting their significant impact on the physical transformation of the road system Initially, these efforts fostered trust among residents regarding the effective use of their annual fees for road maintenance The findings were based on thorough examinations of actual roads, collaboration with provinces, and a review of reports from DRVN and RNMF.
To clarify the identity of the Audit of State, this article will present a comparative analysis using data collected from the Ministry of Transport (MOT), the Department of Road and Vehicle Management (DRVN), and the National Road Maintenance Fund Organization (NRMFO) This analysis is based on Audit Report No 260/BC-KTNV, which details the collection and allocation for the year 2013, issued by the Audit of State in June 2014.
4.1.1.1 Investment for road maintenance beíore having NRMF
Prior to January 1, 2012, funding for the maintenance of bridges and roads was solely sourced from the State budget The Ministry of Finance managed investments for the national highway system through the central budget, following annual plans approved by the Ministry of Transport Meanwhile, the local road system's funding was overseen by local Departments of Finance and Transportation.
Table 1: Highwav maintenance budget in the period 2010-2012
Allocated fund from State budget
Source: Author collected from M O T (2010, 201 ỉ and 2012)
From 2010 to 2013, the annual capital fluctuations were notable, with an average increase of 11% per year, excluding the additional fees from 2011 However, this capital growth merely matched the rising consumer price index (CPI), which saw figures of 6.9% in 2009, 11.4% in 2010, and a significant 18.8% in 2011 Furthermore, the Ministry of Finance did not allocate funds for local road maintenance in provinces, leaving these repairs to be financed by the respective provincial budgets.
The current capital resources allocated for the management and maintenance of the national road network and highway system fall significantly short of demand, meeting only about 30% of highway needs This funding shortfall has resulted in a focus solely on urgent repairs, leaving regular maintenance and timely repairs neglected Additionally, the surge in vehicle numbers has outpaced initial forecasts, leading to severe degradation of roads and bridges This ineffective investment is detrimental to socio-economic development.
4.1.1.2 Investment on road maintenance from NRMF ln 201 1 there was some excess Capital, 819 billion VND be additional for charging stations Hoang Mai Ban Thach a n d stations T 1 on highway 51
In accordance with Vietnam regulations, the annual Capital Road Maintenance Fund (RMF) is allocated as follows: National Road Maintenance Fund (NRMF) is designated for the upkeep and management of the national highway system, while the Local Road Maintenance Fund (LRMF) is utilized for the maintenance and management of local road systems, as assigned by the provincial People's Council Fund expenditures encompass various aspects of these maintenance and management activities.
- Expenses for maintenance of roads.
- Expenses for the management tasks of road works.
- The operation of the Fund management.
- Other expenses related to the maintenance and management of road vvorks decided by the Fund management Council.
Since 2013, the Fund has provided capital funding to supplement ferry terminal operations, as revenue alone does not cover the entire country's needs The table below outlines the funds allocated for road maintenance over two years, based on the total existing highways and bridges since the establishment of the NRMF.
Table 2: Actual Capital Jor the highwav svstem pẹriod 2013-2014
Source: Author collected from the national NRMF.
Thanks to NRMF, besides local budget, local road maintenance have been allocateđ which is a traditional fund for provinces.
Table 3: Additional Capital levels for loca/ road svstem period 2013-2014
Univ Billion VND ĐAI HỌC QUỎC GIA HẢ NỘI !
TRUNG TÂM THÔNG TIN THƯ V'ÈN I
'''Decree 18/2012 / ND-CP issued by VN Government on Road Maintenance Fund
Source: Author collected from MOT and NRMF office.
The table below shows clearly changes o f the Capital since the establishment of Road Maintenance Fund from 1/1/2013 when the fund look effect.
Table 4: Cotnparison changes o fth e Capital for road maintenance
Source: Author collected from MOT and NRMF
Figure3 Comparison among road maintenance investment (2010-2014)
■ Highvvay ■ Local road □ Investment total
Since its establishment, the National Reserve Management Fund (NRMF) has seen a remarkable capital increase of 308.5% from 2010 to 2014 This growth reflects a consistent annual rise, emphasizing the budget's focus on maintenance areas By 2014, the capital reached approximately 3,300 billion, representing 46% of the funds allocated from current resources.
4.1.2 Changing of management mechanism of government agencies on Road maintenance beíore and after NRMF was established.
4.1.2.1 Contractors selection method of national road management and maintenance unit:
The Vietnamese government has established that road maintenance activities are considered public products, necessitating the organization of bidding or order placements for state enterprises and other economic sectors, including cooperatives The Ministry of Finance has provided guidelines for the financial regime related to road management and maintenance, stipulating that bidding or order placements are required, except for specific cases such as ferries, tunnels, floating bridges, urban roads, and remote roads However, since 2011, the management and maintenance of the national road network have not adhered to these bidding requirements, although other activities like road repairs and inspections have followed the appropriate bidding procedures During this time, the Regional Road Management Units (RRMU) and Provincial Departments of Transport (PDOT) have implemented alternative management modes.
At the beginning of each year, traditional companies involved in national road management and maintenance prepare their annual road maintenance plans Subsequently, the Road Management Unit (RRMƯ) signs quarterly contracts with these companies to ensure effective road management and maintenance.
- At the end of each quarter, acceptance and evaluation on períormance quality are conducted for payment; also basing on grade of national road damage to
The National Repair and Maintenance Fund (NRMF) was established under Decree No 18/2012/ND-CP, following the guidelines set by Decree No 31/2005/ND-CP dated March 11, 2005, and Circular No 30/2010/TT-BTC issued by the Ministry of Finance on March 5, 2010 This framework outlines the identification of the quantity of regular repair work planned for the upcoming quarter, emphasizing that management quantities are assigned based on targeted goals rather than on a quarterly basis.
4.1.2.2 Contractors selectỉon method of national road management and maintenance unit after NRMF was established:
DRVN oversees the annual settlement review and approval of RMBs and PDOTs related to highway management, summarizing expenditures for reporting to the NRMFB The NRMFB then approves these expenditures for the NRMF and NRMFO operations, with a summary sent to the MOT and MOF Any surplus funds from approved spending in a given year are carried over to the next year.
State companies are required by the DRVN to maintain roads annually; however, due to incomplete order procedures, practical contract signing and order placement have not progressed significantly Consequently, each Road Maintenance Unit (RRMU) continues to approve cost estimates and adjustments for periodic repairs to supplement existing contracts executed by the companies.
In early 2012, a bidding plan was developed for seven packages of national roadway maintenance and four packages of medium repair for additional national roads However, by June 2012, the bidding process was delayed due to the lack of prepared procedures, bidding document samples, and contract forms To ensure the management and maintenance of these national roads during this period, ad hoc ordering contracts were signed for the eleven routes The bidding process was anticipated to commence in July 2012, with the execution of ordering contracts projected for 2013.
Changes by the funding source impacts
In early 2013, significant changes were implemented in road management, operation, and maintenance following the introduction of road maintenance works by the NRMF This included the replacement of previous regulations established by MOT20, leading to a new set of guidelines aimed at improving road infrastructure and management practices.
:i’MOT issued the Circular No.52/2013/TT-BGTVT dated 12/12/2013
SWOT analysis for next years (2015-2020)
This research employs a SWOT analysis to identify obstacles and challenges while leveraging strengths and opportunities, ultimately providing targeted recommendations.
The íìrst challenge is that a>ncerrung how to íìnd out sources for the fund meeting the needs of road maintenance while the number of road construction prọịect completed.
Meeting the total needs for road maintenance is unfeasible due to the new road system's construction aimed at future economic development As of 2014, the total length of the road system reached 339,223 km, marking a 55.2% increase from 2008's 218,527 km This includes highways at 19,520 km (up 13%), provincial roads at 29,342 km (up 17%), district roads at 54,132 km (up 14%), commune roads at 217,392 km (up 67%), and other roads at 24,057 km (up 479%), with an additional 12,348 km (up 226%).
Table 5: Comparison between real source o f Capital o fN R M F and the demand o f C apital bv DR VN requested by vears
Source: Author collected from Ministry of Transport and NRMF office
The maintenance fund for the management system currently covers only 40-60% of the demand For example, the Ministry of Communications and Transportation has proposed a budget of 12.995 billion, with 7.537 billion sourced from the fund, which includes income fees and allocations from the Ministry of Finance.
As Vietnam's economy continues to grow rapidly, the construction of new roads and bridges has increased significantly, making the search for capital to support maintenance services a challenging task.
The implementation of the road traffic maintenance fund's operational model in Vietnam marks a pioneering effort, inevitably leading to various challenges during its execution.
Beíbre's role in road maintenance has shifted significantly with the establishment of the National Road Maintenance Fund (NRMF), as all maintenance activities now depend on annual approvals from the Ministry of Finance (MOF) This change has relegated Beíbre to a lesser role, primarily providing additional capital for NRMF, while the Directorate of Roads and Bridges (DRVN) and the Ministry of Transport (MOT) handle investment decisions and procedures Consequently, the MOF has lost its influence over capital allocation and its crucial role in managing substantial annual funding, leading to concerns about its ability to oversee dispersed funds, particularly regarding road tolls perceived as taxes by residents.
In the future, if the Chairman of the Fund is an unpopular successor to the minister, it is probable that the RMF will revert from its current ideal model back to the Ministry of Finance, transforming into an allocation mechanism similar to its previous structure.
To ensure effective annual road traffic maintenance and reduce reliance on budget allocations, it is crucial to explore alternative funding sources Relying solely on income fees is not feasible due to societal reactions and the reality that a significant portion of the population faces financial hardships.
The implementation of the íundinu operation model for road traffic management in Vietnam is a pioneering effort, leading to various challenges during its execution Notably, several local funds have not utilized the allocated capital since 2013, which significantly impacts the overall efficiency of the capital deployment.
The policy system faces challenges that hinder effective implementation Notably, at the start of 2013, essential circulars and legal documents were needed to ensure the regulations governing fund application were suitable.
According to the report of Government Auditing Company ahout the operation o f the maintenance fund
The Ministry of Finance's Circular No 24 (97/TT/BTC), which previously guided road traffic fee payments, was replaced by Circular 133/TT/BTC in September 2014 Additionally, Decree 18/NĐ-CP addresses the funding for road traffic maintenance.
The lack of standardized fund management models across the country has resulted in challenges for central control and has created inconsistencies in operational practices.
Vietnamese citizens primarily rely on motorbikes for transportation, making it challenging to manage annual income and expenditure fees due to insufficient regulatory enforcement Local authorities often impose lenient penalties, resulting in low compliance and effectiveness in oversight.
Many residents in Vietnam are familiar with government subsidies but often lack a clear understanding of their responsibilities and the purpose behind fees This misunderstanding has led to protests against new policies, as people mistakenly believe that they are only required to pay taxes and fees without recognizing the associated benefits.
The Vietnamese government is accelerating its policy of socializing road traffic maintenance, highlighting the need to strengthen and establish relevant policies This initiative aims to enhance the development of funding for road maintenance, positioning it as a key priority for the government.
RECO M M ENDATIO N
NRFM is crucial for Vietnam's transport sector, especially in road maintenance To support sustainable development in NRMF, several recommendations can be made for future improvements.
The primary challenge facing the National Road Maintenance Fund (NRMF) is securing financial resources for road maintenance To address this, the government should explore alternative revenue streams, such as implementing user fees for electricity infrastructure and fiber optic cables Given the extensive presence of power lines, water pipes, and fiber optic cables in Vietnam's urban areas, these rental fees could generate significant income to support NRMF's needs With the assistance of the World Bank, the Ministry of Transport (MOT) should engage a consultant to develop a comprehensive strategy for optimizing these revenue opportunities.
5 year road toll collection plan vvith the aim of making use of revenue from leasing inírastructure transport into communication and electricity.
- Government also early encourages various business modes, promote privatization process on road maintenance sub-sector in order to eliminate State abundant.
In response to the positive feedback from road users regarding the impressive outcomes achieved by the National Road Management Fund (NRMF), there is a plan to establish a legal framework for the NRMF This initiative aims to enhance revenue from road tolls imposed on vehicles, aligning with GDP growth, while also exploring additional funding sources.
- For further construction projects, maintenance should be subjected to an item in the contract, guaranteed by the contractor for at least 5 years after construction completion and handing over.
The government must expedite the development of alternative transportation modes, including railway transportation, which is currently under study by the Ministry of Transportation (MOT), and the enhancement of coastal transportation routes that traverse the country.
- In order to achieve high efficiency in collecting fee, the Government should issue penalty reaulations to well control road fee, particularly motorbike users.
The NRMF must collaborate closely with World Bank-funded consultants to establish a nationwide Provincial Road Maintenance Fund (PRMF) model This coordination is essential for ensuring consistency in revenue generation and expenditure management across the country.
- MOT, NRMF should continue using the media, educating and disseminating and building propaganda campaigns to direct beneĩits brought back from NRMF against the road users’ contributions.
In this article, I present my evaluation of the significant impacts of the NRMF since its establishment and operation over the past two years I aim to identify strategies that will reinforce the role of the NRMF specifically, as well as its influence on the broader transport sector I welcome constructive feedback from my tutors and peers.
Vietnam and National Road Maintenance Fund of Vietnam
2 Asian Development Bank (2002), “TA SRI 3110 Re-engineering of Road Sector Institutions, Final Report, Volume A Analysis”.
3 Asian Development Bank (2003), “An Asian Perspective, Road Funds and Road
4 Circular No.l0/2010/TT-BGTVT dated 19 April 2010 issued by Ministry of Transport of Viet Nam
5 Circular NO.197/2012/TT-BTC: Circular guiding regulation on collection, payment, management and use charges by unit of vehicle, Hanoi November 15,
6 Circular No.230/2012/TTLT-BTC-BGTVT: Joint circular, guiding regime of management, use, payment and settlement of Road Maintenance Fund, use, payment and settlement of Road Maintenance Fund, Hanoi December 27 2012
7 Cừcular No.52/2013/TT-BGTVT issued by MOT dated 12/12/2013
8 Decree No.31/2005/NĐ-CP dated 11/3/2005 by the Government on production and supply public Products
9 Deuree Nol8/2012/NĐ -CP issued by Pnme Minister of Vietnam in 13 March 2012 on Road Maintenance Fund
10.Heggie lan G and Piers Vickers (1998), “Commercial Management and Financing of
Roads”, the World Bank Technical Paper No 409, May 1998 lU e n n a r oB Odoki and Paulina AgyekumBoamah (2012), “Optimal Fund Allocation for Road Maintenance”, University of Birmingham 2012.
12.Kcnneth M Gwilliam&ZmarakM.Shalizi, “Road Funds, User Charges and Taxes” World Highvvays, Vol 9, No 7, October 2000 “Second Generation Road Funds: The Way Ahead”
13.Law on Road Traffic approved by Vietnam National Assembly in 13 November
14.0ffĩcial letter NO.430/UBATGTỌG-VP dated 16 November 2011 by Offĩce of National Traffíc Safety Committee.
15.S N Malkanthi and T Matsumoto (2012), “Study of Effectiveness of Road Fund as a Solution for Maintenance Problem in Sri Lanka”, ACEPS 2012.
16.The research of PADECO Consultant for Ministry of Transport (2011)
17.Transportation development strategy to 2020, Vision to 2030 has been approved by the Prime Minister under Decision No.35/2009/QD-TTg dated 3rd March 2009
The Road Maintenance Fund, established in 2012 under the Vietnam Road Acts and Decree No 18/2012/NĐ-CP, aims to generate funding through road vehicle tolls and annual contributions.
State budget allocation for road maintenance which has ever been so constrained; and, gradually, for heading total socialization of road maintenance to reduce national budget burden.
To enhance the effectiveness of the Road Maintenance Fund, we conducted in-depth interviews with state road maintenance management agencies to assess the impact of the fund on road maintenance activities Our goal is to refine the financial management mechanisms of the fund for improved efficiency We kindly request your support in providing the information outlined in the accompanying table.
Thank you very much for your cooperation! All iníbrmation received from the inten iew shall be used for the above-mentioned purpose only.
AI Province/City: Ha noi
A2 Full name of the interviewer:
A4 Full name of the interviewed person: Mr.NGUYEN HONG TRUONG
A5 O f offíce/agency: MIN1STRY OF TRANSPORT
A6 Address of the offíce/agency: 80 Tran Hung Dao Street, Hanoi, Vietnam
2 Overview of road maintenance in Vietnam compared on periods before and aíterload fund mechanism.
3 Assessing on the positive and negative changes that Road Maintenance Fund affects road maintenance in Vietnam after 2 years of implementation of operation of the road fund.
3.1.Changes on mechanism, policies and procedures to road maintenance works and road maintenance management.
3.2.Changes of investment sources in road network maintenance and mechanism on collecting and managing allocation of Road Maintenance Fund.
3.3.Changes on quality of road and bridge system, especially in remote areas and provincial areas
3.4.Renovation in application of Science and technology in order to increase efficiency of implementation and saving human resources in road maintenance work.
4 Awareness of the road users.
The Road Maintenance Fund, established in 2012 under the Vietnam Road Acts and Decree No 18/2012/NĐ-CP, aims to generate funding through road vehicle tolls and annual state budget allocations for road maintenance This initiative addresses the previously constrained funding for road upkeep and seeks to promote the total socialization of road maintenance, ultimately reducing the burden on the national budget.
To enhance the effectiveness of road fund operations, we conducted in-depth interviews with state road maintenance management agencies to assess the impact of the Road Maintenance Fund on maintenance activities Our goal is to refine and improve the financial management mechanisms associated with the fund We kindly request your support in providing the necessary information as outlined in the table below.
Thank you very much for your cooperation! All iníormation received from the interv iew shall be used for the above mentioned purpose only.
AI Province/City: Ha noi
A2 Full name of the interviewer:
A4 Full name of the interviewed person:
O f office/agency: VIETNAM AUTOMOBILE TRANSPORT
A6 Address of the office/agency: Street, Hanoi, Vietnam
2 How many members are there in VATA and the form of participation and operation?
3 The positive and negative changes that Road Maintenance Fund affects directly to the VATA.
3.1 Effects by mechanism, policies and procedures on production and operation after the establishment of Road Maintenance Fund; and effects by road toll to the corporate revenue?
The economic benefits to corporations include improved traffic flow on roads and bridges, which leads to reduced congestion, facilitates easier movement of goods and services, and ultimately results in savings on human resources, time, and fuel consumption.
3.3 General assessment on economic beneíìt and loss against gained beneíĩts and costs.
4 Recommendations by the VATA to Road Maintenance Fund and the Government.
The Road Maintenance Fund, established in 2012 under the Vietnam Road Acts and Decree No 18/2012/NĐ-CP, aims to generate funding through road vehicle tolls and annual state budget allocations This initiative addresses the previously constrained resources for road maintenance and seeks to promote the total socialization of road maintenance efforts, ultimately reducing the burden on the national budget.
In order to contribute to the more and more effective road fund operation, deep interview to State road maintenance management agencies to seize effects from Road
To enhance the efficiency of the Maintenance Fund dedicated to road maintenance, it is essential to refine the financial management mechanisms associated with the fund We kindly request your support in providing the necessary information outlined in the table below.
Thank you very much for your cooperation! All iníbrmation received from the interview shall be used for the above mentioned purpose only.
AI Province/City: Ha Noi
A2 Full name of the interviewer:
A3 Date of interview A4 Full name of the interviewed person A5 O f office/agency
A6 Address of the office/agency: Street, Hanoi, Vietnam A7 Title: CEO
2 At present, how many companies, you think, are there who take part in road maintenance in
Vietnam; apart from the traditional road maintcnance companies, are there any other economic sectors who also take part in road maintenance?
The assessment of changes in mechanisms and policies for selecting contractors involved in road maintenance works, following the establishment of the Road Maintenance Fund, reveals both positive and negative impacts on corporate operations and production.
4 Economic beneíìts to the corporate, (such as quick circulation and rotation of the corporate's
Capital, in-time disbursement that meet construction progress for acceptance and no bad debt because of the stable fund from Road Maintenance Fund.
5 General assessment on economic benefits and disadvantage aíìer investment in and application of Science and technology on management to raise competitive capacity when bidding for Road Maintenance Contract.
6 Recommendation of the association to the Road Maintenance Fund and the Government.