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Press Releases

June 15, 2011

Signing of Japanese ODA Loan with the Socialist Republic of Vietnam
—Support for Transportation Infrastructure to Promote Economic Growth in Central and Southern Vietnam—

PhotoSigning Ceremony

1. Today, the Japan International Cooperation Agency (JICA) signed Japanese ODA agreements with the Government of the Socialist Republic of Vietnam for a total of up to 40.946 billion yen for two projects.

2. Economic development in recent years in Vietnam's southern region, including Ho Chi Minh City and in its central region, including Da Nang, has caused an increase in traffic volume and resultant traffic congestion, a problem that is becoming increasingly serious. Based on projections that traffic demands in these regions will continue to grow, increased logistics efficiency is expected from links among airports, harbors, other transport depots, such production locations as industrial parks, and expressways. Moreover, because overloading of vehicles on ordinary roads is causing them to deteriorate and become damaged, there is a need to compartmentalize ordinary roads and expressways, and to maintain them differently based on changes in transportation characteristics.

3. To assist in this situation, JICA has decided to offer its support for the most important sections of Vietnam's North-South Expressway network, namely Ho Chi Minh City - Dau Giay section and Da Nang - Quang Ngai section.

4. In recent years, the relationship between Vietnam and Japan has grown markedly deeper. At the October 31, 2010, summit meeting of the leaders of Vietnam and Japan, the two governments agreed to comprehensively deepen the two nations' strategic partnership for peace and prosperity in Asia. Today's signing of ODA loan agreements to improve the North-South Expressway network is a case of Japan offering its support based on this partnership.

5. At the signing ceremony in the capital city of Hanoi, JICA's chief representative in Vietnam, Motonori Tsuno, expressed deep gratitude for the feelings of the Vietnamese people and the consideration of JICA's counterpart institutions. He also said, "The realization of these two projects will help promote greater logistics efficiency and enhance traffic safety in the regions concerned, thereby contributing to economic growth in Vietnam."

6. Between 2005 and 2007, the Socialist Republic of Vietnam showed strong economic growth of over 8% annually (see Fig. 1), and was making strides in poverty alleviation. (The poverty rate dropped to 14.5% in 2008 from 37.4% in 1998; see Table 1.) Economic growth has slowed because of the financial crisis that began in the fall of 2008, but thanks to the efforts of the government of Vietnam (public spending stimulus) and with support from Japan (e.g., the Eighth Poverty Reduction Support Credit), steady economic growth was achieved, with real GDP growth held at 5.3% in 2009 and 6.8% (estimated) in 2010.

7. JICA's policy is to dynamically assist with development issues in Vietnam while strengthening the coordination of various ODA schemes, including Japanese ODA loans, technical cooperation and grant aid.

Fig. 1. Growth Performance of Vietnam

FigureSource: Based on the IMF World Economic Outlook Database

Table 1. Poverty Alleviation Performance of Vietnam

 

1993

1998

2002

2004

2006

2008

Overall58.1%37.4%28.9%19.5%16.0%14.5%
 Northeast Region86.1%62.0%38.4%29.4%25.0%24.3%
 Northwest Region81.0%73.4%68.0%58.6%49.0%45.7%
 Red River Delta62.7%29.3%22.4%12.1%8.8%8.1%
 North Central Coast74.5%48.1%43.9%31.9%29.1%22.6%
 South Central Coast47.2%34.5%25.2%19.0%12.6%13.7%
 Central Highlands70.0%52.4%51.8%33.1%28.6%24.1%
 Southeast Region37.0%12.2%10.6%5.4%5.8%3.5%
 Mekong Delta47.1%36.9%23.4%15.9%10.3%12.3%

Source: Based on the Vietnam Living Standards Survey

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Reference

1. Terms and Amounts of Loan

Project titleAmount (million yen)Annual interest rate (%)Repayment period / deferment period (years)Procurement
(1) North-South Expressway Construction Project (Ho Chi Minh City- Dau Giay Section) (II)25,0341.2%30/10General untied
(2) North-South Expressway Construction Project (Da Nang – Quang Ngai Section) (I)15,9121.2%30/10General untied

Notes:

  1. An annual rate of 0.01% applies to the consulting portion.
  2. To ensure fairness and competitiveness in the procurement process, the Vietnamese government and JICA will consult together, and specify items for which Vietnam will implement post-project monitoring by a third party agency. The expenses for this monitoring are not included in the Japanese ODA loan.

2. Project Summaries

(1) North-South Expressway Construction Project (Ho Chi Minh City – Dau Giay Section) (II)

Background and Necessity

Ho Chi Minh City and southern Vietnam form the industrial and commercial center of the Socialist Republic of Vietnam, having a great number of industrial parks. Many Japanese companies also have a conspicuous presence there. With the rapid economic development that has taken place in recent years, there has been a sharp increase in freight traffic volume, leading to increasingly serious traffic congestion. A new international airport and harbors are planned, and they are expected to generate even greater traffic demand in the future. Currently this area is served by National Highway No.1 and No. 51, but they have reached their capacity limits. Such problems as road deterioration and a decline in safety due to the mixing of different types of vehicles, as well as inadequate road network maintenance, have become hindrances to smooth transportation. Under these circumstances, it is required to alleviate congestion and to construct an expressway connecting industrial parks with airports and harbors.

Objectives and Summary

The objective of the Project is to meet increasing traffic demand and ease traffic jam of existing National Highway No.1 and NO.51 to Vung Tau which already run out its capacity by constructing an expressway from Ho Chi Minh City to Dau Giay – a top priority section of the North-South Expressway - thereby contributing to economic growth and international competitiveness of Ho Chi Minh and Southern Vietnam.

Loan funds will be allocated to the civil works necessary for the construction of the expressway, the procurement of equipment and materials, and consulting services.

Executing Agency

Vietnam Expressway Corporation (VEC)
Address: Hamlet 2-Linh Nam Ward, Hoang Mai Dist. Hanoi, Vietnam
Phone: +84 (4) 643-0273

Planned Implementation Schedule

  • (i) Completion of project: October 2014 – when the facilities are put into service
  • (ii) Issuing of letters of invitation for consulting services: Hired
  • (iii) Tender announcement of initial procurement package for international competitive bidding on project construction: Contracted
(2) North-South Expressway Construction Project (Da Nang – Quang Ngai Section) (I)

Background and Necessity

Many logistics and production bases such as industrial parks and economic zones are located in the largest city of central Vietnam, Da Nang, and the neighboring provinces of Quang Nam and Quang Ngai. Along with the rapid economic growth of the past few years, traffic volume in this region has been in turn accelerated, and it is expected to further increase. In addition, there have been remarkable changes in transportation characteristics with increase of passenger vehicles and large trucks. So the mixing of different types of vehicles has caused road deterioration and traffic accidents. Under these circumstances, the construction of safe, efficient and comfortable expressway is an urgent issue. Furthermore, Da Nang City is an eastern logistics base of East-West Economic Corridor that passes through Laos, Thailand and to Myanmar. In this context, this project will contribute to the economic growth in the central region of Vietnam and balanced development of national land, as one section of main road for international logistics connecting Mekong Region with Vietnam.

Objectives and Summary

The objective of the Project is to meet increasing traffic demand, to reduce travel time and uncertainly for passenger users and freight, and to enhance travel safety for road users, by constructing an expressway from Da Nang to Quang Ngai – a top priority section of the North-South Expressway, thereby contributing to economic growth and international competitiveness of Da Nang City and Central Vietnam.

Loan funds will be allocated to the civil works necessary for the construction of the expressway, the procurement of equipment and materials, and consulting services.

Executing Agency

Vietnam Expressway Corporation
Address: Hamlet 2-Linh Nam Ward, Hoang Mai Dist. Hanoi, Vietnam
Phone: +84 (4) 643-0273

Planned Implementation Schedule

  • (i) Completion of project: December 2015 – when the facilities are put into service
  • (ii) Consulting services: Issuing of letters of invitation: March 2012
  • (iii) Tender announcement of initial procurement package for international competitive bidding on project construction:
    Procurement package title: Main Package (procurement for eight packages is planned for this project)
    Release date: July 2011

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