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Press Releases

November 2, 2011

Signing of Japanese ODA Loan with the Socialist Republic of Vietnam
–Supporting Sustainable Development through Climate Change Measures and Economic Growth–

PhotoThe signing ceremony was conducted in the presence of the Prime Minister of Vietnam, H.E. Mr. Nguyen Tan Dung.

1. Today, the Japan International Cooperation Agency (JICA) signed Japanese ODA loan agreements with the Government of the Socialist Republic of Vietnam to provide loans of up to 92.645 billion yen (for six projects) in the presence of the Prime Minister of Vietnam, H.E. Mr. Nguyen Tan Dung. On June 15, 2011, Japanese ODA loan agreements were signed for up to 40.946 billion yen (for two projects), bringing the total agreed loans signed in fiscal 2011 to 133.591 billion yen (for eight projects).

2. Vietnam recorded high economic growth from 2005 to 2007 that exceeded 8 percent (refer to Reference 1) while it successfully alleviated poverty (refer to Reference 2, decreasing the poverty rate from 37.4 percent to 14.5 percent between 1998 and 2008). Since fall of 2008, economic growth has decelerated due to the effects of the worldwide financial and economic crises, but policy efforts of the Government of Vietnam (economic measures including fiscal stimulus) and support from Japan (Eighth Poverty Reduction Support (including economic stimulus assistance)) have had an effect, leading to growth supported by a real gross domestic product of 5.3 percent in 2009, and solid economic growth in 2010 of 6.8 percent.

3. Based on these circumstances, this Japanese ODA will support sustainable development in Vietnam through the development of economic infrastructure based on public-private partnership and improvements in measures to counter natural disasters and climate change.

(1) Supporting the development of economic infrastructure based on public-private partnership

As a large amount of funds are required to develop economic infrastructure indispensable for economic growth in Vietnam, the utilization of private funding, in addition to public investment and Official Development Assistance (ODA), is necessary. While the construction of ports and related basic infrastructure (including access roads and bridges) will be implemented with yen loan through the Lach Huyen Port Infrastructure Construction Project, the berth facilities will be invested and managed by a joint venture of Japanese and Vietnamese companies. It is expected that the project will be a model for the development of economic infrastructure through collaboration between the public and the private sectors.

(2) Promoting growth through developing economic infrastructure

In the Southern Region of Vietnam, including Ho Chi Minh City, traffic volume has increased and congestion has become serious with the economic development of recent years. The need for transportation in the region is predicted to increase further, and the efficiency of transporting goods is expected to improve by linking transportation hubs such as airports and ports, production bases such as industrial complexes, and highways. In response to these conditions, JICA is providing support for the construction of a highway between Ben Luc and Long Thanh, the highest priority interval in the North-South Expressway of Vietnam [North-South Expressway Construction Project (Ben Luc-Long Thanh Section) (I)].

Furthermore, JICA is constructing a new thermal coal-fired power plant and related facilities in northern Thanh Hoa Province to improve the strained balance of supply and demand in Vietnam, and to assist in its economic growth and international competitiveness [Nghi Son Thermal Power Plant Construction Project (III)].

(3) Promoting policy actions and improving technology to respond to disaster and climate change

In 2008, the Government of Vietnam formulated the National Target Program to Respond to Climate Change as a comprehensive policy for responding to climate change. To support implementation of specific measures in that program, JICA is forming policy actions through policy dialogue and providing fiscal support based on an evaluation of the achievement of the policy actions [Support Program to Respond to Climate Change (II)]. By building facilities and equipment as well as transferring technology for the development and operation of a global observation satellite, JICA is advancing the technology for responding to disasters and climate change as well as taking concrete steps to mitigate disaster risks [Project for Disaster and Climate Change Countermeasures Using Earth Observation Satellite (I)]. It is expected that this support will contribute to sustainable economic development and to the alleviation of the global issue of climate change in Vietnam.

4. Relations between Vietnam and Japan have grown significantly deeper in recent years, and at the October 31 summit meeting of the leaders of Vietnam and Japan, the governments of the two nations agreed to cooperate in a strategic partnership between Japan and Vietnam for peace and prosperity in Asia. Today’s signing of the loan agreements for the Lach Huyen Port Infrastructure Construction Project and the North-South Expressway Construction Project is a further sign of Japan’s support based on this partnership. It also assures the further advancement of cooperation between the two countries for assistance in the field of climate change based on this partnership.

5. JICA’s policy is to promptly implement projects that address development issues in Vietnam while reinforcing the coordination of JICA’s various ODA modes, which include Japanese ODA loans, technical cooperation and grant aid.

Reference

1. Growth Performance of Vietnam

Growth Performance of Vietnam

Created with reference to the IMF World Economic Outlook Database

2. Poverty Alleviation Performance of Vietnam

 199319982002200420062008
Overall58.1%37.4%28.9%19.5%16.0%14.5%
 Northeast Region 86.1%62.0%38.4%29.4%25.0%24.3%
 Northwest Region 81.0%73.4%68.0%58.6%49.0%45.7%
 Red River Delta Region 62.7%29.3%22.4%12.1%8.8%8.1%
 North Central Coast Region 74.5%48.1%43.9%31.9%29.1%22.6%
 South Central Coast Region 47.2%34.5%25.2%19.0%12.6%13.7%
 Central Highlands Region 70.0%52.4%51.8%33.1%28.6%24.1%
 Southeast Region 37.0%12.2%10.6%5.4%5.8%3.5%
 Mekong Delta Region 47.1%36.9%23.4%15.9%10.3%12.3%

Created with reference to the Vietnam Living Standards Survey

3. Terms and Amounts of Loans

Project titleAmount (million yen) Annual interest rate (%)Repayment period/ deferment period (years)Procurement
(1) Lach Huyen Port Infrastructure Construction Project (Port) (I)11,9240.2%40/10Japan tied
(2) Lach Huyen Port Infrastructure Construction Project (Road and Bridge) (I)9,0710.2%40/10Japan tied
(3) North-South Expressway Construction Project (Ben Luc-Long Thanh Section) (I) 14,0930.2%40/10Japan tied
(4) Nghi Son Thermal Power Plant Construction Project (III)40,3301.4%30/10General untied
(5) Support Program to Respond to Climate Change (II)10,0000.3%40/10General untied
(6) Project for Disaster and Climate Change Countermeasures Using Earth Observation Satellite (I) 7,2270.2%40/10

Japan tied,
bilateral tied

* Special Terms for Economic Partnership (STEP) apply to projects (1), (2), (3) and (6), and the conditions of the Climate Change ODA Loan apply to project (5).

* An annual rate of 0.01 percent applies to the consulting portion.

* To ensure the procurement process is fair and competitive, the Government of Vietnam will implement post-project monitoring by a third party agency of procurement procedures, for projects specified based on consultation between the Government of Vietnam and JICA. The expenses for this monitoring are not included in the Japanese ODA loan.

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