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Press Releases

March 30, 2012

Signing of Japanese ODA Loan with the Socialist Republic of Vietnam
–Assistance balanced between urban infrastructure for propelling growth and rural living improvements–

PhotoMr. Nguyen Cong Nghiep,Deputy Minister of Finance, and Mr. Motonori Tsuno, Chief Representative, JICA Viet Nam, shook hands after the signing.

1. Today, the Japan International Cooperation Agency (JICA) signed ODA loan agreements with the government of the Socialist Republic of Vietnam up to a total of 136.447 billion yen for assistance for eight projects. So far in fiscal 2011, ODA loan agreements up to 40.946 billion yen for two projects were signed on June 15, and on November 2 loan agreements up to 92.645 billion yen for six projects have been signed. Combined, total ODA loan packages in fiscal 2011 amounted 270.038 billion yen for 16 projects.

2. Since the 1990s, Vietnam has achieved rapid economic growth (Reference 1). Vietnam achieved its national target to become a Middle-Income Country by 2010, and successfully reduced poverty from 37.4 percent in 1998 to 14.5 percent in 2008 (Reference 2). Going forward, the country will be integrated to the international economy more deeply and competition with neighboring countries will become intense. Amid such environment, improvement of the investment climate, including development of economic infrastructures, and nurturing strategic industry with higher additional value will be important. In addition to pursuing national economic growth, consideration must also be given to the lag in living improvements in rural areas.

3. In this situation, many of the projects committed this time are supposed to promote continued economic growth in Vietnam through large-scale urban infrastructure development and the construction of a science and technology center. On the other hand, some projects will contribute to improve medical services in the provinces, and environmental improvements in provincial areas. ODA loan packages signed today thereby support sustainable and balanced development of Vietnam.

(1) Infrastructure for urban development and furthering reforms
In Ho Chi Minh City, which propels the economic growth of Vietnam forward, assistance will be provided to construct Vietnam's first urban railway to solve the transportation problem accompanying the rapid growth in urban population and vehicles (Ho Chi Minh City Urban Railway Construction Project: Ben Thanh – Suoi Tien Section (Line 1) (II)). In Binh Duong, adjacent to Ho Chi Minh City on the north, assistance will be provided for a sewer system, to improve the sanitation of the region, as well as to conserve the city's source of tap water (Southern Binh Duong Province Water Environment Improvement Project (Phase 2)).

In the capital of Hanoi, a new terminal will be constructed for the international airport that is the gateway to the capital (Terminal 2 Construction Project in Noi Bai International Airport (II)), and an arterial highway will be constructed to connect Hanoi with the newly industrializing city of Thai Nguyen to the north (New National Highway No. 3 and Regional Road Network Construction Project (II)). In the Hoa Lac area on the outskirts of Hanoi, assistance will be provided for basic infrastructure for an integrated science and industrial technology center, promoting human resource development and advancing science and technology, areas where Vietnam lags behind advanced ASEAN countries, and contributing to raising the level of industry (Hoa Lac Science and Technology City Development Project (I)).

Along with these physical infrastructure developments, various policy reforms, which are needed to strengthen Vietnam's international competitiveness, are backed up through fiscal assistance (Tenth Poverty Reduction Support Credit).

(2) Living improvements in the provinces
While medical services have reached a certain level in the urban areas of Vietnam, medicine in rural areas continues to face many obstacles. Support for medical equipment and supplies, as well as personnel training will be provided to the core hospitals in 10 provinces and cities (Regional and Provincial Hospital Development Project (II)).

Also, reforestation of protection forests and livelihood improvements for residents will be supported in 11 coastal provinces of Central Vietnam, reducing poverty in the target areas and helping to conserve the environment for the country as a whole (Protection Forests Restoration and Sustainable Management Project).

4. JICA's policy is to dynamically implement projects that address development issues in Vietnam through JICA's various ODA modes, which include Japanese ODA loans, technical cooperation and grant aid.

Reference

1. Growth Performance of Vietnam

Photo

[Real GDP growth rates]
Created with reference to the IMF World Economic Outlook Database

2. Poverty Rates of Vietnam

Photo

Created with reference to the Vietnam Living Standards Survey

3. Terms and Amounts of Loans

Project titleAmount (million yen) Annual interest rate (%)Repayment (years)Grace Period (years)Procurement
(1) Ho Chi Minh City Urban Railway Construction Project: Ben Thanh – Suoi Tien Section (Line 1) (II)44,3020.2%4010Japan tied
(2) Southern Binh Duong Province Water Environment Improvement Project – Phase 2 19,9610.65%4010General untied 
(3) Terminal 2 Construction Project in Noi Bai International Airport (II) 20,5840.20%4010Japan tied 
(4) New National Highway No.3 and Regional Road Network Construction Project (II) 16,4861.40%3010General untied 
(5) Hoa Lac Science and Technology City Development Project (I) 15,2181.40%3010General untied 
(6) Tenth Poverty Reduction Support Credit 3,5001.40%3010General untied 
(7) Regional and Provincial Hospital Development Project (II) 8,6930.20%4010Japan tied 
(8) Protection Forests Restoration and Sustainable Management Project 7,7030.30%4010General untied 

Notes:
[1] Special Term for Economic Partnership (STEP) apply to projects 1, 3 and 7. Preferred terms apply to project 2, and Climate Change ODA Loan terms apply to project 8.
[2] An annual rate of 0.01% applies to the consulting portion.
[3] To ensure the procurement process is fair and competitive, the government of Vietnam and JICA will consult together and specify items for which Vietnam will implement post-project monitoring by a third party agency with procurement procedures. The expenses for this monitoring are not included in the Japanese ODA loan.

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