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Press Releases

July 6, 2015

Signing of Japanese ODA Loan Agreements with the Socialist Republic of Vietnam
Strengthening international competitiveness through infrastructure improvements

photoExchange of signed documents

On July 4, the Japan International Cooperation Agency (JICA) signed Japanese ODA loan agreements with the Government of the Socialist Republic of Vietnam to provide up to 66,086 million yen for five projects.

Since the 1990s, Vietnam has maintained steady economic growth (see reference 1), achieving the national goal of becoming a lower middle income country by 2010 while reducing the poverty ratio from 37.4 percent in 1998 to 14.2 percent in 2010.* With the tariff barriers within the ASEAN region scheduled to be abolished in 2015 and the national target to achieve industrialization by 2020, Vietnam needs to create a better investment environment through infrastructure development, so that sustainable economic growth can be achieved. In addition, Vietnam also should strengthen its international competitiveness by stabilizing its macro economy with a medium- to long-term perspective through reforms to the economic structure and administrative system of the country, including to the financial system. At the same time, Vietnam also needs to address various aspects of its vulnerabilities by: 1) enhancing income in rural areas where 70 percent of the country’s population lives and the poverty rate is higher than urban areas, 2) making improvements to the public health that has been adversely affected by the urbanization process and 3) mitigating and adapting to global warming as Vietnam is one of the world’s most vulnerable countries to climate change.

Under these circumstances, the ODA loans will be provided to support the development of infrastructure and industrial human resources, both of which are crucial for enhancing the country’s competitiveness, as well as supporting efforts to overcome vulnerabilities such as urban environment improvement and climate change countermeasures. The five projects are summarized below.

(1) Support for economic infrastructure and human resource development to strengthen international competitiveness

Thai Binh Power Plant and Transmission Lines Construction Project (III) will construct a power plant that uses coal produced in the northern part of Vietnam, as well as the related facilities. Second Power Transmission and Distribution Network Development Project will construct power transmission and distribution facilities near industrial complexes in major cities in Vietnam. These efforts will increase and stabilize the power supply in Vietnam.

The Can Tho University Improvement Project will strengthen the research and education capacity in the fields of agriculture, fisheries and the environment at the Can Tho University, which is a leading model operating under international standards, thereby supporting the development of the human resources necessary to promote Vietnam’s agriculture and fisheries, and addressing environmental issues in the Mekong Delta region, with support from Japanese universities.

(2) Support to overcome fragility

Ha Long City Water Environment Improvement Project (E/S) will support the construction of sewer facilities in Ha Long City, home to Ha Long Bay which is a registered World Heritage Site. Dong Nai Province Water Infrastructure Construction Project will support the expansion of water supply facilities to meet the demand for industrial and household water in Dong Nai Province, where foreign direct investment including from Japan, is very active. These efforts will contribute to improving of the living and investment environment, which has been degraded by rapid urbanization and industrialization.

JICA will continue to provide active support for Viet Nam's development issues, while pursuing integrated implementation of a wide range of ODA assistance, such as ODA loans, technical cooperation and grant assistance.

* Source: General Statistics Office, “Vietnam Living Standards Survey”

Reference 1. Growth Performance of Vietnam

photoCreated from the IMF World Economic Outlook Database

Reference 2. Terms and Amounts of Loans

Project title Amount
(million yen)
Annual interest rate (%) Repayment
period
(years)
Grace
period
(years)
Procurement
Project Consulting services
(1) Thai Binh Thermal Power Plant and Transmission Lines Construction Project (III) 9,873 1.4 0.01 30 10 General untied
(2) Second Power Transmission and Distribution Network Development Project 29,786 1.4 - 30 10 General untied
(3) Ha Long City Water Environment Improvement Project (E/S) 1,061 - 0.01 40 10 General untied
(4) Dong Nai Province Water Infrastructure Construction Project 14,910 1.4 0.01 30 10 General untied
(5) Can Tho University Improvement Project 10,456 0.3 0.01 40 10 General untied

Notes:
*Preferred terms (environment, climate change) apply to projects 3, and preferred terms (human resource development) apply to project 5.
*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 loans.

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