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  • Signing of Loan Agreement for the Rental Factory Development Project for SMEs in the Socialist Republic of Vietnam under the Private Sector Investment Finance Scheme

Press Releases

August 13, 2015

Signing of Loan Agreement for the Rental Factory Development Project for SMEs in the Socialist Republic of Vietnam under the Private Sector Investment Finance Scheme
Assistance for the development of supporting industries in Vietnam and attracting investment from Japanese companies

photoThe signing ceremony

On August 13, the Japan International Cooperation Agency (JICA) signed a loan agreement with the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), one of the largest banks, the majority of which is owned by the State Bank of Vietnam, for the Rental Factory Development Project for SMEs. This is the first collaborative investment project with a local government body since JICA resumed Private Sector Investment Finance in October 2012.

JICA will use a private sector investment finance scheme to build a lease-type industrial complex on approximately 18 hectares of land in the Nhon Trach III Industrial Park in Dong Nai Province, about 25 kilometers southeast of central Ho Chi Minh City in southern Vietnam.

The project will be carried out by Japanese SMEs Development JS Company, a special purpose company (SPC) established in June 2015 by Forval Corporation and local private companies. JICA will support the project by providing loans to BIDV, which will offer sub-loans to SPC (refer to the project diagram below). The Saitama Prefectural government intends to make an investment in SPC in order to attract more investment to Vietnam from companies in Saitama Prefecture, and this will be the first instance in which a Japanese local government makes an equity investment in a company administering an overseas industrial complex.

Project Schematic Diagram

photo

It has been pointed out that Vietnam has not adequately developed its supporting industries despite a national policy of creating a base toward building a modern industrial country by 2020. Therefore the Government of Vietnam is trying to grow its domestic supporting industries by inviting foreign small and medium-sized enterprises (SMEs) with technological capacity and encouraging them to have business with domestic companies. This project will provide an industrial complex where SMEs from Japan can easily expand, contributing to the development of supporting industries in Vietnam.

Under a partnership between Forval Corporation, JICA, the Saitama Prefectural government and 24 financial institutions (including regional banks and trusts) which have a business alliance with Forval Corporation, this project will provide overseas investment support to SMEs in Saitama Prefecture and other areas of Japan to implement the policies described above which the Japanese Government is promoting. Through discussion with the Government of Vietnam and other steps, JICA is creating an environment under which the Saitama Prefectural government and financial institutions can provide favorable support to SMEs. The Saitama Prefectural government plans to support the overseas investment of its regional companies by establishing preferential zones for them with equity participation and through the provision of information from financial institutions with partnerships in the target area.

The government of Dong Nai Province, which will carry out this project, has strong hopes that the lease-type industrial complex will become a model for promoting supporting industries through business between Japanese SMEs that will be tenant companies and companies in Vietnam. JICA intends to provide, in addition to financing for this project, technical assistance for promoting the supporting industries.


A design of the completed lease-type industrial complex

photo

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