Japan pledges over US$2 billion to 12 Vietnamese projects

The Japanese government has agreed to grant 202.926 billion yen (more than US$2 billion) in official development aid to Vietnam in the 2012–2013 fiscal year.

The Japanese government has agreed to grant 202.926 billion yen (more than US$2 billion) in official development aid to Vietnam in the 2012–2013 fiscal year.

Nhat Tan bridge in Hanoi

The agreement formalising the pledge was signed in Hanoi on March 22 by Japanese Ambassador to Vietnam Tanizaki Yasuaki and Vietnamese Minister of Planning and Investment Bui Quang Vinh.

Under the agreement, 12 Japanese-funded projects, worth a total US$2.16 billion, are seeking the participation of Japanese bidders.

Eleven of these projects are expected to receive investment capital through the Japan International Cooperation Agency (JICA), about to sign its own funding agreement with the Vietnam Ministry of Finance. The remaining project—the first phase construction of the O Mon 3 thermal electric power plant—will need to wait for loans because of certain procedures as yet incomplete.

Four of the projects will enjoy a preferential interest rate of 0.2 percent/year. These include the construction of Cai Mep Seaport in Ba Ria-Vung Tau, the construction of the Nhat Tan bridge and urban railway route in Hanoi, and the upgrade of the Hanoi-HCM City railway route. However, all four of the preferenced projects must involve Japanese bidders in accordance with the special condition the JICA imposes on its economic partners.

Another project on climate change adaptation will also receive an incentive interest rate of 0.3 percent/year over a period of 30–40 years.

The remaining projects will accept the standard rate of 1.4 percent/year.

Japan resumed its ODA loans to Vietnam at the end of 1992 and is currently the Southeast Asian country’s largest ODA donor. So far, nearly 2,118 billion Japanese yen in ODA has been granted to Vietnam, primarily in the fields of infrastructure development and climate change response.