JICA: Signing of Japanese ODA Loan Agreements with Viet Nam

OREANDA-NEWS. On March 31, the Japan International Cooperation Agency (JICA) signed Japanese ODA loan agreements with the Government of the Socialist Republic of Viet Nam to provide loans of up to a total of 95.167 billion yen for assistance for four projects.

Since the 1990s, Viet Nam has maintained steady economic growth (see reference 1). By 2010, Viet Nam achieved status as a lower middle-income country, which had been a national goal, and successfully reduced its poverty rate.* In a process that began last year, tariffs are being abolished in stages within the ASEAN region. In order to maintain sustainable economic growth while progressing toward the goal of industrialization by 2020 under these new circumstances, Viet Nam must make economic structural and governance organizational reforms, including improvements to the financial system and to infrastructure to improve the investment environment. Taking these steps will create mid- to long-term macroeconomic stabilization and strengthen international competitiveness. Viet Nam must also address its vulnerabilities by raising the income of rural residents who make up about 70 percent of the country’s population and have a higher poverty rate than urban regions, by improving public sanitation, which worsens with urbanization, and by alleviating and adapting to the effects of climate change.

Given this situation, these Japanese ODA loans will provide support for building the economic infrastructure essential to strengthening Viet Nam’s competitiveness, and for promoting environmental improvements to overcome the country’s vulnerabilities. The features of the four projects are summarized below.

(1) Support for economic infrastructure to strengthen international competitiveness
The North-South Expressway Construction Project (Da Nang – Quang Ngai Section) (III) will enhance the efficiency of transportation and goods distribution near Da Nang, which is a center of industry and goods distribution for central Viet Nam, and thereby meet the increase in transportation volume. The Lach Huyen Port Infrastructure Construction Project (III), which covers one project for the port and one for roads and bridges, will construct an international deep-water mega-port and related facilities in Hai Phong on the northern coast of Viet Nam, making it possible to meet the rising volume of cargo and to accommodate the larger size of vessels used in maritime transportation. The projects will promote economic development in Viet Nam and strengthen the country’s international competitiveness.

(2) Support to fight climate change toward overcoming vulnerabilities
The Support Program to Respond to Climate Change (VI) will provide support for alleviating and adapting to climate change and for solving cross-field issues through fiscal assistance and policy dialogue in Viet Nam, one of the world’s most susceptible countries to the effects of climate change.

JICA’s policy is to dynamically implement projects that address development issues in Viet Nam while coordinating JICA’s various types of assistance, which include Japanese ODA loans, technical cooperation and grant aid.

* According to the “Country Report: 15 years achieving the Viet Nam Millennium Development Goals” by the United Nations Development Programme, the poverty rate in Viet Nam dropped from 18.1 percent in 2004 to 8.4 percent in 2014.

Reference 1. Growth Performance of Viet Nam