Japan signs to provide Vietnam $422 million assistance

The Japan International Cooperation Agency (JICA) signed three loan agreements with the Government of Vietnam in Hanoi to provide an ODA loan of up to 60,983 million yen (roughly $423 million) in total.

The first agreement reaches $346.7 million for the general budget support program for the socio-economic recovery and development of Viet Nam post-covid-19 pandemic.

Vietnam’s economy still showed a good performance during the years of Covid-19 pandemic with its GDP growth rate at 8.02 per cent in 2022. However, the negative impacts of Covid-19 pandemic are more silent but tremendous as it undermines the strength and resilience of many economic and social resources, particularly on the vulnerable people and working forces.

In addition, for the very open economy of Vietnam with a trade/GDP ratio of about 180 per cent, amidst the slowdown of global growth, decline of global demand, phenomena of financial sector stress, and high inflation in major economies, challenges are still ahead for Vietnam to protect the vulnerable groups, keep good economic records and promote overall social development in post-Covid-19 years.

The low GDP growth rates recorded in quarter 1 and the first half of 2023 at 3.32 per cent and 3.72 per cent respectively suggested the importance and urgency of government interventions and public spending to stimulate the economy. The general budget support aims at providing the Government of Vietnam high concessional funding for implementation of the socio-economic recovery and development program in the post Covid-19 period which was passed by the National Assembly in early 2022.

The second ODA loan from Japan is worth $43.3 million. This amount is used for the public transport infrastructure improvement project in Binh Duong province, which has seen a significant increase in population and rapid urbanization.

The project will alleviate traffic congestion and enhance connectivity among cities by improving traffic infrastructure between Binh Duong New City and Suoi Tien Terminal of the Ho Chi Minh City Urban Railway Line 1, thereby contributing to the economic and social development of Binh Duong province.

Another $32.8 million loan is provided for the project for upgrading infrastructure for agricultural development in Lam Dong province (phase 1).

Lam Dong province is endowed with favorable natural conditions for agricultural development. The province leaders have determined to develop the province as an advanced agricultural center in the central highlands.

The project has been formulated to initially transform the agricultural sector in Lam Dong province through the improvement of infrastructure including a road network for enhancing the transportation of agricultural products, an irrigation system, and the Flower Collection Center for the overall goal of improving the income of farmers and industrialization of agricultural sector.

The project is a significant model for agricultural cooperation between Vietnam and Japan.

The signing of the three loan agreements marks another milestone to celebrate the 50th anniversary of the diplomatic relations between Japan and Vietnam.