Signing of Japanese ODA Loans with Vietnam From Crisis to Recovery:Toward Balanced Development

1. Today, JICA (President Sadako Ogata) signed a Japanese ODA loan agreement with the government of the Socialist Republic of Vietnam to provide up to a total of 25.822 billion yen for five projects. With a Japanese ODA loan agreement signed on November 10, 2009 for 119.791 billion yen for six other projects, this brings the loan total for fiscal 2009 to 145.613 billion yen for 11 projects.

2. Vietnam posted a high rate of growth from 2005 to 2007 that exceeded eight percent while successfully alleviating poverty (fig. 1): The percentage of the population classified as impoverished decreased from 37.4 to 16.0 percent between 1998 and 2006 (fig. 2), though the economic growth has decelerated due to the impact of the global financial and economic crisis that began in fall of 2008. Nevertheless, policy efforts taken by the Vietnamese government such as the implementation of economic stimulus measures through an expansionary fiscal policy have supported economic growth along with assistance from Japan that includes the Eighth Poverty Reduction Support Credit with Economic Stimulus Support; Vietnam’s real gross domestic product rate grew in 2009 by about 5.3 percent.

3. The Japanese ODA loan signed today is significant in that it will support Vietnam to move back to a path to recovery from the global financial and economic crisis while supporting balanced development. This will be done through the following two measures:

(1) Development in the North: Promoting Economic Growth through Improved Functioning of the Capital

Vietnam is the archetypal ASEAN nation, and as the international gateway to Vietnam’s capital of Hanoi, Noi Bai International Airport requires improvements to accommodate the increasing number of international travelers that economic development brings as well as to stimulate the development of Hanoi’s functionality as a capital (Terminal 2 Construction Project in Noi Bai International Airport (I)). Furthermore, improving access from Noi Bai to Hanoi is an indispensible step for maximizing the potential of the airport (Noi Bai International Airport to Nhat Tan Bridge Connecting Road Construction Project (I)). In addition to transportation infrastructure improvements, the integration of science, industry and technology will be promoted in Hanoi (Hoa Lac Hi-tech Park Infrastructure Development Project (E/S)), stimulating industry and economic growth in Vietnam.

(2) Development in the South: Boosting the Mekong Delta Region

As Vietnam is a long, narrow country running north and south, ensuring balanced development between the north and south regions is an important issue. The Mekong Delta Region in the south is divided by rivers, a topographical feature that makes road transportation difficult. Improving transportation efficiency is therefore of particular importance in the south. To that end, support will be provided to construct, repair and replace bridges along National Highway No. 1, the primary means of transportation for the region (Third National Highway No.1 Bridge Rehabilitation Project (II)andCuu Long (Can Tho) Bridge Construction Project (II)).

4. It is JICA’s policy to strengthen the coordination among Japanese ODA loans, technical cooperation, grant aid and other modes of aid while actively solving development issues in Vietnam.