In 1995, the Japan International Cooperation Agency (JICA) established a presence in Vietnam. In October 2008, JICA merged with the ODA Division of the Japan Bank for International Cooperation (JBIC) and assumed responsibility for implementing Japan’s ODA-funded projects in all three forms of cooperation: technical cooperation, non-refundable aid and ODA, or official development assistance. Currently, JICA is carrying out more than 100 projects in Vietnam, mainly focused on transport infrastructure, urban development, health, education, environmental protection and climate change.
Driving force for economic development
Mr Fumihiko Okiura, Deputy Chief Representative of JICA in Vietnam, said Vietnam and Japan have had a very good relationship since 1973 when the two countries established diplomatic relations. Japan’s ODA for Vietnam was resumed in 1992. To date, the amount of preferential loans has exceeded 2,000 billion yen. Japan is the largest ODA donor for Vietnam. This shows that Vietnam is an important strategic partner of Japan. In addition to project financing, Japan also provides ODA for Vietnam in the form of direct budget support, co-financed with the World Bank, for climate change response support programmes.
Via JICA, Japan has actively supported Vietnam in areas such as transportation, construction, health, energy and environment, while directing its particular focus to infrastructure development; capacity, institutional and policy building; and human resource training and development. Currently, Japan’s ODA for Vietnam is used effectively to contribute significantly to the development of Vietnam and promote mutually beneficial relations of Vietnam and Japan.
Currently, more Japanese companies are operating in Vietnam, especially those involved in ODA-funded projects, technology and experience transfer to Vietnam and infrastructure construction.
2013 was chosen as the Vietnam – Japan Friendship Year, to celebrate the 40th anniversary of diplomatic relations. During his recent visit to Vietnam, Japanese Prime Minister Shinzo Abe vowed to add 46.6 billion yen (US$500 million) of ODA for Vietnam, reconfirming the strong bilateral relationship and significantly contributing to Vietnam’s future socioeconomic development.
At the end of 2012, the amount of ODA capital pledged by the Government of Japan for Vietnam approximated 2,000 billion yen (equivalent to US$21 billion). Highly regarding the significance of newly signed agreements, representatives of the Ministry of Finance of Vietnam and JICA jointly affirmed that the cooperation between the Government of Japan and the Government of Vietnam in general, as well as the close and efficient cooperation between the Ministry of Finance of Vietnam and JICA in particular, has importantly contributed to socioeconomic development and infrastructure improvement in Vietnam.
The series of successfully invested and operated projects, including Pha Lai, Phu My and Ham Thuan – Da Mi thermal power plants; No. 5, No. 10 and No. 18 national roads; Bai Chay and Can Tho Bridges, is important evidence for the effective cooperation of the two countries over the past more than 20 years.
JICA President Akihiko Tanaka said that with the close cooperation of both sides, Japan’s ODA has been playing an effective role in Vietnam’s socioeconomic development. He added that in the coming time, he truly hopes to have specific discussions with Vietnam to consider possibilities and methods for Japan to effectively support necessary fields.
Focus on troubleshooting
Currently, the coordination between the Government of Vietnam and JICA in some projects, especially transportation projects, is not as effective as expected because site clearance troubles have held back ODA disbursement.
According to Mr Mutsuya Mori, JICA Chief Representative in Vietnam, the disbursement of JICA-funded transportation projects is very slow. The expected amount of loans for the fiscal year 2013 is 115 billion yen, but the actual disbursement is slow.
“Nearly all 20 transportation projects being funded by JICA are slow, including key projects like new National Road 3 connecting Hanoi and Thai Nguyen province, Nhat Tan Bridge, Terminal T2 at Noi Bai International Airport and Ho Chi Minh City – Long Thanh – Dau Giay Highway. From now until the end of the fiscal year, the amount of capital on balance is more than 100 billion yen. This is a very high value. To complete the disbursement plan, much effort and close coordination of all stakeholders is needed,” he said.
He cited three main reasons for sluggish capital disbursement in traffic projects. The first is lengthy site clearance problems. Currently, many projects have not completed site clearance even after years of deployment, thus affecting the entire schedule of projects. Typical examples are Nhat Tan Bridge, Nhat Tan – Noi Bai Highway, some bridges belonging to the second-phase Transport Credit Project and Ho Chi Minh City – Long Thanh – Dau Giay Highway. The second is the lack of counterpart funds. The final reason is slow and problematic contract finalisation, payment and management. Some projects have not fully settled payments for contractors, although they have been completed and put into operation for years like Bai Chay Bridge, Thanh Tri Bridge, and Ring Road 3. Many measures have been applied to accelerate the completion and operation of projects, but a progress reward regime has not been completed.
To resolve these difficulties, Vietnamese Transport Minister Dinh La Thang has stood out to direct clearance and accelerate ODA capital disbursement. He said, apart from investor-caused reasons, the direction of the Ministry of Transport for removing bottlenecks of projects is not really timely. The coordination between the Ministry of Transport and project management units with JICA is still slow. This weakness needs to be addressed in the last months of the year. “The Government has recently issued a resolution concerning the guarantee of enough counterpart funds for ODA projects. This is a very favourable condition to accelerate projects. The Investment Planning Department [under the ministry] must ensure enough counterpart capital for ongoing projects. Each deputy minister in charge of projects must work in detail with every investor to clarify causes and have thorough responses. The deputy minister in charge will take responsibility for delayed projects,” he concluded.