Wednesday, February 26 2020


Japanese ODA approved for transport, environment plans

Update: April, 02/2016 - 09:00
Work underway on part of the Lạch Huyện Port’s infrastructure project in the northern port city of Hải Phòng. The project is funded by Japanese ODA and the Vietnamese Government’s counterpart capital.- VNA/VNS Photo Huy Hùng

HCM CITY (VNS) — The Japan International Cooperation Agency (JICA) has signed agreements with Vieät Nam to provide Official Development Assistance (ODA) loans worth a total of 95.17 billion yen (US$847.39 million) to develop four projects.

The ODA loans are expected to enhance the country’s competitiveness and promote environmental improvements.

The projects include the North-South Expressway Construction Project Đà Nẵng – Quảng Ngãii section), which will enhance the efficiency of transportation and goods distribution near the central city of Đà Nẵng

The Lạch Huyện Port Infrastructure Construction Project, including one project for the port and another for roads and bridges, will include a new international deep-water mega-port and related facilities in the northern port city of Hải Phòng.

In addition, the Support Programme to Respond to Climate Change will provide support for adapting to climate change and solving cross-field issues through fiscal assistance and policy dialogue in Vieät Nam, one of the world’s most susceptible countries to the effects of climate change.

Most JICA-supported projects address development issues in Việt Nam.

Japan is among the countries that provide the most assistance to Việt Nam, in the form of ODA loans, technical co-operation and grant aid.

Việt Nam loses its access to the concessional ODA

Owing to its rising per capita incomes and ability to raise funds in the international market, Việt Nam will lose its access to the concessional part of its official development assistance (ODA) financed from the Asian Development Fund (ADF) sometime in the next few years, according to Eric Sidgwick, ADB Country Director for Việt Nam.

"However, equivalent or even higher amounts will be available to continue financing Việt Nam's development from ADB's Ordinary Capital Resources (OCR) window. Indeed, ADB stands ready to scale-up its overall financial assistance to Việt Nam in the coming years," said Sidgwick at the launch of the Asian Development Outlook (ADO) 2016 on Wednesday.

Việt Nam now benefits from two types of lending from ADB including OCR and ADF. The ADF is aimed at countries that are less well-off than countries that are eligible for only OCR, he said.

To be eligible for ADF, a country needs to meet a number of criteria, including gross national income (GNI) per capita and credit worthiness. Việt Nam already reached the GNI threshold in 2010 and has borrowed on international markets since 2005.

Because global interest rates are low right now, the actual interest rate on ADF is a little bit higher than that of OCR, but the maturity for its payment is longer. Therefore, ADF is still a good option for Việt Nam to borrow from ADB.

The decision to stop ADF for Vieät Nam has to be based on the assessment of where Vieät Nam is now and what prospects look like for Việt Nam. But at some point, Việt Nam will graduate from ADF.

The timing of that is scheduled to be around January 1, 2019. It comes shortly after the WB’s graduation from IDA, which is set for July next year, Sidgwick noted, adding that this is not a decision of ADB, but of ADB’s shareholders.

According to a Government report from 2011-15, the total value of ODA and preferential loans reached US$26.4 billion with an increase of 5.36 per cent from the previous period. The total ODA disbursement reached about $23.22 billion in comparison with $13.86 billion during the term from 2006-10. — VNS

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