Stringent regulations regarding foreign loans are influencing the disbursement of loans committed by lending organisations to carry out projects in Việt Nam, said Chief Representative of Japan International Co-operation Agency (JICA) Việt Nam Office Fujita Yasuo on Thursday. — VNA/VNS Photo

HÀ NỘI — Stringent regulations regarding foreign loans are influencing the disbursement of loans committed by lending organisations to carry out projects in Việt Nam, said Chief Representative of Japan International Co-operation Agency (JICA) Việt Nam Office Fujita Yasuo on Thursday.

Fujita Yasuo pointed out obstacles to JICA’s support provision, elaborating that the introduction of an annual quota on official development assistance (ODA) funding last year as part of the Vietnamese Government’s efforts to keep public debt under control resulted in a stall in money disbursement to pay several contractors on JICA projects.

Contractors were owed up 10 billion yen (US$91.6 million), of which a major part was from the ongoing Hồ Chí Minh City Urban Railway project, said Yasuo during a press conference on JICA’s activities in the fiscal year of 2016 and 2017.

“Failures in paying the contractors and hence the workers stopped the money flow in the society which was a real pity,” Fujita said.

“It is also not beneficial for Việt Nam when it wants to call for capital or issuing bonds as its credibility is already tainted.”

Fears over increasingly high public debt, which stood at 64.7 per cent of GDP in 2016, nearing the red line of 65 per cent, prompted the Government to tighten controls on foreign loans.

A governmental decree went into effect in May last year – Decree 16 on the management and use of ODA funding – making the approval of an ODA project more complicated, which has prolonged time spent on the projects, said Yasuo.

“We know that this is a common problem of other lenders like the World Bank or the Asian Development Bank,” he said.

“We will work with loan providers to ask the Government to fix the issue.”

In the fiscal year 2016 starting from April 2016 to March 2017, Japan pledged to provide Việt Nam 187 billion yen ($1.7 billion) and managed to disburse 175.6 billion yen ($1.6 billion). The disbursement amount was the second highest that Việt Nam received from Japan over the last seven years.

Japan planned to provide Việt Nam 130 billion yen ($1.19 billion) this year for five big projects, one of which is to strengthen the country’s maritime security.

“However, the funding depends on many factors, like Việt Nam’s actual demand considering the public debt context,” Fujita said.

Hà Nội urban railways

JICA is stepping up its efforts to resume the two urban railway projects in Hà Nội that have been up in the air for four years.

Out of the nine railway lines planned in the capital, railway Route 1 and Route 2 will be funded by Japan’s ODA.

Route 1 will run from Thanh Trì District’s Ngọc Hồi to Yên Viên in Gia Lâm District while Route 2 will connect Nội Bài international airport and the Thượng Đình area in Thanh Xuân District

Fujita said that it took up to four years for authorities to finalise the total investment amount.

“We are working with the authorities in order to start the bidding round as soon as this year,” he said. — VNS