Japan to Increase more Support to Vietnam

In 2010, the concern of Japan for Vietnam is the highest ever. The Japanese side actively carried out political activities with Vietnam, featuring Japanese Prime Minister Naoto Kan’s visit in October. Before that, Japanese ministers of industry and trade, and foreign affairs also visited.

 

Japan’s pledged ODA for the fiscal year 2010 is the largest ever, totalling US$1.8 billion.

 

ODA projects carried out in 2010 include Lach Huyen deepwater port (Hai Phong City), the second international terminal in Noi Bai International Airport, Nhat Tan Bridge, Nhat Tan - Noi Bai Highway, Da Nang - Quang Ngai Highway (a part of the North - South Highway), and Nghi Son power plant.

 

One problem last year was that Vietnam suffered heavily from natural disasters and floods, particularly devastating flooding in central Vietnam. This proves that Vietnam is seriously affected by climate change. Therefore, Vietnam’s response to climate change is very important and we care about it. A part of our US$1.8 billion aid will be funded to climate change response.

 

As regards the Japan - Vietnam Joint Initiative Programme, JICA sent many senior volunteers to work with collaborating agencies like the State Bank of Vietnam (SBV), tax authorities, the Ministry of Planning and Investment and Ministry of Agriculture and Rural Development to implement this programme.

 

ODA capital granted to Vietnam by the Government of Japan is divided into two categories. The first is soft loans for infrastructure projects and the other is technical assistance for improving the quality of human resources and the investment environment. In general, ODA projects have generated good results. Compared with African countries, Vietnam has a high ICOR ratio.

 

Japan-funded projects like bridges, seaports and power plants are playing their roles in promoting socioeconomic development in Vietnam, like attracting investment capital, reducing poverty and increasing export.

 

It is true that we encounter some difficulties in executing projects in Vietnam. It usually takes more than we have planned. When we start our projects, we often have site clearance problems, especially in big cities like Hanoi and Ho Chi Minh City. When we embark on construction, we need more time for bidding and disbursement mechanisms.

 

An example is the Nhat Tan Bridge project, which is divided into three smaller packages, namely, the northern bank and conducting road, the bridge body, and the southern bank and conducting road. The construction of the bridge body and the North Bank with conducting road is barely progressing because of incomplete site clearance. Worse, the site clearance for the South Bank and the conducting road is also jammed up. As a result, to date, no contractor has taken over this package. In the past year, we have worked with concerned authorities and units to push this project forward, but we were able to clear a small area of agricultural land. Slow progress has also caused great damage.

 

Two other projects of particular concern are the East - West Avenue and water environment improvement project, both in Ho Chi Minh City. The implementation always gets stuck with underground telecom cable, electrical line and water systems. The Ho Chi Minh City People’s Committee is responsible for handling the underground work but it is late in settling the problem. This forces us to wait. As you know, construction material prices are escalating day after day and the waiting time will lead to the shortage of finance. Thus, we have to prepare a compensation loan package for the shortfall.

 

ODA-fund project implementers are mainly large, prestigious companies in Japan. When there are difficulties, they always prove that they have completed their works as planned. Unfortunately, when they request payment, they have to wait very long for project evaluation. Thus, they always regard delayed payment as a grave risk in doing business in Vietnam. This leaves a bad impression on foreign businesses when they carry out projects in the country.

 

Normally, these projects are implemented by management boards but when difficulties arise, they must seek guidance from superior agencies or central or provincial/municipal authorities, and this work is very time consuming.

 

In the coming time, Vietnam needs to make every effort to address persistent difficulties like administrative procedures, minimise delays, and speed up project progress.

 

Apart from construction, the transfer of technology, management and operation of those projects is also very important. The role of private enterprises is key for this aspect. We think Vietnam should mobilise more capital from the private sector under the public - private partnership (PPP) model, a very suitable option for Vietnam in the near future. Taking Lach Huyen seaport as an example, works requiring complex technology like sea bridges, sea encroachment and wharf construction will be funded by ODA loans of the Government, and the installation and operation of handling equipment and machines will be carried out by private enterprises.

 

Trade within ASEAN will be liberalised in 2015 and Vietnam will have to prove its competitiveness if it wants to continue attracting foreign investment. The Government of Vietnam must take 2015 as a "warning" landmark because ASEAN trade will be totally liberalised and you will encounter great competition pressure from other regional countries.

 

To compete, Vietnam needs to focus more on improving infrastructures like highways, power plants, seaports and airports and perfecting human resources. As far as I am concerned, power shortage is common in Vietnam. Rotational power outrages also occur in industrial parks. If this is not solved, it will be a major obstacle to attracting investment.

 

As the largest donor, we will increase lending and training support for Vietnam to improve business and technical capacity, as well as the managerial capacity of Vietnamese business leaders.

 

Since Japan resumed aid to Vietnam in 1992, I had the opportunity to work here. Indeed, Vietnam has dramatic economic and social changes in the past 18 years. I am lucky enough to witness these changes. I am really excited.

 

My wife and I celebrated Tet (Lunar New Year) twice in Vietnam. I still vividly remember my impression of Tet in Vietnam 18 years ago - the sound of firecrackers. Now, Vietnam does not set off fireworks but the atmosphere is always cheerful. During Tet days, I visited my friends’ families and shared Tet with them. This reminded me of my childhood in Japan when my family and I went to visit and hang out with our friends. We are different in Tet foods and arrangements, but we also cook and enjoy foods together and visit pagodas, and I feel the cosy atmosphere here. I think Vietnam is the Southeast Asian country most similar to my country.