Japan Bolsters Vietnam’s Investment Environment

September 16, 2013 Posted by Vietnam Briefing Reading Time: 2 minutes

Sept. 16 – Japan will extend an Official Development Assistance (ODA) loan to Vietnam this year worth US$500 million, according to Japan’s Foreign Minister Fumio Kishida. The announcement was made this week during the fifth meeting of the Vietnam-Japan Cooperation Committee, a forum for bilateral cooperation chaired by the foreign ministers of both countries.

The US$500 million ODA loan has been earmarked for infrastructure and educational projects in Vietnam as a key component of the Joint Vietnam-Japan Initiative. The initiative, established in 2003, brings together both public and private sector leaders in an effort to strengthen Vietnam’s investment environment.

The Joint Vietnam-Japan Initiative utilizes the public-private partnership (PPP) model to provide support to Vietnam’s service and retail industries as well as funding for infrastructure projects. It also seeks to address macroeconomic concerns affecting Vietnam, such as inflation control and exchange rate stabilization.

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In exchange for its assistance, Japan receives priority investment incentives in economic zones and other investment benefits.

According to the report on the Joint Vietnam-Japan Initiative, “the Action Plan resulting from this Joint Initiative will benefit not only the Japanese investors, but also other foreign and local investors alike.”

Japan is currently the number one country investing in Vietnam, accounting for 50 percent of Vietnam’s total FDI in 2012, and currently overseeing 1,990 projects in the country.

The Ho Chi Minh City Export Processing and Export Zones Authority (HEPZA) has already approved licenses for over 20 Japanese projects this year with a total investment value of US$183 million, representing 54 percent of the city’s FDI inflow.

This week, three more large Japanese projects were approved by HEPZA for a total investment of US$166 million over the development’s lifespans. The projects, which will be located in the city’s industrial and processing zones, will include the development of warehouse infrastructure for small and medium-sized enterprises and investment in precision engineering facilities.

Vietnam’s economy is expected to grow by 5.3 percent this year before reaching a GDP growth rate of 6 percent by 2015, according to Vietnam’s National Financial Supervisory Commission. The World Economic Forum has also increased the country’s ranking on its Global Competitiveness Index.

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