Vietnam and Japan on May 21 signed three agreements worth 61 billion yen (US$442 million) to finance official development assistance (ODA) projects in Vietnam.

The meeting between Prime Minister Pham Minh Chinh and his Japanese counterpart Kishida Fumio on May 21. Photo: VGP

The ODA projects aimed at socio-economic development and recovery in the post-pandemic stage, worth 50 billion yen (US$362.4 million), development of public transport in the southern province of Binh Duong, and development of agricultural facilities in Tay Nguyen (Central Highlands) province of Lam Dong.

At the signing ceremony, Vietnamese and Japanese prime ministers agreed to discuss the potential of new-generation Japan-funded ODA projects.

Accordingly, Vietnam will receive flexible concessional loans with more incentives to serve the nation’s mass infrastructure development projects in urban railroad construction, green transition, digital transformation, healthcare, and the development of the North-South high-speed railroad.

The two governments will hasten the progress of ongoing key projects such as the Cho Ray 2 Hospital and the metro line No.1 in HCM City.

Prime Minister Pham Minh Chinh suggested that Japanese businesses invest in Vietnam’s green energy and technology sectors to improve the competitiveness of local enterprises and facilitate them to join Japanese and global supply chains.

He also recommended that the Japanese Government simplify the visa certification process for Vietnamese citizens, thus fostering travel, student exchange, and labor recruitment between the two nations.

The two government leaders also consented to promote further cooperation in national defense and security, human resources development, and technological transfers.

Japan will assist Vietnam in growing a self-reliant, resilient economy to foster bilateral trade relations.

They agreed it is important to maintain security and peace in the East Sea (known internationally as the South China Sea), stressing that all conflicts must be resolved regarding international laws.

In his part, Japanese PM Kishida invited PM Chinh to visit Japan and attend the ASEAN-Japan Summit held in December 2023.

Vietnam-Japan business forum

Japanese companies on May 21 proposed that the Vietnamese Government resolve issues in land price management, power supplies, and ease of administrative policies.

According to a representative of automobile manufacturer Mazda Corporation, since it cooperated with local manufacturer Thaco in 2011, the company has seen a strong increase in local market consumption. In 2022, the Thaco Mazda automobile manufacturing plant sold 40,000 cars in Vietnam.

The company suggested that Vietnam soon complete the legal framework for electric vehicles, facilitate a circular economy, and fight climate change.

An officer of semiconductor firm Rorze said that the company had invested a total of US$134 million into a Vietnam-based plant, which is the key to the company’s global robot production.

He said the Vietnamese Government should promote green energy and ensure sufficient, stable power supplies for production to meet the net zero emission in 2030.

Rorze officer said that power supplies are unstable in summer while land rentals keep rising, thus, their local operations are severely affected.

However, he said the company plans to expand its Vietnamese operations because the nation is among its key manufacturing hubs.

In his response, Prime Minister Pham Minh Chinh promised the Vietnamese Government would side with Japanese investors and facilitate their long-term development.

The Government will make tax reforms to support businesses, assist them in restructuring their debts, and seek to diversify the markets and supply chains to boost exports.

PM Chinh also pledged that local authorities would work to resolve problems related to employment and labor and guarantee social security for foreign investors to operate.

To Vietnam, Japan is now the largest ODA partner, the second largest partner in labor cooperation, the third largest partner in foreign investment and travel collaboration, and the fourth largest trade partner.

Japanese companies have poured a total investment of US$70 billion into more than 5,000 Vietnam-based projects. In return, Vietnam has had some 106 projects set up in Japan, worth a total of US$19.5 million.

In 2022, the Vietnam-Japan trade value was nearly US$50 billion.