Vietnam’s State President Vo Van Thuong (left) held talks with Japan’s Prime Minister Kishida Fumio, photo VNA

During an official visit to Japan by Vietnamese State President Vo Van Thuong last week, he and Japanese Prime Minister Kishida Fumio confirmed the elevation of the Japan-Vietnam relations to a comprehensive strategic partnership, thereby reaffirming both countries’ endeavours to bring the cooperation in all areas to new heights.

Japan stated its continued support of Vietnam’s journey into an independent and self-reliant economy that deeply engages in international integration, with the goal of becoming a developed country by 2045.

As an example of such efforts, the Economic Research Institute for ASEAN and East Asia has submitted a policy proposal called “Vietnam 2045” to both leaders for formulating policy towards the industrialisation and modernisation of Vietnam.

Japan and Vietnam have also underscored the further ties in official development assistance (ODA).

“With the shared recognition that Japan’s ODA to Vietnam has significantly contributed to Vietnam’s socioeconomic development for more than 30 years, the two leaders will further strengthen cooperation to reinvigorate Japan’s ODA and promote large-scale quality infrastructure development projects in Vietnam,” read a joint statement released during the visit.

The two leaders welcome the prospect that the amount of yen loans from Japan this fiscal year could exceed ¥100 billion ($674.15 million) for the first time since 2017.

The two leaders also discussed the acceleration of efforts to resolve outstanding difficulties in implementing Japan’s ODA projects, including technical cooperation in Vietnam, and expressed their intention to enhance the promotion and implementation of Japan’s new ODA projects under Japan’s new Development Cooperation Charter. This covers areas such as infrastructure, digital transformation, green transition, climate change response, and healthcare.

According to the Japan International Cooperation Agency (JICA), from April 2022 to the end of March 2023, the total value of ODA loan commitments was ¥18.9 billion ($126.1 million), exclusive of investment financing for the private sector. The value of ODA capital is ¥4.7 billion ($31.36 million) for technical cooperation projects and ¥700 million ($4.67 million) for projects with non-refundable aid projects. The total number of projects with Japanese ODA mount to over 100. Japan is currently the largest ODA provider to Vietnam, with about $30 billion.

“ODA aims to contribute to Vietnam’s national socioeconomic development. Nevertheless, for related projects to be implemented effectively, it is important that the recipient must have clear regulations and quick procedures,” Sugano Yuichi, chief representative at JICA Vietnam told VIR.

Delays in the Vietnamese government’s internal approval procedures can cause the total project cost to increase due to inflation, exchange rate fluctuations, and increased prices of materials during the project’s delay, Yuichi added.

“So, JICA along with other donors such as the World Bank and Asian Development Bank, are currently asking the Vietnamese government to take improvement measures. We hope that the government will improve complex and overlapping procedures, and reduce the number of documents that need to be submitted. Additionally, on-lending regulations should also be changed,” Yuichi explained.

Sharing recognition of the need to promote major economic projects, both nations last week said they would identify those projects at the earliest possible timing, thereby exploring the possibility of establishing a Japan-Vietnam coordinating working group led by both governments in Vietnam to accelerate identified major projects.

Vietnam and Japan have also confirmed that they will promote cooperation in smart power grids, smart cities, power market development, and localisation of the energy industry. Vietnam will encourage Japanese businesses to participate in the liquefied natural gas power market in Vietnam in compliance with the country’s law and promote technology transfer and human resource development in the market.

The Japanese government will also encourage its strategic investors to boost activities in Vietnam in clean energy and renewable energy, and offer support in improving its agricultural value chains via technology and improvement in capacity in distribution and processing. Both sides will also to work on completing procedures for Vietnam’s pomelos to enter the Japanese market and for Japanese grapes to be marketed here.

According to Vietnam’s Ministry of Planning and Investment, Vietnamese financiers have put money into just over 100 projects in Japan, with total registered capital of $19.5 million. Vietnam has pulled in nearly 5,230 Japanese investment projects registered at $71.4 billion in total, ranking third in all countries and territories worldwide.