Japan’s ODA plays an important role

Japan International Co-operation Agency (JICA) chief representative in Vietnam Mutsuya Mori

How do you observe the role of Japan’s official development assistance (ODA) in Vietnam?

Vietnam’s government and JICA have placed priority on using Japan’s ODA loans for infrastructure investment. This has drastically improved the investment climate in Ho Chi Minh City and Hanoi. For example, Hanoi has inaugurated Terminal 2 of Noi Bai International Airport, Nhat Tan bridge, and the road connecting the bridge to the airport. This has improved the arterial transportation route from the international gate to the city centre. Similarly, the inauguration of Ho Chi Minh City-Dau Giay expressway in the city has made it easier to get from Dong Nai and Ba Ria-Vung Tau to the city.

Moreover, Japan’s ODA loans also benefit Vietnamese firms. For example, the value of contracts awarded to Vietnamese companies under Japan’s ODA loans has increased 2.4 times, from 31.192 billion yen ($252.65 million) in 2010 to 73.491 billion yen ($595.3 million) in 2014. Also, the technical transfer of sophisticated technologies from Japanese companies to Vietnamese partners has been widespread.

Regarding technical co-operation, we can see many successful cases. However, human resources development has seen the most prominent examples.

Since 2000, JICA has been implementing technical co-operation projects and promoting three strategic solutions: “Training process management”, “Employment support system development”, and “Skills evaluation system development”. These measures have tackled the constraints facing industrial human resource development by enhancing capacities, and setting up equipment at many educational and training institutions.

Also in the legal field, JICA has been implementing projects since 1996 to promote legal and judicial system reform through the draft of civil and commercial laws. Enhancing the capacities of central and local legal professionals will help realise the application of legal normative documents, in line with the 2013 Constitution and Party resolution.

Some say that almost all projects funded by Japan’s ODA are implemented by Japanese contractors, leaving a narrow room for Vietnamese companies. What is your comment on this?

ODA projects are sometimes criticised, as they require the use of contractors and technologies appointed by donor countries. However, in case of Japan’s ODA, loans where procurement from Japanese companies is necessary only applies to projects requiring highly advanced Japanese technologies. Those projects account for just 40 per cent of the total amount committed between 2010-2014, while the remaining 60 per cent have been unimpeded by restrictions on contractors' nationality.

The value of contracts awarded to joint-ventures between Japanese companies and Vietnamese companies has also increased. The Noi Bai International Airport Terminal 2 Project (Taisei and Vinaconex) and the Lach Huyen Port Construction Project (Sumitomo Mitsui and Cienco 4, Truong Son) are examples.

The transfer of Japanese technologies has enhanced the engineering and construction management capacity of Vietnamese companies.

What will be new in Japan’s ODA programme for Vietnam in the near future?

For the past twenty years, Vietnam has seen robust growth. However, in order to solve the negative impacts of that growth, support for agriculture and rural development plays an extremely important role.

JICA has been implementing the “Northwest region rural development project in Vietnam” since 2010. Within the framework of this technical co-operation project, JICA has encouraged local government entities to establish farmers’ voluntary associations for irrigation canal management, in tandem with the dissemination of a “Guideline for agricultural extension” and a “Guideline for irrigation management by farmers”.

What is your recommendation for Vietnam to improve its use of Japan’s ODA?

The proper selection of the project to be funded by the ODA loan is important. However, avoiding delays during the project’s implementation is the most efficient way. To avoid delays in implementation, transparency and third party evaluation are crucial.

JICA has been preparing to implement a measure that includes the disclosure of information in each step of projects funded by ODA loans, and that incorporates third party evaluation for projects with a prolonged procurement period.

With the above-mentioned solutions, information about the government agencies that create delays in their decision-making processes will be disclosed to the mass media and the public. Meanwhile, JICA is considering the use of third party evaluation for all projects that fail to sign a consultancy service contract within two years or a contractor contract within four years, following the signing of loan agreements.