Vietnam pushes green transition with Japan’s $320 million ODA support

Japanese Ambassador to Vietnam Ito Naoki

The “Programme Loan for Green Transformation towards Green Growth and Climate Resilience” (GX-DPL) with help the country engage with its sustainability goals.

Pursuing green growth and climate adaptation has become an essential global agenda as the world faces worsening environmental degradation, climate change and the depletion of finite resources.

With a commitment to achieving net-zero emissions by 2050, Vietnam has been strengthening its legal and policy frameworks to turn this goal into reality. Japan, through coordinated efforts by multiple agencies, including the role of the Japan International Cooperation Agency (JICA) in Vietnam, continues to support the country on this path.

Speaking at the opening, Japanese Ambassador to Vietnam Ito Naoki highlighted the GX-DPL programme loan as a strong demonstration of the Japanese government’s commitment to supporting Vietnam’s green transition.

The programme aims to help Vietnam achieve its nationally determined contributions while enhancing resilience to increasingly severe climate-related disasters.

It also represents a flagship example of next-generation official development assistance (ODA), featuring streamlined preparation processes, faster disbursement and a strong focus on achieving development outcomes through effective policy design and resource mobilisation.

Ambassador Ito said that under the leadership of General Secretary To Lam, Vietnam was advancing wide-ranging reforms towards a new era of development. The Japanese government and business community strongly support Vietnam’s reform agenda, particularly in digital transformation, building a data-driven society and modernising the economy through innovation.

He stressed that the GX-DPL loan is not merely a traditional financial instrument, but the first initiative of its kind globally under Japan’s ODA framework.

It is designed to implement projects tailored to Vietnam’s needs in green growth and disaster risk reduction, leveraging advanced Japanese technologies such as AI and satellite observation data.

“The signing of this programme loan is not the end, but the beginning of new initiatives and proactive efforts towards green growth and net-zero in Vietnam and the Asia Zero Emission Community,” the ambassador said.

Deputy Minister of Finance Tran Quoc Phuong

At the event, Deputy Minister of Finance Tran Quoc Phuong noted that Vietnam was among the countries most vulnerable to climate change and rising sea levels. In recent years, the country has experienced increasingly frequent and severe storms and floods, causing significant socioeconomic losses.

In response, the government has adopted the National Green Growth Strategy for 2021-2030 and beyond The strategy aims to restructure the economy alongside transforming the growth model, delivering economic prosperity, environmental sustainability and social equity, while contributing to global efforts to limit temperature rise.

However, Vietnam faces substantial financial needs to achieve these goals. According to expert estimates, the total funding required for emission reduction measures across sectors by 2030 is approximately $68.75 billion. Of this, around 36 per cent is expected to come from domestic resources, while about 64 per cent will need to be mobilised from international partners.

“To secure these resources, Vietnam hopes that international partners, including Japan, will continue to provide support in finance, technology and human resources,” Deputy Minister Phuong said.

The Vietnam-Japan Comprehensive Strategic Partnership has entered its third year since being upgraded in late 2023, with cooperation across all fields continuing to expand and deliver tangible results. Economic cooperation remains a central pillar of bilateral ties.

During the visit to Vietnam by Japanese Prime Minister Ishiba Shigeru in April 2025, the two countries reaffirmed their commitment to deepening cooperation towards a new era, including revitalising Japan’s ODA flows and exploring collaboration in key areas such as green transition, digital transformation and innovation.

Building on this shared understanding, in 2025, the Ministry of Finance, in coordination with the Japanese Embassy and JICA, developed a ¥50 billion programme titled “Budget Support for Green Transition towards Green Growth and Climate Adaptation”. The programme aims to support the implementation of Vietnam’s strategies and policies in these areas.

Following close cooperation between both sides, the exchange of notes for the programme loan has now been approved by the two governments and is expected to be signed this month.

This marks a significant step in translating high-level commitments into action, encouraging “next-generation ODA” characterised by more concessional terms, simplified procedures and greater flexibility. The programme will support one of Vietnam’s four priority areas, green transition and climate resilience, while strengthening bilateral relations.

“Japan has extensive experience and success in green transition and climate adaptation. I believe the successful implementation of this programme will open up new opportunities for cooperation between the two sides, starting from today’s workshop,” the deputy minister said.

Several Japanese companies operating in green transition and climate adaptation attended the workshop, where they shared their initiatives. The presentations by companies and experts reflected Japan’s comprehensive efforts, helping to expand the space for cooperation across national borders as well as between public and private sectors.

Legislation gives government flexibility for loan guarantees Vietnam's revised Law on Public Debt Management gives the government greater flexibility in granting loan guarantees, allowing the ceiling to rise above annual GDP growth and widening access to official development assistance (ODA) and concessional financing.

MoF workshop highlights mounting concerns over ODA on-lending costs Vietnam continues to rely on foreign financing to support growth and modernisation, but longstanding issues in the on-lending system are prompting calls for reform.

ODA prioritises high-impact transformative projects Prioritising the allocation of official development assistance and concessional foreign loans to key projects with strong spillover effects is central to mobilising, managing and utilising concessional financing for 2026-2030.