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Japanese ODA capital remains abundant for Vietnam
By Thuy Dung
Thursday,  Oct 18, 2018,18:37 (GMT+7)

Japanese ODA capital remains abundant for Vietnam

By Thuy Dung

The metro line No. 1 project in HCMC is funded by Japanese ODA. Vietnam can continue to access Japan's ODA loans - PHOTO: THANH HOA

HANOI – Vietnam can still access Japan’s official development assistance (ODA) loans in decades to come, but with fewer incentives, according to a recent report by the Japan International Cooperation Agency (JICA).

Regading complaints that the requirements and interest rates of Japan’s ODA loans will no longer be attractive to Vietnam when the country becomes a middle-income nation, the report by JICA states that the lending requirements are based on the income levels of borrowing countries.

As such, the interest rate on loans for Vietnam will increase slightly, from 1.4% to 1.45% for nonbinding loans. In addition, grants remain substantial.

Since July last year, multiple donors have stopped offering their preferential ODA loans for Vietnam.

JICA, on the other hand, will continue offering ODA loans to Vietnam until the country achieves upper-middle-income status, with average income per capita exceeding US$12,200 per year.

The agency also stressed that Japanese ODA loans are preferential, with low interest rates and a long repayment period of 30-40 years, which cannot be offered by private financial companies.

Vietnamese borrowers can even choose the most appropriate kind of loan for their projects as well as the payback period. Most borrowers choose fixed interest loans with the longest payback period.

JICA respects borrowers’ choices and does not impose floating interest rates on Vietnam, according to the report.

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