Japan announces $315mn in next-generation ODA for Vietnam’s green transition

The workshop, jointly held in Hanoi on Wednesday by the Vietnamese Ministry of Finance and the Japan International Cooperation Agency (JICA), focused on a program loan designed to promote green growth and strengthen climate resilience in Vietnam.

Deputy Minister of Finance Tran Quoc Phuong said the exchange of notes for the loan had been approved by both governments and they are expected to be signed later this month.

He said the Japanese government’s funding would support Vietnam’s green transition, advance sustainable development, and help deliver on international commitments, including the goal of net-zero emissions by 2050.

Japanese Ambassador to Vietnam Ito Naoki said the $315-million loan reflects Japan’s strong commitment to supporting Vietnam in developing its green growth, fulfilling its nationally determined contribution, and enhancing its capacity to respond to climate-related disasters and natural hazards.

“Above all, this program represents a potential framework for delivering next-generation ODA to Vietnam,” he said.

Kobayashi Yosuke, chief representative of JICA in Vietnam, said the loan is expected to be disbursed in 2026.

He noted that it took only eight months from the official request to reach an initial agreement between the two governments, reflecting a rapid response to urgent needs.

This contrasts with traditional infrastructure ODA loans, which often take years to move from proposal to agreement and whose disbursement depends on construction progress.

Kobayashi said the program’s core feature lies in its comprehensive and strategic approach, linking Japanese companies with advanced technology to Vietnamese authorities and relevant institutions.

The next-generation ODA package is expected to create a $315-million ‘market,’ combining Vietnam’s financial incentives with Japan’s technological capabilities.

This mechanism will allow Vietnamese agencies to partner with Japanese firms on concrete projects, improving policy implementation and execution.

It will also facilitate the transfer of Japanese technology to Vietnamese enterprises, supporting the development of both private and state-owned sectors in line with the government’s reform priorities.

Regarding climate change risks, Phuong told the workshop that Vietnam is among the countries most vulnerable to sea-level rise, underscoring the urgent need for financial resources to implement the national green growth strategy for 2021–30 with a vision to 2050.

Vietnam is estimated to require about $68.75 billion by 2030 to implement emission reduction measures under its environmental commitments.

Of the total, more than $24.7 billion, or 36 percent, is expected to come from domestic resources under the country’s NDC, while the remaining amount, or 64 percent, will rely on international support.

To help bridge the gap, Vietnam is seeking continued cooperation from foreign partners, including Japan, in financing, technology transfer, and human resource development.

“Japan has extensive experience in green transition and climate adaptation, and the effective implementation of this loan is expected to create further opportunities for cooperation between the two sides,” he said.

Japan is Vietnam’s largest provider of yen-denominated loans, with total lending reaching about 2,550 billion yen (over $16 billion) as of the end of fiscal year 2024, accounting for more than 26 percent of the government’s total foreign borrowing.

At the workshop, Duong Hung Cuong, deputy director of the finance ministry’s Department of Debt Management and External Finance, outlined a policy matrix for the $315-million loan comprising 25 actions jointly developed by agencies from both governments.

Eleven Japanese companies also shared ongoing and planned projects in Vietnam related to green growth and climate adaptation.

Among them, Idemitsu Vietnam introduced an initiative to cut CO2 emissions by optimizing fertilizer use using satellite data, while Tromso proposed producing biochar from agricultural and forestry by-products for soil application to absorb carbon and reduce greenhouse gas emissions.