GRIPS Development Forum > Diversifying PRSP > Ch. 5 Japanese Development Cooperation in Vietnam

Economic Reform Support Loan ("New Miyazawa Initiative")

This is Japan's first, free-standing structural adjustment loan, whose conditionality was designed through bilateral policy discussions between Japan and Vietnam. This was a quick-disbursing loan, aimed at improving the balance of payments pressure and supporting the economic reform efforts by the Vietnamese government. The Exchange of Notes and the Loan Agreement were concluded in September 1999, and the loan amounting to 20 billion yen was fully disbursed in 2000. The Japan Bank for International Agency (JBIC) was the executing agency for the Japanese side.

Based on the agreements at bilateral policy discussions, the "New Miyazawa Initiative" supported a reform program covering three areas: (i) the formulation and publication of a program to promote private sector development; (ii) the diagnostic auditing of the selected large-scale SOEs; and (iii) the conversion of all non-tariff barriers into tariffs. In particular, reflecting Japan's real sector concern, the private sector development program ((i) above) aimed to promote private business activities in three areas and published a detailed action plan. In light of the importance to sustain these efforts, Japan has carefully monitored the reform progress, including the implementation of the action plan.

Conditionality in Economic Reform Support Loan
("New Miyazawa Initiative")
(Exchange of Notes/Loan Agreement concluded in 1999, 20 billion Yen)

Private-Sector Promotion Program

  1. General principles to promote the private sector
  2. Improvement of financial environment
    • Establishment of a new credit facility that will provide credit to private enterprises;
    • Creation of a partial guarantee scheme for small- and medium-size private enterprises;
    • Improvement of collateral system;
    • Other measures.
  3. Improvement of business environment
    • Removal of entry barriers against private enterprises;
    • Improvement of customs system;
    • Improvement of business environment for foreign enterprises;
    • Enhancement of transparency of rules and simplification of procedures;
    • Other measures.
  4. Reinforcement of organizations to promote the private sector.

Diagnostic audit of the 100 large SOEs to be conducted under the international accounting standard by independent auditors with international standard.

Convert non-tariff barriers into tariffs, accelerating the schedule of tariffication, and introducing new instruments consistent with the WTO rules to protect domestic industries.
The Government of Vietnam will continue to consult with the Government of Japan, international financial institutions, and other donors on the schedule of tariffication.

Source: Japan-Vietnam Joint Press Release dated May 16, 1999, Japan's Financial Support for Vietnam's Economic Reforms.