The government on Monday formalized an Official Development Assistance package for Vietnam, including up to 88 billion yen in yen-denominated loans, to support Hanoi’s market-oriented reforms under the “Doi Moi” (renovation) policy.

The aid package was announced after a top-level meeting Monday in Tokyo between Prime Minister Keizo Obuchi and visiting Vietnamese Prime Minister Phan Van Khai, who arrived in Japan Sunday for a three-day official visit.

The aid comes under the framework of the so-called Miyazawa plan — a $30 billion fund proposed in October by Finance Minister Kiichi Miyazawa to help Asian countries hit by the regional economic crisis.

In a joint statement issued after Monday’s talks, the Japanese side said it highly values Vietnam’s achievements under the Doi Moi policy and pledged further support for Hanoi’s industrialization and modernization through its integration into the international community.

In response, the Vietnamese side reaffirmed its strong commitment to accelerating the reform process. Khai expressed his gratitude for Japan’s continuous support and reassured further efforts toward economic reforms, according to the statement.

The ODA loan, to be provided via the government-backed Overseas Economic Cooperation Fund and with a limit of 88 billion yen for fiscal 1998, will be used to finance nine projects, related mainly to energy development and enhancing the transport sector, Foreign Ministry officials said.

Of the nine projects, three are for constructing thermal and hydroelectric power plants, four for building a tunnel, bridge and roads, one for regional development and one for financing small enterprises, the officials said.

In dealing with a recent decrease in Japanese investment in Vietnam, the two prime ministers agreed to begin discussions aimed at concluding a bilateral agreement to promote and protect foreign investment, the joint statement said.

They also agreed that Japan will continue to take various steps to offer technical assistance to Vietnam in the area of science and technology, especially in promoting forest conservation and plantation, it said.

Meanwhile, Japan will extend cultural grants-in-aid to Vietnam, worth some 80 million yen, for improving a history museum and a cultural research institute in the country, it said.

During his meeting with Trade Minister Kaoru Yosano earlier in the day, the Vietnamese prime minister pledged to cut back on Ho Chi Minh’s red tape and improve the tax system to better facilitate Japanese investment.

At the same time, Phan urged Yosano to encourage reluctant Japanese businesses to invest in Vietnam.

Yosano said he will consult Japanese businesses about the proposal and explained to Phan that Vietnam’s complex investment, procedures peculiar to socialist states, are barring Japanese investment.

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