|
RoK ODA pledge’s milestone
A framework agreement signed this month between Vietnam and South Korea covering $1 billion in preferential loans for 2008-2011, marked a milestone in bilateral economic relations, South Korea ambassador to Vietnam Im Hong Jae talks about it.
What are the key points of this framework agreement?
This framework agreement contains two main points. The first will ease the procedures and shorten the processing time of preferential loans, the second, in a more important and profound facet, will confirm Korean government’s commitment to expanding loans from the Economic Development Cooperation Fund (EDCF) to Vietnam, making the country South Korea’s largest ODA recipient.
Under the framework agreement, assistance to Vietnam from the Korean government will increase to $1 billion in 2008-1011. It means that there will be an average of $250 million from EDCF to Vietnam each year during the period. In the past, the amount was only around $30 million. Obviously, this framework agreement marks a milestone in relations between the two countries.
In the context of expanding the Korean government’s ODA, which matches the nation’s economic power and its standing in the international arena and especially since Vietnam and South Korea established a “comprehensive partnership in the 21st century”, economic ties between the two countries have been strengthened.
What are the prioritised areas for the loans?
According to the framework agreement, the money will be focused on economic infrastructure including energy and transport and social infrastructure such as environment, healthcare and vocational training. Of which, transport will receive 67.5 per cent of the funds and water supply and drainage will get 13.2 per cent. The prioritised areas are chosen based on Vietnam’s economic development strategy and the country’s Socio-Economic Development Plan (SEDP) for 2006-2010.
In addition, we are also looking to assist large-scale projects such as highways and those with high economic yield potential. The Hanoi-Haiphong highway, which is set to be a commodity hub for ASEAN and the Southeast of China, is an example.
How will the money be disbursed?
As it is planned for four years, the framework agreement has a mid-term and comprehensive vision. Each project will be conducted according to its own form. The disbursement will start after the selection of beneficiaries and the completion of preparations under the agreement. It will take one year from selection to the implementation of a project.
In your opinion, why has South Korea chosen Vietnam to be its biggest ODA recipient?
Our ODA is limited. In order to maximise the effectiveness of the money, South Korea applies the EDCF policy in every receiving country under the method of “selecting and focusing”. As Vietnam has big potential for economic cooperation, it becomes very important for South Korea’s development assistance.
Vietnam has a stable political and social environment and has been lauded by the international community for its efforts in poverty reduction. It has maintained high economic growth and joined the World Trade Organization in November, 2006. In the near future, Vietnam will speed up economic development reforms.
I could say that, the framework agreement is a “meeting” of the needs of the two countries, the need for capital to develop Vietnam and the need to expand ODA loans, fitting the national economic potential and international position of South Korea.
Will FDI flows from South Korea go together with an expansion of ODA from the country into Vietnam?
ODA, including EDCF, is a source focused on assisting projects on infrastructure development and public facilities. It’s hard to say if there will be a connection between our ODA and FDI from our non-state companies. However, one of the important functions of ODA is to act as catalyst for non-state development projects. In my opinion, projects on infrastructure development such as road, sea ports and electricity will be followed by FDI projects.
VNN
|
