The decision was made three months after Japan announced a halt to ODA to Vietnam due to a graft scandal at Pacific Consultants International (PCI) involving several Japanese and Vietnamese officials.

Even though the newly committed amount is lower than the 2007 figure, it is significant to Vietnam given the current context that many Japanese car manufacturers need financial support from their government to survive the global financial and economic woes.

In a recent interview granted to VOV, the spokesperson of the Foreign Ministry, Le Dung, said that Japanese ODA has helped boost key socio-economic development projects in Vietnam and facilitate Japanese business operations in the country.

He said that the decision has resulted from the close cooperation between the two governments as well as their determination to combat corruption in Japanese ODA-funded projects and increase the effective use of aid in Vietnam.

In another interview granted to the media, Minister of Planning and Investment Vo Hong Phuc confirmed that the Vietnamese government had shown its firm resolve to bring the PCI case to light by prosecuting and arresting two officials who were allegedly involved in the case.

The firm resolve has won trust of the Japanese Government and people.

Yasuhisa Kawamura, a spokesperson of the Japanese Foreign Ministry, said that his government attaches great importance to friendship and cooperation with Vietnam and considers it one of the priority countries in its Asian diplomatic policy. He said that the PCI case was just a minor error which will not affect bilateral relations towards a strategic partnership.

According to Nguyen Duc Kien, member of the National Assembly Committee for Economic and Budgetary Affairs, combating corruption requires cooperation between the donor and the aid recipient. That’s why the two countries established a joint working group to wrap up the PCI graft scandal.

“Both countries have learnt a valuable lesson from the scandal about increasing dialogues before signing any ODA agreements and seeking the best management methods,” said Mr Kien. “In addition, the two countries should develop a joint cooperation mechanism to monitor the disbursement of ODA, including the appointment of foreign consultants and contractors.”

The World Bank, which is a major donor to Vietnam, said that Japan’s decision to resume its ODA will help the southeast Asian nation overcome present difficulties while capital resources are limited.

The acting WB country director for Vietnam, Martin Rama, underlined the need to harmonise procedures between the donor and the aid recipient. He pointed to the fact that the project management and implementation system in Vietnam remains overlapping and too weak to ensure that these projects will be free from corruption.

He said that in the future Vietnam will have to perfect this system, helping to speed up the implementation of projects.

The Japanese government’s decision is also expected to benefit Japanese businesses and equipment suppliers involved in ODA-funded projects in Vietnam. This is mutually beneficial cooperation.

Since Japan began granting ODA to Vietnam in 1991, it has topped the list of the country’s ODA donors, with its committed amount increasing annually. Development aid from Japan has reached nearly US$14 billion so far, making up 30 percent of the total amount committed by foreign donors.

The US$900 million for 2009 will mainly be used for the Hanoi metro project, the second phase of the Hanoi sewage system, the upgrade of the sewage system and the water environment in Ho Chi Minh City, and a project to upgrade provincial bridges and roads.