(Japanese Note)


					Hanoi, March 31, 2003

Excellency,

	I have the honour to confirm the following understanding recently reached between the representatives of the Government of Japan and of the Government of the Socialist Republic of Viet Nam concerning a Japanese loan to be extended with a view to promoting the economic stabilization and development efforts of the Socialist Republic of Viet Nam:

1.	A loan in Japanese yen up to the amount of seventy-nine billion three hundred and thirty million yen (79,330,000,000) (hereinafter referred to as “the Loan”) will be extended, in accordance with the relevant laws and regulations of Japan, to the Government of the Socialist Republic of Viet Nam by Japan Bank for International Cooperation (hereinafter referred to as “the Bank”) to implement the projects enumerated in the list attached hereto (hereinafter referred to as “the List”) according to the allocation for each project as specified in the List.

2.	(1)	The Loan will be made available by loan agreements to be concluded between the Government of the Socialist Republic of Viet Nam and the Bank.  The terms and conditions of the Loan as well as the procedures for its utilization will be governed by the said loan agreements which will contain, inter alia, the following principles:

	(a)	(i)	The repayment period will be twenty (20) years after the grace period of ten (10) years;

(ii) The rate of interest will be one and eight-tenths per cent (1.8%) per annum;

(b)	Notwithstanding sub-paragraph (a) above, where a part of the Loan is made available to cover payments for the environmental portions of the projects mentioned in 5 and 6 of the List, then:

(i) 
the repayment period of the said part will be thirty (30) years after the grace period of ten (10) years;

(ii) the rate of interest of the said part will be seventy-five-hundredths per cent (0.75%) per annum; and

(c)	The disbursement periods will be five (5) years with regard to the projects mentioned in 1, 3 and 5 of the List, six (6) years with regard to the projects mentioned in 2 and 6 of the List and seven (7) years with regard to the project mentioned in 4 of the List from the dates of coming into force of the relevant loan agreements.

	(2)	Each of the loan agreements mentioned in sub-paragraph (1) above will be concluded after the Bank is satisfied of the feasibility, including environmental consideration, of the projects to which such loan agreements relate.

	(3)	The respective disbursement periods mentioned in sub-paragraph (1)(c) above may be extended with the consent of the authorities concerned of the two Governments.

3.	(1)	The Loan shall be made available to cover payments to be made by the Vietnamese executing agencies to suppliers, contractors and/or consultants of eligible source countries under such contracts as may be entered into between them for purchases of products and/or services required for the implementation of the projects enumerated in the List, provided that such purchases are made in such eligible source countries for products produced in and/or services supplied from those countries.

	(2)	The scope of eligible source countries mentioned in sub-paragraph (1) above shall be agreed upon between the authorities concerned of the two Governments.

	(3)	A part of the Loan may be used to cover eligible local currency requirements for the implementation of the projects enumerated in the List.

4.	The Government of the Socialist Republic of Viet Nam shall ensure that the products and/or services mentioned in sub-paragraph (1) of paragraph 3 are procured in accordance with the guidelines for procurement of the Bank, which set forth, inter alia, the procedures of international tendering to be followed except where such procedures are inapplicable or inappropriate.

5.	With regard to the shipping and marine insurance of the products purchased under the Loan, the Government of the Socialist Republic of Viet Nam shall refrain from imposing any restrictions that may hinder fair and free competition among the shipping and marine insurance companies.

6.	Japanese nationals whose services may be required in the Socialist Republic of Viet Nam in connection with the supply of the products and/or services mentioned in sub-paragraph (1) of paragraph 3 shall be accorded such facilities as may be necessary for their entry into the Socialist Republic of Viet Nam and stay therein for the performance of their work.

7.	The Government of the Socialist Republic of Viet Nam shall exempt:

(a)	the Bank from all fiscal levies and taxes imposed in the Socialist Republic of Viet Nam on and/or in connection with the Loan as well as interest accruing therefrom;

(b)	Japanese companies operating as suppliers, contractors and/or consultants from all fiscal levies and taxes imposed in the Socialist Republic of Viet Nam with respect to the income accruing from the supply of products and/or services to be provided under the Loan; and

(c)	Japanese companies operating as suppliers, contractors and/or consultants from all duties and related fiscal charges imposed in the Socialist Republic of Viet Nam with respect to the import and re-export of their own materials and equipment needed for the implementation of the projects enumerated in the List.

8.	The Government of the Socialist Republic of Viet Nam shall take necessary measures to ensure that:

(a)	the Loan be used properly and exclusively for the projects enumerated in the List; and

(b)	the facilities constructed under the Loan be maintained and used properly and effectively for the purposes prescribed in this understanding.

9.	The Government of the Socialist Republic of Viet Nam shall, upon request, furnish the Government of Japan and the Bank with information and data concerning the progress of the implementation of the projects enumerated in the List.

10.	The two Governments shall consult with each other in respect of any matter that may arise from or in connection with the foregoing understanding.

	I should be grateful if Your Excellency would confirm the foregoing understanding on behalf of the Government of the Socialist Republic of Viet Nam.

	I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration.










				        (Signed)	Norio Hattori
					Ambassador Extraordinary
					and Plenipotentiary of Japan
					to the Socialist Republic
					of Viet Nam








His Excellency
Mr. Vo Hong Phuc
Minister of Planning
and Investment
of the Socialist Republic
of Viet Nam

List


(Maximum amount
 in million yen)


1.	Saigon East-West Highway Construction	6,775
	Project (III)

2.	Third National Highway No.1 Bridge	5,013
	Rehabilitation Project

3.	O Mon Thermal Power Plant and 	21,689
	Mekong Delta Transmission Network 
	Project (III)

4.	North-South Submarine Fiber Optic	19,497
	Cable Link Project

5.	Ho Chi Minh City Water Environment	15,794	Improvement Project (II)

6.	Small-Scale Pro Poor Infrastructure	10,562
	Development Project


	Total	79,330

(Vietnamese Note)


					Hanoi, March 31, 2003

Excellency,

	I have the honour to acknowledge the receipt of Your Excellency’s Note of today’s date, which reads as follows:

“(Japanese Note)”


	I have further the honour to confirm on behalf of the Government of the Socialist Republic of Viet Nam the understanding set forth in Your Excellency’s Note.

	I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration.










				         (Signed)	Vo Hong Phuc
					Minister of Planning
					and Investment
					of the Socialist Republic
					of Viet Nam








His Excellency
Mr. Norio Hattori
Ambassador Extraordinary
and Plenipotentiary of Japan
to the Socialist Republic
of Viet Nam


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