Japan's $266 million loan for Cambodia’s road improvements to boost regional connectivity

26, Mar. 2020

National Road No.5 in Poipet (NNA)
National Road No.5 in Poipet (NNA)

BANGKOK, NNA – The Japanese government will provide two loans amounting to 29.417 billion yen ($266 million) to Cambodia to carry out extensive improvements to an arterial road to boost transportation and facilitate the increase in cross-border logistics with neighboring Thailand.

The loans will fund two projects covering three sections of National Road No. 5 in the central and eastern regions of the Southeast Asian country, Japan’s Ministry of Foreign Affairs said in a statement on Tuesday.

The arterial thoroughfare serves the booming Southern Economic Corridor, which stretches from Myanmar through Thailand and Cambodia to Vietnam in the Mekong region.

To be completed in March 2022, one project will enhance logistic efficiency between the Prek Kdam and Thlea Ma’am sections along National Road No.5, a stretch which connects the Phnom Penh capital and the Thai border.

Apart from road refurbishments, new bypasses will be constructed, according to Japan International Cooperation Agency (JICA) which signed the loan agreements with the Cambodian government.

(NNA)
(NNA)

The second project will see similar improvements to the segments between Thlea Ma’am and Battambang as well as Sri Sophorn and Poipet to boost connectivity between Phnom Penh and the Thai border. The upgrading is scheduled for completion in June 2023.

The improvements are expected to cut travel time in each section by at least 13 minutes to as much as 46 minutes.

This will be a boon to Japanese firms that had moved their factories from Thailand to Cambodia or transferred labor-intensive production processes across the border to reduce costs. Demand for transportation to ferry parts and materials has been on the rise between Thailand and Cambodia, a key emerging economy in Asia.

The repayment period for the latest loans is 40 years, including a 10-year grace period, with annual interest rate at 0.01 percent, said Japan foreign ministry in its statements.

Apart from road repairs projects, Tokyo and Phnom Penh had also agreed on three other grant aid programs for water works, landmine clearance and transport equipment worth a total of 4.721 billion yen, according to the ministry.