Public Debt as Temporary Burden & Long-Term Capital Investment


logoViet Nam’s infrastructure, including its roads, bridges, and airports, plays a major role in the country’s continued economic development.  Japan – through the Japan International Cooperation Agency (JICA), is the top ODA (Overseas Development Assistance) sponsor to Viet Nam.  ODA is a key part of its visionary foreign policy for Viet Nam in particular and Southeast Asia in general.  (Follow this link to view a JICA map of its nationwide activities as of 25 July 2019.)  

After arriving at the Noi Bai International Airport Terminal 2 the other day, I noticed this plaque just outside the exit.  

noi bai terminal 2

This $900 million dollar project was begun in December 2011 and completed in 2014.  It’s a notable example of ODA projects that have either been completed or are currently in progress around the country. 

According to this 4 December 2011 JICA press release, it was considered to be “one of the most important transport infrastructure projects being implemented with Japan’s ODA.”  The Noi Bai-Nhat Tan expressway and Nhat Tan bridge were built at the same time.  All three projects made life much easier and more convenient for the legion of Vietnamese and foreign passengers arriving and departing from Hanoi.  

Public debt, like reasonable levels of personal debt resulting from solid long-term investments, makes possible what would otherwise be impossible in the here and now.  It is a frequent topic of discussion in the media, both positive (a key driver of economic growth) and negative (a risk and potential obstacle to the same). 

On the bright side, Viet Nam’s public debt is the lowest level since 2015.  Specifically, the Viet Nam Ministry of Finance estimates public debt at the end of 2018 at 58.4% of GDP, or $136.75 billion.  (Compare that with the US, where the national debt of $22 trillion is a staggering 107% of GDP.)  As of December 2018, 90% of Viet Nam’s bonds had a maturity period of over 10 years, with the average maturity period for all bonds coming to 12.7 years.

The Noi Bai International Airport Terminal 2 is one small piece of that multi-billion dollar puzzle.  

Shalom (שלום), MAA