After reaching agreement late last month, the contract for a $90 million concession loan from Japan to Cambodia was officially signed in Phnom Penh yesterday to improve 83.5 kilometres of National Road 5.

Signed by Cambodian Economy and Finance minister Keat Chhon and Arakawa Hiroto, the vice-president of the Japan International Co-operation Agency (JICA), the loan agreement is to advance transportation capacity and logistic efficiency between Battambang and Sri Sophorn.

Speaking after signing the contract, Arakawa Hiroto said that this construction project is very beneficial, and it will not only connect Phnom Penh to the Thai border but will also link Thailand to Cambodia and further on to Vietnam.

“This is critically important for the logistics networks that will contribute to attract foreign direct investment,” Arakawa said. “Private companies will get more benefit from this connection and will contribute to Cambodia’s economic growth.”

The construction is scheduled to start in June 2015 and will be completed by May 2018. The loan’s interest rate is 0.01 per cent per annum with a repayment period of 40 years including a 10-year grace period.

According to JICA’s master plan, the $90 million agreement signed yesterday is a first phase. The second section is from Battambang to Thleamorm in Pursat province and the last part is from Thleamorm to Prek Kdam Bridge. But both sections are under-surveyed.   

Since 1992, Japanese loan and grant aid to Cambodia has amounted to about $2.2 billion with average annual delivery of more than $120 million.