The Japan International Cooperation Agency (JICA) will help Ho Chi Minh City authorities establish a firm that will operate and maintain the city's first urban railway line.
This will happen under a Technical Assistance Project that the two sides have just signed, JICA said in a statement.
The agency said the project comprises two phrases with first conducted from March 2011 to March 2013 ending with registration of the firm.
The city plans to build an urban railway system in the next five years to ease road traffic congestion, increase traffic safety and reduce air pollution.
It was necessary to make organizational and institutional arrangements for the service, JICA said.
The city's first line, connecting Ben Thanh Market with Suoi Tien Park in District 9 is being built using ODA loans from the Japanese government.
The first loan package worth 20,887 million Yen or US$255 million was approved in 2007. This is a small package of the whole project and other ODA agreements will be signed in coming years, JICA said.