Japanese Prime Minister Shinzo Abe yesterday pledged 100 billion yen (S$1.2 billion) in low-interest loans to Vietnam for its infrastructure development as he and Vietnam's top leader, Mr Nguyen Phu Trong, affirmed closer security and economic ties.

Speaking at a joint news conference after their talks in Tokyo, the leaders expressed "serious concern" about the "complicated" situation in the South China Sea, a veiled criticism against China's muscle-flexing in the disputed waters.

"It was very meaningful that both leaders shared serious concern about the continuation of unilateral actions such as large-scale land reclamation and building of outposts in the South China Sea," Mr Abe said, without mentioning China.

He said the fresh loans will help Vietnam finance infrastructure projects such as ports and highways, adding: "Our country will strongly support Vietnam's growth through such initiatives."

Separately, Japan also offered 200 million yen in grant aid to Vietnam to boost its maritime law enforcement capabilities.

With the aid, Tokyo plans to provide Hanoi with two used vessels that can be converted to patrol vessels, in addition to the six it offered last year, according to a Japanese official.

Two of the six have been delivered. Vietnam, together with Brunei, Malaysia, the Philippines and Taiwan, has overlapping territorial claims with China in the South China Sea.

"We shared concern about the complicated situations in the South China Sea and the East China Sea," Mr Trong said, referring to a row between Tokyo and Beijing over a group of East China Sea islands administered by Tokyo but claimed by Beijing and Taiwan.

"We shared recognition that any dispute should be settled in accordance with international law," the general-secretary of the Vietnamese Communist Party said, speaking through an interpreter.

On the economic front, the leaders vowed to work towards the goal of doubling two-way trade and investment by 2020. Japan is Vietnam's fourth-largest trading partner after China, the United States and South Korea.

Japan also pledged 28.61 billion yen in low-interest loans for building a hospital in Ho Chi Minh City.

On firmer maritime security cooperation between the two countries, security experts say it is important that countries in the region send a clear message to China that they will not overlook any unilateral action that would force a change in the regional status quo.

"This is important not only for Vietnam and other states in the region but for Japan itself because it is also embroiled in a row over the Senkaku Islands," Mr Tsuneo Watanabe, director for policy research at the Tokyo Foundation, a think-tank, said.

Chinese ships have repeatedly entered Japanese waters around the islets. Beijing has also set up gas exploration platforms in the East China Sea that Japanese officials suspect may be used for military purposes.

"Japan should play a greater role in assisting capacity-building efforts by developing countries so as not to create a power vacuum in the region," Mr Watanabe said.

Mr Trong is scheduled to have an audience with Emperor Akihito of Japan today.