The Ministry of Health in Vanuatu is hoping to double the number of hospital beds in Vila Central Hospital by then end of 2013.
The hospital has 150 beds and the Ministry is planning to construct a new building with similar capacity.
The Minister's private secretary Daniel Molisa says the hospital was built when the population of Vanuatu was only 85 thousand.
Now, he says, the population is 230,000 and the hospital is struggling.
"It's too vital. The existing one is just overloaded. The maternity ward, the paediatric ward, surgical, medical, outpatient department - that's the consultation department, laboratory, x-ray, operating theatre, is just overloaded at the moment."
Daniel Molisa says the Japanese Government has made a commitment to fund the project, which is estimated to cost more than 30 million US dollars.