Japan and the Marshall Islands have agreed to a 16 million US dollar plan for funding two new cargo and passenger vessels for the Marshalls.
It is the highest-dollar value aid project that Japan has provided to the Marshall Islands.
A Japanese embassy official in Majuro says if the procurement process moves smoothly, the vessels will be built and delivered to the Marshall Islands within 16 months.
Two years ago, Marshall Islands officials requested Japan provide ships because shipping service was declining due to old and deteriorating inter-atoll ships.
The original plan was for two dual cargo-passenger vessels.
But after the government's only landing craft vessel sank in January 2011, the request was changed for one of the vessels to be a landing craft that is capable of delivering heavy equipment to remote outer islands that do not have dock facilities.