Japan's aid agency downplays possible clash with China's BRI

For decades, Japan poured development aid into its own backyard of South-east Asian nations, and reaped the dividends of peace, stability and prosperity in Asia.

But some say the Japanese policy of building infrastructure to smoothen regional trade may come into conflict with China's Belt and Road Initiative (BRI) that aims to develop trade routes connecting South-east Asian nations.

For now, officials at the Japan International Cooperation Agency (Jica), which coordinates Japan's overseas development assistance, forestall talk of any such clash.

Jica does not need to challenge the BRI, its president, Dr Shinichi Kitaoka, said in an interview in June with Asean reporters who were on a visit to Japan hosted by Jica.

But he had some cautionary advice for Asean on the principles that BRI projects should stick to: Stay open, do not build white elephants, and do not borrow more than you can repay. Jica has long kept to these principles when deciding to fund a project and hopes China will do the same, said Dr Kitaoka. "Our policy is that (the BRI) should be open to everyone and benefit everyone. If you can use this road but not that road, or this harbour but not that harbour, that's not good."

It was a stance laid out by Japan's Prime Minister Shinzo Abe at the Nikkei conference in June, when he told global leaders that Japan is open to cooperating with China as long as the BRI follows international norms, such as fair procurement and debt sustainability.

Said Dr Kitaoka: "You should not borrow too much beyond your financial capacity. If you borrow too much money, it's very hard to pay the money back."

FOR ONE AND ALL

Our policy is that (the BRI) should be open to everyone and benefit everyone. If you can use this road but not that road, or this harbour but not that harbour, that's not good.

DR SHINICHI KITAOKA, president of the Japan International Cooperation Agency, saying China's Belt and Road Initiative (BRI) should be open to all.

After all, "heavy borrowing was how imperialism expanded in the 19th century in various places, including China and East Asia", said Dr Kitaoka, a former political science and history professor.

Many Asean countries are aware of this danger, he added, citing the public-debt ceiling Vietnam set at 65 per cent of its GDP.

"If the Asian Development Bank or Asian Infrastructure Investment Banklends too much beyond the power of the recipient countries to repay, that's dangerous," he said, referring to the banks through which Japan and China primarily fund their development projects.

Dr Kitaoka also advised Asean to avoid white-elephant projects that benefit too few people and are thus a waste of money.

As Asean turns 50 this year, Jica has taken the opportunity to celebrate its longstanding partnership with the region. But its relationship with the region will have to evolve as Asean develops, its needs change, and bigger players such as China enter the game.

Set up in 1974, Jica has poured $200 billion into South-east Asia by building infrastructure and training people, its latest 2015 figures show. It has sought to strengthen the connectivity among Asean members to boost trade.

Said Dr Kitaoka: "That created export industries in Asean regions, which were a major driving force of their development. With the rise of those industries, a middle class was created."

Jica is also trying other ways of assistance, such as tie-ups with Japanese cities which offer expertise that matches Asean cities with specific needs. Japan's second-largest city Yokohama, for instance, is exporting its urban solutions in areas such as waste and water-supply management to Asean.

But above all, Japan hopes Asean stays united and open to free trade. "If Asean is divided into several groups or divided by some elements into a couple of groups, then it will lose its power," said Dr Kitaoka.

Charissa Yong

A version of this article appeared in the print edition of The Straits Times on August 28, 2017, with the headline 'Japan's aid agency downplays possible clash with China's BRI'. Print Edition | Subscribe