Japan's Official Development Assistance White Paper 2005

Main Text > Part II ODA DISBURSEMENTS IN FISCAL YEAR 2004 > Chapter 2 Details and New Policies about Japan's ODA: Striving for Further ODA Reforms > Section 2. Measures for Each of the Priority Issues > 2.Sustainable Growth > (2) Policy Formulation and Institution Building

(2) Policy Formulation and Institution Building

In order to promote private sector-led sustainable growth, it is indispensable to provide "soft" assistance in areas besides infrastructure development, such as macroeconomic stabilization; economic structural reforms, including financial sector reforms, state-run company reforms, and optimization of public financial management; establishment of policy and institutions on trade and investment; and development of policy and institutions for information-communication society.

The New Medium-Term Policy on ODA, as one of the concrete efforts toward policy formulation and institution building, advocates assistance in areas such as macroeconomic stabilization and promotion of trade and investment. Regarding the macroeconomic stabilization, Japan provides assistance for the formulation and implementation of appropriate and sustainable fiscal and monetary policy, public debt management, and economic policy. At the same time, Japan places an emphasis on assistance for the formulation of industrial policy designed to expand trade and investment and of rural and regional development policy in the light of decentralization. Furthermore, with regard to the development of institutions to promote trade and investment, Japan will assist the improvement of systems and institutions that are in accordance with international economic rules, taking into account each country's economic situation. This includes, for example, assistance with government procurement standards and certification systems, protection of intellectual property, and improvement and operation of physical distribution networks.

Based on such policies, Japan has been providing assistance for the development of institutions by accepting trainees and dispatching specialists, and by making use of corroborative projects and developmental research, etc.

For example, in China, Japan launched a technical cooperation project in November 2004 to assist in developing economy-related laws. Its objective is to ensure a fair competitive environment by improving and optimizing systems that would affect the advancement of Japanese corporations and their economic activities into China. This project aims to grasp the needs of Japanese companies located in China, as well as to revise Chinese enterprise laws, formulate antitrust laws, and conduct research on the legislation of laws related to market distribution. Moreover, in Thailand, Japan is cooperating to introduce and disseminate the use of a pollution control officer system and an energy conservation system, and such endeavors have been showing positive results. For example, examinations to become pollution control officers in the fields of air and water pollution was commenced in 2004.

In recent years Japan has been advancing projects that would assist in the area of policy formulation. Under these projects, Japanese experts in various fields such as trade, investment, economy and law hold multiple talks with government officials of developing countries, who are responsible for policymaking in order to develop relations of mutual trust and provide recommendations on long-term development strategies that fully take into consideration the situation of each developing country.

To Indonesia, for example, Japan has been co-financing with the World Bank a development policy program loan (US$100 million from Japan and US$3 million from the World Bank) for the purposes of promoting the stabilization of Indonesia's macro economy, the development of the investment environment, the enhancement of public finance management, and the improvement of its accountability and transparency. Furthermore, to Vietnam, through co-financing with the World Bank Poverty Reduction Support Credit ( PRSC ), (¥2.5 billion from Japan and US$100 million from the World Bank), Japan has been supporting the promotion of various reforms, such as its financial sector reform, state-run company reform, optimization of public finance management, and investment environment development. Through such assistance Japan intends to cooperate to promote the transition to a market-oriented economy, to advance sustainable development, and to improve governance.

Assistance to Enhance Governance

Strengthening the foundations of democracy in developing countries promotes the participation of people in governance and development of their countries, and also leads to the promotion and protection of human rights. It is also an indispensable factor in promoting medium- to long-term stability and development. For these reasons, Japan has extensively provided its assistance to developing countries that demonstrate proactive efforts toward peace, democratization and human rights protection.

At the G7 Lyon Summit in 1996, Japan announced the Partnership for Democratic Development ( PDD ). Based on the three principals of (1) partnership, (2) self-help efforts (ownership), and (3) consultations and agreement with the developing country, Japan revealed its intention to enhance efforts to assist in developing various systems (legal system, administrative system, civil servant system, police system, etc.), supporting the election system, strengthening civil society, and improving the status of women, among others.

The ODA Charter highlights that both human resource development and the establishment of laws and institutions create the foundation for development in developing countries. The New Medium-Term Policy on ODA also states that eradicating corruption, implementing legal and institutional reforms, improving the efficiency and transparency of public administration, and strengthening the administrative capacity of local government are important to building a fair and democratic society and also to improving the investment climate. For this purpose, Japan will assist the capacity-building of governments to improve governance.

Japan has been building up domestic support systems through cooperation with relevant ministries and agencies, as well as other related organizations, in order to adequately respond to the various assistance needs that arise with respect to the stage of progress toward democratization or the transition to a market economy of each developing country. At the same time, Japan has been implementing multifaceted support through various forms of assistance such as acceptance of trainees, dispatch of experts, development research, facility improvement, equipment provision, and assistance to NGOs.

Demonstration given on the occasion of delivering the automatic fingerprint identification system (Philippines: Project for Establishment of the Automatic Fingerprint Identification System) (Photo: Security Electronics and Communications Technology Association)
Demonstration given on the occasion of delivering the automatic fingerprint identification system (Philippines: Project for Establishment of the Automatic Fingerprint Identification System) (Photo: Security Electronics and Communications Technology Association)

For example, in Vietnam, Cambodia, Laos, and New Independent States ( NIS ) such as Uzbekistan, etc., the development of legal systems is a current issue as they make efforts to introduce market economies and adopt policies to open their economies to foreign competition. Therefore, Japan provided assistance to these countries in FY2004 in drafting and revising bills and enacting laws related to civil codes and civil procedure codes, as well as developing legal systems to train legal professionals. As for drafting and revising bills, dispatched experts, etc., are striving toward creating laws that take into account the social situation of the developing country, and are beginning to produce concrete results. To Vietnam, in particular, Japan has been providing support in drafting its civil code, civil procedure code, enterprise bankruptcy law, etc., and the civil procedure code and enterprise bankruptcy law were approved by the Vietnamese Congress in June 2004, and the revised civil code in June 2005. As for fostering legal professionals, in order to develop human resources working in the field of law application and fair legal procedures, Japan has been utilizing its knowledge and experience to help establish systems that would match the situation of each recipient country, targeting such schools as National Judicial Academy of Vietnam and Royal School for Judges and Prosecutors of the Royal Academy of Cambodia.

Maritime salvage training using a helicopter (Philippines: The project on Philippine Coast Guard Human Resource Development) (Photo: Japan Coast Guard)
Maritime salvage training using a helicopter (Philippines: The project on Philippine Coast Guard Human Resource Development) (Photo: Japan Coast Guard)

Furthermore, in the area of improving capabilities of police agencies, Japan has been providing assistance that combines facility development and equipment provision with the priority of human resource development, including support for system building and improvement to administrative capacity, etc. In Indonesia, the national police became independent of the national army in 2000, and the democratization of the organization has been promoted with the aim of consolidating it as a civil police force. To support such endeavors, Japan has been dispatching experts and accepting trainees since 2001 as part of the "Indonesian National Police Reform Assistance Program." Furthermore, in FY2004 Japan provided equipment as grant aid for wireless communication systems, on-site identification, and drug-control to Indonesia as part of the "Project for Enhancement of the Civilian Police." Moreover, Japan has been joining efforts with Singapore, which established its own police box system through Japan's technical cooperation, to spread the two countries' experiences concerning this system throughout Asia. Concretely, Japan and Singapore work together to provide third-country training by inviting police officers from various Asian countries to learn about the police box system. In addition, to Southeast Asian countries that are putting forth various efforts to maintain security and ensure safety at sea, Japan has been providing assistance to system and human resources development. In the Philippines, the coast guard separated from the naval force in 1998, for which Japan has been implementing the Project on Philippine Coast Guard Human Resource Development. In this project, Japan has dispatched experts to give policy advice and provided technical guidance on establishing training programs, etc. Experts have also been dispatched to Indonesia and Malaysia to help with the establishment of coast guards.

In light of the fact that Azerbaijan and Georgia have been working for nation-building toward democratization and introducing market economies since their independence from the Soviet Union, Japan invited young officers of election management committees from the Caucasus region to implement the "Japan-Caucasus Youth Friendship Programme" with the objective of providing assistance in managing and monitoring fair and adequate elections.