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 3. Assistance for Each Region > 1. East Asia

1. East Asia

Japan's bilateral ODA to East Asia in 2004 was approximately US$1,884.56 million, 31.7% of total bilateral ODA.

Japan has traditionally placed a high priority on its diplomacy with Asia, and the ODA Charter designates Asia as a priority region. East Asian countries in particular have a close interdependent relationship with Japan in all aspects including politics, economy, and culture. As such, the development and stability of the East Asia region has great significance for the safety and prosperity of Japan. Japan has supported economic infrastructure developments in the region through ODA, and facilitated private-sector investments and trade through means such as enhancing economic partnerships. Through these measures Japan has thus far contributed to the remarkable development in the East Asia region by advancing economic cooperation that coordinates ODA with investment and trade.

East Asia has attained a rapid economic growth, and some countries, such as the Republic of Korea ( ROK ) and Singapore, have already been transformed from aid recipients into donors. On the other hand, there are still some least developed countries ( LDCs ) within East Asia, such as Cambodia and Laos. There are also countries like China, which still has internal disparities even though its economy has grown dramatically in the recent years, or Vietnam, which is in the process of transitioning from a centrally-planned economy to a market economy. In extending assistance, Japan is fully taking into account such diversity in socio-economic conditions and changes in the respective assistance needs in each country.

In relation to ASEAN, Japan provides assistance that contributes to sustainable development and poverty reduction while taking into consideration the differing socio-economic development and natural environment for each member country. Recently, as economic partnerships among East Asian countries become more enhanced, Japan has been providing assistance that aims to improve the investment environment, such as assistance in Cambodia for economic policy and assistance in Indonesia for the construction of access roads to ports.

Moreover, as ASEAN works toward the formulation of an ASEAN community by 2020, reducing the development disparities within the region and strengthening the unity of ASEAN are becoming some of the most important issues. To rectify the development disparities, Japan places priority on the development of human resources and on the Mekong River Basin Development, which targets the new ASEAN member countries (Cambodia, Laos, Myanmar, and Vietnam) and Thailand. For example, in order to develop socio-economic infrastructures that can link up a wide-ranging area throughout the Mekong region, the implementation of cross-border projects or projects whose effects spread across the borders are being promoted. To support this effort, Japan has been cooperating with the Asian Development Bank ( ADB ), which is promoting the Greater Mekong Sub-region ( GMS ) Program for project formulation, and working on the development of the East-West Corridor. In order to promote a broad-based consolidation of the entire Mekong region, while it is important to develop economic infrastructures such as transportation, electricity and communication, it is simultaneously vital to promote software type cooperation such as policy planning, institution-building, and human resources development in order to streamline this process. Therefore, software type assistance is also provided through such efforts as policy consultations with countries in the Mekong region and ADB. At the Japan-ASEAN Summit, which was held in Vientiane, Laos in November 2004, the government of Japan explained its various kinds of assistance efforts and disbursements for the development of the Mekong region, as well as human resource development in the ASEAN nations. Japan received high regard and grateful acknowledgements from the ASEAN nations for its steady implementation of cooperation. At the Japan-CLV (Cambodia, Laos, and Vietnam) Summit Meeting which was held on the same occasion, each head of state requested Japan to extend assistance for the development of the "CLV Development Triangle" region that spans those three countries. In response, Japan dispatched a study mission to the region over March and April 2005.

Chart 25. Japan's Assistance Disbursements in the East Asian Region

Chart 25. Japan's Assistance Disbursements in the East Asian Region

Furthermore, Japan has extended its support and cooperation to the South-South Cooperation, which Thailand is advancing in order to resolve the various issues caused by the economic disparity with its neighboring countries. For example, Japan is cooperating in reducing development disparities and enhancing integration within the ASEAN region through provision of Thailand-based technical cooperation, such as the Animal Disease Control Project, to neighboring countries.

Also, Japan is actively utilizing ODA for transnational issues in the ASEAN region such as terrorism, piracy, and disasters. Concerning assistance for the disaster caused by the major earthquake off the coast of Sumatra and the tsunami in the Indian Ocean in December 2004, the assistance package (US$500 million in grant aid, etc.) announced by Japan at the Special ASEAN Leaders' Meeting were highly appreciated by participating countries. Furthermore, at the Asia-Africa Ministerial Meeting and the Asia-Africa Summit held in April 2005, Japan announced that as a part of disaster prevention and post-disaster reconstruction measures, it would provide assistance of over US$2.5 billion mainly in the Asian and African regions over the next five years. This includes the rehabilitation and reconstruction for the aftermath of the major earthquake off the coast of Sumatra and the tsunami in the Indian Ocean, and the building of tsunami early warning system. (For information on assistance for the disaster of the major earthquake off the coast of Sumatra and the tsunami in the Indian Ocean, see 3 of Part II, Chapter 2, Section 1)

ODA to China

Japan's ODA to China has assisted the infrastructure development of China's coastal areas, environmental measures, improvement in the Basic Human Needs ( BHN ) sectors including health and medical care, and human resource development, among other efforts that contribute to the steady development of the Chinese economy. As such, Japan's ODA has played a significant role in promoting and sustaining China's reform and open-door policies. Such ODA to China can be valued as having supported the development of economic relations between Japan and China, and having supported the multilayered Japan-China relationship as one of the main pillars of Japan-China relations. Regarding this point, the representatives of China, including those at the summit-level, have expressed their gratitude on many occasions. For example, at the Japan-China Foreign Ministers' Meeting in April 2005, Foreign Minister Li Zhaoxing stated, "ODA to China has been playing a significant role in China's development, and for that I would like to express my gratitude. When I exchange opinions with Chinese college students, I constantly remind them that when SARS hit, Japan provided the world's highest amount of assistance to China."

Chart 26. Trends in Yen Loans to China

Chart 26. Trends in Yen Loans to China

While the economy of the coastal areas of China is developing at a rapid rate, the inland regions face serious issues of poverty and environment degradation. Moreover, in order to develop favorable overall Japan-China relations, it is extremely important to advance Japan-China cooperation in areas such as person-to-person exchanges. From this viewpoint, Japan intends to continue to actively utilize forms of cooperation other than yen loans within overall Japan-China relations that promote exchanges between the two countries such as technical cooperation, grassroots human security grant aid, and cultural grant aid, mainly through projects that contribute to mutually-beneficial fields such as poverty reduction and environmental conservation and projects that promote the Chinese citizens" understanding of Japan.

However, as the Chinese economy has grown over the recent years, the need for yen loans, which account for a large portion of ODA to China, has declined. Therefore, Japan determined that it is not appropriate to continue to provide ODA loans to China in the same manner as it had done in the past. As a result, in the telephone conference between Japanese and Chinese Foreign Ministers in March 2005, Foreign Minister Nobutaka Machimura and Foreign Minister Li Zhaoxing agreed to hold discussions in the direction of concluding the extension of new yen loans by the time of the Beijing Olympics Games in 2008. This agreement was reconfirmed at the Japan-China foreign ministers' meeting held in Beijing in April 2005. As a result, working-level discussions are being held between Japan and China so that yen loans to China can be concluded smoothly and with appreciation from both parties.