Keyword 3 ODA Use for Promotion of Economic Diplomacy

Japan has made a variety of international contributions through official development assistance (ODA). In order to continue to actively provide such international cooperation, it is increasingly important for Japan to create a stronger economic foundation.

As Minister for Foreign Affairs Maehara announced in his foreign policy speech to the 177th Session of the Diet in January 2011, based on the "ODA Review," Japan will continue to attach high priority to reducing poverty, namely, contribution to the achievement of the MDGs, investing in peace, and supporting sustainable growth. At the same time, Japan will place a particularly great importance on actively using ODA to promote economic diplomacy. Japan intends to promote ODA which benefits the international community, developing countries, and Japan together.

A big challenge for economic diplomacy is securing a stable supply of natural resources, energy, and food. It is a vital task for Japan to reinforce strategic relations with food exporting countries and countries with mineral and energy resources, including rare earth. In this light, Japan will strengthen bilateral relations with those countries by actively supporting the socioeconomic development, including infrastructure development, of resource-rich countries, through utilizing diplomatic means such as ODA under public-private collaboration.

Another major pillar of economic diplomacy is support for the international promotion of Japanese infrastructure systems. To date, in order to promote greater coordination between ODA and the private sector, Japan has introduced a number of measures, including the Special Terms for Economic Partnership (STEP) concerning ODA loans and a scheme for receiving proposals on public-private partnership projects submitted by private companies. STEP is a system introduced in 2002 to promote the "visibility of Japanese aid" by making use of Japan's advanced technologies and know-how, and transferring excellent technologies to developing countries. In FY2009, Japan implemented a total of six ODA loan projects through STEP, including the dedicated freight railway construction project in India, the international airport terminal construction project in Vietnam, and the sewerage system project in Papua New Guinea. Through STEP, Japan will support the development of developing countries by making use of its advanced technologies and know-how, and enhance efforts for the international promotion of Japanese infrastructure systems.

Furthermore, in FY2010, Japan introduced a JICA scheme for the study of private sector proposals. The aim is to make use of the know-how, financial resources, technologies, and other resources of private companies for the resolution of the development challenges of developing countries, and support the international promotion of private companies. Based on the proposals for Public Private Partnership (PPP) and Base Of the economic Pyramid (BOP) business projects submitted by private companies, JICA entrusts those companies to carry out feasibility studies (F/S) (*1).

With a view to promoting ODA which contributes to economic diplomacy, Japan will make further use of these frameworks and actively promote other initiatives, including closer dialogue with the business community and the consideration of new tools.

*1 Studies for verifying whether individual projects are feasible from various perspectives, including technical, economic, social, and environmental, to formulate an optimal program plan.