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Statement by H.E. Ichiro Aisawa
Senior Vice-Minister for Foreign Affairs of Japan

High-level Dialogue on Financing for Development
27 June 2005
New York

Mr. President, Mr. Secretary-General, Excellencies, Distinguished Delegates,

I would like to begin by expressing our great appreciation to President Ping for convening this High-level Dialogue. Along with the issues of peace and security, human rights and structural reform of this Organization, development is of central importance to the vast majority of member states. The success of the September Summit hinges to a large extent on the progress we can make towards the Millennium Development Goals and wider international development challenges.

Mr. President,

In order to secure sufficient financing for development, and to be effective, we need a comprehensive approach. First and foremost, besides ODA, financial resources available in developing countries will need to be mobilized effectively. Trade and investment can also play an essential part in successful development processes.

First on ODA, throughout the 1990s, Japan was the only major donor to steadily increase its assistance, providing 20 percent of the overall global volume of ODA. In order to contribute to the advancement towards MDGs, we in Japan will continue our efforts toward the goal of providing ODA equal to 0.7% of our gross national income. With this in mind, we are committed to maintain a credible and sufficient level of ODA in years to come. This commitment was made clear by Prime Minister Koizumi at the Asia-Africa Summit held in Indonesia in April. A recent Cabinet policy decision confirmed this, by noting a "strategic expansion of the volume of Japan's ODA".

Part of this expansion strategy is the doubling of our ODA to Africa over the next three years. Grant aid will continue to be the central feature of this increased assistance to Africa.

Mr. President,

Sustainable economic growth is essential to poverty reduction and the fight for freedom from want. Sustainable economic growth is difficult to achieve through foreign aid alone, however generous. Measures to improve the investment environment, including infrastructure, are critically important. The success story of East Asia's economic development is a testimony to this.

There are various reasons for this success story, most importantly the self-help efforts of the countries themselves. Although the total ODA received by East Asia in the last quarter century has been much less than that received by other regions, GDP per capita there has dramatically increased, resulting in substantial poverty reduction. Japan is confident that its ODA programme, which places great emphasis on human resources development and economic infrastructure, has by and large proved successful in East Asia. This is especially true for its yen loans. Indeed, Japan's ODA, together with the active flow of foreign direct investment from its private sector which has produced an increase in exports and market opportunities, has greatly contributed to the East Asia's economic achievement.

We believe that this development experience in East Asia shows that successful development is made possible, not by ODA alone, but more basically, through the promotion of trade and investment. Resources available through trade and investment are often far larger in volume than ODA. One might say that fight to reduce poverty without promoting economic growth is like building a ship without an engine. Such a ship will not take us to any great distances.

It is important to reaffirm that partnership and ownership, two concepts that Japan has been advocating since the 1990s, are the fundamental principles agreed upon in the Monterrey Consensus. This notion of ownership will require that developing countries set out key policy objectives and specific measures in Poverty Reduction Strategy Papers (PRSPs), taking into account specific policy circumstances of each country. This should include measures to improve governance, eliminate corruption, and strengthen institutional capacity, among others.

Mr. President,

With such ideas in mind, I should mention a few examples of efforts my government are making in order to contribute to advancement of MDGs.

First, Japan has been promoting the TICAD process. Launched in 1993, the Tokyo International Conference on African Development, and the programs and projects under this initiative, are making important contributions to MDGs in several sectors including human resource development. The fourth conference is due to be held in 2008.

In particular, at the TICAD Asia-Africa Trade and Investment Conference held last year, participants from Asia and Africa highlighted the importance of fostering local industries by strengthening infrastructure and building institutions. They also agreed to cooperate with one another to identify the market needs and promote the development of products that have comparative advantages. They will also cooperate with each other in promoting small and medium enterprises.

Second, Japan hosted a High-level Forum on the Health MDGs in Asia and the Pacific last week, which I myself attended. We launched a "Health and Development Initiative", which underscores the importance of improving health of individual persons in developing countries. Such an approach would lay the basic foundation for human capacity building in the health sector, thereby contributing to the achievement of the MDGs.

Third, the agricultural sector is fundamentally important for many developing countries in their development strategy. Japan provides roughly 40 percent of the total ODA of DAC member countries in the agricultural sector.

In Africa, for example, the importance of agriculture was reaffirmed in a recent African Union declaration, in which African leaders pledged to allocate 10% of their respective national budgets to agriculture. We welcome this commitment, and in our response we will increase assistance for agricultural research and rural development, agricultural policy development, and implement the African Village Initiative announced in February.

To help achieve sustainable poverty reduction in Africa, and in order to support the development of the private sector, including the development of small and medium industries, the Japanese government will initiate, in partnership with the African Development Bank, a soft-loan facility totaling $1.2 billion over the next five years.

Fourth, Japan will help implement some of the initiatives in the context of the "New Asia-Africa Strategic Partnership Plan of Action" announced at the Asia-Africa Summit in April in Indonesia, for human resources development and capacity building. We should not overlook the fact that there are still a number of poor countries in the Asia-Pacific region as well, such as LDCs, LLDCs and SIDS. As part of this initiative, we will explore the concept of an "Asian African Development University Network" with interested countries in Asia and Africa.

Finally, we will all have to continue to move ahead, taking realistic and practical approaches and avoiding excessive focus on new financial mechanisms such as the IFF and International Taxation. These have a number of conceptual and technical problems that need to be resolved. In other words, donor countries should redouble their efforts to strengthen appropriate initiatives within their capacity, based on their own institutional systems and circumstances.

Mr. President,

In conclusion, the year 2005 is an important one for development as well as for UN reform. No effort should be spared to achieve tangible results in both of these areas. Japan will continue to work together with member states, with you, Mr. President and your Facilitators, as well as the Secretary-General, to make the September Summit an historic milestone for the future of this Organization and for all humanity.