Japan unveiled a plan on Thursday to provide $110
billion in aid for Asian infrastructure projects, as China prepares to launch a
new institutional lender that is seen as encroaching on the regional financial
clout of Tokyo and its ally Washington.
The amount of Japanese funds, to be invested over 5 years, tops the
expected $100 billion capitalisation of the Asian Infrastructure Investment
Bank (AIIB), the Beijing-sponsored lender scheduled to begin operations next
year.
Japanese officials said the plan, announced by Prime Minister Shinzo Abe
at a symposium of Asian officials and experts, represents a 30 percent increase
over Tokyo's past infrastructure funding.
Japan said it wants to focus on "high quality" aid, for
example, by helping recipients tap its expertise in reducing pollution while
building roads and railways. That's an implicit contrast with the AIIB, whose
projects Washington has said may not adequately safeguard the environment.
"We intend to actively make use of such funds in order to spread high-quality
and innovative infrastructure throughout Asia, taking a long-term view,"
Abe said in a speech announcing the plan.
About half the funds will be extended by state affiliated agencies in
charge of aid and loans and the rest in collaboration with the Asian
Development Bank (ADB).
Japan hopes the aid will help draw private funds to help meet the vast
demand for infrastructure in Asia.
The United States and Japan were caught off guard when a total of 57
countries, including Group of Seven members Britain, Germany and France jumped
on board the AIIB bandwagon by March.
The two allies have stayed out of the China-led institution, seen as a
rival to the U.S.-dominated World Bank and Japan-led Asian Development Bank,
citing concerns about transparency and governance - although Tokyo for one is
keeping its options open.
Finance officials said Japan's aid plan had long been in the works as
part of a Group of 20 pledge to meet global needs.
But worried that Japan may look less pro-active than Beijing, Tokyo also
wants to showcase its support for the region.
"We had thought it was better not to speak up much, but that
doesn't get through," Koichi Hagiuda, a special aide to Abe in his Liberal
Democratic Party, told Reuters.
"So some demonstration seems to be needed."
Japanese and Chinese finance officials will meet in Beijing on June 6
and may discuss the AIIB, but Tokyo looks unlikely to make a decision on
joining any time soon.
LDP lawmakers looking into the matter will put together a report later
this month or in early June, but will only state the pros and cons of joining
or staying out, said Masahiko Shimayama, a member of the party panel.
"I think it's unlikely that the government would make a decision on
when to join based on our report," he told Reuters.
Tokyo, which given the size of its economy could become the No. 2 donor
if it decides to join the AIIB, may well keep its powder dry for some time to
come.
"If it (AIIB) becomes a proper financial institution for the sake
of Asia, there is no reason to be embarrassed about joining later,"
Hagiuda said.
The United States and Japan agreed last month that the World Bank and
ADB should team up with the AIIB in syndicated loans as a way to help the new
lender establish strong standards.
The AIIB is holding a meeting of founder members in Singapore this week
to decide on the articles of association and operational details. A delegate to
the conference, speaking on condition of anonymity, said it was unlikely the
new bank could start lending at the start of 2016 as predicted, given the need
for member countries to get approvals from their legislatures.
"China hopes that members get such approvals by year-end and the
operations start from the next year, said the Asian delegate. "But I
wonder if it is possible, given domestic political situations in each
country."
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