Before the ASEAN Summit concluded this week, Japan Prime Minister Shinzo Abe promised to double the amount of loans and investments in ASEAN member states to compete with China’s massive international funding program the Belt and Road Initiative.
“We are prepared to double loans and investment by the Japan International Cooperation Agency going forward with the aim of mobilizing funds including from the private sector. In May this year, an agreement with ASEAN was concluded to enable technical cooperation benefiting ASEAN as a whole to enhance connectivity,” said Abe.
So far Japan has outpaced Chinese infrastructure projects in Southeast Asia in number and in value, according to Fitch Solutions, an international credit rating agency.
Japan regional projects across ASEAN
economies amounted to 240, while China has 210. The Japanese infrastructure projects are valued at $367 billion versus $255 billion by China.
However, in Cambodia Chinese infrastructure projects are still leading all other countries with $3.8 billion invested in projects last year alone.
Seventy-five percent of all Cambodia government approved foreign direct investments flow from China. The Middle Kingdom is not only Cambodia’s largest trading partner, but also biggest foreign investor, bilateral donor, importer of Cambodian rice and the largest origin of foreign tourists.
Japan is making steady in roads in the Kingdom with Japanese expatriates living in Cambodia increasing from 2,000 in 2014 to nearly 4,000 today.
Investments form Japan has reached over $1.66 billion over the last 25 years, according to the Council for the Development of Cambodia (CDC).
According to the CDC, Japan has increased funding in investment projects the last few years. Data from the CDC show Japan funding increases of $119.7 million in 2016 to $171.8 million last year in Cambodia. The CDC estimates that Japan will fund $249.4 million worth of projects this year.
In comparison, support from the European Union and the US continue to decrease. EU project funding dropped from $70.3 million in 2014 to $26.7 million last year. The US funded $91.6 million worth of projects in 2014 and only $35.7 million last year.
US-based rights organization Human Rights Watch released a statement earlier this year criticizing Japan for trying to build closer ties with Cambodia’s government to compete with China.
“Japan has been important to Cambodia, for decades its largest aid donor and one of its largest foreign investors,” stated HRW.
“Now, with China surpassing Japan in both areas, the Japanese government appears willing to throw its principles out the window to compete with China for Hun Sen’s affections,” it added.