Japan to revise ODA policy to focus on economic security

The Japanese government plans to revise the Development Cooperation Charter, which sets guidelines for Japan’s official development assistance to developing countries, in the first half of next year with a focus on economic security, The Yomiuri Shimbun has learned.

According to sources, the government intends to make strategic use of ODA by specifying its stance to seek a free and open Indo-Pacific and strengthen economic security with an eye on China, which is trying to expand its influence over developing countries through massive loans.

A panel of experts will be established soon, and draft revisions will be drawn up by the end of this year, the sources said. If the revisions are made, they will represent the first changes to the charter in eight years.

In recent years, China has used its economic prowess to strengthen its clout in the Indo-Pacific region through its Belt and Road Initiative, which is aimed at creating a giant economic zone.

However, Beijing’s method of putting partner countries into massive debt through loans that exceed their repayment capacity has become a problem. After building a port with Chinese loans, Sri Lanka became unable to repay them due to high interest rates and effectively transferred its right to operate the port to China in 2017.

In the wake of such events, the Japanese government intends to differentiate itself from China through highly transparent financing. It will promote in the revised charter a free and open Indo-Pacific, which is not mentioned in the current edition.

Japan also intends to include measures to reinforce supply chains, in response to the global food crisis and energy shortages largely caused by Russia’s invasion of Ukraine, as well as supply chain disruptions caused by the novel coronavirus pandemic.

Japan’s ODA budget has been on a downward trend since its peak of ¥1.1687 trillion in fiscal 1997. In fiscal 2022, the figure almost halved to ¥561.2 billion. Given its difficult fiscal situation, Japan is unlikely to boost funding significantly.

“It’s necessary to select and focus on appropriate measures,” a senior Foreign Ministry official said.

In anticipation of revising the charter, the Foreign Ministry has requested an ODA budget of about ¥110 billion for fiscal 2023, up about ¥20 billion from this fiscal year, to help realize a free and open Indo-Pacific. The ministry envisages allocating the increased funding to projects such as infrastructure development in Indo-Pacific countries, according to the sources.

The charter was first created as the ODA Charter in 1992 and has since been revised twice, in 2003 and 2015. The name of the charter was changed to the current one when it was amended in 2015.