Japan Considering Foreign Aid

Press, Volume CVII, Issue 31500, 14 October 1967, Page 16

Japan Considering Foreign Aid

(From DAVID EXKL, Special Correspondent N.Z.P.A.) TOKYO, Oct 12.

The request of the Indonesian Acting President, General Suharto, for Japanese aid amounting to more than SUSIOO million has come as no surprise to Japan.

The Japanese Government met a promise of SUS6O million worth of aid this year, and has been expecting Indonesian demands to increase.

The request was put to the Japanese Prime Minister, Mr Eisaku Sato, who was visiting Indonesia during a trip which also includes New Zealand. Mr Sato, says a Reuter report, "made no definite commitment.’’ “No definite commitment” is about the only answer any Prime Minister in Mr Sato’s position could be expected to give. For Japan is taking a cold look at its whole aid programme. And it is not tide of Japanese generosity as Japan asks itself the old question of “What’s in it for me?” A number of senior Japanese Foreign Office officials and politicians look askance at aid given to Indonesia as being potentially less valuable—to Japan—than similar amounts of money lent to smaller countries where the impact is greater. And this is one of Japan’s primary concerns in international politics at present: to boost the impact of aid programmes so that fewer countries are in a position to claim that Japan is entirely self-seeking in its aid. While the statement is true to some degree of every aidgiving country, the 30 per cent of Japanese aid which goes to South-East Asia has been decidedly lacking in success in creating good will. A change in over-all aid-

giving tactics—including lower interest rates on loans and longer terms for repayment—could mean that aid to Indonesia is kept to a mini: mum, although aid in some form will certainly continue. One Foreign Office official said: “Many of the projects begun with Japanese money are still not complete. The best way to create ill will is to leave the projects unfinished, even though the fault for this would lie not with us but with Indonesia.”

Japan’s foreign aid programme, as revealed by Mr Koyohisa Mikangi, chief of the planning section of the Economic Co-operation Bureau, is an impressive example of international good will.

The impression is perhaps tempered somewhat by the comment of a South-East Asian leader, who “hoped that South-east Asian countries would be astute enough to make as much out of Japanese aid as Japan One peculiar feature of Japan’s foreign aid is that 40 per cent of the total is handled through ordinary commercial channels, with the Government-sponsored Export-Import Bank guaranteeing the private credit arrangements. Interest rates on this form of “aid” are not inclined to be very markedly different from interest rates on any

other form of commercial credit arrangements. A certain degree of hostility seems inevitable (although several Japanese officials professed themselves puzzled by it) when short-term loans at six per cent interest, to be used to buy Japanese products, are offered as fruits of Japan’s generosity. A good deal of Japanese aid still comes under the heading of that much-disliked word, “reparations”—a word which is avoided in any re-cently-negotiated agreements. Although Japan has completed reparations payments to Vietnam and Cambodia, she is only in the twelfth year of a 20-year agreement with the Philippines, is still involved in reparations to Burma (under another name), and is still in the process of finally solving what Malaysia and Singapore nastily and openly call “the blood debt.” But for all the cynical things that can be said About Japanese foreign aid, it is a fact that Japan spends more money per capita on aid than many more developed countries. Last year, the total amounted to 0.69 per cent of the gross national product A tentative plan (not yet approved by the Ministry of Finance) calls for increasing amounts rising to. 1 per cent of the G.N.P. by 1971. Technical aid, which so far

has been Yninor, may amount to 5 per cent of the total by that time. Other forms of aid are also to be tried: before next April, 250 “youth volunteers” are due to be sent out to Laos, the Philippines, Thailand, Malaysia, India and some African countries in an attempt to reap the same benefits of good will won by the Peace Corps or Volunteer Service Abroad. For New Zealand, with defence interests tied to the stability of Asia as a whole and South-east Asia in particular, Japanese aid programmes offer significant hope of boosting the economies of the area. No matter how much benefit Japan might reap from Japan's aid, an overflow of benefit to New Zealand is an inevitable by-product One particular facet of Japan’s work in the area—the "develop and import” scheme —is significant in helping South-east Asian countries to help themselves.

Japan is now importing several hundred thousand tons of maize each year from Thailand, after Japanese economists persuaded the Thais tn switch to maize production and Japanese agriculturalists helped with technical advice. Last year, 0.2 per cent of Japan’s “foreign aid” went to "Oceania” (Australia and New Zealand). Details could not immediately be found in the Foreign Office files.

Japanese officials do not expect any dramatic increase in the amount of aid given to these countries.