Despite facing a monumental reconstruction process after being hit by the worst earthquake in its recorded history, Japan on Monday reassured the global community that it remains “deeply committed” to its international obligations, including major infrastructure projects in India.
India is one the largest recipients of Japanese developmental funds worldwide. The Japan International Cooperation Agency (JICA), the country’s official development assistance arm, for instance, is involved in the Western corridor of the Dedicated Freight Corridor Project, with a loan of ¥94.5 billion, as well as the second phase of the Delhi Metro Railway project, where it has advanced ¥211.9 billion.
Additionally, JICA is also assisting in other schemes such as the Hyderabad Outer Ring Road Project, Visakhapatnam Port Expansion Project, Rajasthan Minor Irrigation Improvement Project and the Yamuna Action Plan.
“Japan will continue to honour the commitments (made) and remain engaged with Asia. I want to clear out any uncertainties about Japan’s future commitments,” Japan’s Deputy Vice Minister for International Affairs Naoko Ishii said.
Ishii, who was in Singapore to attend the World Bank Conference on East Asian Development, said that her government was unlikely to scale back its loan commitments, even though the country’s will need substantial funds to reconstruct after twin disasters — an earthquake, followed by a tsunami — ravaged four prefectures.
“Yes, definitely. I see no problem (with the funding continuing). There should be no revisions to the commitments and loans already approved,” she said.
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Estimates indicate that the disaster will cost the economy at least $200 billion, a figure that could rise if the nuclear crisis, involving the battered Fukushima Daiichi nuclear plant, worsens. More recently, there have been fears over radioactive contamination of food products, and Japan’s industry has been unable to recover quickly due to inadequate power supply.
But even then, according to Ishii, Japan will not back down from its role in developing countries, including functions undertaken by JICA. “I really don’t see that kind of policy direction in the future. We would like to continue our engagement,” she added.
Meanwhile, the World Bank has predicted that the impact of the crisis in Japan on East Asian economies will be limited and temporary.
“Japan’s real GDP growth will slow, but the slowdown will likely be temporary, as a result of the earthquake and tsunami and growth should start picking up after mid-2011 as reconstruction efforts get underway,” the Bank’s latest East Asia and Pacific Economic Update stated.
“While it is still too early for a full assessment, Japan’s past experience suggests an accelerated reconstruction effort, and the short term impact on the economies of developing East Asia is likely to be limited,” the report added.
The report also raised concerns over the possible impact on finance in the region, as about one-fourth of East Asia’s long-term debt is denominated in yen, from about 8 per cent in China to 60 per cent in Thailand.
A one per cent appreciation in the Japanese yen, it stated, would translate into about a $250 million increase in annual debt servicing on yen-denominated assets held by East Asia’s developing nations.