In China’s overseas development community, Japan is often considered a forerunner of particular learning value for China. The East Asian neighbor was one of the first development assistance providers to China after it opened up in the late 1970s. In the process, Chinese policy makers witnessed first-hand how Japan’s infrastructure-for-loan model “worked” in China’s own development, inspiring the architects of Chinese foreign aid decades later on an infrastructure-centered strategy. The cultural affinity between the two countries also makes Japan’s experience of doing overseas development in the developing world more accessible to Chinese actors, who are immensely interested in the operation of the Japanese aid apparatus, including JICA, JBIC and ADB (as a Japan-led multilateral development bank).
In earlier articles, Panda Paw Dragon Claw has engaged with observers and practitioners of Japanese foreign aid on their observations and lessons learned, as an indirect channel into understanding Chinese thinking about the issue. In those exchanges, one topic that was often raised is how Japanese civil society has engaged with the country’s overseas development apparatus and held it accountable, a task that is considered particularly challenging for their Chinese counterparts. For the past 30+ years, Mekong Watch has followed Japanese developmental entities in their activities across the Mekong region. The Japanese NGO has accumulated precious first-hand knowledge – in Mekong countries and in Tokyo – on how the Japanese overseas development apparatus approaches accountability and sustainability.
PPDC recently had the chance to interview Mr. Toshiyuki Doi (Toshi), a Mekong Watch staff who has been based in Bangkok for over twenty years. He shared his insights on the similarities between Japanese and Chinese overseas development assistance and the challenges in introducing accountability.
Panda Paw Dragon Claw (PPDC): A bit of personal history first. What brought you to Mekong Watch in the early 2000s?
Toshi: I started working for Mekong Watch in 2002. At that time I was teaching at a Thai University. The organization asked me for help to monitor coal-fired power plant projects in southern Thailand that involved the Japanese state and private investors. I did that in a part-time capacity for about a year and in 2003 became their senior advisor working on specific projects and policy issues particularly around the Asian Development Bank (ADB). On a personal note, I was deeply interested in Asian cultures when I was studying in Hawai’i in my early 30s, where I got to know people from Southeast Asia. Japan is of course part of Asia but very different. Being immersed in an Asian country, learning the language and knowing the people was my inner calling when I came back to Japan as a college professor. And that ultimately brought me to Thailand.
PPDC: What was the state of Japanese official development assistance (ODA) around that time?
Toshi: Back then, many Japanese Civil Society Organizations (CSO) were concerned about the new trend in Japanese official development assistance. Whereas in the earlier era, Japanese ODA also had its problems such as the support of authoritative regimes that caused negative environmental and social impacts, around the turn of the century, the involvement of the private sector increasingly became a big issue. So did the state’s financing arm for the private sector such as the Japan Bank for International Cooperation (JBIC). While the issues of the earlier era were not completely solved, the new trend was worrying enough that we began to put our focus on how the state backs up the private sector in its development finance.
PPDC: Was this new trend part of Japan’s national strategy on development finance at that time?
Toshi: It was more of a global trend. At that time the governments of industrialized countries were saying that more development was needed in the developing world. However, official funding was insufficient to respond to the massive developmental need in the Global South. The private sector should be involved more in development financing and development projects. The Japanese government basically followed that logic. So we were seeing more projects like the ones Mekong Watch asked me to monitor: projects initiated by private Japanese companies that were backed up by the state export credit agency JBIC.
PPDC: If you compare Japanese development assistance or finance in the region 20 years ago with Chinese overseas investment today, what similarities and differences do you see?
Toshi: I see a lot more similarities than differences, although I won’t claim I fully understand Chinese ODA and overseas investment.
From my point of view, both have a clear tendency of supporting large scale infrastructure projects, whether it’s hydropower or road construction. There may be similar historical backgrounds behind this. When I asked Japanese government officials why Japan focuses on large scale infrastructure in overseas development, they said infrastructure was fundamental to economic development. They very strongly buy into the model of “infrastructure first, then development follows”. In Japan’s own case, it has re-industrialized and recovered from war time devastations by building large-scale infrastructure including hydropower dams and high-speed train lines. They borrowed from institutions like the World Bank and successfully paid back all the money.
So even today many Japanese bureaucrats seem to believe that providing low-interest concessional loans (instead of giving grants, which may lead to moral hazards in their views) would help the recipients’ economic development. Whether this is true or not can be debated. But it is a belief that Japanese institutions hold strongly.
Also, supporting large scale infrastructure can allow you to allocate a large amount of money with relatively few projects, meeting your ODA obligations in quantity more easily than doing small-scale health projects, for example. The infrastructure projects are highly visible and can be used to impress the public. All these factors may contribute to the tendency to support large-scale infrastructure projects.
A second similarity is that both countries tend to put responsibilities on the shoulders of recipient countries. When it comes to particular issues such as conducting thorough Environmental Impact Assessments (EIA), or compensating affected communities, Japanese officials would say that the main actor responsible for them is the host country government. They try to relegate their own responsibility as a lender.
Finally, in overseas development both countries appear keen to ensure some benefits for their own companies. I hope Japan and China are genuinely concerned about the development of the recipient countries. But if the Japanese government gives assistance for Cambodia to build a power plant project, for instance, it would prefer that Japanese private companies get the contracts. Of course, in the international system there are transparent bidding and procedures. Unless it is tied aid, the Japanese government cannot really “give” the projects to its private sector. But at the back of their mind it is always their concern that the benefits of Japanese overseas aid or investment will somehow return to Japan. I believe that’s probably more or less the case in China as well.
PPDC: As you mentioned, a lot of the dynamics in overseas development are very similar between the two countries. The natural question is whether such features pose challenges to accountability, when, for example, the relegation of responsibility to host country governments is the norm?
Toshi: In overseas development, responsibility is not a clear cut “either or” question. We should clearly differentiate the responsibilities of recipient governments and lenders. From there we can work out the specifics in different cases. For example, on the issue of compensation, maybe the recipient governments will do the distribution, but the lender should make sure that compensation actually reaches the affected communities. The lender has the overseeing responsibility.
There are structural issues around large-scale infrastructure projects when it comes to accountability. The state agencies responsible are often understaffed. Conducting thorough due diligence for development projects requires specialized expertise in environmental and social issues. If you look at JBIC or even ADB, they don’t have enough expertise, especially to safeguard environmental and social impacts. Structurally there is a bias toward economic, finance and engineering backgrounds in their staff. While they have hired more environmental and social specialists in gender, Indigenous Peoples and involuntary resettlement in more recent years, the number is still not enough.
Another key challenge to accountability is the mentality in these institutions. To ensure accountability, you always have to be open to feedback from stakeholders, particularly affected communities. In recent years, a major issue is to establish accountability processes and grievance mechanisms to ensure compliance with environmental and social policies. Affected communities can file complaints through the mechanisms and whoever responsible should look into them.
But here comes a cultural factor. The very concept of “complaint” is culturally charged. Some Japanese bureaucrats might overreact as they feel that their face or reputation is jeopardized by simply receiving complaints. Part of this may stem from a patriarchal mentality. In many Asian cultures – especially in Japan – if you are in the senior or “giving” position, you are expected to take good care of the junior. If the junior is not happy about the senior’s deeds, it is considered a mistake on the side of the seniors for being inconsiderate. If you put that into the development context, as a donor providing assistance to a recipient, a complaint from the latter may be seen as a blame on the former. And this cultural aversion to complaints is built into the system. A bureaucrat’s performance review could be affected. S/he might be sidelined or demoted for receiving complaints from projects overseas. In those situations, s/he either tries to pacify and make sure that a complaint is not filed, or even tries to cover up.
PPDC: How does civil society overcome such accountability challenges? In the East Asian context, CSOs often do not have equal standing with other stakeholders such as government agencies or the private sector.
Toshi: In Japan, CSOs fought to have access to the decision-making process on overseas aid and investment. In early 1996, as ADB was preparing for its 1996 annual meeting in Manila, it required accreditation for Japanese CSOs, as any other CSOs, wanting to attend the event. When such requests arrived at the desk of the Ministry of Finance, the response from officials was to reject some organizations, particularly newly established non-metropolitan CSOs, on the ground that they were not funded by public agencies. I was among the ones that were denied accreditation.
The CSO community was outraged because no other ADB member country had denied their CSOs. In early 1997, the Japanese CSOs asked one friendly parliamentarian from the opposition party to raise it at the Diet (Japanese parliament). Fortunately, the representative of the Ministry of Finance (MoF) present was quite open minded. He promised to open up the [accreditation] process to accommodate as many Japanese CSOs as possible for that year’s ADB annual meeting in Fukuoka, Japan. The MoF representative also agreed with the parliamentarian’s proposal to start regular consultation between the MoF and civil society, as he conceded that CSO participation was becoming increasingly important in the development sector. That’s how regular consultation started with the Ministry of Finance and later on with the Ministry of Foreign Affairs, JBIC and JICA. At sessions with the MoF, CSOs keep copious notes and disclosed them through a dedicated website. By mid-2023, the CSO-MoF regular consultations took place 80 times over 16 years.
PPDC: The civil society – government interactions also helped produce JBIC’s first Environmental Guidelines?
Toshi: It was around 2000, when JBIC was at its formative stage. The OECD (Organization for Economic Co-operation and Development) was urging Export Credit Agencies of member countries to strengthen environmental and social standards for their operations. So a few enlightened Japanese civil society leaders, including academics, with officials in the Japanese Ministry of Finance and other institutions started this so-called “study group” to co-create a set of recommendations for JBIC’s new environmental and social guidelines. Upon its set-up, all sides made agreements on some basic rules: complete transparency of the process (anyone can register in advance to take part in study group sessions); and JBIC should take the recommendations coming out of the process into serious consideration in drafting its new environmental and social guidelines. In the end, the Japanese government was quite proud of the quality of the final product. The CSO side saw some weaknesses in the finalized guidelines, but the feedback was positive overall. The complete proceedings of the study group are kept at this website until today.
PPDC: Do you see the regularized CSO-government consultation as an effective way to increase accountability for Japanese overseas development projects?
Toshi: There are always issues that are not fully accounted for through such channels. But the regular consultation achieved at least two things: first, it built confidence between the two sides. Before, when we made phone calls to the ministries, we could not even reach the right person to pick up the phone. Second, it facilitated information exchange. CSOs had better access to ministerial information, and the ministries appreciate information from on the ground, in particular what impacts a development project has actually brought about to local environments and communities, as in their own capacity they have very little way of accessing that information.
PPDC: If such semi-formal channels prove inadequate in bringing about positive changes, what else will you do?
Toshi: There is really nothing new or fancy. Project monitoring on the ground level through the public lens is always needed, that’s where CSO strength lies. We need to strengthen our ability to monitor what’s happening with a developmental project, especially who puts up with environmental and social risks. In my case, I’m still monitoring a particular hydro project in Cambodia and my colleagues are monitoring projects in other parts of the Mekong region.
Plus, we should strengthen our regional and international partnerships. Our work can be enhanced when we are working in a network. Compared to 10 years ago, CSOs, particularly those in the Asian region, have grown in maturity and skills. They have organized together to form effective watchdog platforms such as the Manila-based NGO Forum on ADB. The Japanese government is pretty sensitive to how it is viewed outside Japan. International reputation matters to them. I think this applies to China too, to a certain extent. So sometimes rather than us Japanese CSOs making recommendations to Japan, we can coordinate our effort with colleagues and friends in Asia to communicate in a concerted voice. I think this will make the Japanese government take us more seriously.
PPDC: In recent years your work has also begun to cover Chinese-invested projects in the Mekong region, such as dam projects in Cambodia. What challenges do you have when working on such projects?
Toshi: The most difficult thing is the lack of access to Chinese actors. The Japanese experience shows that dialogue is important. To start the dialogue process, you need to reach out first. Compared to the earlier experience of Japanese CSOs trying to establish communication channels with Japanese stakeholders, it’s even more difficult to do so with Chinese stakeholders in the region. That’s why having Chinese civil society in the network to help build bridges is crucial.
