Infrastructure Development in the Indo-Pacific: A Japanese Strategy for Port-able Governance?
May and June were busy times for Japan’s Prime Minister Shinzo Abe. Within a week, Abe hosted several heads of state, including Bangladesh’s Prime Minister Hasina. Amidst a recent push to develop “quality infrastructure”, the meeting ended with Abe committing 1.2 billion USD towards infrastructure projects, ranging from a high-speed rail network to a commercial port in the Southeast of Bangladesh. As part of the “Free and Open Indo-Pacific Strategy”(FOIPS), Tokyo has been stepping up its infrastructure development in the region. Critics argue that this push is aimed almost exclusively towards balancing against Beijing’s Belt and Road Initiative. Yet, perceiving such investments as a zero-sum power game veils how Tokyo can both capitalize upon, and simultaneously reshape, how the region’s presumed need for “peace and stability” is governed.
Pushing Port Development
Development aid schemes have been part and parcel of Japan’s foreign policy approach for decades. Yet, the country’s latest development funds have predominantly pushed infrastructure projects higher up on its strategic priority list. Alongside Abe’s ambitious “Free and Open Indo Pacific Strategy”, Japan has been able to gain considerable momentum through its infrastructure development scheme. In this regard, the recent commitment to continue constructing Matarbari port in Bangladesh’s southeastern region, presents only one piece of Tokyo’s Indo-Pacific investment puzzle. The long-term port project, which is said to increase capacity for larger vessels to dock, is meant to maximize trade flows, attract further investments and generate economic revenue for the surrounding Matarbari region.
Almost simultaneously Japan announced that it would construct a deep-sea container terminal in Colombo, Sri Lanka, as part of a joint-venture with the Indian government. The new port will also facilitate a higher frequency of larger ships and thus enhance the port’s economic turn-for Sri Lanka’s capital region. The Japanese government has made assurances that this project would be partially financed through development loans provided through its development agency (JICA). Construction will be carried out by firms from both Japan and India, as stipulated by the development funding agreement. Bangladesh’s Matarbari port’s construction tenders, though openly contested, were also won by major Japanese construction conglomerates.
In addition to financing the development of ports in the Indo-Pacific, Japan has gained the rights to hold major shares in the ports it constructs. It currently holds operational rights at Thilawa port, a project in Myanmar finalized in December 2018, which is run by Japanese logistics company Kamigumi, with its headquarters in Kobe, Japan. While the port is still owned by Myanmar’s Port Authority, Kamigumi acquired the rights to run the facility together with a Japanese consortium consisting of Sumitomo and Toyota Tsusho Corporations. This public-private partnership model of joint development and operation will likely extend to Bangladesh’s south-eastern port, although concrete details are yet to emerge.
Securing Japan Through Connectivity
While not the only infrastructure funded through Japan’s strategic development aid program, ports lend themselves as an ideal analogy to Tokyo’s wider pivot to “peace and stability” in the Indo-Pacific. However, it is all too tempting to downplay Japan’s role in developing key infrastructure as attempts to strategically balance Beijing’s influence in a zero-sum game. The port development projects in Bangladesh, Myanmar and Sri Lanka exemplify how the current Japanese administration is gaining its own diplomatic leverage not only through funding but by strategically employing private Japanese companies to strengthen the nation’s grip on local development for its own national interest. Thus, Japanese aid does not come on altruistic terms, but revolves around a sophisticated influence seeking approach running through economic means.
For a nation facing a host of strong economic headwinds, including demographic pressure and the need to diversify its energy resources after Fukushima, opening up other channels for market access and generating revenue by developing the necessary infrastructure for these markets is a vital stepping stone. With its workforce and domestic consumption said to decrease over time, Prime Minister Abe has been fervent to revitalize Japan’s domestic economy. It should therefore come as no surprise that Bangladesh, Myanmar, and Sri Lanka were selected for large-scale, ambitious infrastructure projects, as all three are rapidly expanding economies.
The infrastructure needs for these nations to retain an economically competitive edge presents Japan an opportunity to kill two birds with one stone. Firstly, it allows Tokyo to capitalize on its own export of expertise in developing quality infrastructure, including ports. Since most tenders are awarded to Japanese companies, this opens up a new source of revenue at times of heightened financial burdens. Secondly, the newly developed ports which have capacities for larger ships, will in return, provide Tokyo with another source of economic revenue through improved market access.
While both aspects highlight potential material gains, they do not expose the practice of how they are achieved. While largely envisioned as an appealing alternative to Beijing’s alleged debt-trap diplomacy, the manner in which Japan operates the construction process and gains control over these ports is largely not reported upon. Although not all ports are under full control, the Japanese businesses that hold a large share are simultaneously shifting what ought to be under local ownership to foreign entities with close governmental ties.
Beyond Balancing: Shaping the Rules of the Game – for Mutual Benefit?
Developing ports gives the Japanese government a competitive edge to provide goods and services and subsequently gain access and even a certain amount of control over these hubs, thereby alleviating mounting domestic social and economic pressures. Thus, whereas China’s perceived rising influence might function as a precursor for Japan to expand its portable diplomacy beyond national borders, it would be a mistake to place emphasis solely on Beijing as the driving force. Instead, investing in ports embodies how Japan’s infrastructure scheme is both a tool for strategic national security governance, by opening up economic channels connecting Japan’s economy to those of the Indo-Pacific, as well as being a vast private business network for Tokyo to utilize for political leverage.
The port-able aspect, however, might not bank so much on a fairer alternative. Instead, it is the provision of almost unhindered access to a nation promising to establish fairer rules and mutual gains vis-à-vis Beijing which appears to falter when one analyzes what is happening on the ground. All in all, whilst Japan’s infrastructure push is set for praise at the 2019 G20 meeting in Osaka, its pitfalls and potentially negative consequences for the host nations should not be dismissed in the light of the perceived predatory tactics of the Chinese development model.