Abe Touts Streamlined Loans as China's AIIB Gets Set to LendBy
Japan aims to cut loan approval time by as much as half
ADB and Japan to make $110 billion of loans in next 5 years
Prime Minister Shinzo Abe is beefing up Japan’s role as a provider of infrastructure and finance in Asia just as the Chinese-backed Asian Infrastructure Investment Bank prepares to make its first loans.
Japan aims to halve the time it takes to get a development loan and make it easier to obtain funds, Abe told business leaders on Saturday on the sidelines of an Association of Southeast Asian Nations meeting in Kuala Lumpur. He reiterated that Japan and the Asian Development Bank -- which the country backs -- would seek to provide $110 billion of infrastructure funding in Asia over the next five years.
Abe’s push coincides with preparations by China to soon open the coffers of the AIIB, a $100 billion multilateral development bank. Like its U.S. ally, Japan declined to join the AIIB even as the countries including the U.K., France, Australia and Germany signed up to become founding members.
Japan and China are vying to bolster their political influence in Asia by becoming the infrastructure providers of choice. There is plenty of demand, according to Abe, who estimated it could rise to as much as 100 trillion yen ($814 billion) a year. While China is a member of the ADB, Japan and the U.S. are the biggest shareholders and the institution’s chiefs since it was founded in 1966 have been Japanese.
Abe’s vision is to enhance Japan’s role as an infrastructure provider by playing on the perception of quality and safety associated with most Japanese engineering.
“The pursuit of short-term profits through only sales without support is not the way Japan conducts itself,” he said. “We will also not spare any effort to share Japan’s sophisticated technologies or know-how, or the reliability of ‘Made in Japan.”’
ADB President Takehiko Nakao said earlier this month the Manila-based lender is in talks with the AIIB to jointly finance projects in the region next spring. The ADB said in May it would boost its total annual lending and grant approvals by 50 percent to as much as $20 billion.
China’s Premier Li Keqiang also announced in Kuala Lumpur Saturday that China would offer $10 billion of loans to boost infrastructure construction in Southeast Asia. Last month, China won the rights to build a $5.5 billion railway line in Indonesia. Japan agreed this month to lend the Philippines $2 billion for a rail project, the biggest expenditure of its kind between the two nations.
To help give Japan an edge, the country aims to cut the time it takes to get a loan from three years to between 18 months and two years, and end its practice of requiring government guarantees for each loan.
While Abe burnished his lending credentials, U.S. President Barack Obama touted the benefits of the Trans-Pacific Partnership, a 12-nation trade deal that is the centerpiece of his self-proclaimed economic and security re-balancing to the region. China isn’t a member of the pact, which covers about 40 percent of the global economy.
“Countries are more integrated than ever,” Obama told the business leaders immediately before Abe spoke. “The answer is to do trade the right way. That’s what TPP is. A win for all of our countries.”
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