Japan intends to confirm over $1.83b in aid next week

[Black_cats]

Japan intends to confirm over $1.83b in aid next week
39th ODA package
FHM Humayan Kabir | Published: June 03, 2018 10:21:57 | Updated: June 03, 2018 10:23:58

https://thefinancialexpress.com.bd/...confirm-over-183b-in-aid-next-week-1527999838

Representational image

Japan is likely to confirm a US$ 1.83 billion in aid for Bangladesh next week, officials said Saturday.

The money from the country's largest bilateral development partner is meant to bankroll six development projects.

Finance ministry officials said the Japan International Cooperation agency (JICA) is expected to sign a deal on Yen 200.37 billion ($ 1.83 billion) official development assistance.


The agreement signing is scheduled for June 14.

Under the proposed 39th ODA package, Japan will provide some Yen 2.65 billion loan for the Matarbari port development project.

The Yen 37.22 billion will be for Dhaka MRT line-06 construction (phase-III) project, and Yen 7.36 billion for Dhaka MRT line-05 feasibility study project.

Besides, it will lend Yen 7.93 billion for the Matarbari ultra-super critical coal-fired power plant (phase-IV) project, Yen 6.73 billion for the Jamuna railway bridge project and Yen 6.56 billion for the health service strengthening project.

Meanwhile, the Economic Relations Division (ERD) and the JICA completed their preparations for signing the agreement, a finance ministry official said.

"We are hopeful about confirming the loan under the upcoming aid package on June 14. The loan will be utilised for six ongoing and fresh development projects," he told the FE.

In March this year, a Japanese team pledged to channel the money, expressing willingness to confirm.

Headed by Japanese Ambassador in Bangladesh Hiroyasu Izumi, the team met Economic Relations Division (ERD) secretary Kazi Shofiqul Azam.

A JICA team in September-October period last year completed its mission to Bangladesh to explore the possible financing to the proposed six projects.

The official said the aid will be useful for Bangladesh as it will be utilised for developing the new and ongoing projects, including the Matarbari power plant.

"All these projects are very important for the country to ensure smooth transportation and uninterrupted power supply," he added.

The government will have to repay the loan in 30 years with a 10-year grace period.

The JICA will charge 1.0 per cent interest rate for the proposed credit.

Over the last five to six years, Japan has enhanced its aid with confirming more than US$ 1.0 billion worth of funds under each of the aid packages.

In the last 38th ODA package, signed in June 2017, the JICA also confirmed Yen 178.223 billion ($ 1.64 billion).

The credit was used for six development projects in transport infrastructure, power and water sectors.

The Japanese government offered $ 700 million (Yen 76.825 billion) for Hazrat Shahjalal International Airport Expansion project, $ 480 million (Yen 52.73 billion) for the 2nd Kanchpur, Meghna and Gumti bridges construction.

It also granted $ 50 million (Yen 5.593 billion) loan for Dhaka Mass Rapid Transit development project (Line 1).

It confirmed loans for several projects, including $ 100 million (Yen 10.745 billion) for Matarbari ultra super critical coal-fired power plant.

In June 2016, Japan signed the 37th ODA deal worth $1.50 billion (173.54 billion Japanese Yen) with Bangladesh. And in December 2015, it signed the 36th ODA package, confirming $1.2 billion concessional loan for six development projects.

Japan has provided nearly US$ 12 billion of assistance since the country's independence in 1971.

kabirhumayan10@gmail.com

 

[khansaheeb]

Bangladesh seems to be the new darling of the West and Japan. It must mean low wage workers reasdy to be exploited.

 

[Bilal9]

Bangladesh seems to be the new darling of the West and Japan. It must mean low wage workers reasdy to be exploited.

Bhaisaab - Japan, Korea, Taiwan, China and now Thailand, Vietnam, Indonesia all were 'planning to be exploited'. This is how high wage countries use low wage countries to get cheap affordable good like jeans and T-shirts. Japan was in Bangladesh' low wage situation in the 1920's and China was too, as late as 2010. In inland areas it may still be.

1st phase - low value addition and low wage - garments, shoes, toys, kitchen electrics, small appliances, pots and pans, light engg. goods

2nd phase - medium value addition and medium wage - electronics items, TVs, computer peripherals, cellphones, machined goods, shipbuilding, automobile assembly

3rd phase - high value addition items and high wage - precision goods such as aerospace items, automotive parts, custom bespoke industrial assemblies such as transformers and powerplants

 

[UKBengali]

Bhaisaab - Japan, Korea, Taiwan, China and now Thailand, Vietnam, Indonesia all were 'planning to be exploited'. This is how high wage countries use low wage countries to get cheap affordable good like jeans and T-shirts. Japan was in Bangladesh' low wage situation in the 1920's and China was too, as late as 2010. In inland areas it may still be.

1st phase - low value addition and low wage - garments, shoes, toys, kitchen electrics, small appliances, pots and pans, light engg. goods

2nd phase - medium value addition and medium wage - electronics items, TVs, computer peripherals, cellphones, machined goods, shipbuilding, automobile assembly

3rd phase - high value addition items and high wage - precision goods such as aerospace items, automotive parts, custom bespoke industrial assemblies such as transformers and powerplants

BD is at 1st/2nd phase now.

 

[Curious_Guy]

i don't get economics

I read Japan has highest National debt, so where is this extra money coming from to aid other countries?

 

[UKBengali]

i don't get economics

I read Japan has highest National debt, so where is this extra money coming from to aid other countries?

The debt is owed to itself - it's citizens.

Japan also has massive investments around the world and so it is a net creditor and therefore can afford to lend money.

 

[khansaheeb]

i don't get economics

I read Japan has highest National debt, so where is this extra money coming from to aid other countries?

Obviously, they borrow money to lend to other countries

 

[mb444]

Japan’s economy is in serious decline, it’s population is tumbling has negative interest etc....

They are not really risking anything.... they will get back capital with interest. In real terms after 40 years they will have gotten a decent return at zero risk. They will probably also insist on Japanese involvement in the projects.

It’s a win win for both parties. This is not aid it is economic investment by japan.

 

[50cent]

India needs Japan aid more than bangladesh
Their population is forced to eat rats Bollywood will never show this. Rafales or Rats. Decide

 

[Nilgiri]

India needs Japan aid more than bangladesh
Their population is forced to eat rats Bollywood will never show this. Rafales or Rats. Decide

Are you really even Chinese?

https://www.youtube.com/results?search_query=chinese+rat+cooking

 

[bluesky]

Japan’s economy is in serious decline, it’s population is tumbling has negative interest etc....

They are not really risking anything.... they will get back capital with interest. In real terms after 40 years they will have gotten a decent return at zero risk. They will probably also insist on Japanese involvement in the projects.

It’s a win win for both parties. This is not aid it is economic investment by japan.

Bold parts:
1) Japan's GDP is almost equal to the total GDP of Germany and Spain combined. As a percent of world GDP,
Japan's share is 5.91%, Germany's 4.54%, and Spain's 1.62%. Any student of economy of national development knows that sky is not the limit of any country's progress and development. Japan's economy is not growing very further because it has already reached the zenith. Its living standard can more than match the living standard of european countries.
2) Being a world economic power, Japanese assistance to BD is not only free of interest to BD, it is also covered by debt grants. As a result, BD in reality, does not pay back any money. Please read the excerpts below to the last line. Japan helps out as a commitment to the poor least developed countries. Help thy neighbor. But, you are talking Japan is not risking any money when all the money given to BD is pure GRANT.
3) JICA is not a business group. It is a Japanese government organ that looks after the interest of LDCs like Bangladesh, Laos, Cambodia, Vietnam, Myanmar, etc.

Bangladesh people should appreciate what Japan is doing for BD instead of whining. Read the excerpts below to know that Japan's Grant to BD exceeds that of its ODA.
"Japanese ODA Loan: Japan has been extending Japanese ODA loans mainly in the area of infrastructure. In FY2008, Japan provided Japanese ODA loans amounting to 39.749 billion yen to Bangladesh. The cumulative amount of Japanese ODA loans to date has reached 680.5 billion yen. In April 2003, Japan decided to relinquish the Japanese ODA loans of 158.09 billion yen to Bangladesh, based on the UNCTAD resolution in 1978. Eastern Bangladesh Bridge Improvement Project (about 7.82 billion yen).

5. Grant Aid: Ministry of Foreign Affairs of Japan Fiscal Year Japanese ODA Loan Grant Aid Technical Assistance Japan has been extending grant aid to Bangladesh mainly in the fields of basic human needs, especially in the areas of agriculture, medical services and disaster management. In FY 2008, Japan provided the grant aid of 4.271billion yen for Bangladesh. The cumulative amount of Japan’s grant aid to Bangladesh has reached 494.489 billion yen, out of which 256.866 billion yen was given in the form of grant aid for the debt relief. Bangladesh is the largest country receiving Japan’s grant aid in the form of the debt relief.

 

[Bilal9]

Obviously, they borrow money to lend to other countries

There you go. Econ 101.

 

[mb444]

Bold parts:
1) Japan's GDP is almost equal to the total GDP of Germany and Spain combined. As a percent of world GDP,
Japan's share is 5.91%, Germany's 4.54%, and Spain's 1.62%. Any student of economy of national development knows that sky is not the limit of any country's progress and development. Japan's economy is not growing very further because it has already reached the zenith. Its living standard can more than match the living standard of european countries.
2) Being a world economic power, Japanese assistance to BD is not only free of interest to BD, it is also covered by debt grants. As a result, BD in reality, does not pay back any money. Please read the excerpts below to the last line. Japan helps out as a commitment to the poor least developed countries. Help thy neighbor. But, you are talking Japan is not risking any money when all the money given to BD is pure GRANT.
3) JICA is not a business group. It is a Japanese government organ that looks after the interest of LDCs like Bangladesh, Laos, Cambodia, Vietnam, Myanmar, etc.

Bangladesh people should appreciate what Japan is doing for BD instead of whining. Read the excerpts below to know that Japan's Grant to BD exceeds that of its ODA.
"Japanese ODA Loan: Japan has been extending Japanese ODA loans mainly in the area of infrastructure. In FY2008, Japan provided Japanese ODA loans amounting to 39.749 billion yen to Bangladesh. The cumulative amount of Japanese ODA loans to date has reached 680.5 billion yen. In April 2003, Japan decided to relinquish the Japanese ODA loans of 158.09 billion yen to Bangladesh, based on the UNCTAD resolution in 1978. Eastern Bangladesh Bridge Improvement Project (about 7.82 billion yen).

5. Grant Aid: Ministry of Foreign Affairs of Japan Fiscal Year Japanese ODA Loan Grant Aid Technical Assistance Japan has been extending grant aid to Bangladesh mainly in the fields of basic human needs, especially in the areas of agriculture, medical services and disaster management. In FY 2008, Japan provided the grant aid of 4.271billion yen for Bangladesh. The cumulative amount of Japan’s grant aid to Bangladesh has reached 494.489 billion yen, out of which 256.866 billion yen was given in the form of grant aid for the debt relief. Bangladesh is the largest country receiving Japan’s grant aid in the form of the debt relief.

I am not sure how you are reaching your conclusion. The article clearly states BD has to repay the so called aid which is really a loan at 1% interest in 40 years where there is a grace of 10 years. Current global interest rate is hovering around 0.005% annually and the jap economy has been moribound for the last 20 years plus. The money being invested will return for the jap greater interest then their economy will generate and also it will create a ready market for them.

There is no altruism at play here. It’s business. JICA is exactly like every other country specific development agency ....it is there to further the interest of the that country by gaining influence and cornering foreign market. Japan does not care about helping their neighbours but they do care about being able to sell their goods to their neighbours and being able to exert as much political leverage as possible.

This is how the world works. BD needs to work and press its advantage within the rules of the game. Everyone is looking out for themselves, please do not mistaken loans for aid or self interest for aultarism.

 

[Bilal9]

I am not sure how you are reaching your conclusion. The article clearly states BD has to repay the so called aid which is really a loan at 1% interest in 40 years where there is a grace of 10 years. Current global interest rate is hovering around 0.005% annually and the jap economy has been moribound for the last 20 years plus. The money being invested will return for the jap greater interest then their economy will generate and also it will create a ready market for them.

There is no altruism at play here. It’s business. JICA is exactly like every other country specific development agency ....it is there to further the interest of the that country by gaining influence and cornering foreign market. Japan does not care about helping their neighbours but they do care about being able to sell their goods to their neighbours and being able to exert as much political leverage as possible.

This is how the world works. BD needs to work and press its advantage within the rules of the game. Everyone is looking out for themselves, please do not mistaken loans for aid or self interest for aultarism.

Excellent analysis Bhai.

 

[Nilgiri]

s. Current global interest rate is hovering around 0.005% annually

Pulling numbers from your you know what again?

https://www.ceicdata.com/en/indicator/japan/bank-lending-rate

Japan could easily get 0.5% more (or more given this is just base rate) on this loan servicing within its own domestic economy and right away. So offering a massive grace period of 10 years AND a 30 year window AND fixed 1% interest rate is a pretty huge ODA (and hence why it gets put as ODA in first place) that amounts to effectively some level of billions when all is said and done. The exact number of that will only be available after that window has elapsed by checking the opportunity cost integral.

@bluesky