On the visit of Katsuya Okada
May 13, 2012
M. Serajul Islam
In the backdrop of the high profile visits of the US Secretary of State Hillary Clinton and the Indian Finance Minister Pranab Mukherjee, the visit of the Japanese Deputy Prime Minister Katsuya Okada was almost a non-event. Pranab Mukherjee was scheduled for the visit earlier and hence his visit was not entirely unexpected. Those of Katsuya Okada and Hillary Clinton have taken place quite unexpectedly.
But once these visits were known to the media, all focus was on Hillary Clinton and Pranab Mukherjee and little on Katsuya Okada despite Japan’s great importance to Bangladesh as its number one development partner. Japan with the WB and the ABD are the three financiers for Padma Bridge project that has run into trouble on corruption charges on the Bangladesh side. Japan is also financing the US$ 1 billion Dhaka metro rail project that too has run into trouble.
Japan has been a major financier of the Jamuna Bridge, Bangladesh’s biggest ever economic infra structure project. In fact, for quite some time after diplomatic ties were established in 1972, Bangladesh was on top of the list of countries receiving Japanese ODA largely in recognition of the great war of liberation that Bangladesh fought in 1971. Last year Japan increased its ODA from US$ 400 to US$ 600 million a year, much greater than that from the USA and greater than the UK.
Japan’s ODA to Bangladesh has been over US$ 10 billion so far. It is also the quality of that aid that makes Japan so important for Bangladesh. Japanese aid over the years has gone to key areas of economic infra structure and human resources development. Japanese assistance is also largely grants and a lot of assistance initially received as aid is also eventually converted into grants. Thus on quantity and quality, the importance of Japanese assistance that is seldom acknowledged in Bangladesh publicly, is in a class of its own. More importantly, unlike its other donors, Japan does not humiliate Bangladesh for the assistance it gives to the country.
Bangladesh’s dependence on aid today is however not as desperate as it was in the initial decades after independence. Nevertheless its importance cannot also be under estimated. These factors notwithstanding, Japan is a major destination for countries seeking FDI. Malaysia’s transformation from a developing country no better than Bangladesh when the two were seeking economic development in the 1970s to a major economic success story has largely been to due to Japanese FDI. Japanese FDI has also helped in a major way in launching China’s economic development.
Japan is these days itself seeking new FDI destinations. In China, Japanese investors are now un-comfortable for a variety of reasons, one being the historical animosities between the two countries. Many Japanese investors in China are seeking new pastures for investment. Malaysia has saturated. So has Vietnam. Other Southeast Asian nations such as Cambodia, Laos, etc do not have the geopolitical or other potentials to attract Japanese FDI. Bangladesh’s geopolitical location and its huge reservoir of cheap labour force are great lures for attracting Japanese investments. Till December 2011, 208 Japanese companies have registered in Bangladesh with a cumulative investment of US$ 1.2 billion. The numbers have not even scraped the vast potentials.
Japan has in the past quite explicitly expressed its interest in Bangladesh as an investment destination. It has also highlighted the reasons that have been distracting Japanese investors from coming to Dhaka in a major way. During his stint in Dhaka under the last BNP government, Ambassador Matsushiro Horiguchi had highlighted these distractions in a letter to the Government that was leaked to the press. Unfortunately, the government of the time took no note of the distractions and Japanese investment in Bangladesh never fulfilled the potentials that are invariably there.
Two recent events in Bangladesh have encouraged Japan to focus on Bangladesh with renewed interests that have been additional reasons for the sudden visit of the Japanese Deputy Prime Minister. The possibility of Bangladesh becoming the connectivity hub of the region as a result of the initiatives taken for improvement of Bangladesh-India relations is one reason. Bangladesh now has a large portion of the Bay of Bengal for looking for hydro-carbons as a result of the ITLOS decision on demarcation of maritime boundary with Myanmar. Bangladesh expects to have another large portion of the Bay for the same purpose once its case against India comes up at the UN Commission on Law of the SEA (UNCLOS) in 2014. Energy starved Japan is viewing these developments with keen interest.
Katsuya Okada spelled out this interest in clear terms. In one of his meetings in Dhaka, he said that “Bangladesh is a raw diamond. If it is polished it will be real diamond.” He expressed Japan’s willingness to fund the Padma Bridge but only after the cloud of corruption raised by the WB accusation is satisfactorily resolved. He said that Japan would soon re-start the funding of the Dhaka metro rail project as it is satisfied with the re-routing. He nevertheless clearly underscored the importance of a zero tolerance on corruption in Japan-Bangladesh aid relations as required under Japanese law.
The Japanese DPM is a very important leader of the ruling party, no less influential than the Prime Minister. In Dhaka, he met the Prime Minister and the Leader of the Opposition but held official talks with the Foreign Minister. Given the fact that Japan has the capability to turn Bangladesh around and launch it to the orbit of assured economic development with its investment potentials alone, he needed assurance from the level of the Prime Minister to take home about Bangladesh’s seriousness for economic relations with Japan.
The fact that US Secretary of State held official talks with the Bangladesh Foreign Minister perhaps made it difficult to elevate the level of talks of the Japanese DPM. In this sense, the timing of the Japanese DPM’s visit was an inopportune one for Bangladesh because a leader of his importance should have held his official talks with the Bangladesh Prime Minister. Nevertheless even in these 3 visits, a departure was made. The Indian Finance Minister’s courtesy call with senior ministers in attendance followed by a luncheon she hosted for him was given the aura of summit level talks. Something like that should have been arranged for the Japanese guest.
The timing of this visit was also wrong for Bangladesh because the Japanese DPM visited Dhaka when on issues that Japan is deeply interested for continued economic cooperation, namely political stability and corruption, Bangladesh’s position is very fragile. One good thing that Bangladesh offered to Japan, an offer that has come decades too late, is that of an exclusive economic processing zone that Bangladesh offered to South Korea when the last AL Government was in office. Whether this offer would be translated into concrete result would depend largely on whether Bangladesh can overcome the current political instability gripping the country and the quicksand of corruption into which it is sliding.
The three important visits to Dhaka took place not due to diplomatic initiatives of the Bangladesh Government. The underlying reason for the visits is just one; to offer Bangladesh the incentives and the preconditions for joining a new security alliance in the making for the region aimed at containment of China. Katsuya Okada came to Dhaka holding out the aid and investment incentives to encourage Bangladesh to join this new security initiative when it is formalized.
There has been no Bangladesh Ambassador in Japan for nearly a year since the last one was withdrawn under an embarrassing accusation of sexual harassment. Yet Katsuya Okada came to Dhaka. That lends credence to the belief that the three important visits to Dhaka were all undertaken with a well coordinate game plan in the interest of the visitors rather than Bangladesh. Nevertheless, the visit of a Japanese DPM was one loaded with great opportunities. Unfortunately because of its pre-occupation with Hillary Clinton and Pranab Mukherjee, the Bangladesh Government failed to give the visit the importance that it deserved.
The writer is a former Ambassador to Japan.