Can Japan and India Counter China’s Growing Infrastructure Push in Southeast Asia?

At the G7 Summit in the UK earlier last month, member countries agreed on a new initiative in the field of infrastructure for low and middle income countries. Dubbed as the “Build Back Better World” (B3W) Partnership, it could provide an alternative to the China-led Belt and Road Initiative(BRI).

Although Japan has been a major player in Southeast Asia in the field of infrastructure, it is clear that China has stolen a march over Japan in the region, especially after the launch of BRI.

Can Japan now (in cooperation with other countries) seize back the initiative in Southeast Asia in the field of infrastructure?

There are a host of factors which will determine this.

First, one interesting development is that both India and Japan have not joined the Belt and Road Initiative (BRI).

Meanwhile, India and Japan were to jointly develop the East Container Terminal at the Colombo Port in Sri Lanka. Though that specific project has been set aside, Sri Lanka approved joint venture with India and Japan in March for development of the "Western Container Terminal" in the same Colombo Port. The deal could lay down a template for cooperation between India and Japan in other parts of the world, including in Southeast Asia, in the field of infrastructure development.

Second, Japan is still one of the biggest investors in Southeast Asia in the field of infrastructure. The importance of this region for Japan can be seen in the fact that the first two countries which Japanese Prime Minister Yoshihide Suga visited after taking office were Vietnam and Indonesia. This is a continuation of Tokyo’s “Free and Open Indo-Pacific Vision”, which was launched during the time of his predecessor, former Japanese Prime Minister Shinzo Abe.

Third, Tokyo is also trying to regain lost ground in Southeast Asia. In the past, Indonesia had selected a Chinese-Indonesian consortium over Japan to build a high-speed railway line between Jakarta and Bandung.

Japanese firms have also been increasing their investment in Southeast Asia following growing tensions between the U.S. and China over the past decade. In addition, many Japanese firms have been moving their supply chains away from China as Tokyo-Beijing ties suffer from political tensions.

Where Does India Figure?

Meanwhile, India is looking towards Southeast Asia in a big way as part of its “Act-East Policy”, which aims to reinvigorate its historic ties with this region and East Asia. New Delhi has been providing loans to the CMLV (Cambodia, Myanmar, Laos and Vietnam) countries. It has extended Lines of Credit (LoC) to the Mekong region (CMLV countries and Thailand) and has disbursed approximately “$580 million USD for various projects which include hydro power generation, digital connectivity, rural electrification, irrigation schemes, installation of transmission lines and building of educational institutes.”

It has also been investing in a big way in the infrastructure sector in Myanmar. Connectivity is a major area of collaboration with projects like the India-Myanmar-Thailand trilateral highway, which could be extended to Vietnam in the not-too-distant future. In fact, Myanmar could emerge as a major area of cooperation between India and Japan, given the close and historical ties between these two countries and Myanmar.

Another area where India and Japan are likely to cooperate in the region is in the realm of maritime security. The Indian Navy conducts a whole range of naval exercises with the navies of the region and is seen as a benign presence there. The JMSDF (Japan Maritime Self-Defense Force), too, has been increasing its cooperation with like-minded navies in the region and in some cases has also handed over assets to some of the Southeast Asian countries, which suffer from resource constraints.

Challenges

However, there is no denying that it will not be easy for India and Japan to counter China’s influence in Southeast Asia.

There are many reasons for this.

First, China is the leading trade partner for many countries in this part of the world. In addition, it is also a member of the UNSC (United Nations Security Council), where it enjoys veto power. This will be key for countries like Myanmar, which have been facing international opprobrium because of its internal unrest.

Last month, foreign ministers from the Lancang-Mekong Cooperation (LMC) countries met in China's Chongqing to “discuss joint efforts on the COVID-19 pandemic and future work on recovery and development.” This is yet another example of China’s growing influence all over the world, and Southeast Asia’s case is no different.

Second, both Japan and India will need to be careful when pitching joint projects in Southeast Asia, given the fact that these nations have always been keen to protect their neutral political stance. Though Japan had been advocating its “Free and Open Indo-Pacific Vision” for some time, there seems to be reluctance among some Southeast Asian nations towards the same.

Third, India has been hit hard by the second wave of the coronavirus pandemic, and hence it may take some time for the economy to recover. While it is noteworthy that the total trade between India and the ASEAN countries stood at $86.86 billion in FY20, India has not joined the RCEP, and this could be a major drawback.

There is no doubt that both Japan and India have long-standing ties with the countries in Southeast Asia and hence it is only natural for them to be showing interest in this region once again. The Southeast Asian nations also realize that it would be unwise to put all their eggs in one basket.

Although as of now, China is ahead in the infrastructure race in Southeast Asia, other countries are pushing back. It is here that countries like Japan and India will play a major role. The race is certainly getting hotter.

Author: Dr Rupakjyoti Borah

Dr Borah is a Senior Research Fellow with the Japan Forum for Strategic Studies. The views expressed here are personal.