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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: lurqer who wrote (39326)	3/12/2004 12:04:01 AM
From: lurqer	Read Replies (2) \| Respond to of 89467

For those following the changing Asian economic scene. Japanese soft loans pour into Indian projects By David Pilling India will for the first time become the prime recipient of Japanese soft yen loans, eclipsing China as the biggest destination for Tokyo's overseas development aid. The change follows a 10 per cent rise in loans to India to about Y120bn ($1bn, €884m, £602m) and a 20 per cent cut to China, to Y97.6bn. Japan is the world's biggest sovereign lender to both India and China, according to foreign ministry officials. Loans to China have been slashed in recent years in response to heated political arguments that Japan should not be funding its biggest emerging competitor. This year's allocation is about half the 2001 peak, when a change of policy was enacted. Indonesia, which has been allocated loans of Y104.6bn this year, has also overtaken China for the first time. Unlike Japanese loans to China, which can no longer fund infrastructure projects, lending to India will be concentrated in the power generation and transport sectors. "There are so many Japanese companies that are very interested in the Indian market, but they are hesitant to go in because of the infrastructure bottlenecks," said a foreign ministry official. "For India to get rid of its enormous poverty, they have to achieve economic development, but there are bottlenecks in terms of social and physical infrastructure." By contrast, the official said, China had built up "magnificent" ports and airports in its coastal regions. Japanese loans are now directed solely to the Chinese interior, mainly to environmental, health and people-related projects. Japanese loans are now only a fraction of China's huge foreign investment. But until the mid-1990s, according to foreign ministry, lending from Tokyo accounted for about 20 per cent of total investment. In all, Japan has lent nearly Y3,000bn to China, whose repayment record was described by officials as faultless. The foreign ministry hopes development loans to China will not need to be cut much further. By shifting away from big-ticket items, the programmes were gaining better understanding from disgruntled Japanese taxpayers, it said. news.ft.com lurqer