Japan on Saturday pledged $7.4 billion in development aid over the next three years to Cambodia, Laos, Burma, Thailand and Vietnam, and also waived billions of dollars in Burmese debt.
The aid, directed at boosting infrastructure in the Mekong River region -- a resource-rich area where China is competing for influence -- was the result of meetings in Tokyo between leaders of the five countries.
Japanese Prime Minister Yoshihiko Noda, who announced the pledge, says Japan set out 57 "flagship" projects focusing on development of ports, highways, power plants and high-speed railways worth an estimated $28 billion.
At the meetings, Thai Prime Minister Yingluk Shinawatra called for Japan’s support in development of the $8.6 billion deep-sea port and industrial-estate development in Burma’s Dawei southern region, a project led by Thai development and construction companies.
Japan provided a key boost to Burma's military-backed civilian government of President Thein Sein by saying it would begin taking steps to forgive $3.7 billion of the country’s outstanding debt and said it was recommence suspended aid on condition the country continues moving ahead with political reforms.
Ian Storey, a fellow at the Institute for South East Asian Studies, says Japan’s aid program highlights growing competition in development spending in the region.
"Of course there are three development projects going on at the same time -- the Chinese, the Japanese and the Lower Mekong Initiative, which is [a 2009 cooperative development agreement between these five countries and] the U.S. -- so there seems to be some competition among the three powers in this area," he says.
Kanae Doi, Japan director for Human Rights Watch, says Japan must use the newly announced financial arrangements to keep pressuring Burma on following through with political reforms.
“The Japanese government should maintain its leverage for the next three years before the next general election in 2015," she says, explaining that Tokyo should strategically reward Burma with a combination of aid stimulus and debt forgiveness upon making actual steps toward reform.
Japan’s favorable policies toward Burma are likely to lead to a boost in Japanese investment in the country.
"We just want to make sure that these chances are used to the maximum extent," she says.
Meanwhile, the European Union on Monday announced a one-year suspension of a wide range of sanctions against Burma.
EU officials, who said they would retain an arms embargo, called for continued progress in the country’s political reforms, an end to ethnic conflict and the release of all remaining political prisoners.