Japan is taking the lead in reimagining connectivity and co-creating a shared future in the Indo-Pacific by pushing a “triple I” strategy – infrastructure, investment, and industrial value chains – with the aim of fostering economic corridors, competitiveness, productivity and inclusive growth. Prime Minister Kishida Fumio’s “New Plan for a Free and Open Indo-Pacific (FOIP),” launched in Delhi in March 2023, outlined multi-layered connectivity as one of the four pillars of Japan’s strategy. In this regard, Tokyo is putting a premium on Southeast Asia, South Asia, and the Pacific Islands.
Infrastructure and connectivity are as much about geostrategic value as they are geoeconomic tools of statecraft. Geopolitical jostling over ports, undersea cables, digital innovation, 5G, and critical and emerging technologies is mainstream in international relations today. Battle lines are drawn over quality infrastructure and connectivity, high-technology supply chains, critical materials and minerals, and so on. Beijing’s Belt and Road Initiative sparked high powered politics, and since then the competitive space of infrastructure financing has witnessed several alternative solutions.
Tokyo has positioned itself as a norm-setter crafting the G-7 Ise-Shima Principles, and also the G-20 Principles for Quality Infrastructure Investment enunciated at the Osaka Summit. Japan is also part of several multilateral infrastructure initiatives: The G-7 launched its Partnership for Global Infrastructure and Investment (PGII), and the Quad has its own $50 billion infrastructure commitment. Japan’s New Plan for FOIP has pledged to mobilize a total of more than $75 billion in public and private funding for infrastructure in the Indo-Pacific region by 2030, through private investments, yen loans, and other means.
Japan has been a trendsetter in quality infrastructure. Doing things distinctly differently from Beijing, Tokyo’s infrastructure game leads with the intent of norm setting and defining global standards. Complementing this, the concept of “quality growth” got embedded in Japan’s Development Cooperation Charter.
Policy elites in developing economies today have several competing infrastructure financing options. Hence, Tokyo has anchored its infrastructure financing on responsible debt financing and ecological sustainable practices. The goal remains alignment of infrastructure financing with the developmental objectives of the host country so as to add value by contributing to the advancement of respective local and national economies. It has been buttressed by consultative practices involving local stakeholders.
In its 2023 ODA Charter, Tokyo promotes offer-type cooperation, which enables it to actively propose cooperative projects rather than waiting for recipient nations to come up with a request. It further explores private capital mobilization-type grant aid that is likely to draw investments as a new form of ODA. It coalesces grant aid and technical cooperation with the aim of managing economic and social challenges by supporting start-ups. Additionally, amendment to the Japan Bank of International Cooperation (JBIC) law is likely to enable it to make loans to foreign companies that support Japanese companies’ supply chains as well as to invest in start-ups with overseas operations, with focus on growth areas like digital and decarbonization.
Tokyo’s strategic thinking is not limited to connectivity alone. It is rather transforming connectivity into mega industrial corridors. In Southeast Asia, Japan’s ODA and investments have demonstrated success in fostering the Southern Economic Corridor and the East-West Economic Corridor, linking regional production networks.
Tokyo is now prioritizing another critical sub-theater of the Indo-Pacific: the Bay of Bengal. Beyond its strategic maritime geography in the Indian Ocean and natural resources, the Bay of Bengal hosts more than one quarter of the global population and some of the fastest growing economies, including Bangladesh and India, with fairly young demographics and rapid trends of urbanization. Advancing its focus on this subregion, Japan has launched the Northeast India-Bay of Bengal Industrial Value Chain.
In this endeavor, Japan is cooperating with India and Bangladesh. Japanese ODA data suggests that India and Bangladesh have been prioritized in South Asia. Japan’s New Plan for FOIP identifies India as an indispensable partner. Japan’s interest in Bay of Bengal projects is a good fit with Delhi’s regional infrastructure and connectivity pursuits, whether the connectivity pillar of India’s Indo-Pacific Oceans Initiative (IPOI) or the Coalition for Disaster-Resilient Infrastructure (CDRI) announced at the U.N. Climate Action Summit in 2019.
For its part, Dhaka is pushing its own infrastructure and connectivity goals as it aims to achieve Upper Middle-Income Country status by 2031 and a High-Income Country status by 2041. Additionally, Bangladesh has emerged as India’s largest development and trading partner in South Asia, making trilateral Bangladesh-India-Japan cooperation a natural extension of existing partnerships.
Tokyo’s strategic foresight is now “connecting the connectivities” – for instance linking Japan’s Big-B project in Bangladesh with its Northeast Road Connectivity Improvement projects in Northeast India. It is thus developing an economic corridor connecting Bangladesh’s Matarbari deep sea port through Chattogram and Dhaka to Northeast India with Tripura as one of the anchors, and further linking it up with Nepal and Bhutan. Further synergizing these efforts with existing mega-regional projects including the Bangladesh, Bhutan, India, and Nepal (BBIN) subregional initiative, South Asia Subregional Economic Cooperation (SASEC) Road Connectivity Project, Asian Highways, Trilateral Highway, and the Master Plan on ASEAN Connectivity (MPAC) 2025 would be a force-multiplier.
Beyond Bangladesh, cooperation with Sri Lanka is also in the works, despite the bumpy experience Tokyo and New Delhi had with the East Container Terminal (ECT) project in Colombo, which suffered the collateral damage of the Rajapaksa brand of politics. But as Japan together with India and France are working together on the debt restructuring program of Sri Lanka, Colombo is reportedly seeking the return of projects, especially on renewable energy and grid connectivity projects, development of Trincomalee as an oil pipeline hub, and connectivity.
The significance of Sri Lanka’s maritime geography is not lost on Tokyo. A Japanese destroyer recently underwent maintenance in the Colombo Dockyard, which operates in joint collaboration with Onomichi Dockyard. The episode was historic, and not only for Japan-Sri Lanka ties; it was the first time a Japan Maritime Self-Defense Force vessel received service at any port overseas. After spending five days at Colombo Dockyard, the destroyer JS Samidare sailed to Port Blair in India’s Andaman and Nicobar Islands situated at the mouth of the Malacca Strait – a poignant example of Japan’s larger maritime security strategy.
While China has already showcased some flagship projects in Bay of Bengal under the banner of the Belt and Road Initiative, Japan remains a potent force in infrastructure financing by emphasizing the global standards of openness, transparency, economic efficiency taking into account life-cycle cost, and debt sustainability.
Despite the geostrategic significance of the Bay of Bengal, regional economic integration supported by quality infrastructure and investment leaves much to be desired. For the Bay of Bengal to realize its full strategic and economic potential, Tokyo’s recent initiative, the Northeast India-Bay of Bengal Industrial Value Chain, may be the centerpiece demonstrating Japan’s “three I” strategy at work.
However, it will not be easy to make good on these ambitions. Third country cooperation has to navigate not just complex geopolitics as well as the domestic political dynamics in each of the Bay of Bengal states, but also soft infrastructure hurdles including non-tariff barriers, advancing trade facilitation and cross-border customs logistics.