Japan and China are locked in a fierce battle over maritime interests in Asia. The Japan International Cooperation Agency (JICA) will acquire a stake in a state-run port operator in Cambodia, which is situated along a strategically important shipping lane. In Sri Lanka, Mitsui & Co. is looking to win a project to build and operate a port in the country in partnership with an Indian conglomerate. While China is stepping up efforts to operate ports located along its “One Belt, One Road” economic sphere, Japan is taking steps to secure a stable shipping route for energy imports.
JICA will invest in Sihanoukville Autonomous Port (PAS), the operator of an international port located in the southern part of Cambodia. PAS went public on the Cambodian bourse on June 8 to release 25% of its stockholdings. JICA plans to obtain roughly 50% of that portion.
The port is Cambodia’s only maritime gateway for international trade. Its container handling volume grew at an annual pace of 13% on average from 2011 to 2015, thanks to solid economic growth in Asia. Though Japan helped build the port through the injection of massive amounts of yen loans, China acted aggressively in an attempt to win a stake in the port. Japan strongly opposed this and effectively waged an intense turf battle against China.
Mitsui wants to win a package deal to expand and operate the Colombo port, located in the southwestern part of Sri Lanka, by teaming up with the Tata Group. Plans are already underway for the Japan Bank for International Cooperation (JBIC) and Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN) to extend loans and investments after the Japan-India duo win the project.
The Japanese government also identifies Sri Lanka and vicinity as a key transportation hub. This past April, Japan extended support to help the country bolster maritime policing capabilities. Furthermore, Japan recently decided to extend additional loans totaling 45 billion yen.
In Myanmar, it appears that arrangements are underway for Japan to be selected as an operator of the Thilawa port, which is due for completion in 2018.
Since the end of World War II, Japan has financed infrastructure-building projects in many Asian countries through loans and the Asian Development Bank (ADB). Recently, China has also been attempting to broaden its reach in the region. While the country tries to increase its presence on the maritime route to Europe via the Indian Ocean under its “One Belt, One Road” initiative, Japan has long used this ocean channel to import oil and natural gas from the Middle East and ship containers to Europe.
A Japanese government official warns that ports that usually function as distribution hubs “could be put to military use” once China exercises influence over operations. In the autumn of 2014, a Chinese submarine stopped at a Sri Lankan port operated by a Chinese firm, sending shock waves across surrounding countries.
India, which has a territorial dispute with China, fears that ports under Chinese influence could be diverted to military use. Its recent tie-up with Japan for the acquisition of interests in the Colombo port highlights its wariness toward China.
Similar fears are also growing within Japan. The government, led by Prime Minister Shinzo Abe, is working to strengthen Japan’s ties with Cambodia and other concerned countries through official development assistance (ODA) and other aid programs based on its “Free and Open India and Pacific Strategy,” which is aimed at building stronger bonds with Asia and coastal nations in the region. (Abridged)