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July 2010

Q1: Are only a limited number of Filipinos benefiting from Japanese ODA?

A: No, Japan assistance is spread over various fields and benefits a large number of Filipinos. It accounts for 33% of all ODA received by the Philippines in 2008 (Source: DAC).

Japan has been the top donor country to the Philippines for many years. Despite its current economic difficulties, Japan will continue to support the Philippines, one of the most important and friendly countries to Japan. Japanese assistance to the Philippines has also been funneled through multilateral donors such as the World Bank, the Asian Development Bank (ADB), and various UN agencies.


With the cumulative amount of Japan ODA to the Philippines totaling US$20.560 billion (1967-2008), the Philippines ranks as the fourth largest recipient, next to Indonesia, China and India.


Then, how many Filipinos are actually aware that Japanese ODA has been benefiting their lives? While Japan is known as a funding source for big projects such as NAIA Terminal 2 and the Second Mandaue-Mactan bridge, many people including those who directly benefited from Japan assistance, are sometimes unaware of Japan support in a large number of the projects.


Through the decades, Japanese ODA has been contributing to Philippine’s development efforts in many fields, including irrigation, flood control, education, health care, earthquake detection, rural road network construction/improvement, water supply, and livelihood programs. For example, the 2,100-km Philippines-Japan Friendship Highway (Pan Philippine Highway) was constructed under Japanese ODA loan. For sure, you can find Japan-supported projects all over the Philippines, as well as Japanese experts and Japanese volunteers.

Q2: Is Japanese ODA used for promoting the export of Japanese goods and services?

A: No. 95% of Japanese ODA is open to non–Japanese goods and services.

With regard to the procurement system, the types of ODA can be internationally categorized into tied and untied. Untied ODA means that procurement of goods and services necessary for ODA projects is open to those of any country. In 2007, the ratio of Japan untied ODA worldwide is 95.1%, which shows that most of Japanese ODA projects are not limited to using Japanese goods and services alone.


Some people still misunderstand, if not misinformed, that Japanese ODA is used in export promotion and only profits Japanese companies. That was actually once true, from the 1960s up to the mid-80s, when Japan ODA financing contributed to promote its exports of businesses. During this period, most projects were tied to Japan, but things have since changed. It is therefore unfortunate that some people still confuse the old practice as still existing.

Q3: Is Japanese ODA ill-balanced toward loans?

A: No. Loans, grants, and technical assistance are well-balanced to meet various needs. Loans are suitable for promoting self-help development efforts.

Japan provides assistance in three forms: loans, grants, and technical assistance. The breakdown of Japanese ODA in 2008 is as follows: US $7050.81 million in loans, US $4780.69 million in grants, US $3057.82 million technical assistance (on a gross disbursement basis).


A large portion of Japanese ODA, especially that extended to middle-level developing countries, has been in the form of loans because Japan firmly believes that ODA should be used to support the self-help efforts of developing countries. ODA loans, with their repayment obligations, are more effective in facilitating development in middle-level developing countries, making the recipient governments more carefully appraise how such loans are effectively and efficiently allocated for specific projects.

Furthermore, loans make it possible for recipient governments to invest in large-scale socio-economic infrastructure as well as respond to the vast fund demands of societies that grants cannot serve. In fact, in the process of its own national reconstruction after World War II, Japan borrowed money from the World Bank to construct large-scale infrastructure.

Loan conditions under Japanese ODA to all developing countries in the world are extremely concessional. On the average, in 2000, the interest rate was 1.34% and the term of repayment was 33 years and two (2) months, including a grace period of nine (9) years and ten (10) months. These conditions are quite favorable as compared to loans from other multilateral donors. Because Japanese ODA loans are not administered on a self-paying basis, their very concessional terms are afforded by their built-in grant component, which is actually borne by the Japan taxpayers.

On the other hand, Japan caters to poor areas and social projects mainly through grants and technical assistance. In the health sector, for example, the upgrading and expansion of medical and health facilities and the training of personnel are among the priority areas of its grant and technical assistance programs.

Q4: Does Japanese ODA contradict the needs of the Philippines?

A: No. The Philippine government alone proposes ODA projects on behalf of the Filipino people.

Japan highly respects the self-help efforts of every developing country. Thus, Japanese ODA, in principle, is extended upon the request of the governments of developing countries. In the case of the Philippines, government agencies and LGUs submit project proposals to NEDA for its evaluation. After the respective approval by NEDA and the ICC, the Philippine government makes an official request for its short-listed priority projects to the Japanese government, which then carefully appraises those projects and approves those that are most necessary and matured.


Appropriate utilization of ODA is most important not only for the Philippines but also for Japan, since ODA funds originally come from Japan taxpayers.


In order to implement its ODA more effectively and efficiently, the Japanese Embassy closely coordinates policies and programs with the Japan International Cooperation Agency (JICA), the development assistance implementing agencies operating under the Government of Japan.

Q5: Is Mindanao the least priority region of Japan ODA?

A: No. Assistance for Mindanao is one of the three main pillars of Japan's ODA for the Philippines. Japan is firmly committed to alleviating poverty and consolidating peace in Mindanao through ODA.

Under Japan's country assistance program for the Philippines, the Government of Japan places assistance for Mindanao as one of the three pillars. To pursue the goal of peace and stability in Mindanao, the Government of Japan launched J-BIRD ( Japan- Bangsamoro Initiatives for Reconstruction and Development) in December 2006, which is designed to contribute to the peace process and development in the Conflict-Affected Areas in Mindanao (CAAM) and the surrounding areas in the ARMM (Autonomous Region in Muslim Mindanao).


The objective of J-BIRD is to enable the people and the communities in the target areas to enjoy the “dividends of peace” through the Japanese ODA on the basis of “Human Security” principles. As of now, the total amount of the J-BIRD assistance is approximately Y11.23B (PHP5.92B).