It’s an opportune time to take a look at two of the Philippines’ major foreign aid donors to highlight issues and problems that characterize official development assistance (ODA). These are the Asian Development Bank (ADB) and the Japanese government. 

There have been excellent civil society studies as well as critical academic research work on the ADB. One civil society organization that has been engaging the ADB since the 1990s is the NGO Forum on the ADB (formerly NGO Working Group on the ADB). It should be noted that the ADB has accredited the NGO Forum and regularly holds meetings and consultations with its members including in annual bank meetings. 

On the occasion of the ADB’s 50th year in 2017, the NGO Forum published a photo essay titled “A Visual Testimony of Asian Development Bank’s 50 Years of Destruction.” The photo essay graphically depicts a sampling of 50 projects in several ADB-recipient countries that have resulted in “social, health, and environmental harm and displacement to local communities.” Projects featured from the Philippines include the Marcopper Mining Disaster, the Masinloc Coal-Fired Thermal Power 12 Plant, the Calaca Coal-Fired Thermal Power Plant, the Visayas Base-Load Power Project, Industrial Tree Plantation Project, and the MWSS New Water Source Project. The NGO Forum further argues that “despite its safeguard policies, ADB projects may have displaced over 2 million people over the last five decades.” 

The ADB has consistently relied on an immunity clause in its charter to shield it from court suits from affected sectors and communities and to escape responsibility and accountability for the serious social and ecological damages its funded projects have caused. The NGO Forum has launched a campaign to challenge this immunity, arguing that, for 50 years, the ADB financed projects that caused “loss of livelihood” and “irreparable damage to vulnerable and marginalize sectors.” 

One study concluded: “For 50 years ADB has acted more like a commercial bank than the development agency it claims to be. It has also long relied on a faulty internal grievance procedure and inadequate social and environmental safeguards mechanisms. It is time it was held accountable under both national and international laws for its ruinous policies and projects.” 

A major issue that needs to be raised with respect to Japan’s ODA is how it ties in with Japanese corporate business interests, its external trade priorities, and the Tokyo government’s geopolitical thrusts. Data from the Organisation for Economic Co-operation and Development (OECD) show that while Japan is a major ODA donor, it is among the poorest performers in complying with the recommended ODA/GNI ratio of 0.7%, ranking nearly at the bottom of the list of OECD member-countries. 

The NGO advocacy group, EURODAD, points to Japan as the most notorious practitioner of tied aid. Tied aid refers to loans or grants which are offered “on the condition that it be used to procure goods or services from the provider of the aid.” The OECD’s Development Assistance Committee says that “tied aid can increase the costs of development projects by as much as 15% to 30%,” thus preventing “recipient countries from receiving good value for money for services, goods, or works” while unfairly setting “legal and regulatory barriers to open competition for aid-funded procurement.” 

Japan is also one of the most delinquent in reporting the tying status of technical cooperation. The Tokyo government justifies its position on tied aid, “arguing that [its] citizens were more likely to support high aid budgets if companies in the donor country benefitted.” 

Japan provided the US$355 million loan for the 94-kilometer Subic-Clark-Tarlac Expressway supported by the Japan Bank for International Cooperation. As a tied loan, only Japanese contractors were allowed to bid for the project’s construction. The project went through countless difficulties in implementation including bidding and rebidding, delays in civil works, right of way access problems, and violations of the project contract by Japanese construction firms. Operational since 2008, the SCTEx appears to be a “white elephant,” with little traffic traversing it on both sides. 

National interests pervade Japan’s ODA program as its ODA charter ties foreign aid with ensuring its own security and prosperity and notes the internal benefits that would accrue given its dependence on other countries for resources and energy. The charter also sees ODA as an alternative to military power and includes the dispatching of Japan’s Self-Defense Forces to other countries in peace-keeping and logistical operations. 

Japan’s ODA program is also linked with the strategy of expanding trade relations with the preference for bilateral agreements with other countries rather than the more cumbersome 13 multilateral agreements. Japan has signed bilateral trade agreements (officially known as “economic partnership agreements”) with Singapore, Mexico, Malaysia, the Philippines, Indonesia, Chile, Thailand, Mongolia, Brunei, the Association of Southeast Asian Nations or Asean (as a whole), Vietnam, Switzerland, India, Peru and the United States.

While foreign loans now constitute less than 40% of the Philippines’ total debt, these mostly go for big-ticket items such as major infrastructure projects including flood control, highways, bridges and dams. With the current exposé of massive corruption in flood control projects, it wouldn’t be too far-fetched to speculate that some foreign aid may have also gone the way of corrupt dealings.