Rethinking Japan’s Investment in Manipur

By Jiten Yumnam

Development financing by International Financial Institutions such as the Asian Development Bank (ADB), the World Bank (WB), the Japan International Cooperation Agency (JICA) has become more intense in Manipur in recent years. India’s Look East or Act East policy has further facilitated the intrusion and investment of such financial institutions. The ADB is the key multilateral institution and the JICA is the bilateral agency extensively focusing on investment in India’s North East. The JICA’s focus on Manipur and other parts of India’s North East is becoming an obvious reality even as the region remained unprepared with its responses. The Japanese Ambassador to India, Kenji Hiramatsu, took a delegation of 38 Japanese companies based in Delhi to Imphal, Manipur on May 20-21 to encourage investments in the State and across India’s North East region. Indeed, an Memorandum of Understanding to set up India-Japan Act East Forum was the major agreements signed during Japanese Prime Minister Shinzo Abe’s visit to India for the 12th Indo-Japan annual summit on 3rd August 2017.  The India–Japan forum envisaged to counter China’s One Belt One Road (OBOR) initiative. Japan is keen to expand infrastructure projects in Southeast Asia and along with India; it is exploring opportunities to develop projects in ASEAN.

Japan’s engagement in India’s North East is quite extensive. JICA has previously provided 15,359 million Japanese Yen (approximately INR 900 crore) in ODA loan for “Umiam Hydro Power Station Renovation Project” in Meghalaya and Tuirial Hydroelectric Power Station Project in Mizoram. In addition, JICA has provided technical assistance from 2013-15 for study on development and management of land and water resources for sustainable agriculture in Mizoram.

Of late, JICA is preparing to invest heavily in infrastructure projects like roads. Indeed, the JICA signed an agreement with Government of India in March 2017 to provide 67,170 million Japanese Yen (approximately INR 4,000 crores) Official Development Assistance (ODA) loan for “North East Road Network Connectivity Improvement Project (Phase I)”.  JICA further signed an agreement with the Government of India on 6 April 2017 to provide an ODA Loan of approximately Rs 400 crore for the Nagaland Forest Management Project. JICA further expressed its interest to build road infrastructure in Arunachal Pradesh, where close to 200 Mega dams are already planned.

Japan is one of the countries involved in an extensive scale of investment in Manipur and across India’s North East. Earlier, the Manipur Sericulture Project (MSP) is one of JICA (earlier Japan Bank for International Cooperation) financed ODA projects. A loan agreement for the Phase I of MSP was drawn up by the Government of India with a total outlay of Rs. 154.991 crores, of which Rs 136.661 crore was JICA loan and Rs 18.33 crore was share of Govt of Manipur. Of late, JICA is preparing to finance the Water Supply Augmentation Project for Imphal Town, to draw water from the Mapithel dam reservoir. In Manipur, JICA is also preparing to fund several infrastructure projects, including the Imphal Moreh Road, as it forms part of the Asian Highway 1. In addition, the Japan Government has indicated its preparedness to provide technical assistance to the Government of Manipur in development, planning and implementation of certain projects especially in the aftermath of visit of Japan’s Ambassador to India in Manipur. The Manipur Government has been preparing to seek loans and financial investments from JICA and ADB and for development of State Highways, district roads and other district roads.

The intensification of involvement of financial institution, in particular the Asian Development Bank and also the increased loan investment as ODA in Manipur and other parts of North East need serious introspection to the purpose, rationality and impact of such loan initiatives and also the larger implications. On the experience of projects financed by JICA in India’s North East, the 60 MW Tuirial Hydroelectric Project financed by JICA in Mizoram landed in wide controversy due to inadequate rehabilitation and resettlement. Project work stopped in 2004 on problems with rehabilitation and resettlement. The Tuirial Crop Compensation Claimant Association complaint of failure to provide compensation for crop loss in the land forcibly acquired.. The project was also marred with inordinate delays and cost overrun, leading to feasibility and high cost of power per unit to be purchased by the Mizoram Government from the project development. The project cost in 1998 was fixed at Rs 369 crore but the inordinate delays over the years on the issue of the payment of compensation to the displaced and infrastructure bottlenecks has led to huge cost escalation.

The Manipur Sericulture project financed by JICA is a failed project, due to multiple factors, which both JICA and the Government of Manipur held each other responsible for the failure. The JICA funded Imphal Water Supply Augmentation Project (IWSP) from Mapithel dam will not only lead to privatization of water supply, but also legitimize the arbitration of community rights and deprivation of their livelihood due to submergence of their agriculture land, forest and settlement areas by the dam.  The JICA’s pre-feasibility study for IWSP suggested policy change of Manipur Water Supply Act, 1992 (Manipur Act No. 1 of 1993) to privatize water supply services. Based on the Act, the State government of Manipur adopts flat rates for their water supply service. The pre-feasibility study report prepared by JICA, while highlighting the Forest clearances for Mapithel dam, failed to mention the violations involved in the “forest clearance”, cleared fraudulently in arbitration of Forest Rights Act, 2006.  JICA’s plan to support drawing water from Mapithel dam for Imphal Town also seems to legitimize the violations of indigenous peoples’ rights by the controversial dam.

One of the most controversial JICA funded project in India’s North East is the JICA funded Guwahati Water Supply Project. The Louis Burger International Inc, a US based consultancy firm is confirmed to have bribed officials of Assam Government to win contract for consultation services and agreed to pay a fine of $17.1 million criminal fee. As per a directive by the Gauhati high court, the Central Bureau of Investigation (CBI) of the Government of India has taken up the multi-crore Louis Berger corruption case by filing an FIR against unknown officials of the company for allegedly bribing the former Assam government to corner contracts.

The policy decision to connect with India’s North East with South East Asia again comes from the Government of India and Japan and rather undefined by the indigenous peoples of the region. The new investment and connectivity projects are meant to serve the economic and political interest of the two countries. Japan will always consider its political and economic interest before investing in any part of the world.

IFIs in all their development financing insisted on a strong private sector role and involvement and to tap the unexploited natural resources in India’s North East. The JICA focus on infrastructure also comes at a time when the myriad corporate bodies are aggressively involved in extracting the land and natural resources from the region. More than 200 mega dams are already planned across the Brahmaputra-Barak River basin. Oil companies like the Jubilant Energy, Canoro, Oil India Limited, Asian Oilfields etc are involved in exploration and drilling works. There are concerns that the financing of roads by ADB and JICA in Manipur and in India’s NE region is more to facilitate extraction of minerals and building of dams in NE region.   JICA rather from directly funding mega dams are now focusing on infrastructures to aid such large scale, unsustainable and exploitative development projects across India’s North East.

Another challenge of such financial support of these financial institutions is these monetary support come as loan support with obligatory interest payments. Both JICA projects in Manipur, the Manipur Sericulture Project and the Augmentation of Water Supply for Imphal Town are ODA loans. The implications of these loans in Manipur has never been considered in projects or discussed with communities. ODA loans will increase Indebtment and pressure to open up its water, forest, land for corporate exploration. A government running on loans without clear accountability mechanism will only led to wide Indebtness. The ineffectiveness of JICA financing in places like Manipur, Mizoram in the case of Manipur Sericulture project, the 60 MW Tuirial Dam etc and the corruption case in awarding contracts in the JICA funded Guwahati Water Supply project need serious assessment.

Manipur for that matter, as a subservient to the Government of India, cannot decide its foreign policy independently and hence dictated by India’s economic and political priorities. Irrespective of whether Manipur decides or not, Manipur is now centering for the joint economic initiative of both Japan and India, also in a bid to counter China’s OBOR initiative. The economic priorities and calculations of both India and Japan would mean and increased targeting of the land and resources of Manipur and across India’s North East. The larger implications of such extensive financing by Japan in Manipur and the potential of further complicating the conflict and human rights scenario in Manipur need be perceived and dwelt carefully. One need be careful that the economic interest of Japan and India may not necessarily confer with the economic priorities of Manipur. It is high time both for the Government of Manipur and the people of the State to be cautious of financing by external financing agencies. Moreover, the fallacies of results, for instance, the failure and unaccountable delays of the French Government supported Imphal Sewerage Project and the failure of the JICA funded Manipur Sericulture Project are adverse realities that should guide us to better deal with international financing agencies. The Manipur Government needs to develop a policy on how best to deal with financial institutions with peoples’ participation. It is good to see beyond the diplomatic exercise of building the Japan War Museum at Maibam Lokpa Ching or the work culture of Japan, as many in Manipur would emphasize every time Japanese officials visits the State.