US-Japanese Strategic Dissonance and Southeast Asian Infrastructure Finance

CDB and CHEXIM have been at the center of debt-financed, tied-aid infrastructure projects in Southeast Asia, among them hydropower dams and rail projects in Mekong states which have raised questions about life cycle costs, value for money, lack of transparency and lack of international competitive bidding processes which breach industry best practices. The envisioned 'crowding in' of U.S.-Japanese private-sector led investment to quality infrastructure projects is plagued by two serious limitations in low-income Southeast Asian countries: high-risk projects that are not 'bankable' to risk-averse Wall Street -aligned companies and Southeast Asian governments' dis-inclination and low capacity to engage in public-private-partnership (PPP) style project financing, the preferred modality of U.S.-led deal making. Leveraging Rule Promotion & Enforcement The United States & Japan are well positioned to leverage influence, expertise, technical assistance, and resources to assist Southeast Asian governments in adopting collective private investment regulations to uphold higher environmental and social safeguarding for infrastructure projects beyond Blue Dot accreditation, and to constrain the fast financing of harmful projects.