Ara Hitoshi is deputy director general for the South Asia Department of the Japan International Cooperation Agency (JICA). He is responsible for overseeing cooperation with Nepal, Sri Lanka, Pakistan, Afghanistan and the Maldives. JICA has implemented various cooperation projects, especially in the areas of social and economic infrastructure development, disaster resilience and poverty reduction. Ara was on a brief visit to Nepal in May to take stock of the situation here. Prithvi Man Shrestha of The Post caught up with Ara to ask him about JICA’s future cooperation in Nepal. Excerpts:

How has JICA’s cooperation been in Nepal so far, particularly during the Covid-19 pandemic?

Because of Covid-19, JICA was restricted in dispatching survey teams, experts and JICA’s missions to Nepal for a while. However, JICA is back. Now we are willing to accelerate our cooperation through face-to-face communication. With this idea, my visit has taken place. Communication is very important to deeply understand things.

JICA recognises that the development of South Asia is quite important and Nepal is one of the core countries. JICA implemented and continued various cooperation projects even during the Covid-19 situation. The year 2022 marks the 120th anniversary since the first Nepali students went to study in Japan. So it is some kind of symbolic year on the issue of human resource development.

JICA is willing to keep working on development with high quality infrastructure and initiate the build-back-better policy for the Covid-hit country. This year, JICA is planning to start new technical cooperation in the areas of climate change and sustainable forest management, flood risk management and a career support programme for migrant workers. We will provide a career support programme to migrant workers. This is quite a new initiative for JICA which pays attention to migrant workers who have experience of living in Japan. There are many Nepali migrants to Japan.

JICA has the country assistance strategy of 2016 for Nepal. Is JICA preparing a new assistance strategy?

The country assistance policy is the policy of our government. I think our government is thinking about introducing a new one. I don't have detailed information about it. As per the Country Assistance Policy 2016, there were four priorities: Post-earthquake recovery, social and economic infrastructure, poverty reduction and governance enhancement.

What is the specific policy for Nepal now?

Under these four core priority areas, there are several sub-areas such as education, health, agriculture, infrastructure, road development and urban infrastructure improvement. All these sectors are important. Now, there is also a huge need for recovery from Covid-19. Still, there are many needs in many areas. Nepal got Covid-19 vaccines from Japan to recover from the pandemic.

Is there any plan of the Japan government to support livelihoods affected by the pandemic?

Our government decided to provide a policy credit of 10 billion yen in January. This support will help the Nepali economy to strengthen. The impact of Covid-19 is very big and wide, and it covers many areas. So, we want to consider what kind of activity is necessary to improve the situation against the impact of Covid-19. We are seeking the possibility to conduct some cooperation in the health sector, and in general, when we think about measures, we think there are some important points—infectious disease prevention and other research and development. We are thinking if there are any needs in these sectors in Nepal.

The Covid-19 pandemic has shed light on the need for good health infrastructure. Will Japan increase support in these areas?

Actually, there is a need to improve health infrastructure. Covid-19 is an important issue but there are many needs in Nepal. My understanding is that our government is thinking of conducting an aid project based on the needs of each sector. Obviously, it is important to upgrade the health infrastructure in Nepal.

How can Japan help to modernise Nepal’s transport network?

Obviously, Nepal is in need of improving its road network. There is a need to improve urban transportation infrastructure as well as the national road networks. So, now we are discussing these issues with the Nepal government. At the same time, there are other development partners such as the Asian Development Bank which are providing some kind of support for improving the national road networks. So, I would like to continue discussions with the Nepal government so that some concrete projects are identified where we can contribute.

China is enrolling countries under its flagship Belt and Road Initiative (BRI). Japan itself appears to be prioritising helping to develop infrastructure abroad. The G7 countries introduced the Build-Back-Better initiative. Can we expect more competition among countries to help Nepal in infrastructure development?

In my personal opinion, JICA’s support in the infrastructure development of Nepal is for the development of Nepal. We don’t engage in competition with other countries. Of course, people say competition is important. But I think it is necessary to think about what is the need of Nepal. An appropriate approach should be adopted to solve Nepal’s problem, and that should be based on need. We also think that infrastructure is very important, including road infrastructure. I would like to continue discussing the matter with the Nepal government.

Lately, we have been receiving more aid as loans than grants from Japan. Is it Japanese policy to provide more aid as loans?

We are implementing both schemes—grants and loans. We don’t stop grant aid. Nepal has been developing and upgrading to the status of a middle income country. It means that Nepal can enjoy aid under loan schemes. With loans, we can implement large projects compared to grant aid projects. For example, we provided Development Policy Credit amounting to 10 billion yen in January. If it was grant aid, it could be around 2-3 billion yen. Of course, there are big projects being implemented with grants too. Utilising loans, we can contribute more. If the GDP per capita is very low for the recipient country, we cannot implement aid in loan projects.

What was the reason behind providing policy credit? Will JICA continue to provide aid in policy credit form?

It is in response to the Nepal government’s urgent needs. As you know, the Nepal government was fighting Covid-19 very well. We heard that Nepal needed some kind of financial resources to implement these kinds of activities. The policy credit covers various areas of the health sector. The Nepal government needed to secure more budget to implement activities in the health sector. What I want to say is that there was an urgent need for financial support, and we recognised this and decided to provide this kind of support. Whether policy credit will continue will depend on Nepal’s needs. We have to discuss it with our government. I personally think there is a need for this kind of financial support to Nepal even in the future.

There is a growing possibility of markets for Nepal's hydropower in power-hungry South Asia. What are the prospects of Japanese investment in the hydropower sector?

I am not an expert in this area. I cannot say concretely about this. But I expect many Japanese investors will have interest in this country. The power sector is JICA’s important sector for cooperation. Now, JICA is implementing a technical cooperation project on Integrated Power System Development. The project covers Independent Power Producers (IPP) related issues. We are supporting Nepal to supervise and manage the activities of the IPPs. I expect that many Japanese power plant operators and private companies who are interested in the energy market will increase. I also expect that the total investment from Japanese companies will increase in Nepal. I think there is a possibility of attracting Japanese investments in the service sector. For this, Nepalis who studied and worked in Japan can be a big asset for Nepal.

Any further plans of JICA to support civil aviation as Japan has been supporting this area?

As you know, the ADB is playing a big role in developing infrastructure investment. There was a miserable air accident in the 1990s in Nepal, and many JICA experts had lost their lives in that accident. As a JICA staff member like me, we remember this incident. So, how to make air travel safe is a very important issue for JICA. We would like to collaborate with other partners in this sector too to continue our support in this sector in Nepal.