Japan Unveils $110 Billion Plan to Fund Asia Infrastructure

The amount of Japanese funds, to be invested over 5 years, tops the expected $100 billion capitalisation of the Asian Infrastructure Investment Bank (AIIB), the Beijing-sponsored lender scheduled to begin operations next year.

Japanese officials said the plan, announced by Prime Minister Shinzo Abe at a symposium of Asian officials and experts, represents a 30 percent increase over Tokyo's past infrastructure funding.

Japan said it wants to focus on "high quality" aid, for example, by helping recipients tap its expertise in reducing pollution while building roads and railways. That's an implicit contrast with the AIIB, whose projects Washington has said may not adequately safeguard the environment.

"We intend to actively make use of such funds in order to spread high-quality and innovative infrastructure throughout Asia, taking a long-term view," Abe said in a speech announcing the plan.

About half the funds will be extended by state affiliated agencies in charge of aid and loans and the rest in collaboration with the Asian Development Bank (ADB).

Japan hopes the aid will help draw private funds to help meet the vast demand for infrastructure in Asia, Reuters reported.

The United States and Japan were caught off guard when a total of 57 countries, including Group of Seven members Britain, Germany and France jumped on board the AIIB bandwagon by March.

The two allies have stayed out of the China-led institution, seen as a rival to the US-dominated World Bank and Japan-led Asian Development Bank, citing concerns about transparency and governance - although Tokyo for one is keeping its options open.

Finance officials said Japan's aid plan had long been in the works as part of a Group of 20 pledge to meet global needs.