A glimpse into Japan’s understated financial heft in South-East Asia

VIETNAM’S FIRST two rapid-transit rail lines are inching closer to completion, after years of delays. The projects, one in each of the country’s two largest cities, have become symbols not just of Vietnam’s modernisation, but of the duelling interests of Asia’s two biggest sources of infrastructure investment. Hanoi’s line has been funded by Chinese development assistance; Ho Chi Minh City’s was launched with help from the Japanese government.

Although China’s financial reach overseas attracts enormous attention, when it comes to infrastructure in South-East Asia, Japan is still very much the leader (see chart). In total, it has $259bn invested in unfinished projects in Indonesia, Malaysia, the Philippines, Thailand and Vietnam, according to Fitch Solutions, a data provider, compared with China’s $157bn. Both figures have declined since 2019, as the covid-19 pandemic has deterred greenfield infrastructure investment, but Japan’s lead has widened a bit.