 |  |  |  |
 |  |  |
| | | |
| | |
I. IdentificationThis case study is about Japanese foreign aid to the Malaysian state of Kedah and the special problems and opportunities presented. It will look at the purpose of the aid and how local cultural practices are impacted by the program.
Over the past decades, foreign aid is becoming one of the major trades among nations. Some institutions which dealt with international foreign aid such as IMF and World Bank have been built, and more money has come to flow as a foreign aid. As other developed countries have, Japan has become increasingly involved in supporting projects throughout the developing nations especially in this decade. To treat these projects, in 1961, Overseas Economic Cooperation Fund (OECF) was established as the development financial institution within the Japanese government. The OECF provides various types of loans to foreign government, and the amount of investment from 1961 to 1998 became 18,459.4 billion yen (equal to $154 billion).
The purpose of providing aid is of course to help the nation develop. In this aspect, OECF provides aid in good condition, so that it is widely recognized as one of the best financial institutions all over the world. However, it is becoming serious problem recently that there are some impacts of the foreign aid not only on economy or social condition but also on its culture or tradition. In other words, the foreign aid put spurs on modernization so much that the balance between "modern" and "tradition" is being lost. Though tradition and culture should not be ignored, people in underdeveloped nations tend to put importance on development, and they can afford to proceed with modernization by the force of foreign aid.
This case study evaluates the impact of foreign aid focusing on the aid from OECF to the Malaysian state of Kedah. This aid is for hardcore poor development program, which aims to uplift economical and social status of hardcore poor. As a result of this program, the economy of Kedah has rapidly grown in ten years as well as its social condition. Meanwhile, by being modernized with this program, the original culture of Kedah state has changed. It is woman role that we can see the greatest effect of modernization. The program changed the main contributor of GDP from agriculture to manufacturing. As a consequence, women come to work in the factories instead of being in house.
II. Legal ClustersAt the first stage of the procedure for the OECF loans, the Malaysian government submited its loan request to the Japanese government through the Japanese Embassy in the country. Then, the request was examined by the OECF, the Economic Planning Agency, Ministry of Foreign Affairs, Ministry of Finance, and Ministry of Internaitonal Trade and Industry. Going by these process, after the two government assented to the amount, terms and conditions of the loans, they concluded official notes to affirm the conditions agreed upon. Following the agreement, OECF and the Malaysian government then signed the Loan Agreement, with which the OECF made its financial commitment. This Loan Agreement "describe in detail the legal rights and obligations of all parties in relation to the loan, and procurement and disbursement procedures, as well as the purpose, scope and content of the project." (OECF Homepage)
III. Geographic Clusters
b. Geographic Site: East Asia
c. Geographic Impact: Malaysia
Kedah is one of the border State of the North of the Malaysia, with access to its neighbor Thailand. The population of the state is about half and one million, over 70 percent of whom are Malay, Islam. The broad Kedah-Perlis rice plain occupies most part of the state, where over half of the nationfs homegrown rice grows. Kedah is the one of the most ancient state in the Malaysian Federation, and its royal family can be traced its line back to Hindu times. The state is a rich source of archaeological sites dating back to the Hindu-Buddhist era in Malaysian history. Kedah was prosperous for the center of trade located on the great trade route. However, the openness as a trade center resulted in vulnerability to outside forces, and the country had been influenced by the neighbor great powers; Sumatran empire, Melaka, Portugal, Thai, Japan and British. It is after W.W.II. that Kedah became free from any occupation. In 1946, the Sultan reluctantly signed the Mac Michael Agreement that created the Malayan Union, and subsequently joined the Federation of Malaya.
IV. Trade Clustersb. Indirectly Related to Product: Yes
c. Not Related to Product: Yes
d. Related to Process: Yes
The purpose of this project is to aid rural and regional development supporting agriculture and regional industory, infrustructure, and social services for achiving poverty eradication. For Rural Development Project, regarding whole Malaysia as the object OECF supported eight programs; rural community development, rural electrification, rural water services, rural transportation, living environment maintenance, vilage industrialization, FELCRA (land rearrengement), and hardcore poor development. Aiming at synthetic development on certain regions, OECF provided aid to nine development authorities; DARA, KEJORA, KETENGA, KESEDAR, PERDA, JENGKA, SALCRA, RISDA, and KEDA for Regional Development Project.
"This programme caters for those earning a family income of less than RM202 (US$80) per month or individual per capita income of RM40.4 (US$16) per month. The main objective of this programme is to uplift the economic as well as social status of the hardcore poor through Economic projects, Training activities, Resettlement projects (which provide houses and basic amenities) and Agriculture infrastructures. The programme was introduced in late 1989 and since then about 35,900 hardcore poor have benefited; 17 resettlements being built and few more under construction. Improving skills, knowledge and attitudes through structured training activities has been the programme emphasis by KEDA in order to prepare the hardcore poor in facing the challenges of development by year 2020." (Information Malaysia 1998, p666)
Japan has offered various loans to the amount of 708.183 billion yen (US$6 billion) to Malaysia through OECF since 1969. In the term of the Rural Development (Poverty Eradication) Project, OECF provided the sum of 32.498 billion yen, which is equal to about US$350 million, in 1990, and additional 10.949 billion yen (US$90 million) in 1992. Besides, 9.318 billion yen (US$78 million) was provided as the Regional Development Project in 1990. While it is difficult to distinguish how much of the former was distributed to a certain area, 1,219 million yen (US$10 million) of the latter went to KEDA. (Statistical Data of OECF)
The economy of Kedah state has rapidly grown since 1990; GDP per capita of Kedah was 2,092 RM in 1978 prices in 1985, which grew to 2,612 RM in 1990, and then, it sharply developed into 3,791 RM in 1995. Average household income has increased from 690 RM in 1985 and 748 RM, 1990 to 1,287 RM in 1995. 1990 is the year OECF started to provide the aid. Thus, this sudden change can refer to the aid from OECF. The sectors which compose Kedah's growing economy have also changed. Before 1991, it is agriculture that has been the main contributor to GDP averaging about 30% of GDP annually. However, with rapid economic policies geared towards modernization focused on economic stability, expansion and sustenance, the manufacturing sector has grown fairly significantly to replace agriculture as the highest GDP contributor. (Kedah Homepage)
In addition to economical development, social condition has improved very much, too. For instance, the infant mortality rate has dropped off into half the figure in ten years. According to the case study OECF carried out, 82% of 22 households surveyed said, "the standard of living was improved." As the reason of the improvement, they brought "improvement of water supply," (72%) "improvement of electricity," (55%) and "improvement of ketchen fixture such as gas" (41%). (OECF Evaluation) Therefore, the key of social development was the spread of basec service KEDA brought about with money from OECF.
Japan exported this aid through the Overseas Economic Cooperation Fund (OECF). The OECF is "a development finance institution of the Japanese government, principally provides ODA Loans to developing countries, while providing Sector Investment Finance funds for corporations undertaking projects in developing countries, and conducting related research projects and other activities." (OECF homepage) Established in 1961, OECF has provided long-term and low-interest financial assistance through ODA (Official Development Assistance) loans to more than sixty developing nations and regions. The purposes of loan projects manifold from infrastructure to education, health and medical services. Today, dealing with nearly fifty percent of net ODA disbursements, OECF has become one of the world's major development financial institution and a core one for Japan's ODA.
This aid was imported by the Kedah Regional Development Authority (KEDA). The KEDA "was established on 28 May 1981. Its primary objective is to expedite social and economic development and to improve the income and living standard of the rural population of the state of Kedah. In general, KEDA aims to change the way of life and improve the environment of the rural communities in the KEDA region. Major emphasis is given to commercial orientation under the Regional Development Projects which includes agriculture and industrial activities. To help further reduce the inter and intra regional imbalances programmes for the hardcore poor is also introduced." (Information Malaysia 1998, p665.)
V. Environment ClustersThere would be little opposition against that the modernization has some effects on the environment. Of course, this case is not an exception, and woods have cut down for development. However, deforestration is not so serious problem there because Kedah state originally has relatively small forest area; 342,740 hectare out of 942,600 hectare dominion, and the forest gathers in rural area, that is, around the border between Malaysia and Thailand.
VI. Other FactorsDue to the fact that as much as over 70% of Kedah population are the Malay, it is Islam that forms Kedah culture.
Men are in charge of women, because Allah hath made the one of them to excel the other, and because they spend of their property (for the support of women). So good women are the obedient, guarding in secret that which Allah hath guarded. As for those from whom ye fear rebellion, admonish them and banish them to beds apart, and scourge them. Then if they obey you, seek not a way against them. Lo! Allah is ever High, Exalted, Great. (Quran 4:34 translation)
As this Quran, Muslim Holly Book, indicates, men are at a higher status than women in Muslim world. Accordingly, the responsibilities towards family differ between men and women. Men are obligated to work, and must take care of the women and children dependent upon him. On the other hand, the role of the women is in the house raising children and keeping the home running smoothly, so they are tied to house.
However, as Kedah state has modernized with increasing amount of aid, it has adopted the law, legal procedure, education and so on from the West. Consequently, the social sphere has changed as have the ideas governing the social sphere; namely, the state has become more western and less traditional. In the aspect of women role, of course Westernization has influenced the traditional values. Formerly, agriculture was the main work, and it needed so much strength that men worked chiefly. However, manufacturing has rose with moderniation. Factory works do not need so much power; moreover, women workers are prefered for labor-intenseve sectors because they are much cheaper than male workers are. Therefore, not only men but also women started to work in the factories to earn more money. Also, swelling number of women students leads to the growth of female workers. The state is inviting more plants and that will lead to more female workers.
Delphons, A. William. "Don't Overlook Japan for Financing," Global Trade. May 1991. North American Pub. Co.. Philadelphia, PA, 1991.
Imformation Malaysia 1998 Year Book. Berita Publishing SDN. BHD.. Kuala Lumpur, 1998.
Kedah Darul Aman Homepage. http://www.kedah.gov.my/
The Overseas Economic Cooperation Fund, Japan. http://www.oecf.go.jp
Shattering Ten Misconceptions about Islam. http://www.usc.edu/dept/MSAnotislam/misconceptions.html