Go to contents

Korea Was Most Efficient in Utilizing Japanese Reparation

Korea Was Most Efficient in Utilizing Japanese Reparation

Posted January. 19, 2005 22:59,   


A report indicated that among the five Asian nations that received reparation from Japan, South Korea used the money most efficiently.

According to “Research on the use of reparation from Japan” (Kim Jung-shik, economics school of Yonsei University) which the Korean Institute for International Economic Policy (KIEP) published in 2000, Japan paid reparation to five countries including Korea, Myanmar, Philippines, Indonesia and Vietnam.

Philippines received the biggest amount in free loans, $550 million, followed by Korea with $300 million, Indonesia with $223.08 million, Myanmar with $200 million and Vietnam with $39 million.

When the credit loan from the Japanese government and commercial loans by the private sector are counted, Korea and Philippines were the biggest recipients with $800 million each.

Both countries invested the money mainly to improve social infrastructure and the public living standard. However, Korea exceeded Philippines in terms of return of investment, according to the report.

The report discovered that Indonesia spent the money most inefficiently. The then Indonesian government built hotels in the location of the then president’s private holiday villa, which was too far from Jakarta to attract tourists. Besides, it spent the money in building luxurious department stores for the rich in Jakarta.

For Philippines, there were both critics and compliments. According to the Japanese embassy in Philippines, the reparation was spent in port and road construction and thereby greatly contributed to the nation’s economic growth. However, with the postponement of the construction of a multi-purpose dam, some problems occurred in power supply. Besides, the plan to extend railroads was not implemented as scheduled either.

In addition, in a symposium held in a university of the Philippines in 1994, some criticized that the reparation from Japan were used to benefit landlords and capitalists who ruled the politics of Philippines.

Myanmar focused on recovering destroyed roads and railroads while spending quite a lot of the money in social welfare projects in an effort to implement the then prime minister’s “plan to be a welfare state”. Vietnam invested a half of the reparation on power-plant and transmission tower construction.

South Korea spent most of the money establishing social infrastructures, founding POSCO, building Kyungbu Highway and the Soyang River Dam. The report said, “South Korea efficiently spent the reparation with specific plans. The country, in particular, invested much on raw materials.”

Jong sik Kong kong@donga.com