Japan Cements Future Ties with ASEAN

Posted by Reading Time: 3 minutes

Dec. 27 – During a meeting in Tokyo marking the 40th anniversary of Japan-ASEAN relations, Prime Minister Shinzo Abe pledged ¥2 trillion (about US$20 billion) in aid and loans to Southeast Asian countries over the next five years in a move signaling both tighter cooperation between Tokyo and the Southeast Asian block, and an attempt to counterbalance China’s growing influence in the region.

Cementing Ties

At the Japan-ASEAN Summit, PM Abe emphasized the importance of strengthening economic ties between Japan and the regional organization, saying that his administration’s recent policies aimed at promoting Japanese growth will benefit ASEAN whose growth, in turn, will benefit Japan.

In 2009 Japan ranked as ASEAN’s largest trading partner, but has since been replaced by China, the world’s second largest economy. Nevertheless, Japan is still a major economic player, accounting for 11 percent of ASEAN trade – just two percentage points behind China.

Today, more than half of Japan’s total Economic Partnership Agreements rest within Southeast Asia, including a trade deal with ASEAN and bilateral agreements with Singapore, Indonesia, Malaysia, Thailand, Vietnam, Brunei and the Philippines.

Japan is also negotiating with many of these same countries in the Trans-Pacific Partnership (TPP), a free-trade agreement that could potentially boost trade among a dozen or so countries that account for more than 40 percent of the global economy.

Abe also stated earlier this year that he would like to upgrade cooperative relations between the two sides to a higher dimension, and carry out further cooperation in healthcare, urban development and disaster management.

Counterbalancing China

Since establishing relations 40 years ago, Japan and the members of ASEAN have shared a capricious rapport. Recently though, there has been a steadily increasing amount of development cooperation. Many cite this cooperation as part of a larger strategy to maintain diplomatic influence in the region as China pursues an overly assertive territorial policy in East Asia that has heightened tensions among its neighbors.

As Japan seeks diplomatic support from ASEAN, four of whose members have similar territorial disputes with Beijing in the South China Sea, ASEAN member countries may realize they are  not in a position to side with Japan against China – largely because they need both countries to preserve their own economic well-being.

Development Projects

During the meeting, Tokyo pledged an additional US$600 million in overseas development assistance and investment loans to the region.

The five-year commitment will focus mainly on development assistance to reduce poverty and build infrastructure in the ASEAN regional block, and more specifically to help with struggling infrastructure projects in Myanmar – a country seeking to rely less on China as it continues its transition from a military regime to a democracy. Myanmar serves as critical part of Japan’s ASEAN engagement strategy because it is the next in line for ASEAN chairmanship in 2014.

Vietnam and other areas in the Mekong sub-region will also receive development assistance from Japan. Earlier this month, Abe announced an official development assistance package of US$1 billion for Vietnam.

Tokyo also agreed at the Summit to expand currency swaps and other arrangements with Indonesia and the Philippines in an effort to stabilize Asian financial markets.

In an impressive feat, Abe has now visited all 10 ASEAN countries in the first year of his term while advocating for stronger economic ties and cooperation in security.

It remains unclear whether Japan’s refocus upon Southeast Asia will be sustainable in the long run, but as the success of the summit suggests, even China’s closest partners in Southeast Asia are searching to achieve greater autonomy and a stronger voice in regional decision-making.

You can stay up to date with the latest business and investment trends across ASEAN by subscribing to Asia Briefing’s complimentary update service featuring news, commentary, guides, and multimedia resources.