June 5, 2013
Hilton Hotel, Kuala Lumpur, Malaysia
Japan International Cooperation Agency
It is pleasure to have this opportunity to participate in the Asia-Pacific Roundtable.
My theme is Re-Energizing the ASEAN-Japan Partnership. But I would like to start with the assertion that the ASEAN-Japan relations are sound, dynamic and thriving. Let me list up some of the basics.
First, economic relations between ASEAN and Japan are deep and extensive.
The cumulative Foreign Direct Investment Stock of Japan in ASEAN at the end of 2012 was 122 billion USD. This comprises about 12 per cent of Japan's entire FDI stock in the world and larger than that in China of 93 billion USD and 43 per cent of that in US.
From the viewpoint of ASEAN:
More remarkably, Japan's FDI flow into ASEAN has dramatically increased in the first decade of the 21st century. The annual inflow of Japan's FDI into ASEAN in the beginning of this decade is 5 times larger than ten years ago. The total inflow of Japan's FDI into Indonesia in 2011 and 2012 was 7.4 billion USD. Japan's FDI into Cambodia increases sevenfold in the last five years.
Japan's FDI is mostly directed to the manufacturing sector and played a leading role in building the supply-chains in East Asia.
ASEAN and Japan really form a huge transnational network of manufacturing production.
As in any other region, trade between ASEAN and China has soared in recent years
Japan's trade share in ASEAN has declined from 16 per cent in 2000 to 9.5 per cent in 2011. But given the tremendous increase of FDI and the establishment of transnational supply-chains, Japan is now deeply internalized within ASEAN economy.
Let me now touch upon some of the trends related with my current job: Official Development Assistance.
Given the remarkable growth of older ASEAN members, CLMV are the countries that Japan is working more actively in the area of ODA.
Politically, Japan-ASEAN relations are quite active. With the establishment of new government under Shinzo Abe, Japan's political approach to ASEAN increased markedly. Abe visited Vietnam, Thailand and Indonesia in January, and Myanmar two weeks ago. Taro Aso, Vice Prime Minister and Finance Minister, to Myanmar in January. Foreign Minister Fumio Kishida visited the Philippines, Singapore and Brunei in January.
In the area of security, Japan's relations with ASEAN are largely centered on ARF. Japan participated in many non-traditional security area cooperation. If I may be allowed, I would like to advertise what JICA is doing in peace-building in Southeast Asia.
One good example is Mindanao:
Japan has committed its assistance for ethnic minority areas in Myanmar.
So, I think that ASEAN-Japan relationship is sound and thriving.
Do we need to re-energize ASEAN-Japan partnership? I think we do. There are at least two reasons.
First, ASEAN as well as Japan are facing new internal challenges.
It is widely known that Japan is struggling to get out of deflation and facing challenges of aging society. In order to get out of deflation trap, Pm Abe is pursuing the policy of three arrows: bold monetary policy, flexible fiscal policy, and a strategy to generate new sources of growth. The third arrow requires active international engagement not only of big business but of SMEs. Southeast offers opportunities for them.
However, Southeast Asia faces emerging challenges, too. The middle income countries in ASEAN have to escape from middle income traps. CLMV have to overcome many development challenges.
There are some concerning tendencies.
Some countries show Widening disparity in income.
Like Japan and Korea, some countries will face aging population.
Rapid urbanization is another problem.
Climate change may affect Southeast Asia negatively.
Partly related with climate change, there are risks of frequent and large scale Disasters.
As Japan needs prosperous Southeast Asia, it wants Southeast Asia to overcome these challenges. Many of the issues are common to Japan or Japan experienced similar challenges slightly earlier. We have to overcome these challenges together. This is the first reason we need to re-energize ASEAN -Japan relations.
There is at least another reason why we need to re-energize ASEAN-Japan relationship. That is the tectonic change of the global economy. The rise of China is the most obvious indication of the change that has geopolitical implications. ASEAN and Japan should make all sorts of efforts to keep this period of power transition as peaceful as possible.
But in addition to the tectonic change that the rise of China brings about, I would like to point out another great transformation. That is the rise of the Indian Ocean. Africa is being connected to the economic dynamism of Asia. Sub-Saharan Africa achieved more than 5 % annual growth in the past ten years. The last quarter of the twentieth century saw the dramatic rise of the Pacific economies. The first quarter of the 21st century may demonstrate the dramatic rise of the Indian Ocean areas starting from Southeast Asia to India and to Africa.
Already, ASEAN's trade with Africa increase three times over the last six years.
If this trend continues, ASEAN will be the key areas to connect the two oceans.
But obviously Africa also has many, many challenges. If the Indian Ocean is to be the next Pacific, African countries need to overcome many challenges. Here, the experiences of Southeast Asia are relevant. As a partner of development in Southeast Asia, Japan and JICA would like to promote south-south cooperation between Southeast Asia and Africa. JICA is already benefitted very much in organizing technical cooperation programs for African counties in Malaysia.
With the rise of the Indian Ocean, ASEAN and Japan have a new frontier in which to work together. This is the second reason why we should re-energize ASEAN -Japan relationship.
ASEAN and Japan face internal challenges and external challenges. In order to cope with the internal challenges, we need to learn each other. In order to cope with external challenges, we need to be work together globally. To realize the age of the Indo-Pacific Oceans ASEAN-Japan relationship should be re-energized.