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  • Luncheon Talk "Re-Energizing the ASEAN-Japan Partnership" at the 27th ASIA-PACIFIC Roundtable hosted by ASEAN Institutes of Strategic and International Studies (ASEAN-ISIS): Evolving ASEAN-JAPAN Relation-New Dimension of ASEAN-JAPAN Partnership-

Speech Transcripts

June 5, 2013

Luncheon Talk "Re-Energizing the ASEAN-Japan Partnership" at the 27th ASIA-PACIFIC Roundtable hosted by ASEAN Institutes of Strategic and International Studies (ASEAN-ISIS): Evolving ASEAN-JAPAN Relation-New Dimension of ASEAN-JAPAN Partnership-

Hilton Hotel, Kuala Lumpur, Malaysia

Akihiko Tanaka
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:

  • Japan's FDI accounts for 12% of total FDI flow (cumulative amount of 2006-2011) to ASEAN.
  • Japan's FDI position in selected ASEAN countries (end of 2011).
    • Thailand - 31.4%
    • Philippines - 24.0%
    • Malaysia - 12.9%

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.

  • Manufacturing sector occupies 69% share of Japan's FDI in ASEAN
  • 73.8% of parts for transport machinery procured by Japanese local subsidiaries are produced locally in ASEAN.
  • 91% of automobile produced in Thailand(2007) produced by Japan's FDI
  • 32 % of East Asia intra-regional trade is occupied by parts and components in 2010 (NAFTA for 17% & EU for 16%), mostly for electronics, machinery, and transportation equipment.

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

  • Share of China in ASEAN's trade increased from 4.4% in 2000 to 11.2% in 2011.

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.

  • The accumulated amount of ODA from Japan to ASEAN 10 countries from 1960 to 2011 accounts for 34.9% of total ODA from the world to ASEAN

Given the remarkable growth of older ASEAN members, CLMV are the countries that Japan is working more actively in the area of ODA.

  • The amount of ODA(gross) to CLMV increased by 57.4% in 5 years (US$3,358 million, 2007 → US$ 5,283 million, 2011)

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:

  • Mindanao has long been affected by conflicts between the government and MILF.
    • International contact Group (ICG): observatory group of the Peace Talk,
    • International Monitoring Team: JICA dispatch of Japanese experts.
    • ODA assistance, called J-BIRD: community development assistances and capacity building support in conflict-affected areas.
    • Framework agreement was agreed between the government of the Philippines and MILF.

Japan has committed its assistance for ethnic minority areas in Myanmar.

  • A loan aid project (170 million USD) was pledged and 5 grant aid agreements (54 million USD) were signed in JFY2012 to assist ethnic minority areas. JICA will shortly implement projects in all States 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.

Stagnant productivity.

  • Productivity gains have either declined or stagnated in major ASEAN countries since the middle of the last decade.

Some countries show Widening disparity in income.

  • Gini coefficient increases in some countries
    • Indonesia (29.2 → 38.9)
    • Lao PDR (30.4 → 36.7)

Like Japan and Korea, some countries will face aging population.

  • population over sixty will increase more than 3 times by 2050
    • 53 million (2012)
    • 183 million (2050)

Rapid urbanization is another problem.

  • BBC named 10 gridlock cities and 3 ASEAN cities (Bangkok, Jakarta, Manila) are included.

Climate change may affect Southeast Asia negatively.

  • 63 million people will be affected by a half-meter rise of sea level by 2050 in Asia Pacific Region.
  • 5 ASEAN countries, Philippines, Myanmar, Cambodia, Vietnam, and Thailand, ranked in top15 extreme risk countries of Climate Change Vulnerability Index.

Partly related with climate change, there are risks of frequent and large scale Disasters.

  • The number of disasters in Asia shows a fourfold increase in 40 years. The number of disaster victims in Asia accounts for 52% of the world total.

Infectious disease

  • Avian Influenza has been widely spread to 7 ASEAN countries. ASEAN accounts for 59% of total cases (358/598) and 71% of total deaths (253/352).

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.

  • ASEAN's ties with Africa is important for Japan.
  • Thailand is the production base of automobile export where 6 major Japanese companies' factories locate. For example, Mitsubishi produced 2 million cars in Thailand, out of which 13% was exported to Africa

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.


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