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Japan must show Southeast Asia that it can still be relied upon

Military power is inseparable from economic power

| Japan
Japan Maritime Self-Defense Force destroyer Kurama leads other vessels during a fleet review at Sagami Bay in October 2012: Southeast Asians may start to doubt whether Japan can be relied on as a security partner.   © AP

Raymond Woo is a value creation professional at a Singapore-based investment company. He was previously in management and public sector consulting, and used to be attached to the United Nations and the Rajaratnam School of International Studies of Nanyang Technological University in Singapore.

There has been growing discussion that Japan should assume more responsibility not only for its own security but also for the wider region at a time of growing U.S.-China rivalry. For this to happen, Japan will have to move beyond being just an economic player. How do Southeast Asians see this?

Since the end of World War II, Japan's strong investment and economic leadership have earned it a high level of trust across Southeast Asia. But Japan's role has diminished in the past decade in comparison with China.

According to the article "Japan's economic clout wanes in Southeast Asia" published in Nikkei Asia on June 4, up until 2008, Japan and the U.S. competed as the top trading partner of the 10 members of the Association of Southeast Asian Nations. But China overtook Japan in 2009 and has trebled its trade with ASEAN by 2021.

A major provider of foreign direct investment to ASEAN, the value of Japanese investment has steadily declined from nearly $15 billion in 2012 to just $8.5 billion in 2020, putting it in sixth place. It is also noteworthy that Japan's FDI to ASEAN plummeted by 64% in 2020, with FDI in 2019 totaling $24 billion.

While Japan's FDI in Southeast Asia is still higher than China's, the gap has narrowed significantly due to the falloff in Japanese investment. China's FDI to ASEAN was $9 billion in 2019 and $7.6 billion in 2020, putting China just behind Japan in 2020 when it was four places behind Japan in 2019.

According to the annual State of Southeast Asia Survey by the ISEAS Yusof Ishak Institute of Singapore, Southeast Asians' trust in Japan declined during the COVID period, perhaps due in part to Japan's declining economic footprint in the region and Japan's closed-border COVID policies.

The 2022 survey showed that while Japan was still ASEAN's most trusted major power, 54.2% of those surveyed in 2022 expressed confidence in Japan, down from 67.1% in 2021.

On the other hand, while China has been considered the most untrustworthy major power by those surveyed compared to the other four powers, Japan, the U.S., the EU and India, 26.8% expressed confidence in China in 2022, up significantly from 16.5% in 2021.

At the same time, amid the growing U.S.-China geostrategic, technological and economic rivalry, Southeast Asia sees itself as stuck between two behemoths whose conflict it wants no part of.

Still, China's economic influence in Southeast Asia has been catching up with the U.S., and this is something that is resonating loudly across a very trade-focused region. Indeed, U.S. investment in ASEAN countries has remained fairly stable at around $34 billion in 2019 and 2020, while Chinese investment has been growing exponentially over the same period.

While Japan has always tried to maintain close diplomatic and economic ties with the West, China, Southeast Asia and other countries and regions, it is politically aligned with the U.S. as a Quad member. But as U.S.-China competition accelerates, Japan, as a close U.S. ally, has been taking a firmer stance against China on various issues such as supply chains and economic security.

Fumio Kishida welcomes Joe Biden in Tokyo on May 24: Japan is politically aligned with the U.S. as a Quad member.   © Reuters

This hardening of Japan's stance is said to be making Southeast Asian governments uncomfortable because they rely on China economically, but they still want to maintain good ties with Japan and the Western alliance. A factor in the calculations of Southeast Asian governments and businesses is Japan's relatively diminishing economic role in the region with regard to China.

It is true that five Southeast Asian states are engaged in a territorial dispute with China over the South China Sea. And many Southeast Asian states are genuinely concerned about undue Chinese influence on their local economies through Chinese-dominated infrastructure projects that do not employ as many local people as expected, as well as fears of falling into a so-called debt trap.

As part of Washington's push for allies like Japan and South Korea to take more responsibility for their own national security, there have also been calls for Japan should to not only enlarge its military defense capabilities but to start projecting more of the considerable military hard power it already has in order to bolster regional security. This can only occur with an amendment to Article 9 of Japan's constitution.

As the classic Sino-Japanese idiom fukoku kyohei, or prosperous country and a strong military, shows, military power is inseparable from economic power. With Southeast Asians beginning to doubt whether Japan can maintain its regional economic leadership, they may start to doubt whether Japan can be relied on as a security partner.

Southeast Asians are pragmatic people and care about Southeast Asian interests first, and do not want to partake in big power politics. Ideally, Southeast Asians want to continue the status quo of relying on the U.S. for security and China for trade and the economy while maintaining their long-standing ties with Japan.

But fluid regional dynamics are changing all of this. As a region, Southeast Asia can clearly see that Japan is struggling to stay afloat in this whirlpool rather than acting as a regional anchor.

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