Japanese PM to woo ASEAN on regional tour

Japanese PM to woo ASEAN on regional tour

George Nishiyama, Reuters, Tokyo

Prime Minister Junichiro Koizumi begins a Southeast Asian tour this week, eager to prove Japan is not neglecting its neighbors for America and that Tokyo won't be outdone by Beijing in forging closer ties in the region.

Koizumi's trip, put off last year after the September attacks in the United States, has taken on added significance after an agreement between China and the Association of Southeast Asian Nations (ASEAN) to craft a free trade area within 10 years.

The Japanese prime minister is under pressure to alter the impression that he has left Asia in the lurch as he rushed to tighten ties with the U.S. after taking office in April.

"The key point of the visit will be whether Koizumi can turn that perception around and strengthen ties with Southeast Asia," said Susumu Yamakage, a specialist in ASEAN issues at Tokyo University.

In meetings with leaders of five nations -- the Philippines, Malaysia, Thailand, Indonesia and Singapore -- Koizumi will reaffirm Tokyo's commitment to cooperating with the ASEAN members, a Japanese Foreign Ministry official said.

Like several of his predecessors, Koizumi will also make a wide-ranging policy speech during his final stop in Singapore on Jan.14, outlining what media said would be a proposal for a broad economic accord linking Southeast Asia and Japan.

"We put great importance in our diplomatic relations with Southeast Asian countries...There can be no Japanese diplomacy without these nations," Chief Cabinet Secretary Yasuo Fukuda said on Tuesday.

ASEAN and Japan have long been closely knit by trade and investment but both are now struggling to respond to China's growing economic and political presence in the region.

A decade of economic stagnation and weak leadership at home have compounded the unease felt in Japan at China's revival.

Those concerns were heightened after Beijing's agreement with ASEAN, reached at a November gathering in Brunei of ASEAN plus Japan, China and South Korea, to work towards a free trade zone.

Koizumi, who has played down the prospect of Japan being left out in the regional power games, is expected to propose that Japan and ASEAN forge their own cooperation framework, including free trade agreements (FTAs).

Koizumi and Singapore's prime minister, Goh Chok Tong, are expected to formally sign an FTA between the two nations, completed last year, when they meet on Sunday.

Japanese firms have invested heavily in the region and if they do not benefit from an FTA, their competitiveness will suffer, JETRO's Ishikawa said.

Japanese businesses cut back direct investment in ASEAN when a financial crisis swept Asia in 1997, but they remain top investors in the region.

A recent JETRO survey of Japanese firms showed 96 percent of businesses planning to increase foreign direct investment picked China as a target, but 68 percent also named the "ASEAN Four" -- Thailand, Indonesia, Malaysia and the Philippines.

For ASEAN, a link with Japan would improve access to the region's biggest economy by far and help ensure its members don't lose out as Japanese firms shift investment to China.

Japanese direct investment in China rose 32.4 percent in the year to March 31, 2001 -- the first jump in five years -- while investment in ASEAN held steady, a JETRO report said.

"What those ASEAN countries truly want is for Japan to open up (its markets)," Tokyo University's Yamakage said.

"Even the FTA with Singapore met such domestic opposition. Can Koizumi suppress those forces?" Yamakage asked, referring to resistance from economically feeble but politically powerful and long-protected Japanese sectors such as agriculture.

To fulfill Asia's potential, any regional grouping would ultimately have to include both China, the region's up-and-coming power and recent newcomer to the World Trade Organization, as well as Japan, economists said.

"Does it mean we are headed for a pan-Asian free trade area including Japan and China? That's the only thing that makes sense," said Robert Feldman, chief economist at Morgan Stanley in Tokyo.

"A little dance is going on in all the countries in the region as they start a process of economic integration in the Asian context similar to that which resulted in the euro."

But an Asian version of the European common market, with a single currency in 12 of the member countries from Jan. 1, remains a distant dream.

"Japan, China and South Korea coming together with ASEAN obviously is a possibility in the future," said Japan's top government spokesman Fukuda. But there were many hurdles to clear in order to sign an FTA, he said.