Part 1 of 2 : Japan striving to maintain partnership with Asia

Part 1 of 2 : Japan striving to maintain partnership with Asia

Ichiro Fujisaki, Japanese Deputy Minister for Foreign Affairs,
Jakarta

Today, there indeed are a lot of new issues that command our
attention. It is no exaggeration to say that we are entering a
new page in our history. China's emergence. War against
terrorism. New economic partnerships. Changing relations between
developed and developing countries. New energy outlook. You name
it.

But this does not mean we may disregard what we already have.
This is especially so in this part of the world. Two reasons.
One, because this region itself is a success story. No major war
in three decades. Remarkable economic development. There is no
region which has comparable record in the world. Two, although
this is a success story, we cannot take it for granted. With some
mismanagement or lack of sensitivity, the fruit we have in our
hands may still easily slip away.

My message is very simple.

o One, let us cope with new challenges positively without
waiting to be driven by events.

o Two, in doing so, let's maintain consciously those good
things we have in our hands and build anew on that basis.

o Third, let us be inclusive, open and outward looking when we
discuss future regional cooperation.

Yes, maybe nothing new. But, still important to keep in mind,
I believe, at this turn of events.

Let me elaborate these themes in three areas: cooperation in
the economic fields, regional and multilateral institution,
regional and global issues.

East Asia's remarkable success owes much to human resources
with high-level working ethics, social institution and
geographical location. These, together with proper industrial
policies, made it possible for initial members of ASEAN for
example to consolidate a virtuous cycle. Receive assistance and
build infrastructures. Induce FDI utilizing those
infrastructures. Export products from firms made with FDI, and
earn foreign currencies to improve people's living and to pay
back debts. Successful model was illustrated in IDEA (Initiative
for Development of East Asia) ministerial conference held in
Tokyo.

Japan has endeavored and is endeavoring to remain a partner in
this process. Take ASEAN countries for example. In trade, Japan's
share in 2001 was 20 percent and was the largest trading partner
along with the U.S. As for FDI between 1995 and 2001, Japan's
share is 22 percent and is the largest source. Regarding ODA in
2001, Japan contributes 60 percent of all the bilateral
assistance from DAC countries and is still by far the top donor.
Japan announced in its new ODA Guideline this year that Asia
remains its priority region.

Japan's task today is to restructure and recover its economy
as soon as possible. With that, it can continue to cooperate with
partners in the region. A few months ago the Financial Times
wrote Japan has 3Ds. Deregulation, Drastic Structural change,
Definite recovery? No, not quite yet. Debt, Demographics, and
Deflation were their Ds.

But we should not lose a balanced sight. Let me quote Prime
Minister Junichiro Koizumi. "A decade ago when Japan was in the
economic bubble, we were overconfident. Now we have lost
confidence. Both recognitions are wrong; recently, there are
aspects that are not going well due to lack of confidence." I
think this notion may be universally applicable.

Let us maintain and fortify mutually interdependent economic
ties. It took years to build these close and friendly relations.
New challenges should be met on that basis.

Emerging economies such as China and India are of course a
challenge to others. It is very natural that there are concerns
that some investors may shift their manufacture to these new
partners with cheaper wages and larger domestic market. So-called
hollowing out effects. Enterprises go where they can make a
profit. That is the essence of the market economy. So there is
naturally competition to improve environment. Those who can
continue to adapt themselves to changing situations gain more.
The difference with the game of musical chair is that here chairs
don't disappear. It's not a zero sum game. Win-win is possible.
But just how much one win depends on one's own will and ability.
It is in this sense that we say new situation is not a threat but
an opportunity. We are ready to continue to extend inter alia
capacity building assistance in this area.

In this regard, there is one important initiative in the
financial sector. In order to prevent the recurrence of financial
crisis, Japan is taking the initiative with others for the Asian
Bond Market. The aim is, through issuance of bonds in local
currencies, to connect high rate savings in the region with long-
term investment needed for economic development. Japan will
support the development of domestic bond markets.

This article is based on an abbreviated text of a luncheon
speech delivered at the Conference on Security Cooperation in
Asia Pacific (CSCAP) recently held in Jakarta.