Southeast Asia & Japan – The good, the bad & the ugly

The current state of Southeast Asia

The ISEAS - Yusof Ishak Institute has recently released its State of Southeast Asia 2024 survey and the media has largely focused on the respondents’ choice between the U.S. and China. However, the survey results include many other valuable findings, including those pertaining to Japan.

While there are many positive things about Southeast Asia’s relationship with Japan, not everything is perfect and straightforward. There are also some contradictions and conflicts. Even though Japan had a rather unfavorable reputation in Southeast Asia in the past, it has contributed a lot during the last five to six decades and is now viewed favorably. However, different approaches need to be taken because of different circumstances in 2024 and going forward, and it is important that both Japan and Southeast Asia are mindful of this. Currently, Southeast Asia is most concerned about the economy and climate change. Also, geopolitics—especially U.S.-China relations—were on the mind of the survey respondents.

One of the questions asked in the survey is: “What are the top challenges going forward in 2024 that are facing Southeast Asia?” The top three answers are unchanged from the previous year, with the top answer being “unemployment and economic recession” at 60%. “Climate change and extreme weather events” also ranks very high. Regarding ASEAN as an inter-government organization, some concerns that became apparent in the survey are ASEAN being viewed as slow, ineffective, and unable or unwilling to deal with fluid political developments, thereby risking becoming irrelevant. ASEAN itself is becoming an arena where major powers are competing, and the member states of ASEAN may become proxies for other conflicts.

In 2024, Southeast Asia is affected by several internal and external issues. The internal issues include effects of the COVID-19 pandemic, which caused the interruption of economic activities and led to fiscal limitations, but also other long-term issues such as structural problems. The external issues include geopolitical tensions, disruptions of global supply and value chains, China’s economic slowdown and influence, and climate change and energy transition. While Southeast Asia has achieved relatively smooth economic growth over the past few decades, the energy transition is an unprecedented new factor which requires extraordinary expenditures to facilitate the introduction of new technologies. Even though there are assistance programs, such as the Just Energy Transition Programs or JETP Programs, for countries like Vietnam and Indonesia, these countries are still facing implementation problems and financing issues, while other countries face even greater burdens.

The Good: A strong trust-based relationship

First of all, there were many positive findings to be observed in the survey results. For example, in terms trust and distrust in major powers expressed by survey respondents, Japan is the most trusted major power. In fact, Japan has maintained this position ahead of the U.S., the EU, China, and India every year since the survey began. This unique position is a credit to Japan, but it also comes with a kind of responsibility. Similarly, 60% of respondents stated that they were “very confident” or “confident” that Japan would contribute to global peace, security, prosperity, and governance. As for the reasons behind this trust in Japan, the reason most often chosen is that there is a strong belief that Japan is a responsible stakeholder that champions and respects international law. Japan’s vast economic resources and political will to provide global leadership are another frequently chosen reason. On the other hand, the 20% who replied that they do not trust Japan chose reasons such as concerns over Japan being distracted by its own domestic issues and its issues within Northeast Asia as well as Japan lacking the capacity or the political will for global leadership. Furthermore, Japan also has tremendous soft power and ranks very high as a popular holiday destination, chosen by more than 30 % of the respondents.

Finally, Japan comes at the top of the list for the question of which country the Southeast Asian respondents think can play a proactive role in sharing climate expertise with the respondents’ countries. Although the EU has been quite active on this front, their perception in Southeast Asia in this area does not come near that of Japan.

In summary, Japan is familiar, trusted, and liked. It is believed that Japan has adequate or ample financial resources and industrial capacity. The unique relationship between the government and the private sector in Japan, which differs from Western powers, also makes Japan stand out. Additionally, Japan is a part of Western-led groups, particularly the G7, and can serve as an advocate from within these bodies. Japan also has a more nuanced approach toward China than Western powers which aligns with what Southeast Asian countries feel comfortable with. Finally, Japan is advanced in the field of energy technologies and can play a catalytic role for Southeast Asia in energy transition.

The Bad: Delayed digitalization and lack of diplomatic leadership

On the other hand, the survey results also identified some aspects of the relationship that are not as positive. There are 2 issues that are highlighted in particular.

The survey shows a strong optimism within ASEAN regarding the growth of the digital economy. 38% of the respondents expect that the ASEAN Digital Economy Framework Agreement (DEFA) will contribute significantly to the capabilities in the region and enhance regional digital trade. Another 25% believe that it will cause digital integration within the region, thereby making the region more competitive in digital initiatives. It is expected that the digital economy can actually expand regional GDP significantly, probably by 50% to 60%. For this reason, ASEAN has brought forward its negotiations on DEFA and aims to complete negotiations of the main points by 2025.

Another point that was apparent are the top security concerns or geopolitical concerns for Southeast Asia. The top concern is Israel-Hamas, followed by aggressive behavior in the South China Sea. The concern about the situation in the South China sea exists in all of the ten ASEAN countries, whether they are claimant states or not.

How do these two points relate to Japan? In summary, both in terms of digital initiatives and security contributions, Japan is seen as a laggard. Since DEFA is such a high priority for ASEAN, the countries will also look for new partners from outside the region. Unfortunately, although Japan would be in a good position to be embraced on this front, it is probably not ready because of the state of its own digitalization. The biggest players in ASEAN today on the digital front are the U.S. and China. Regarding the South China Sea issue, which is a top security concern for the Southeast Asian respondents, Japan is not sufficiently well-positioned to play a bigger role, particularly in areas such as deterrence. Recently, Japan has come up with a new program: the Overseas Security Assistance Program (OSA). This is playing some role in helping to build regional capacities on the security front, but it is not yet able to play a role in deterrence that can actually enhance the security and stability in the region.

The Ugly: Conflicts and dilemmas

Finally, regarding conflicts and dilemmas in the relationship between Southeast Asia and Japan, one interesting finding is how the respondents ranked dialogue partners for ASEAN in terms of their strategic relevance. Japan is ranked third, not far behind China and the U.S. who are ranked at the top, with only a slight difference among them. Japan is recognized as very relevant to the region, but in 2 questions which asked respondents to choose the most influential economic power for the region and the country with the highest political and strategic influence, only 3.7% of respondents chose Japan for both questions. These results point toward Japan being perceived as an underperformer in regional influence and leadership which can be summarized in three points.

First, as has become obvious in this survey, Japan could potentially rank higher in terms of economic and strategic influence, but it is not quite there yet. Secondly, Japan is seen as playing a very low-key diplomatic role in all of the conflicts that matter to the region, such as Myanmar, the South China Sea, Ukraine, and Gaza, even though it could actually do more. Thirdly, Japan's current climate initiatives in the region are seen as helpful, but also seem tailored to be more self-serving. Japan has its own energy security needs and there is a noticeable tilt in some of Japan’s initiatives on the climate change front to be also supporting Japan's own energy security. Obviously, it is not wrong for Japan to advocate in its own interests, but the region may desire to see a more balanced approach by Japan that can then also help the region to a greater extent.

Japan has done a spectacular job as a dialogue partner to ASEAN. It has built a solid reputation as a trusted power in Southeast Asia, which is a good position to be in. But geopolitical conditions today are more complex, and regional growth is becoming more challenging for Southeast Asia. Japan has a very strong foundation on which it can further strengthen its position if it adjusts its approach to all these new conditions. In particular, playing a stronger role in terms of diplomacy and security in the region and working together with Southeast Asia to address regional climate issues in a more altruistic way may be required.

Comment

AIZAWA Nobuhiro:
I always liken ISEAS’ Southeast Asian Outlook to an intellectual foot massage. It may be painful for us, but it stimulates us intellectually.

First, the point raised about Japan having trust, but not sufficient influence has been becoming a major strategic question in Japan as well. A more proactive role in diplomacy and strategy was suggested based on the survey results, because Japan tends to think mostly in economic terms. Japan does admit that it is no longer a superpower like the U.S. or China, but the comparison between the EU and Japan being picked as the number three country in the survey was particularly striking. Even countries that Japan thought it had a mutually affectionate relationship with, such as Vietnam or Thailand, picked the EU over Japan, by a significant margin. It was mentioned that Japan has a nuanced and realistic approach, but the survey results show us the hard reality of how well this approach is received.

Second, the results regarding views on the U.S. and China were also surprising, for example trust in China increasing due to factors such as the Israel-Hamas conflict. While it is understandable why the U.S. is being discredited, it is not obvious why trust in China has increased, especially considering the fact that some of the countries in the region have actual maritime issues with China related to the South China Sea.

Regarding the third point about Southeast Asia, there is a big narrative about ASEAN not functioning as it had hoped to. Japan also engages in a lot of minilateral settings, for example the Philippines-Japan-U.S. relationship. However, the survey shows that the trust in ASEAN among ASEAN nations is improving. This is a promising sign to keep investing in ASEAN and not yet onto a post-ASEAN structure, which is a positive surprise.

Moderator:
Mr. Choi, do you have any comment?

CHOI Shing Kwok:
As for the Israel-Hamas issue, I do not think that the Southeast Asian countries are actually crediting China for taking any particular action regarding this conflict. They were merely reacting to the fact that the U.S. seemed to be supporting Israel at a time when it was beginning to be seen as violating humanitarian law and humanitarian principles. This lowered the reputation of the U.S., as it is seen as practicing double standards and taking hypocritical action. By default, trust toward China increased in the binary context of this question and in a sense, China’s actions were irrelevant to China’s increasing status in this regard. Southeast Asian countries with a Muslim majority have been following the Palestine issue for many decades. It is not only a religious issue, but it has almost become an identity issue that leans away from those supporting Israel.

Regarding ASEAN, although there are minilaterals that play an important role, it is not wise to think post-ASEAN. For example, Southeast Asia wants to increase its agency to advocate for free trade. However, to take the initiative, even the bigger countries in Southeast Asia see the need for ASEAN.

Q&A

Q:
Japan has recently shifted its fundamental policy stance on national security and plans to increase the budget for defense spending. What is the reaction of the people in the ASEAN member states to this policy change?

CHOI Shing Kwok:
I believe that the ASEAN countries would be supportive of Japan's doubling of its defense budget. If Japan gets stronger in terms of security, it can play a bigger role in helping to provide security and stability in Southeast Asia. The world is in an uncertain state after all, so it is natural for Japan to take this approach. Due to the high level of trust toward Japan, this is not seen as an issue of concern in Southeast Asia today, even though the situation likely would have been different 50 years ago. Possibly, security assistance to Southeast Asian countries will also grow as a result of the increased defense budget, which is something that is appreciated in the region.

Q:
What about the possible impact of the upcoming U.S. presidential elections and the reaction of the people in the ASEAN member states? Do the survey results incorporate the possible U.S. election outcome in terms of capturing long-term trends?

CHOI Shing Kwok:
This relates to the question where 50.5% of the respondents chose China and 49.5% chose the U.S. One of the underlying reasons for this movement between 2023 and 2024 is the perception that the U.S. has become more tentative in its commitment to the region. These concerns about the U.S. becoming more inward looking exist not only in Southeast Asia, but in many regions. This simply means that Southeast Asia needs to look to other partners to become more self-reliant. Nobody knows the result of the election, or the outcome of policies that will be adopted after the election. When it happens, all countries have to take it as a given and adjust accordingly.

Q:
Based on the survey result, what policy recommendations do you have for the government of Japan? What should the government and the private sector do to strengthen the relationship with ASEAN?

CHOI Shing Kwok:
The cooperation between the Japanese government—particularly the Ministry of Economy, Trade and Industry—and the private sector is unique. There is a desire to work together, and this leads companies to not focus only on short-term profitability. The economic issues and climate change issues mentioned earlier are not going to be solved in the short-term. Such long-term issues are more likely to be examined and dealt with by governments. This system of collaboration between the government and private sector companies cannot be found in the U.S. or Europe. Japan is really in a unique position on this front, which is positive.

Moderator:
Thank you for your participation in our BBL Seminar today.