ASEAN-JAPAN ECONOMIC RELATIONS : PROBLEMS AND PROSPECTS

Abstract

Foreign trade and investments have always been the cornerstone to the progress and prosperity of the ASEAN countries. ASEAN has pursued an open economic strategy and bi lateral relations are more important than intra-regional activities. There has been no exception in ASEAN's relation with Japan. While ASEAN's trade with Japan has been asymmetrical, ASEAN faces the problem of over dependency on Japan in many areas. This study aims to provide an analysis of ASEAN's achievment in its relations with Japan. Japan's interest in ASEAN is mainly economic. Initially, ASEAN was not taken seriously and Japan was reluctant to play a more active role in the region. ASEAN tend to use dialogues for political gains and these may have added to dissatisfaction between ASEAN and Japan. Hence, the relations between ASEAN and Japan has not been easy. Politically and economically, Japan bulks larger in ASEAN's world than ASEAN in Japan's. This is evident in the various aspects of the ASEAN-Japan relations. Japanese economic presence as a market for ASEAN's exports, a source of imports and an investor has made vital contribution to the economic boom in ASEAN. In addition, ASEAN serves as a source of raw materials and potential market. Its proximity has increasingly attracted Japanese interest. While this implies interdependence, yet Japan's dependence on ASEAN is far less than that of the region on it. The resulting trade relations allow Japan to exert leverage in the region and this may not be satisfactory. Intra-ASEAN differences impede ASEAN's growth and the overall trade relations with Japan. This is further aggravated by both Japan's and ASEAN's protectionism, and Japanese disproportionate direct foreign investments pattern. Non economic considerations led to further strain lo ASEANJapan relations. While post-war anti-Japanese feelings among ASEAN members had since subsided to a insignificant level, there is a rise of new resentment against Japanese attempts to make the world a 'Japan Inc'. Amidst these problems, many felt that economic cooperation can take on more concrete forms -- as a common market / free trade area among ASEAN members and/or a wider concept of an Asia Pacific Community. Meanwhile, ASEAN economic cooperation takes the form of a joint effort in securing a larger external market and better terms for exports, involving largely the Pacific market economies. These developments have important implications for ASEAN-Japan relations. Hence there is a need to define new directions for future cooperation between ASEAN and Japan, given the rise of the Japanese Yen and Japan's alarming relationship with China.