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NEWS UPDATES Asean Affairs    26 October 2012 

China-Japan row benefits Asean as Japanese investors pick SE Asia


 In two years, a town designed by Japan rail and property developer Tokyu will take shape in Binh Duong, north of Ho Chi Minh City in Vietnam.
In Thailand, more Japanese restaurant chains like Yoshinoya have sprung up in the last year or so, while in Singapore, Kinokuniya is opening its fourth bookstore.

Japan has invested more in Southeast Asia than in China over the last two years and this looks set to continue as Sino-Japanese ties hit the rocks over a territorial spat in the East China Sea.

Last year, Japan's investments in Malaysia, Indonesia, Thailand and the Philippines alone reached US$13 billion, pipping for the first time its investments in China.

And in the second quarter this year, Japan invested 380 billion yen (US$4.7 billion) in Asean, more than the 300 billion yen that went to China.
"Many Japanese companies couldn't deal with the big rise in wages there," said Naoko Fuji kawa, investment manager at the Asean-Japan Centre in Tokyo, referring to China.

A rapid rise in the middle classes has also made Asean "one of the most tempting markets in the world today", she added.

Observers say the shift reflects Japan's "China plus one" strategy, which sees it spreading out risks by betting on another emerging economy.
Some Japanese investors are also moving manufacturing to Asean to cash in on the China- Asean free trade area, which allows them to export goods made in Asean to China with little or no tariffs.

Overall, there has been a greater outflow of Japanese investments after last year's massive earthquake on March 11, which destroyed infrastructure and cut energy production in Japan.

Coupled with the strong yen, this has led to a doubling in Japan's outward foreign direct investment to US$115.7 billion last year, compared with 2010.

The United States received the largest amount of Japanese investment last year, with US$14.7 billion, according to the Japan External Trade Organisation.

Many Asean countries are also actively wooing the Japanese to get a bigger slice of the pie.

"The Philippines has been offering tax incentives, while many new plants have gone up in Indonesia and Thailand," said Alaistair Chan, an economist at Moody's Analytics.

Japanese carmakers, which have seen sales in China plunge after the dispute over the island chain - which Japan calls Senkaku and China calls Diaoyu - are gearing up for expansion in the likes of Thailand and Indonesia.

Suzuki Motor, for instance, started its first factory in Thailand this year, with a capacity to make 50,000 units a year.

Japan's biggest automaker Toyota, which the Nikkei business daily reports is cutting its target of producing 10 million vehicles this year after slashing output in China, made big investments in Indonesia last year and this year.

Their rivals, as well as suppliers, soon followed.

It is not just factories. Japanese department stores and restaurants are also shifting their focus from China to Asean countries.

Takashimaya plans to invest up to 35 billion yen in the region by 2016, twice as much as that for China; convenience chain Family Mart is slowing down expansion in China to go into Indonesia, where it aims to open 500 stores in five years, reported Nikkei.

Japanese restaurants, many of which had to close for business during the worst of the anti-Japanese protests in China last month, are looking to focus more on Asean. "In Thailand and other South-east Asian countries, people are pro-Japan, so it's easy to do business," a restaurant spokesman told the Yomiuri newspaper.

With tensions between China and Japan unlikely to abate soon, Japanese businesses may continue to favour Asean.

The Asean-Japan Centre, for instance, has received more queries of late from those keen to do business in Asean, said Fujikawa.

"The recent situation with China has made Japanese companies more interested," she added.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






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