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Japan seeks bilateral trade deals with southeast Asia

Daily Times, Lahore, February 28, 2005

Japan seeks bilateral trade deals with southeast Asia


SINGAPORE: Japan plans to expand trade in Southeast Asia through a network of bilateral free trade pacts - from Thailand and Malaysia to Indonesia and the Philippines, a senior Japanese trade official said.

Japan’s investment in southeast Asia - now three times that in China - could also get a big lift from Indonesia’s ambitious infrastructure programme so long if Jakarta can introduce stronger investment guarantees, the official said.

“Many Japanese companies have some strong confidence in the new administration in Indonesia,” Osamu Watanabe, chairman and chief executive of the government-backed Japan External Trade Organisation (JETRO), said in an interview.

Japan is already in talks on free trade deals with Thailand, Malaysia, the Philippines and South Korea, and has agreed with the 10-member Association of Southeast Asian Nations (ASEAN) to aim for talks on a free trade agreement (FTA) this year.

The target is to forge a pact with ASEAN by 2012. Japanese negotiators are expected to conclude agreements with some southeast Asian countries before starting talks on an ASEAN pact. Tokyo already has such a pact with Singapore and is near to concluding one with the Philippines.

“With respect of the free trade agreement between the Philippines and Japan, it’s almost all agreed,” Watanabe said before flying on Friday to Indonesia, whose president, Susilo Bambang Yudhoyono, launched a $22.5 billion auction of infrastructure projects at a summit last month.

He estimated that about 51 percent of Japanese companies now have “strong confidence” in Indonesia. “Forty-nine percent are still observing and watching developments there,” he said.

He said an investment guarantee with Indonesia would be included in FTA discussions with Jakarta. This could resemble a similar investment guarantee pact signed by Singapore and Jakarta this month that provides options in the event of disputes.

“Japanese investment to Southeast Asia will continue. Foreign direct investment is FDI is bigger to southeast Asia than to China and accumulated investment to southeast Asia from Japan is three times bigger than that to China,” he said. “This trend will continue.”

Japan has concluded only two FTAs. Its first, with Singapore, excluded farm products. Its second, with Mexico, was signed in September after disputes over pork and orange juice.

He said talks with Thailand and Malaysia hinged on a push from the southeast Asian countries to export their agricultural products to Japan, while Japanese companies want a reduction in tariffs for automobiles, auto parts, iron and steel.

Japan and the Philippines are expected to finalise their agreement this year after clinching a deal in November that covers industry, agriculture and services, and allows a trickle of nurses into Japan to help cope with a shortage.

Southeast Asia, a major source of resources and home to critical shipping lanes, is also being courted by China, which has pushed hard to establish a free trade area with six ASEAN countries by 2010 and with the other four by 2015.

ASEAN groups Indonesia, Singapore, Malaysia, Brunei, the Philippines, Thailand, Cambodia, Laos, Myanmar and Vietnam. Watanabe also said a revaluation of the Chinese yuan may not hurt Japanese companies now as badly as a few years ago.

While some Japanese companies could suffer if China revalues the yuan, a steady rise in the number of Japanese companies exporting into China’s booming domestic market provides a buffer if China allows its currency to float higher.

“The export portion is still bigger, therefore it (a higher yuan) will have some influence on conditions. But compared with a couple of years ago, the situation has changed,” Watanabe said.

 source: Daily Times