Two-way exchanges are crucial for deepening ASEAN–Japan relations

IN BRIEF

Anchored in mutual trust, understanding and respect, ASEAN–Japan relations have transformed from post-war animosity to a strong partnership, with Japan’s influence augmented by its dominant cultural exports and its role as a substantial official development assistance provider in Southeast Asia. But to foster a balanced and reciprocal relationship, ASEAN needs to increase its presence in Japan through investment, promotion of its businesses, start-ups and student exchange programs, while Japan needs to review its immigration policy to allow greater Southeast Asian immigration and integration into Japanese society, enhancing mutual learning and ensuring a more equal partnership.

By Angeline Tan and Maria Monica Wihardja (ISEAS–Yusof Ishak Institute)

ASEAN–Japan relations have been built on heart-to-heart ties, embodied by mutual trust, understanding and respect. Guided by the 1977 Fukuda Doctrine, the relationship has transformed from one of animosity in the post-war era into a deep and meaningful relationship today. This has developed Japan’s soft power in the region, making Japan the ‘most trusted partner’ in Southeast Asia, according to a 2024 ISEAS–Yusof Ishak survey.

The 50th anniversary of dialogue relations in 2023 was designated the Year of ASEAN–Japan Friendship and Cooperation. The theme reflected the importance of heart-to-heart ties and called for an enhanced two-way relationship to build the next generation of ASEAN–Japan relations, as envisioned by the ‘Partnership to Co-create a Future with the Next Generation: WA Project 2.0’.

While ASEAN–Japan relations have always been based on mutual development and prosperity, it has typically operated as a one-way street. The popularity of Japanese culture has augmented Japan’s presence and influence across Southeast Asia. In contrast, ASEAN’s soft power in Japan is barely noticeable — at best, fragmented across industries and countries such as ASEAN coffee and Filipino chocolate.

Japan’s soft power in Southeast Asia stems from long-term strategic decisions, investment and hard work. Since the post-war years, Japan has engaged with ASEAN through official development assistance (ODA), contributing to the economic development of ASEAN members and creating a ‘donor–recipient’ partnership.

Between 2015 and 2021, Japan was Southeast Asia’s largest ODA provider with a 31.4 per cent share of total ODA flows. ODA has become a feature of ASEAN–Japan relations and has promoted Japan’s appeal in the region via infrastructure and technical development and global health initiatives.

Japan was ASEAN’s second-largest external source of foreign direct investment inflows after the United States in 2023 and ASEAN’s fourth-largest external trading partner after China, the United States and the European Union in 2022.

Japan also created the ‘Cool Japan’ strategy to promote and commercialise Japanese culture overseas. For instance, Japanese language centres and restaurants are common across Southeast Asia. Japanese products such as Sanrio and Pokemon have recently made a comeback, and stores like Uniqlo and Muji have become the region’s preferred choice. Japan’s multifaceted approach and long-term investment in the region enabled its soft power to spread.

Since ASEAN has typically been the recipient, it has had limited opportunities to grow its soft power in Japan. For example, Southeast Asia is well known for its culture of food, with Thai, Vietnamese and Indonesian cuisine often considered among the best in the world. Yet the popularity of such cuisines is not apparent in Japan’s most cosmopolitan cities, despite a growing Southeast Asian migrant population.

Promoting two-way exchanges during the 50th anniversary demonstrates the call for a change in attitude towards mutual learning and a more equal partnership. It also reflects new realities, such as Japan’s search for a new grand strategy, ASEAN’s development over the past five decades and emerging common challenges, such as climate change and ageing population issues.

To create a two-way street in future exchanges and nurture a more equal partnership, ASEAN countries need to follow a reciprocal approach by investing in a greater presence in Japan, such as through movies, fashion and food. Culinary diplomacy is effective at introducing a country’s heritage and building cultural appreciation.

Business relations could also be improved to promote ASEAN businesses and start-ups in the Japanese market. In the past, Japanese companies have invested in Southeast Asian businesses or grown their own in the region, but ASEAN has not been able to reciprocate due to the high barriers to entry into the Japanese market, such as the industrial structure, language, bureaucracy and cultural factors.

But there has been a shift in recent years, as Japan is looking to increase investments in start-ups in Japan, including foreign start-ups, and can benefit from ASEAN’s dynamic start-up ecosystem. Japan could seek Southeast Asian start-ups that help meet its net-zero emissions target, such as Indonesia’s CarbonEthics. Further policies targeting investments from ASEAN, such as tax incentives or innovation grants, could help enhance its commercial presence and foster innovation in Japan. This also aligns with the goals of co-creation.

ASEAN countries should also aim to attract more Japanese students by showcasing their high-quality, internationally recognised tertiary education, cultural diversity and affordability. Given the fast-declining yen, the affordability of ASEAN countries offers an excellent alternative to higher education in the United States, Australia or Europe. Greater student exchanges can help build youth connections and nurture the next-generation of ASEAN–Japan relations.

Japan could also consider reviewing its immigration policy to be more favourable to Southeast Asians already living in the country. For example, by promoting a graduate scheme for foreign students to find jobs in Japan after graduation or pathways to permanent residency for foreign workers. This can assist Japan with its labour shortage, while allowing greater immersion of Southeast Asians in Japanese society.

Japan has proven itself to be among ASEAN’s most valuable partners. The trust that has been cultivated should not be taken for granted. To deepen this trust, ASEAN–Japan relations need to ensure a more genuine and equal partnership through a two-way exchange.