The free and open international order based on the rule of law is currently facing serious challenges such as Russia's aggression against Ukraine and rising tensions in the Middle East. In this period of change, ASEAN is of threefold significance to Japan. First, ASEAN is a geopolitically strategic region in the Indo-Pacific, making it all the more important to deter attempts to unilaterally change the status quo by force. Second, the ASEAN region is not only a base for Japan's manufacturing industry, but also a global growth center and an excellent site for the promotion of innovation. And third, ASEAN is a hub for multilayered regional cooperation among the nations of this region, including Japan (Note).

Maintaining regional peace and stability in the face of a difficult geopolitical landscape is a big challenge for ASEAN. Against this background, ASEAN announced the ASEAN Outlook on the Indo-Pacific (AOIP) at the Leaders' level in 2019. The Outlook upholds ASEAN Centrality, emphasizes such principles as openness, transparency, inclusivity, a rules-based framework, and respect for international law, and presents the policy of promoting cooperation in the areas of maritime cooperation, connectivity, the UN SDGs, the economy and other possible domains. Japan was the first to express support for this Outlook in the Leaders’ Joint Statement, followed by nations including India, Australia, the United States, the Republic of Korea, and New Zealand. China also expressed its support, thanks to persistent approach by ASEAN. Strengthening the ASEAN-led framework is vitally important for regional peace and stability.

Japan must update its old image of ASEAN. ASEAN is rapidly becoming digitalized and is ahead of Japan in many aspects, such as respect for diversity and multiculturalism. In the past, Japan was economically more affluent, and the relationship was one of “donor and recipient.” In recent years, however, ASEAN's remarkable economic development has changed the relationship dramatically. Now, Japan and ASEAN are truly equal partners, working together to address regional and global economic and social challenges.

The AOIP shares fundamental principles with the Free and Open Indo-Pacific (FOIP) concept launched by Japan in 2016. ASEAN-Japan cooperation, based on trust and co-creation, will not be limited to ASEAN and Japan; the trust and solutions generated therein can be expanded to the Indo-Pacific region and further to the rest of the world. Japan will have a major role to play in this effort.

(Note) ASEAN Plus Three (Japan-China-Republic of Korea), the Regional Comprehensive Economic Partnership (RCEP) Agreement, the East Asia Summit (EAS), the expanded ASEAN Defense Ministers’ Meeting (ADMM Plus), the ASEAN Regional Forum (ARF), etc.

ASEAN is driving global economic growth; the region’s economy is growing at a rate of 5-6% annually, supported by a young demographic composition and an emerging middle class. Amid the US-China geopolitical tensions, investment in semiconductors, the digital sector, and energy, which had previously gone to China, has shifted to Southeast Asia, making the region also geopolitically important. Japan has contributed to ASEAN's development through official development assistance (ODA) and manufacturing investment and trade, but competition is now intensifying as the U.S., China, India, Europe, the U.K., Australia, and other nations have begun to strengthen their relations with ASEAN. Surveys reveal that within ASEAN, Japan is perceived as a reliable but ‘20th century’ partner, while China and the United States are seen as ‘21st century’ partners.

In order to make the ASEAN-Japan partnership suitable for the 21st century, both sides must recognize that they are equals, work together to solve problems (co-creation) based on the trust that has been cultivated through 50 years of friendship and cooperation, and do so quickly.

Specifically, it will be important for the public and private sectors to cooperate in leveraging Japan's technology and experience to address the key issues of promoting decarbonization and building a secure data economy, which will be the cornerstones of economic growth. In the area of decarbonization, the region's energy transition should be promoted through initiatives including the establishment of a carbon trading system, the development of an ASEAN Power Grid (APG) , the creation of a green finance mechanism, and decarbonization in the energy, industry, and transportation sectors. From this perspective, the Asia Zero Emission Community (AZEC) initiative proposed by Japan holds great promise. In the digital field, there should be cooperation to promote innovation using the latest technologies, such as AI, and to establish rules for data governance, including ensuring security and privacy. The Data Free Flow with Trust (DFFT) concept proposed by Japan will serve as a major guideline in this area.

Nevertheless, the implementation of decarbonization and digital technologies will be costly. Rather than relying solely on risk-taking by private financial institutions for financing, it will be important to use public financing to attract private investment and to work together to create a framework to leverage savings within the ASEAN region for investment.

The accumulated knowledge resulting from Japan's evolution of an advanced economy and its institution-building in the postwar period will represent a valuable resource towards ASEAN's future economic development. We will create a relationship in which the vitality of ASEAN's growing economy and Japan's experience as an advanced economy are able to complement each other. In recent years, Western nations have been chosen as study destinations for young people from ASEAN, and the number of human resources with whom Japan is involved has been declining. There is also an urgent need to foster the next generation of leaders who will link Japan and ASEAN. It is imperative that the bonds of trust that have been cultivated up to the present be passed on to the next generation.

Climate change is a global issue. Europe has led the world in adopting renewable energy as a primary power source, but the technologies needed by Japan and ASEAN countries are more diverse and will take more time. Europe is blessed with land, weather conditions, and natural resources suitable for renewable energy, and the region is interconnected through transmission lines, gas pipelines, and other energy-sharing mechanisms.

Asia, on the other hand, has limited land suitable for renewable energy, a monsoon climate with unstable sunlight and wind conditions, and a lack of infrastructure for cooperation between nations. It will be extremely difficult to deal with this situation using the same strategies as Europe; it will be essential to work toward decarbonization in a manner suited to Asia.

For example, numerous coal-fired thermal power plants in Europe have already deteriorated and depreciated in value, but in Asia there are many newly-built facilities; low-carbon and decarbonized thermal power generation using hydrogen and ammonia, in which Japan is leading the way, is a technological development that can contribute to Asia. The challenge is to reduce costs, but there are high expectations in Asia for Japan's proposal to decarbonize thermal power generation, providing a counterbalance to Europe's “renewables-only approach.”

To enhance the effectiveness of climate change measures, this issue must be tackled across Asia as a whole. Japan's emissions account for about 3% of the world's total, but Asia as a whole accounts for about 60%. It is more efficient to promote CO2 reductions in nations in which numerous measures with low marginal reduction costs remain to be adopted. The bilateral credit system proposed by Japan may be overly conservative in its design, but it is important to make friends in international negotiations. There are many potential partner nations for Japan in Asia, and it is very significant from this point of view.

With reduction of the use of coal, the role of liquefied natural gas (LNG) is increasing in importance, but there are limits to stable procurement by Japan alone. Because Japan has committed to carbon neutrality, the nation’s use of LNG must be reduced to zero in the long term, but a stable supply is essential during the transition period. If LNG could be flexibly traded within the region, it would simplify the conclusion of long-term contracts. In many cases, LNG contracts include a “destination clause” that prohibits the importing country from reselling the LNG, but if Japan's LNG consumption declines, it will be necessary to lobby gas-producing nations to allow Japan to resell LNG in Asian and other markets, in order to reduce hesitation toward the conclusion of long-term contracts. In addition, there is also room for collaboration in the offshore wind power industry.

By deepening Japan's cooperation with ASEAN, while considering the broader Asian market, ASEAN and Japan will be able to realize an ASEAN-Japan decarbonization policy that differs from the European model. There are diverse paths to carbon neutrality, and they must be explored on a regional basis.

In Jakarta, where I am stationed, startups are rooted in daily life, including in the areas of ride-sharing using cars and motorcycles, delivery of refrigerated and frozen foods and household goods that arrive within 15 minutes, online medical care using smartphones, and travel arrangements for hotels and flights.

Fostering domestic startups is one of the key policies of the Indonesian government, which has undertaken a number of initiatives, including the “1,000 Startups” initiative. With government support, high economic growth, and a huge market size of 270 million people, 15 unicorns (valued at over US$1 billion) have been created so far. Many startups provide solutions to social issues such as inefficient production processes in shrimp farming, logistics structures, and difficulties in accessing financial services.

Although startup investment in ASEAN nations has been slowing down over the past two years, it amounted to US$8.3 billion in 2023. Indonesia was second only to Singapore, with US$1.3 billion in investment. Indonesian investment is supported by foreign investors, including Japanese investors, domestic independent venture capital (VC), and corporate venture capital (CVC) provided by conglomerates and state-owned companies. The heads of conglomerates providing CVC are mainly the third generation, and are between 30 and 40, with an international outlook and nimble investment footwork. In addition, many of these conglomerates are “return-oriented” rather than focusing on synergies with their core businesses. Some even claim that only 10% of their investments are aimed at synergies with the main business of the conglomerate. This represents a significant difference from Japanese CVC, which aim for synergies by investing in related industries.

The challenges for Indonesian startups are the immaturity of the secondary market and the lack of deep-tech companies with superior technology. Many have voiced expectations for collaboration with Japanese companies. Recently, there has been significant interest in decarbonization and sustainability-related initiatives, and there are also examples of partnerships with startups to access untapped markets such as remote areas and younger demographics. The mission of the ERIA Digital Innovation and Sustainable Economy Centre (E-DISC), established in 2023, is to promote digital innovation, share knowledge and expertise, and foster human resources. The Centre has begun offering a membership program that promotes matching opportunities and knowledge sharing for startups and entrepreneurs and VC funds and large companies that wish to collaborate with them. We frequently hold startup-related events, which we hope Japanese companies will take advantage of.

A variety of data and indicators show that the human rights situation in ASEAN nations is not always favorable. There are problems such as repression of trade union activities, suppression of free speech and the press, and violence against defenders of human rights, in addition to inadequate labor legislation and social systems. In response to this situation, Western nations have taken the approach of upholding the universality of human rights and imposing sanctions for human rights violations; on the other hand, up to the present, it can be observed that the Japanese government, using ASEAN’s principle of non-interference in internal affairs as its excuse, has not made human rights issues a direct subject of its diplomatic agenda.

However, the “business and human rights” approach, based on the UN Guiding Principles on Business and Human Rights, offers a new hint towards the realization of increased involvement by Japan in this area. The Guiding Principles on Business and Human Rights were unanimously endorsed by the UN Human Rights Council in 2011; the Guiding Principles stipulate that in addition to the obligation of states to protect human rights, companies have a responsibility to respect human rights. For companies, doing business in nations where human rights are guaranteed will ensure transparency in operations, reduce conflicts with workers and residents, and increase the predictability of business. ASEAN nations, which were initially reluctant to commit to the Guiding Principles, have now begun to take a more proactive approach, including the formulation of action plans on business and human rights in order to attract foreign investment. This situation should be seen as an opportunity for Japan, which has avoided confronting human rights issues in the past. The Japanese government will be able to provide realistic solutions by supporting and cooperating with the efforts of the ASEAN nations.

The value of the business and human rights framework lies in its ability to bring people in a variety of positions, including representatives of governments, corporations, and civil society organizations, in addition to investors, to the same table. Japanese companies need to deepen their efforts to respect human rights through responsible investment and responsible business activities by engaging in meaningful dialogue with their own employees, local residents, NGOs, and others in line with the realities of their business.

Companies must identify and address the impact their activities have on human rights. This will not be possible simply by mandating companies to conduct human rights due diligence. Based on the understanding that the advancement of human rights initiatives by ASEAN governments and companies will benefit Japanese companies operating in the region, the Japanese government and Japanese companies can work together with governments, companies, and other stakeholders in each country to create an enabling environment for business to respect human rights. This will lead to the improvement and resolution of human rights issues in ASEAN, and Japanese companies will be able to fulfill their responsibility to respect human rights.

Last year (2023) marked the 50th anniversary of friendship and cooperation between Japan and the Association of Southeast Asian Nations (ASEAN). This had a special significance in that the “law-based order” in Asia has been strongly shaken by concerns regarding change in the status quo through force, and the international community surrounding Japan and ASEAN is in a period of great change. Up to the present, the ASEAN nations have secured their autonomy through neutrality and balance, and have been hard-headed in realizing stability and economic benefit in the region. As a result, ASEAN has succeeded in forming a huge economic zone and enhancing its international presence. At the same time, however, with the U.S.-China confrontation and India's rapid growth unfolding with Asia as the main stage, the instability of the international community and the structure of confrontation among major powers have affected ASEAN's internal security and regional order, while developments in ASEAN itself may also affect inter-power relations and the international order.

Does Japan have an accurate understanding of the current status of ASEAN, a region which is growing rapidly despite inherent political and economic instability? For Japan, ASEAN is a region that represents postwar reparations and the beginnings of the nation’s provision of economic and technological assistance, and Japanese companies have actively expanded into the region. ASEAN and Japan may therefore be considered “old friends.” However, given the history of exchanges between Japan and the region, Japan may not be able to revise its outdated perspective on ASEAN as a recipient of official development assistance (ODA) and a grouping of nations at the mercy of the major powers.

As we celebrate the 50th anniversary of our friendship and cooperation and look ahead to the 100th anniversary of the establishment of exchange between ASEAN and Japan, now is an opportune time for Japan to change its perception of ASEAN to enable it to continue to be an indispensable partner in resolving the region’s problems. If Japan can gain an objective understanding of ASEAN and change its awareness and partnerships into new forms, it may be able to work with the region to improve Asia's standing in the international community, contribute to solving global problems, and ultimately help Japan's economy to rise again.

In this issue of My Vision, we asked five experts their opinions regarding the future of ASEAN-Japan relations and the initiatives required of Japan in resolving problems, looking towards building a new partnership in order to move the ASEAN-Japan relationship to a new stage.

The challenges facing Japan and ASEAN can no longer be addressed by the existing support system. How should we build the partnership in the future?

Ambassador Masahiko Kiya of the Permanent Mission of Japan to ASEAN notes that the challenge for ASEAN, a geopolitically strategic region and a multilayered hub for regional cooperation, is how to maintain peace and stability in the region. With support for the ASEAN Outlook on the Indo-Pacific (AOIP), which was formulated by ASEAN to address changes in the international order through dialogue with major powers, as a linchpin, and by working to address challenges with Japan and ASEAN positioned as “truly equal partners,” we can extend relationships of trust and solutions to the Indo-Pacific region, and further to the rest of the world. This will also aid confidence-building in the political and security spheres.

Japan is lagging behind other nations in advancing into the fast-growing ASEAN economy. Tetsuya Watanabe, President of the Economic Research Institute for ASEAN and East Asia, tells us that both sides should work to resolve issues as equal partners, enabling Japan to become a “21st century partner” of ASEAN . For ASEAN, Japan is still a country that can be relied on, but today, when the region’s main “21st century partners” in the area of investment are the U.S. and China, Mr. Watanabe argues that in order to make the ASEAN-Japan relationship suitable for the 21st century, it will be important to build a relationship in which ASEAN's vitality and Japan's experience can complement each other, in addition to fostering the next generation of leaders.

Then what should we do? Japan - and especially Japanese companies - should cooperate on an equal footing with ASEAN in solving issues in the ASEAN region. For example, there are high expectations for Japan's technological capability in the area of decarbonization. In some ASEAN member nations, such as Indonesia and Singapore, startups are gaining momentum. At the same time, concerns about human rights issues have long been raised. What types of measures should Japan adopt in order to address these issues? We asked the opinions of experts in a variety of fields.

In the opinion of Sumiko Takeuchi, Director and Senior Fellow at the International Environment and Economy Institute, it will be important to promote unique ASEAN-Japan decarbonization policies based on Asia's specific geographical environment and development conditions. She points out that there are high expectations for Japan to display its technological capability in the decarbonization of thermal power generation using hydrogen and ammonia, an area in which the nation is a leader, and also that it will be necessary to take a region-wide view of managing CO2 emissions and securing resources within the Asian region.

ASEAN, which is attracting startup investment against a backdrop of economic growth and population growth, is also an innovation hub. Kentaro Machii, who is involved in providing support for startups in Indonesia, states that there is significant expectation for collaboration between local startups and Japanese companies in Indonesia, where there is a lack of deep tech companies possessing superior technology.

On the other hand, Miwa Yamada of the Institute of Developing Economies, Japan External Trade Organization (JETRO), who makes recommendations in the area of “business and human rights,” says that Japanese companies expanding into local markets must identify and address the impacts of their business activities on human rights. She points out that the “business and human rights” perspective is gaining ground in many countries, and that this is an opportunity for Japan, which has avoided addressing human rights issues in the past, to offer realistic solutions. She argues that the Japanese government and Japanese companies, together with ASEAN governments and companies, should promote human rights initiatives, which will also benefit Japanese companies.

As our interviewees pointed out, the nature of new ASEAN-Japan partnerships will vary depending on the issue at hand. However, the key to any of these issues still lies in Japan's technological capability. Japan's technological capability has waned somewhat over the course of the “lost 30 years,” but by learning from ASEAN's passionate investment in continuous innovation and engaging in ongoing dialogue, Japan can hone its technological development processes and strengthen political and economic ties with ASEAN. “Look East” was a concept proposed by Malaysian Prime Minister Mahathir Mohamad some 40 years ago; with the passage of 40 years, it is now time for Japan to “Look Southeast.” The role required of Japan will be to serve as a bridge between the “Atlantic Network” represented by the G7 and the “Indo-Pacific Network” with ASEAN at its core.