According to Japan, Japan, which once dominated investment in Southeast Asia, has become increasingly "passive" against the backdrop of a rapid increase in foreign direct investment (FDI) to Southeast Asia, especially compared to China and the United States, which are increasing their investment efforts. According to the data, in the five years from 2018 to 2022, Japan's cumulative investment in Southeast Asia was only $43.5 billion, the lowest level in the past 20 years. This decline in Japanese investment in Southeast Asia has obviously caused concern in the Japanese media. So, why are Japanese companies that once occupied the right time and place to invest in Southeast Asia starting to decline now?Is this a short-term trend of regional economic adjustment or will it form a relatively long-term downward trend?In the face of investment competition from China and the United States and other countries in Southeast Asia, how will Japanese companies and even Japanese officials make adjustments or policy guidance?
It is not an exaggeration to say that Southeast Asia was once the "backyard" of Japan's overseas investment. First, Southeast Asia was once regarded as the "Garden of Eden" for overseas investment by Japanese companies. Since the 70s of the last century, Japan has actively carried out overseas investment, and Southeast Asia has met the needs of Japanese companies at that time to promote industrial transfer to achieve the transformation and upgrading of local industries to high-end due to the advantages of cheap labor, abundant initial resources, low investment costs and continuous optimization of the investment environment. Factors such as the relatively tolerant nature of Southeast Asian countries towards Japan's aggression have accelerated the continuous increase of Japanese investment in Southeast Asia, and investment in Southeast Asia accounted for as much as 30% of Japan's overseas investment throughout the seventies and eighties of the last century. The ensuing lucrative return on investment has made Southeast Asia a rare investment destination for Japanese companies for a long time.
Second, Southeast Asia once became a "model area" for Japan's overseas investment. Japan, which has been deeply involved in Southeast Asia for decades, has not only realized the transfer of labor-intensive industries to cheaper regions with investment in Southeast Asia, but also directly promoted the formation of technology-intensive and technology-supported industries in Japan. As Southeast Asia has become a gathering place for Japanese companies to invest overseas, Southeast Asia has become a representative "model area" for Japan's global overseas investment. Subsequently, Japan also used part of the proceeds of the economic and trade surplus to help build infrastructure in relevant Southeast Asian countries in the form of "development assistance" (ODA) and "black letter return".
Third, Japan's investment position in Southeast Asia is "outstanding". As Japan incorporated Southeast Asia into its domestically led regional industrial system, the "goose-shaped model" with Japan as the head goose also gave birth to Singapore, Thailand, Malaysia and other "four tigers" countries and regions. After Japan established what some Japanese media called "a stand-alone" dominant position in Southeast Asia's foreign investment and industrial structure, the position of Southeast Asia in Japan's economic diplomacy has risen correspondingly, and the role of Southeast Asian investment in feeding Japan's politics and diplomacy has become increasingly prominent.
However, with the continuous improvement of the comprehensive strength and growth potential of Southeast Asian countries in recent years, the region is increasingly regarded as a "buffer zone" in the Asia-Pacific geopolitical and economic pattern. Against this backdrop, Japanese companies have taken a "negative" stance towards Southeast Asian investment, which also highlights three major factors, either explicitly or implicitly.
First of all, the reshaping of Japan's core industries has led to a decline in Southeast Asia's overall overseas investment layout. As the industrial focus shifts to chips, new energy vehicles, hydrogen energy batteries and other fields, some Japanese companies' investment concepts are becoming more conservative due to more and more "economic security" considerations, fearing that the technological leadership will gradually be lost with the expansion of investment and geographical penetration, which will conflict with the transformation and upgrading of Southeast Asia's pursuit of high-end manufacturing.
Second, Japan's investment guidance has led to subtle changes. Compared with the historical "economic diplomacy" of Japan's frequent "economic diplomacy" to support its own enterprises to invest in Southeast Asia, now the Kishida cabinet is increasingly constrained by "economic security" or even more direct "security guarantee" factors, the result is that Japanese companies' investment in Southeast Asia is increasingly branded with the symbol of "**" and "geopolitical game", resulting in their increasingly cautious foreign investment, and the scale of aid-based investment such as security is increasingly replacing economic and trade investment such as factories and equipment.
Thirdly, the negative effects of what has been described as "the depreciation of the yen that has fallen to the country" continue to ferment. The reason why Japanese economist Yukio Noguchi named this round of yen depreciation "the country is dead" is that it not only makes the economic conditions of the Japanese country and people more constrained, but also profoundly affects the ability of Japanese companies to invest overseas and severely affects the enthusiasm of overseas personnel to work in Japan. Therefore, the "passivity" of Japanese companies in Southeast Asia this time is not lacking in the shadow of the impact of the depreciation of the yen.
In the face of such a dilemma, it is obvious that Japanese companies need to return to the origin of mutual benefit in investment cooperation, participate in investment competition in Southeast Asia in accordance with market rules, and rely on economic strategies to regain their former dominant positionAt the same time, it is also necessary to explore a new model of investment competition in Southeast Asia, and the foundation of Japanese companies investing in Southeast Asia is still there, and they can no longer pay for some so-called "security risks" because of chokingIn addition, it is also necessary to persuade Japan to optimize the economic environment and provide more "economic support" for enterprises' overseas investment, rather than over-generalizing the yardstick of "economic security". (The author is a researcher at the Institute of Northeast Asian Studies, Heilongjiang Academy of Social Sciences, and chief expert of the Institute for Northeast Asian Strategic Studies).