Policy Proposals Asia and Oceania Keidanren Mission to ASEAN Observations of Keidanren Chairman Hiromasa Yonekura
March 9, 2012
From March 4 to 10, a Keidanren mission visited Vietnam, Malaysia, and the Philippines. This was the second mission to ASEAN countries conducted during my term as Keidanren Chairman.
Looking ahead to the shape of the Asian economy after ASEAN economic integration scheduled for 2015, the mission achieved its objective through an intensive exchange of views with government and business leaders on specific policy measures for bilateral and multilateral cooperation to create a seamless and favorable business environment within the region in terms of both infrastructure and institutional connectivity.
In each of the countries visited, Keidanren outlined its thoughts on regional economic integration, namely that Trans-Pacific Partnership (TPP) negotiations should be promoted as a springboard for a Comprehensive Economic Partnership in East Asia (CEPEA) framework, in the ultimate aim of creating a Free Trade Area of the Asia-Pacific (FTAAP) by 2020. Leaders in all countries fundamentally agreed with Keidanren's views and conveyed their intention to set ASEAN as the core of Asian economic integration, broaden the approach to create ASEAN+3 and ASEAN+6 FTAs, and ultimately to expand these into the Asia-Pacific region.
Vietnam and Malaysia, which are already engaged in TPP talks, expressed high hopes that Japan will also promptly enter negotiations and agreed to continue liaising and cooperating with Japan in this regard.
President of Vietnam Truong Tan Sang once again expressed his support for Japanese participation in TPP, welcoming Japan's extensive knowledge of Asian economies. Prime Minister of Malaysia Najib Razak and other Malaysian leaders observed that Japan enjoys close trade and investment relations with their country, where many people have positive views of Japanese participation in TPP. They called upon Japan to complete internal procedures as quickly as possible and proceed in line with the schedule for negotiations, since Japanese participation is crucial to raising the value of TPP.
Although the Philippines is not currently engaged in TPP negotiations, Trade and Industry Secretary Gregory L. Domingo expressed hopes that Japan will enter negotiations in the near future and that ASEAN will be regarded as a single entity in the talks.
Leaders in all three countries agreed with us to cooperate with a view to starting CEPEA negotiations at this year's East Asia Summit. They also concurred that bilateral economic partnership agreements (EPA) with Japan are helping to invigorate bilateral trade and investment. It was agreed that upcoming reviews of EPAs with Malaysia and the Philippines would take the EPAs to a higher level through measures including further tariff reductions, liberalization of trade in services, and freer movement of persons.
In the infrastructure domain, all three countries explained that they are chiefly prioritizing logistics, electricity such as thermal power, nuclear power, and renewable energy, and energy conservation/environmental technologies. They welcomed participation by Japanese companies, which have some of the world's most advanced technologies and expertise.
Issues relating to such infrastructure development were discussed, including Japan's support for developing public-private partnership (PPP) schemes, rapid full-fledged introduction of bilateral offset mechanisms currently being trialed in pilot projects with Japan to facilitate cooperation in the environmental and energy conservation fields, creation of fair bidding systems that evaluate functionality and quality as well as price, and development of an Asian bond market to raise private capital for infrastructure projects.
The three countries also expressed interest in cooperating with Japan in tourism to encourage personal-level exchange, intangible infrastructure including legal systems, and human resource development.
In each of the three countries, the mission exchanged views on local growth strategies and efforts to enhance the business environment, including specific areas where Japan may be able to provide assistance.
In Vietnam the mission discussed the country's socio-economic development strategy 2011-2020 and the five-year plan 2011-2015 based on that strategy, including the new administration's public investment initiatives and efforts to reorganize state-owned enterprises and financial institutions. The mission also talked about industrialization strategy and agreed to proceed based on a shared view of specific key industries to be prioritized. The Vietnamese side outlined plans to take the opinions of Japanese companies into account to enhance the business environment and conveyed the encouraging news that the action plan in phase four of the Japan-Vietnam Joint Initiative is already projected to achieve almost 70 percent of the targets set.
In Malaysia, Prime Minister Najib noted that this year is the 30th anniversary of the Look East Policy, which made a major contribution to his nation's development. He reported on preparations now under way to formulate a second Look East Policy and expressed the hope that Japan and Malaysia will cooperate in the environmental field as part of this policy. Per capita GDP in Malaysia has already reached US$8,500, and the country's Economic Transformation Programme (ETP) aims to make Malaysia a high-income nation by 2020. Minister in the Prime Minister's Office Idris Jala conveyed the hope that further direct investment by the Japanese private sector will support the achievement of this goal. To this end the mission asked the government to (1) ease regulations relating to foreign workers, (2) extend incentives for reinvestment, and (3) continue tax breaks for steel, and Minister of International Trade and Industry Mustapa assured us that his government is taking a positive approach to examining these issues and promised to raise them again at the upcoming cabinet meeting.
The Philippines also hopes to see increased Japanese private sector investment, and in this context the mission explained the need to address issues including tax system reform, the launch of negotiations for a social security agreement, and adoption of Japan-standard terrestrial digital broadcasting. The mission also explained Keidanren's efforts to promote acceptance of nurses and care workers from the Philippines under the Japan-Philippines EPA and agreed to continue cooperating to achieve this goal.
Based on the mission's findings, Keidanren will report to all interested parties at every level the strong expectations of ASEAN countries that Japan will promptly enter TPP negotiations and Keidanren will energetically urge relevant players to achieve this goal.
Keidanren will also cooperate with the Japanese government to vigorously promote a package of overseas infrastructure development measures, which is essential for supporting Asian growth.
Utilizing opportunities provided by the Mekong-Japan Summit Meeting and the meeting with ASEAN Economic Ministers scheduled for next month, and the 3rd Asian Business Summit to be held in Bangkok in July, Keidanren will link the findings of this mission to concrete action.