Japan has identified post-pandemic areas for investment in the Association of Southeast Asian Nations (ASEAN) as the country shifts focus from “development cooperation” to “co-creation,” according to the country’s economic minister.
Minister of Economy Koichi Hagiuda in an online event on January 10 unveiled the country’s “Asia-Japan Investing for the Future Initiative,” under which Japan will focus on “new future-oriented investment so that we can create together with ASEAN an innovative and sustainable economic society” in the post-pandemic era.
“Asia is becoming the growth center of the world. This future vision wished in the past came true. It’s very encouraging for Japan who is deeply linked to Asia. Investing in Asia’s future including ASEAN is also investment in Japan’s future,” said Hagiuda in his policy speech.
To achieve this objective, Hagiuda said Japan will strengthen investment in ASEAN in four key areas—supply chain, connectivity, digital innovation, and human resources.
Investment in diversification of supply chain aims to make the Japanese economy more resilient by enhancing ASEAN’s capability and attractiveness as an important hub in the supply chain, he said.
“Private sectors are clearly showing their preferences for ASEAN region. We already spent about US$300 million to support capital investment of 92 firms. We plan to continue the support this year, and as early as this month, new applicants for support will be solicited,” he continued.
Further, the country will promote investment in digital supply chain management. Hagiuda said the government will select 100 best cases in ASEAN and Asian countries and provide about $9 million in support, with Japanese financial institutions also providing assistance.
The official said investment will also be poured into building and developing supply chains for new products such as electric vehicles (EVs). Japanese auto manufacturers are now exploring local markets such as Indonesia and Thailand, where various pilot projects in the production of EVs have started.
Support will also be extended for market development for other next-generation vehicles such as those using hydrogen and biofuels.
Meanwhile, investment in connectivity will cover both hard infrastructure and, more importantly, soft connectivity, especially as the Regional Comprehensive Economic Partnership (RCEP)has entered into force on January 1, 2022.This will be in the form of contribution to the digitalization of trade procedures, with government supporting Japanese and ASEAN private companies engaged in such endeavors, said Hagiuda.
The third area of investment under the Asia-Japan Investing for the Future Initiative is in industrial and digital innovations associated with building a sustainable society.
The minister said Japan will support new innovation co-creations, citing support provided to a Japanese venture company that has established a mass production plant in Thailand for a protein fiber developed from a local agricultural product and to another Japanese venture firm working with a Malaysian hospital to establish a platform to provide online healthcare services.
“We will support these efforts for new innovation co-creation and help them grow bigger. Japanese government has provided about $8 million to 40 new projects in the last two years to support alliances of Japanese companies and ASEAN companies offering solutions to local social problems. Moving forward, about $9 million will be newly provided to promote partnership between Japan-ASEAN businesses,” he further stated.
Human resources development is the fourth investment area. Hagiuda said that over the next five years Japan will provide opportunities for 50,000 Asian professionals, including graduates under its education ministry’s program, who will seek jobs in Japanese companies in Asia as well as in Japan.
Toward this end, he said, the Ministry of Education, Culture, Sports, Science and Technology, or MEXT, “has enhanced its initiative to have Japanese universities establish degree programs in collaboration with foreign universities.”
Additionally, the Japanese government will dispatch experts and provide training in fields such as manufacturing know-how, energy conservation, and cybersecurity to support Japanese companies investing in human resources in ASEAN.
At the same event, Hagiuda also announced an investment of $10 billion to encourage projects on carbon neutrality under Japan’s “Asia Energy Transition Initiative” (AETI).
This is a program that strives to address climate change issues and see Japan and ASEAN work closely to advance energy transition in Asia, secure stable and affordable energy, and realize sustainable economic growth.
Under AETI, which was announced last year and will be implemented this year, Japan will support and promote public-private cooperation in renewable power, decarbonization, and geothermal power generation.
The initiative will also undertake co-firing of ammonia in coal-fueled power generation, part of a plan to use more ammonia alongside coal at large-scale commercial coal-fired plants as part of a shift to cleaner fuels.
Hagiuda said that since last year, Japan has been conducting demonstration of 20% co-firing, with the goal to achieve single fuel firing of up to 100% by 2030. “If coal-fueled power can be zero-emission, it would make a huge contribution to the world’s climate change issue.”
Another AETI plan is to realize carbon capture and storage (CCS) in ASEAN, he said. Currently, Japan is conducting a feasibility study in Gundih, Indonesia, the first CCS project under the joint Japan-ASEAN crediting mechanism.