Japan in East Asia

Page 31 

It is essential for the OECD to strengthen its ties with East and Southeast Asia.

Investment by Japanese companies in East Asia increased dramatically from the mid-1980s against a backdrop of sharp yen appreciation following the Plaza Accord. During this period, a string of Japanese manufacturing bases was established in Southeast Asia, including in Thailand, Indonesia, the Philippines and Malaysia. Then, from the 1990s through to the 2000s, the technologies and expertise of Japanese companies gradually took root in the local region. For example, when the automotive industry first moved into Southeast Asia, it relied on importing parts, but gradually local procurement increased.

During the same period, parts and products started being manufactured across several countries following a phased reduction in customs duties on industrial products in the Southeast Asia region as well as the development of distribution and communications networks. In this way, Japanese companies expanded the value chain across the entire region.

The Trade in Value Added (TiVA) statistics published by the OECD illustrate how the value chain has spread throughout the world, and they suggest that in this era of globalisation, bilateral free trade agreements alone are no longer enough.

Moving into the 21st century, Japan signed an Economic Partnership Agreement with Singapore in 2002, followed by bilateral economic partnership agreements with Malaysia in
2006, Thailand in 2007, Indonesia, Brunei and the Philippines in 2008, and Vietnam in 2009. In 2008, the ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEP) was signed with ASEAN as a whole, but this is not enough. The next goal is to build a regional free trade zone incorporating the
region-wide value chain.

In this respect, there is a need to promote economic integration in East Asia: ASEAN has signed free trade agreements with China, Korea and other countries besides Japan, and plans to establish the ASEAN Economic Community (AEC) by the end of 2015, to which can be added the China-Japan-Korea FTA and the Regional Comprehensive Economic Partnership (RCEP) comprising ASEAN plus six countries. This is one of the pathways to a Free Trade Area of the Asia-Pacific (FTAAP), a free trade zone on the scale of APEC.

To ensure that this kind of economic integration in East Asia is effective and achieves sustained and balanced economic growth, it is important to establish both a “hard” and “soft” infrastructure in parallel with the promotion of economic integration, and to enhance connectivity across the entire region.

Specifically, “hard” infrastructure includes the need, for example, to repair the East-West Economic Corridor in the Mekong region and the Southern Economic Corridor, and to improve distribution by upgrading bridges. Japan has contributed to this by providing funding and technological cooperation. Concerning “soft” infrastructure, there is a need to keep international consistency in mind and overhaul the legal systems in ASEAN countries, including customs procedures. On this point, Japan has offered support including despatching experts.

By promoting the economic integration of East Asia in this way, Japan aims to develop together with East Asia. In this process, it is hoped that TiVA will provide useful hints as to the appropriate form of economic integration.

With East Asia expected to increase further in importance as a global centre for growth through economic integration, it is essential for the OECD to strengthen its ties with this region in order to play a leading role in global governance. As the first country in East Asia to gain membership of the OECD, it should indeed be Japan’s role to build bridges between the OECD and East Asia. Japan will chair this year's OECD Ministerial Council Meeting in May, and one of the topics to be raised is “Strengthening ties with Southeast Asia”. The Ministerial Council Meeting should be seized as an excellent opportunity to strengthen this role.

*Keidanren is a confederation of Japanese business and a member of the Business and Industry Advisory Committee to the OECD.

Visit www.keidanren.or.jp and www.biac.org

©OECD Observer No 298, Q1 2014

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

OECD Observer Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Subscribe now

<b>Subscribe now!</b>

To order your own paper editions,email Observer@OECD.org

Online edition
Previous editions

Don't miss

  • MCM logo
  • The following communiqué and Chair’s statement were issued at the close of the OECD Council Meeting at Ministerial level, this year presided by the Slovak Republic.
  • Food production will suffer some of the most immediate and brutal effects of climate change, with some regions of the world suffering far more than others. Only through unhindered global trade can we ensure that high-quality, nutritious food reaches those who need it most, Angel Gurría, Secretary-General of the OECD, and José Graziano da Silva, Director-General of the United Nations Food and Agriculture Organization, write in their latest Project Syndicate article. Read the article here.
  • Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2019