Absolutely. Japan’s active participation, support, and leadership in various multilateral economic partnership agreements (EPAs) and free trade agreements (FTAs) across Asia-Pacific have been crucial in shaping the regional economic architecture, including the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP) and the ASEAN-Japan Comprehensive Economic Partnership (AJCEP). Japan’s role in this respect will remain pivotal, especially as the US is turning away from the global multilateral trading system, amidst a backdrop of rising unilateralism and protectionism worldwide.

To begin with, Japan’s active engagement in shaping the regional economic landscape is driven by its substantial business interests. Japanese corporations have long served as a key driver of regional economic integration because of their expansive cross-border production networks in Asia-Pacific. As underscored in the Japan Revitalization Strategy, EPAs and FTAs serve to “bolster the foundation of the Japanese economy by reducing or eliminating tariffs, addressing trade barriers for services, and establishing rules on trade and investment”. Over the past decade, the proportion of Japan’s trade value with countries having EPAs/FTAs surged from 19% of Japan’s total trade in 2012 to 78% in 2023. Another good example is the benefits of the RCEP, which in effect creates Japan’s free trade agreements with China and South Korea, with a record high number of Japanese businesses applying for RCEP certificates of origin.

Japan’s leadership becomes even more critical in anticipation of the potential re-election of former US President Trump, who will definitely pursue a massively protectionist trade agenda. This would cause severely adverse effects on Japan and Southeast Asian countries, both of whom have substantial trade surpluses with America. This looming scenario underscores the necessity for closer collaboration among Japan and other regional countries to uphold the principles of open and free trade. Moreover, Japan’s leadership in shaping the regional economic order – grounded in the principles of inclusivity, openness and adherence to rules – has historically served as a catalyst for US re-engagement when favourable conditions arise. Given the US’ significance as the largest export market for Southeast Asian countries, where Japanese companies have established deep roots, it is imperative to keep the US engaged economically in the region. Even though trade has become a politically unpalatable topic in Washington, it is still important to keep the door open to US return in the future, one way or another.

Finally, as with many economic integration initiatives previously advocated or supported by Japan, there is a strategic imperative behind Japan’s proactive leadership in shaping the regional economic order. This is particularly evident in terms of rule-making in frontier and emerging domains such as digital trade, AI, or green economy. At the same time, this undertaking will not be easy given that Japan now wields comparatively lesser economic might vis-à-vis China in overall and that China has made significant advancements and actively asserted its influence in setting rules within these new domains. Many Southeast Asian countries are in fact more aligned with China than with Japan in terms of advocating for a more state-driven and localized approach to data governance.

Throughout many decades during and after the Cold War, Japan primarily relied on its economic engagement with Southeast Asia to assert its influence whereas its security cooperation largely prioritized non-traditional security challenges such as bomb and mine clearance, combating illicit drug trafficking, humanitarian assistance and disaster relief, health security, counter-piracy, and counter-terrorism. This deliberate strategy of ‘soft engagement’ reflects Japan’s steadfast commitment to adhere to its pacifist principles and to navigate sensitivities surrounding its militaristic past in the region.

Starting from the mid-2010s, Japan has shifted towards strengthening and deepening its ‘hard security’ cooperation with some littoral Southeast Asian countries through high-level and working-level defense exchanges, capacity-building cooperation, and joint exercises. The intensification of Japan’s security engagement with the region is driven by the changing balance of power in Asia with the resurgence of China, Chinese expansive claims and creeping control in the regional waters, and the escalating strategic tensions between the US and China. All these power dynamics have pushed Japan to become a more serious security actor and to work with its allies and partners to enhance their individual and collective deterrence, denial and response capabilities with the aim of preventing opponents from unilateral changes to the status quo by force. In Southeast Asia, the Philippines is emerging as Japan’s closest security partner. Manila is a key beneficiary of Japan’s support of maritime security capabilities, including through the recently launched Official Security Assistance (OSA). Following the Philippines, other Southeast Asian littoral states, who have sovereignty and/or maritime disputes with China in the South China Sea, namely Malaysia, Vietnam and Indonesia, will potentially become OSA recipients.

Compared to Japan’s economic engagement, which involves its active participation in ASEAN-led initiatives alongside bilateral economic exchanges, Japan’s current security strategy is increasingly characterized by a shift towards minilateral arrangements. These arrangements feature flexible composition that may include Japan, select Southeast Asian nations and other powers like the US and/or Australia. This trend is particularly notable in the ‘traditional security’ domain, where there is a clear emphasis on strategic coordination among like-minded partners in ‘balancing’ against China. The most illustrative example is the emerging US-Japan-Philippines triad, marked by their joint maritime exercises, increased strategic coordination and their leaders’ forthcoming first-ever trilateral summit at the White House.

This kind of ‘hard balancing’ security arrangement is hard to multilateralise through ASEAN platforms, given the divergent strategic outlooks among ASEAN members and among its dialogue partners. Japan of course will not abandon ASEAN-led mechanisms such as the East Asia Summit (EAS), the ASEAN Defence Ministers Meeting-Plus (ADMM-Plus) and the ASEAN Regional Forum (ARF). But the ASEAN-led regional security architecture has proven inadequate in meeting Japan’s evolving security needs, which increasingly pivots towards a strategy of deterrence and denial by bolstering Japan’s capabilities and collectively with allies and like-minded partners. Japan’s security partnerships nowadays tend to be more exclusive, such as the Quad or the US-Japan-Philippines trilateral, whose members share strategic concerns, particularly over China’s military resurgence and assertive behaviors in Asian waters.

Japan’s current security outreach to Southeast Asian countries is firmly anchored in its Free and Open Indo-Pacific (FOIP) strategy, which was first coined by late Prime Minister Shinzo Abe in 2007 and is now embraced by other major powers (except China). This strategic framework is maritime-focused and outward-looking, aiming to bolster the enduring presence of the US while also recognizing India’s strategic significance as a counter-balancing force to China and valuing Australia as a like-minded partner in advancing shared interests and values. Today, Japan remains deeply integrated into the East Asian global supply chains and Tokyo continues to embrace multilateral economic agreements inclusive of China, including the RCEP. However, East Asian economic regionalism, which sought to integrate Northeast Asia and Southeast Asia towards the long-term goal of building an East Asian community, has waned in Japan’s strategic thinking. It no longer influenced Japan’s approach to regional order the way it did in the 1990s and 2000s. Japan’s contemporary strategic discourse no longer refers to the region as “Asia”, much less ‘East Asia’.

Japan has been a longstanding infrastructure development partner in Southeast Asia for many decades not only through its bilateral ODA but also through the Japan-sponsored Asian Development Bank. However, China’s rapid advancements in this domain over the past decade have led it to surpass Japan in total infrastructure development financing to Southeast Asia. According to the Lowy Institute’s Southeast Asia Aid Map, China has emerged as the largest infrastructure development partner in the region, having invested a total of US$31.7 billion between 2015-2021 across 155 projects in five areas: transport & storage; energy; industry, mining & construction; communications; and water & sanitation. In comparison, Japan (including through the ADB) trails behind with US$27.6 billion allocated to 5,550 projects. Japan’s financing is spread across a significantly larger number of small and medium-scale projects whereas Chinese financing is concentrated in a few large-scale projects. Japan holds a strong presence in Vietnam and the Philippines where Tokyo remains the most preferred partner for infrastructure development, given the deep strategic mistrust of Beijing. However, China has notably surpassed Japan in Cambodia, Indonesia, Laos, and Malaysia. In Thailand, Japan still maintains a narrow lead over China with 353 projects and a high implementation rate at 88%, but China holds significant future potential with a committed investment of 21 billion.

China’s geographic proximity to Southeast Asia and its long-term goal of establishing the pan-Asia railway to enhance land-based economic connectivity with the region set it apart from Japan. This strategic vision motivates China to commit substantial investments in laying the groundwork for the pan-Asian railway, starting with big-ticket projects in the region such as high-speed rails such as the Vientiane-Kunming and the Singapore-Kuala-Lumpur-Bangkok. The pursuit of Chinese statecraft through the Belt and Road Initiative (BRI), which prioritizes strategic goals over immediate commercial viability where necessary, has resulted in concerns regarding debt burdens for host countries, as well as social and environmental costs associated with China-financed projects. However, this state-driven approach, coupled with the imperative to export China’s excess production capacity in infrastructure building, has also enabled China to proceed swiftly in project delivery, on a large scale and a comparatively lower cost. In contrast, Japan's infrastructure investments tend to prioritize the commercial viability and social-environmental standards of projects, leading to a more cautious, hence slow-going, approach. Japan’s ‘quality infrastructure’ brand is attractive but in Southeast Asia and across the Global South, it is also important to consider the affordability and political dynamics of host countries. There, the ruling elites often prioritize big infrastructure projects to boost electoral performance, hence their choice of the partner that can deliver it fast and cheap (from a short-term consideration).

From Southeast Asia's perspective, the approach has been “the more, the merrier”. The region has a massive demand for infrastructure development, estimated at US$210 billion annually until 2040. Meeting this demand necessitates tapping into multiple sources of funding, including from Japan, China, and other potential partners. Therefore, Japan remains highly valued as an infrastructure development partner, especially considering that not all commitments made by China in megaprojects have been fulfilled, as highlighted in a recent Lowy Institute report. Moreover, China’s economic downturn has also led to difficulties in its overseas development financing in recent years, hence a shift in the Chinese approach to “small and beautiful” projects in its BRI, focusing more on digital connectivity and green energy transition. This means that Chinese financing will be more selective going forward and that the Chinese can also potentially deliver “quality infrastructure” – a brand that Japan has long promoted.

Japan holds a distinctive edge over other major powers in its relationship with the region, rooted in a foundation of strategic trust. Numerous public and elite surveys consistently rank Japan as the most trusted power among Southeast Asians when compared to other major powers. Japan has also been a longstanding bridge and broker between the region and the West. While firmly upholding democratic and liberal values, Japan has demonstrated a deep understanding of and adaptability to the diverse political systems present in Southeast Asia. The region also appreciates Japan’s consistent role as a stabilizing force for Asia, particularly during periods of disengagement, distraction, or neglect from the US, as well as Japan’s crucially constructive role in shaping the regional order through its engagement with and support for ASEAN multilateralism. This strategic trust enables Japan to effectively promote its regional initiatives, ideas, and proposals with a greater level of appreciation and positive perception in Southeast Asia. Whether advocating for “quality infrastructure” or its own vision of a “free and open Indo-Pacific”, Japan’s approach resonates well with many development and security needs of the region.

That being said, there is no room for complacency. Trust alone does not translate into geopolitical clout. In the annual State of Southeast Asian survey conducted by the ISEAS-Yusof Ishak Institute in Singapore, while Japan continues to be regarded as the most trusted power, those respondents who harbour distrust towards Japan often express concerns regarding its perceived lack of capacity and political will for global leadership. This concern is particularly relevant given Japan's lackluster economic growth at home and its aging population, which has constrained Japan’s financial resources to sustain its global leadership. Japan’s significance to Southeast Asia in economic terms has relatively declined in light of the ascent of other competitors, especially China. Even in Vietnam where Japan wields substantial economic influence, South Korea has outpaced Japan in terms of trade volume and foreign direct investment. Of note, China is forging ahead of Japan in making inroads to Southeast Asia in future-defining sectors such as green transition and digital transformation. A 2023 survey by the Foreign Policy Community of Indonesia revealed that Japan remains the most trusted power in the region. However, China is perceived as the most crucial partner for ASEAN’s future, primarily due to its extensive economic engagement with the region. This is confirmed by a 2022 survey on the perception of ASEAN businesses towards Japan.

Given that its resources are not infinite and Japan’s Indo-Pacific strategy now extends beyond Southeast Asia to encompass South Asia and the Pacific, the question of Japan’s prioritization—both in terms of sectors and regions—is of utmost importance. Southeast Asia’s substantial development and security needs, ranging from poverty reduction to maritime security, green transition to digital transformation, and upgrading of its supply chain value, would benefit greatly from Japan’s support and cooperation. It is also important to note that Japan-Southeast Asia partnership is becoming more balanced and reciprocal. As the region emerges as a center of global growth with a burgeoning middle class, young populations, and a large pool of human talent, dynamism and entrepreneurship, there is increasing potential for co-creation of new values and solutions with Japan.

In the context of ASEAN-Japan relations, Japan has always been a premier dialogue partner of ASEAN and a strong supporter of the AOIP in terms of both principles and practical cooperation, as reflected in their 2020 joint statement. The 2023 Joint Vision Statement on ASEAN-Japan Friendship and Cooperation and the 2023 Joint Statement on the Establishment of the ASEAN-Japan Comprehensive Strategic Partnership further underscore the alignment between the AOIP and Japan’s FOIP vision in terms of upholding “fundamental principles in promoting peace, stability, and prosperity in the region”, such as rules-based order, respect for national sovereignty and territorial integrity, and rejection of the use of force. However, as Japan seeks to advance these principles, it must navigate challenges arising from a more disunited ASEAN amid an increasingly strategically contested region.

Apart from these normative re-assertions, Japan is shifting its regional security strategy towards bolstering deterrence and striving to become a serious security actor. Southeast Asian perceptions of Japan in this respect can swing to extremes. On one end, this may rekindle historical memories of a militaristic Japan in the past, which could be fueled by the propaganda of Japan’s adversaries like China and Russia. On the other, there are concerns about Japan’s willingness and capability, given the legal constraints imposed by its pacifist constitution, its internal debate on Japan’s new military posture, and its ongoing economic uncertainties. Hence, it is imperative for Japan to enhance its outreach efforts and articulate its strategic intent clearly and consistently. More exchanges, dialogues and joint activities would be beneficial in this regard. And even as Japan is pursuing a multi-pronged approach in its security engagements with different sets of players and is becoming more realist and gravitating towards the balance of power, it remains crucial for Japan to maintain active participation in the ASEAN security architecture, especially the EAS, ADMM-Plus and ADMM plus One with Japan.