How Can Indonesia Prosper From the Japan-ASEAN Partnership?

How Can Indonesia Prosper From the Japan-ASEAN Partnership?

  • InCorp Editorial Team
  • 19 June 2024
  • 5 minute reading time

ASEAN partnerships with countries worldwide has become a cornerstone of regional collaboration, fostering economic prosperity and strategic alliances. The Japan-ASEAN partnership is one of the major reasons why Asia is strengthening their economic foothold in the world.  

Explore the dynamic landscape of the Japan-ASEAN partnership, particularly as it pertains to Indonesia, to unveil  a realm of boundless opportunities and mutual growth. 

The Importance of ASEAN-Japan Partnerships

For Japan, the Association of Southeast Asian Nations (ASEAN) is not only strategically important due to its crucial sea routes and valuable resources.  t also holds significant relevance in Japan’s “Free and Open Indo-Pacific” (FOIP) strategy. 

Furthermore, the strategy is now deemed valuable, especially given the escalating competition between the United States (US) and China. Therefore, Japan is recommending strengthening its ties with ASEAN and its member nations.

Historical Background of the Japan-ASEAN

Indonesia's Role in Japan-ASEAN Partnership

The year 2023 marks the 50th anniversary of the Japan-ASEAN friendship and cooperation. The first relationship began in 1973 with the establishment of the Japan-ASEAN Synthetic Rubber Forum.

Over the years, ASEAN and Japan have collaborated for the mutual goals of peace, stability, development, and prosperity in the Asian region. They have also forged a strong business partnership.

Japan recognizes the importance of a cohesive ASEAN. Japan perceives ASEAN is serving as a central hub for regional cooperation. Therefore, the existence is vital for the well-being of Japan, ASEAN, and the entire East Asian region.

ASEAN Exports to Japan

ASEAN’s exports to Japan in 2020 amounted to USD 102.74 billion, while in 2021, they reached USD 113.87 billion, marking a 10.83% increase.   A substantial portion of the goods exported from ASEAN countries to Japan consists of electronic machinery and accessories, totaling USD 27.11 billion in 2021.

Furthermore, among ASEAN’s top 10 trading partners, the highest export destination is undoubtedly within ASEAN itself, with exports valued at USD 370.92 billion in 2021, or approximately IDR 5,660.24 trillion. This figure represents a significant increase of 24.42% compared to 2020.

Recent ASEAN-Japan Partnership Commitment

During the ASEAN meeting with Japan held on September 7, 2023, the country leaders formally agreed to establish a Comprehensive Strategic Partnership between ASEAN and Japan. 

This alliance is part of the Joint Statement on establishing the ASEAN-Japan Comprehensive Strategic Partnership. Moreover, the forum also formulated three essential documents:

  1. Progress Report of the Revised Implementation Plan of the Vision Statement on ASEAN-Japan Friendship and Cooperation, containing updates on how the Vision Statement on ASEAN-Japan Friendship and Cooperation is implemented.
  2. Future Design and Action Plan of an Innovative and Sustainable ASEAN-Japan Economic Partnership, outlining a 10-year plan for cyber connectivity, human resource development, and innovation.
  3. ASEAN-Japan Economic Co-Creation Vision, presenting a vision for economic collaboration between ASEAN and Japan involving the private sector, business communities, and academics.

The Potential Benefits for Indonesia  

As a member of ASEAN, Indonesia has actively participated in economic cooperation within the region. This cooperation has brought several advantages to the Indonesian people, such as:

1. Market Expansion

ASEAN cooperation broadens Indonesia’s market reach within member nations, facilitating exports of goods and services to neighboring countries benefiting businesses of all sizes.

2. Economic Growth

ASEAN collaboration stimulates Indonesia’s economic growth through increased trade and investment. The ASEAN Economic Community (AEC) fosters a single market and integrated production, attracting foreign investment that drives infrastructure development, job creation, and economic growth.

3. Tech and Knowledge Sharing

ASEAN economic cooperation promotes technology and knowledge exchange, granting Indonesia access to the latest innovations and improving workforce skills, boosting competitiveness regionally and internationally.

4. Enhanced Well-Being

ASEAN economic cooperation aims to improve people’s lives by creating jobs, increasing incomes, benefiting related industries like tourism, transportation, and services, and fostering regional economic growth.

5. Policy Alignment

ASEAN economic collaboration harmonizes policies and standards, simplifying trade agreements, removing barriers, and standardizing products, making it easier for Indonesian goods to access ASEAN markets and providing investors with legal certainty.

The Potential Challenges   

Albeit the opportunities, some potential challenges come from ASEAN-Japan partnerships that might affect Indonesia’s business landscape:

1. Challenges to Stability

The shifting power dynamics and increasing strategic competition between the US and China have threatened both ASEAN and Japan.

2. Japan’s Alliance with the US

The intensifying US-China competition affects Japan’s relationship with China despite economic interdependence. This is primarily due to Japan’s core defense and foreign policy strategies revolving around its alliance with the US.

The 2022 National Security Strategy prioritizes cooperation with the US for long-term regional peace and security.

3. ASEAN and China

ASEAN’s role and centrality are affected by China’s assertive actions in the South China Sea that disrupt the rules-based maritime order in the region.

The emergence of multilateral coalitions like the Quad and AUKUS diminishes ASEAN’s significance in regional stability.

In general, both ASEAN and Japan are navigating the complexities of the evolving US-China competition while maintaining economic interdependence with both powers.

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Streamline Your Business Operations with InCorp Indonesia

The longstanding partnership between ASEAN and Japan has provided numerous opportunities for Indonesia, spanning from market expansion to technology transfer. Their recent commitment to partnerships also highlights valuable business opportunities worth exploring.

To streamline their operations in Indonesia, businesses that capitalize on this momentum can turn to InCorp Indonesia for product registration and business license services.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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