Vietnam Key to Japan’s Southeast Asia Policy

Relations between Japan and Vietnam are reaching the level of strategic partnership.

During the Mekong-Japan Summit held in Tokyo last month, Japan announced additional development aid for and investments in the countries that make up the Mekong Delta region.

The summit was further evidence of Japan’s goal of developing stronger relations with Southeast Asian states as the Japanese economy is beset with tepid growth and due to the uncertainty and mistrust with the region’s biggest and fastest growing power, China.

However, the headlines last month overlooked one of the most important outcomes of these meetings thus far, the steady improvement of Japan-Vietnam relations to the level of strategic partnership.

Bilateral trade between Japan and Vietnam reached $21 billion last year, making Japan Vietnam’s leading trade partner in the region.

This comes as Japan and Vietnam have held increasingly numerous high level meetings and exchanges with each other. Both countries realize that they have a mutual interest in cooperating strategically in order to counter the growing maritime threat emanating from China.

During the summit, the fourth since 2009, Japan pledged ¥600 billion ($7.4 billion) in official development assistance to the five countries of the Mekong Delta — Burma, Cambodia, Laos, Thailand and Vietnam. The development aid will come in the form of loans, grants and infrastructure assistance and be spread over the next three years.

Japan’s previous aid commitment to the Mekong nation in 2009 was more than ¥500 billion over a similar three year period.

The summit provided a forum for the parties to discuss economic development, trade and political issues coming after a year of natural disasters in Japan and Thailand and the continuing fear over the prospect of the global economic crisis affecting the region. In their joint statement, Japan and the Mekong countries announced that they will continue to hold meetings at every level in order to encourage continued cooperation.

It was also significant that Burmese president Thein Sein attended because, besides being the first trip to Japan by a leader from Burma in 28 years, the West has been gradually welcoming the country in from the cold since the government embraced political and economic reforms.

Burma is desperately seeking investment now that sanctions are being lifted in the wake of the recent elections in which Aung San Suu Kyi’s opposition party won 43 of the 45 contested parliamentary seats.

Japan hopes to ramp up its investment in Burma, as China has virtually had the entire country to itself in terms of infrastructure development and access to natural resources.

Just before the summit it was announced that Japan had agreed to forgive roughly half of the ¥500 billion ($6 billion) in debt that Burma owed it, with the balance dependent on reforms that the Burma government must follow through on.

In addition to the development aid and economic opportunities, the joint statement expressed the countries’ solidarity in supporting free navigation of the seas, a reference to the continuing crisis over claims to islands in the South China and East China Seas in which Beijing has been increasingly assertive.

The Mekong countries, in turn, continued to extend Japan support in its bid for a permanent seat on the United Nations Security Council which China has long resisted.

In sum, the Mekong countries have a collective interest in engaging more deeply with Japan and vice versa, both as a counterweight to China and for their own development. Japanese investment revitalizes its own economy by assisting with the development of what it hopes will be future markets for its goods.