ASIATODAY.ID, COLOMBIA – The Southeast Asia region has become an investment destination for Japanese companies. This expansion occurred amidst slowing Japanese economic growth.
According to Shujiro Urata, senior advisor to the President of the Economic Research Institute for ASEAN and East Asia (ERIA), Japan’s economy has experienced stagnant growth for 20-30 years.
“Even though Japan’s economy has started to grow, it is still slow,” he said on the sidelines of the International Economic Association World Congress in Colombia, Thursday, December 14 2023.
At the same time, he said, Japan experienced a population decline, which affected Japan’s economic prospects and prompted Japanese companies to invest domestically.
“There are several negative impacts (Japan’s slowing economic growth on the Southeast Asia region), including a decrease in the number of official development assistance (ODA),” he said.
He said the Japanese government had difficulty budgeting ODA as the country’s economic growth slowed.
“So the amount of aid to Southeast Asian countries has also decreased,” said Shujiro.
Even though aid funds from the Japanese Government to Southeast Asia have slowed down, private companies are still expanding into ASEAN.
“As I said before, Japanese companies are very active in investing in Southeast Asia,” said Shujiro.
He said that Japanese companies had previously invested heavily in China. However, they are turning to Southeast Asian countries, such as Vietnam, Thailand and Indonesia as the risks of investing in China increase.
“In the midst of a Japanese market that is not very optimistic due to population decline, Japanese companies can find optimism in Southeast Asia,” said Shujiro.
He hopes that Japanese company investment in Southeast Asia will help improve Japan’s economy itself.
“I hope that profits from investments made by Japanese companies in Southeast Asia can return to the Japanese economy. “It is hoped that this can be used to encourage domestic investment in Japan,” explained Shujiro.
Japan is one of the largest foreign investors in Indonesia. The Indonesian Ministry of Investment recorded that the realization of foreign investment from Japan in Indonesia in January-September 2023 reached $3.3 billion. This makes Japan the fourth largest foreign investor in Indonesia.
Reporting from the Asahi Shimbun, Japan issued an ODA budget of 1,168.7 billion yen ($8.2 billion) in the 1997 fiscal year. However, this ODA budget decreased by 570.9 billion yen in the 2023 fiscal year. (ATN)
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