Asean will take on a greater strategic role for the Japanese economy following the implementation of the Asean Economic Community in 2015, as more Japanese investors will use the region as a manufacturing and trading base under the Asean-Japan Economic Partnership Agreement.
Thailand stands to be one of the Asean member states gaining the most from Japanese eyeing the grouping's policies, since the Kingdom is considered a link to third markets.
At a recent forum entitled "Japanese Perspective on Jtepa and other FTAs", hosted by the Thailand Research Fund, a study showed Japan held high expectations for the pact. It is seen as offering many advantages for trade and investment by helping to eliminate economic disadvantages and to increase foreign direct investment and technology transfers.
Japanese investors and traders are looking to explore more business opportunities through not only Asean's economic integration, but also the economic partnership under Jtepa.
In particular, the low duty rates and special offers under Asean and Jtepa will allow Japan to set up Thailand as its production base for export to third countries.
Shigeki Higashi, an economics professor at Seinan Gakuin University in Japan, said the FTAs among Asean and with Japan were key to driving the economic growth of participating countries.
FTAs will continue to play an important role in driving the global economy, because many influential countries have concentrated on them as an important facet of their trade policies, he said.
"Asean integration has become an active player in the Asia rush. The region has concluded FTAs or entered into negotiations with almost every major region as its key strategy for driving growth and strengthening its political power. The believe the Asean+3 and +6 FTAs will also strongly emphasise the role of Asean in the globe," Higashi said.
Japan realises Asean members are important partners, he said.
Japanese companies have considered investing more in Asean in many industries, in order to capitalise on various resources and incentives, such as low labour costs, plentiful raw materials, infrastructure development and technology adaptation.
Following Jtepa, Thailand has come to be considered a hub for Japan.
Thailand has many FTAs with other countries that Japan does not have, he said.
"Following Jtepa, which was implemented before the free-trade pact with Asean, Thailand has been highly efficient in drawing more trade and investment from Japan. Japan has bridged Thailand with other markets, such as India and Australia, which will result in higher trade growth among Japan, Thailand and Thailand's FTA partners," Higashi said.
Japan has seven FTAs, including the one with Thailand, which have already entered into force. Three pacts are awaiting signing and ratification, while six others are being negotiated.
However, the study showed Japanese traders still reaped fewer benefits from Jtepa, due to higher costs for documentation and a complicated process for export declaration.
The Thai government must provide more information so traders can get the most out of the FTA, because it has not only boosted exports, but also opened investment opportunities to Thailand and other partner countries, Higashi said.
