Prime minister Shinzo Abe’s strong diplomatic push to increase Japan’s commercial interests across South-East Asia, coupled with the high value of the Japanese yen, has led Japanese companies to become the leading foreign investors in the Association for South East Asian Nations region (ASEAN) this year.
fDi Market, is a greenfield investment monitor owned by the Financial Times and affiliated with fDi Magazine reveals that between January and October 2013, Japanese firms were the ASEAN region’s most prolific greenfield investors, spending up to $9.2bn during this period. In contrast, US-based companies – who have historically been the leading investors in the region – trailed in second place with projects worth $3.8bn over the same period. Moreover Japanese companies have been the biggest bidders in mergers and acquisitions (M&A) in South-East Asia. Financial researcher Dealogic estimates that M&A deals pursued by Japanese companies were worth $8.2bn in 2013, up from $614m in 2012, surpassing the value of other M&As into the region from any other country.
While the coal, oil and natural gas sector, alongside the automotive original equipment manufacturing and real estate attracted the lion’s share of capital from Japan, accounting for $4.4bn worth of greenfield FDI between January and October 2013, fDi Markets revealed that business services and automotive components received the largest number of greenfield projects, with 14 and 11 projects respectively. This FDI expansion into the ASEAN region illustrates that Japanese companies are using their cash surpluses to make strategic investments across the region. Mr Abe’s role in spearheading this push into the region shows how Japan is working to counter-balance China’s increasing economic clout across the region.
Although Brunei was the only country out of the 10 ASEAN nations which did not attract any greenfield projects, fDi Markets revealed that Thailand and Indonesia were the top two investment destinations for Japanese firms, attracting $2.9bn and $1.9bn in FDI respectively.