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Count the number of Japanese cars and adverts for Japanese brands as you drive into Bangkok from its main airport and it is no surprise to learn that Japan contributes nearly half of Thailand's foreign direct investment. Japan is one of the biggest investors elsewhere in southeast Asia, too. As the region's once roaring markets sputter, a resurgent Japan (should the newly empowered Shinzo Abe successfully reflate his country's economy as planned) is an interesting proposition for southeast Asia.
China's slowdown and the prospect of less easy U.S. money have sent a chill through southeast Asia. Benchmark indices in Jakarta, Bangkok and Manila have lost almost half of the one-fifth gains they had made this year to mid-May. The real economy is weakening, too. Last week the Bank of Thailand cut its growth forecast below 5 per cent and recent comments from Bank Indonesia suggest it accepts growth will slip below 6 per cent. Hardly a disaster then, but nor is it what these countries or their followers are used to. Enter Japan and, crucially, its direct investment. In terms of trading with the region, Japan's significance has slipped over the past decade as its economy stagnated, but at a shade over $200-billion (U.S.) it commands the same share as China. Its FDI of $60-billion into the region over that period, however, is 10-times greater than its giant neighbour, according to HSBC. Japan is either the largest or second-largest investor in each country.
Over the past two months, Japanese banks and insurers have spent almost $6-billion buying stakes in their southeast Asian counterparts. More deals are expected as they try to escape a weak and aging home market. China's speedy rise and vast size attract more attention these days than creaky Japan. But southeast Asians should look at who is putting in the real money.