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Southeast Asia's Game of Thrones
Japan Throws Its Weight Around in Southeast Asia

With China having locked down Cambodia’s vote in ASEAN, The Japan Times reports that Tokyo is looking to deepen economic ties with Bangkok:

Japan plans to provide Thailand with ¥167 billion ($1.6 billion) in loans for a railway project, Foreign Minister Fumio Kishida told his Thai counterpart, Don Pramudwinai.

Kishida said he hopes the project will ease traffic jams and reduce air pollution in Bangkok during their talks Tuesday on the sidelines of a series of regional meetings involving the Association of Southeast Asian Nations in the Laotian capital, according to the Foreign Ministry.

[…]

Japanese officials said Thailand, located between China and India, is a gateway for the Mekong region and a key country for the region’s development and economic integration.

Kishida also expressed hope that a Thai referendum to be held Aug. 7 on the newly drafted Constitution will be an important step for return to democracy, the ministry said.

Japan is one of the largest investors in Southeast Asia, helping build infrastructure in Indonesia and, critically of late, in Burma. With Thailand in limbo after 2014’s coup created distance with Washington, China has tried to woo Bangkok. Japan, meanwhile, has been trying to keep Beijing out, particularly ahead of a referendum on a new, more democratic and Washington-friendly constitution.

Loaning to Thailand isn’t Japan’s only big foreign investment move this week: Abe’s government also promised over a billion dollars in low-interest (dollar bond) financing for Japanese firms looking to make investments overseas. The use of dollar-denominated financing should assuage worries about a volatile yen and encourage cautious firms to seek returns overseas.

Japanese firms have long been big buyers of foreign assets, dating back to Japan’s heyday in the 1980s. In recent years, Japanese foreign investment has even approached 1990 levels—when Japan’s economy appeared to be headed in a very different direction than it does today. Diversifying internationally was a smart strategy for Japan, as it helped hedge against a slowing domestic economy and increase Japan’s influence. Japanese investors’ propensity for making foreign investments is a resource that Tokyo has repeatedly proven adept at leveraging for geopolitical purposes.

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