Future Direction of ASEAN Japan and Laos Japan Cooperation H. E. Mr. Takeshi Hikihara, Ambassador of Japan to the Lao PDR 27 January 2017 (Friday)

1 Future Direction of ASEAN Japan and Laos Japan Cooperation H. E. Mr. Takeshi Hikihara, Ambassador of Japan to the Lao PDR 27 January 2017 (Friday) 1. Introduction Sabaidee Pi Mai, a Happy New Year. Following the international new year, we will have a Chinese or Vietnamese new year tomorrow. I have found many wonderful things in Laos since I arrived here a year ago. Among them, one of the best is that we can enjoy new year many times in a year. I have had quite a hectic time since I was appointed as Ambassador in Laos a year ago, not only because of joining each of these new year parties, but also the last year has been a very important year for Laos, for Lao Japan bilateral relations, and for ASEAN Japan relations. I feel so lucky to be here to witness these historical moments. Through the 10th Party Congress in January and the formation of a new cabinet in April, a new leadership of the Lao PDR was established. The 8 th Five Year National Socio-Economic Development Plan was approved by the National Assembly and the endeavor to bring the country out of least developed status by 2020 has started. Moreover, Laos has successfully fulfilled its historic role as the first-ever ASEAN chair after the establishment of the ASEAN community in 2015. I would like to express sincere congratulations for all those great successes. The integrity, stability, and prosperity of ASEAN are essential for the peace and prosperity of Japan as well as the Asia Pacific region. From that viewpoint, the Japanese government has been fully supporting the efforts to establish the ASEAN community through various frameworks, such as ODA, the Japan ASEAN Integration Fund (JAIF), Japan

2 Mekong and Japan ASEAN cooperation, and other forms of bilateral and multilateral cooperation. This year already, Japan further continues its effort to strengthen its diplomatic ties with ASEAN member countries. Prime Minister Abe visited the Philippines, Indonesia, Australia, and Vietnam from 12th to 17th January, aiming at enhancing the bilateral and regional relationship with those countries. He also shared the idea that ensuring the unity and centrality of ASEAN is essential to strengthen the role of ASEAN as a main player in the region. On the occasion of the 50 th anniversary of establishment of ASEAN this year, Japan will fully support ASEAN to consolidate its unity and centrality in various fields such as political, security, and economic. Today, I would like to talk about the progress of up to now and future prospects for Japan-ASEAN and Japan-Laos relations. 2. Development of ASEAN Japan Relations Japan and the South-East Asian region have long been connected through maritime trade routes. From the 16th to the 17th century, Japan carried out foreign trade by licensed trading ships under the authority called Shuin-sen. At that time, a Japan-town flourished in Ayutthaya, Thailand. Mr. Nagamasa Yamada, who lived in the Ayutthaya Japan-town and played an active role under the Ayutthaya dynasty, is well known by Japanese people today as his name appears in every Japanese textbook. There were other Japan-towns also in Vietnam, Cambodia, and the Philippines. There also has been a trade relationship between Laos and Japan at that time. In Japan, bamboo parts which connect the fire bowls and mouthpieces of tobacco pipes are called Lao,, which is said to be named after a bamboo from Laos. Japan and the continental part of ASEAN, including Laos, have been closely related not only through commercial activities but also through the Buddhism which we have in common even to this day. We have some Buddhist words in common, such as Tak-Baht (alms giving) and Na-Lok (hell) in Lao, which have the same pronunciations and meanings in Japanese. We can observe the trails of the Buddhist monks across the ocean through those common words. Personally, I was born in Nara, which was once a Japanese capital in the eighth century and has many old temples since that time. Vientiane with its many temples throughout the city feels familiar to me. I have never before seen a country whose people

3 practice so naturally the ethics of Buddhism on a daily basis. I am so impressed and refreshed whenever see the Tak Baht in the early morning. Turning our eyes to the present, ASEAN was established fifty years ago (1967) under the philosophy that the South-East Asian countries could contribute to peace and stability of the region by clarifying their regional identity as a community and tackling challenges on their own. In the late 1990s, Vietnam, Laos, Myanmar, and Cambodia joined ASEAN and the ASEAN 10 was started with its unique diversity of political systems, cultures, and religious backgrounds. Today, ASEAN is situated in the heart of Asia and straddling the Pacific and Indian Oceans. It is now a large center of production and consumption, containing a total population of 630 million and 2.5 trillion dollars of GDP. We can describe the region as a driving force of the world economy. Its importance is not only in the economic area. ASEAN also plays a core role in peace and prosperity in the Asian region as the main driver of East Asian regional political systems such as the East Asia Summit (EAS) and the ASEAN Regional Forum (ARF). This economic and political significance makes the partnership with ASEAN especially relevant and vital for Japan. Soon after World War II, Japan started support for the national building efforts of the South-East Asian countries. Japanese overseas economic cooperation was initiated with grant aid to these countries in the mid-1950s. Immediately after the establishment of ASEAN, Japan started its economic relationship with ASEAN by launching the ASEAN Japan Forum on Synthetic Rubber. in 1973. In 1977, Prime Minister Takeo Fukuda attended the Japan ASEAN Summit Meeting in Kuala Lumpur, Malaysia, which was the first summit meeting between ASEAN leaders and the leader of a non-member country. Prime Minister Fukuda made a historic announcement of the so-called Fukuda Doctrine, in order to clarify Japan's diplomatic principles for ASEAN as follows: (1) Japan rejects the role of a military power; (2) Japan will do its best to consolidate the relationship of mutual confidence and trust based on heart-to-heart ; and (3) Japan will be an equal partner of ASEAN. In the following year, 1978, the Japan ASEAN Foreign Ministers' Meeting was held. Since then, Japan, as ASEAN's first dialogue partner, has developed together with ASEAN for more than 40 years, as an essential partner in economic cooperation, trade, and investment. The new member countries of ASEAN, including Laos, which suffered from the severe aftereffects of civil war for decades, have a development gap with the founding

4 member countries. Japan has been providing assistance to these new member countries to narrow the gap between the member countries and to encourage ASEAN integration. In 2013, the ASEAN Japan relationship marked its 40 th anniversary. In that commemorative year, Japan's Prime Minister Shinzo Abe announced the Five Principles of Japan's ASEAN Diplomacy and visited all the 10 member countries of ASEAN. His purpose was to contribute to ensuring regional peace and prosperity amid a rapidly changing strategic environment in the Asia Pacific region. The Five Principles are as follows: (1) Protect and promote together with ASEAN member states universal values, such as freedom, democracy, and basic human rights; (2) Ensure in cooperation with ASEAN member states that the free and open seas, which are the most vital common asset, are governed by laws and rules and not by force, and welcome the United States' rebalancing to the Asia Pacific region; (3) Further promote trade and investment, including flows of goods, money, people and services, through various economic partnership networks, for Japan s economic revitalization and the prosperity of both Japan and ASEAN member states; (4) Protect and nurture Asia's diverse cultural heritages and traditions; and (5) Promote exchanges among the younger generations to further foster mutual understanding. In the end of the same year, the Japan ASEAN Commemorative Summit was held in Tokyo. At that summit meeting, the ASEAN and Japan leaders announced greater cooperation as equal strategic partners, focusing on four key areas of the partnership: (1) Partners of Peace and Stability, (2) Partners for Prosperity, (3) Partners for Quality of Life, and (4) Heart-to-Heart Partners. Japan pledged 2 trillion yen (approximately 17.6 billion dollars) of economic assistance over five years, to support the establishment of the ASEAN Community. Japan also disbursed 100 million dollars to the Japan ASEAN Integration Fund (JAIF) 2.0 to support ASEAN integration. Since then, ASEAN Japan relations have been developing in many areas. ASEAN has been the largest Asian destination for the foreign investment of Japanese companies since 2013. The number of tourists from ASEAN to Japan has doubled in the past two years, reaching 2.1 million in 2015.

5 3. Recent Progress and Future Vision of ASEAN Japan Cooperation The year 2016, when Laos took responsibility as a chair of ASEAN, was the first year to launch of the ASEAN Community. Japan welcomes that ASEAN integration has steadily progressed and entered into the new crucial phase. We are determined to strengthen our cooperation along with the Five Principles of Japan's ASEAN Diplomacy as I mentioned. In this context, I would like to emphasize two important issues for Japanese cooperation; these are respect for diversity and rule of law. As we all know, prosperity in any region will not be achieved without maintaining peace and stability. The ASEAN and dialogue partners, including Japan, have to deal with many challenges in the region such as terrorism, extremism, and maritime security. We have to make a collective effort to address those challenges and to maintain a secure regional environment. Japan shares universal values such as freedom, democracy, and basic human rights with the ASEAN member countries. At the same time, Japan also respects the diversity of the ASEAN member countries such as religion, ethnicity, and ideologies. Recently, ASEAN is facing a growing threat from terrorism, as we saw in the terrorist attack in Jakarta early last year. In taking counter-terrorism measures, fostering moderation with tolerance and understanding of others is the key. With this viewpoint, Japan is currently conducting projects to prevent violent extremism through the Japan ASEAN Integration Fund (JAIF). What ensures diversity is the rule of law. For the co-existence and co-prosperity of a group of countries with diverse social-economic systems, a common rule should be established and all the member states should respect the rule. The "ASEAN Community Vision 2025 adopted at the ASEAN Summit in November 2015 also emphasizes that the ASEAN Political Security Community should be a rule-based community with common values and norms. That vision firmly maintains the ASEAN basic principles, common values, and the norms and principles of international law. Nowadays, the rule of law is being severely tested in the area of maritime security. Japan advocates the Three Principles of the Rule of Law at Sea : (1) States should make and clarify their claims based on international law; (2) States should not use force or coercion in trying to drive their claims; and (3) States should seek to settle disputes by peaceful means. The importance of maintaining maritime order in accordance with the principles of

6 international law was also reaffirmed at the G7 Summit and its Foreign Ministers Meeting hosted by Japan last year. At these meetings, the participating countries voiced strong objections to unilateral attempts to change the status quo in the South China Sea, or claims and actions not based on international law there. We have to work together to establish a regional order where the principles of the rule of law will be fully respected and implemented. To ensure the rule of law, the EAS will play a key role. In the EAS Summit hosted by Laos last year, almost all the leaders of the participating countries stressed the importance of the rule of law. The EAS Chairman s Statement also mentioned the importance of the rule of law in international relations, the importance of resolving disputes by peaceful means in accordance with universally recognized principles of international law, and the importance of non-militarization. I highly appreciate the effort of Laos as a Chair to make those phrases a reality. To achieve this, it is essential to enhance the role of the EAS as a premier forum of the region, and the further promotion of integrated regional cooperation centered on ASEAN will be needed. Japan will provide full support to enhance the role of the EAS. In accordance with the ASEAN Community Vision 2025, the Blueprint 2025 of three Communities Political Security, Economic, and Socio-Cultural Communities was adopted in November 2015. Japan provides comprehensive support to realize the blueprints of those communities. Examples of the recent Japanese cooperation are as follows: (1) Political Security Community - Maritime Security: Providing human resource development assistance for maritime security capacity building of 1,000 officials over three years (2016). - Counter Terrorism: Adopting The ASEAN Japan Joint Declaration For Cooperation to Combat Terrorism and Transnational Crime (2014), providing approximately 45 billion yen over three years for Asia as comprehensive counter-terrorism measures, and support developing 2,000 personnel for counter-terrorism over three years (2016). - Defense Cooperation: Holding the Second ASEAN Japan Informal Defense Ministers Meeting and announcing Vientiane Vision, a Japanese initiative to strengthen ASEAN Japan defense cooperation (2016).

7 (2) Economic Community - Providing 200 billion dollars in five years to promote the development of infrastructure, both qualitatively and quantitatively, under the "Expanded Partnership for Quality Infrastructure" initiative, based on the principles agreed to at the G7 Ise-Shima Summit (2016). - Developing industrial human resources under the ''Industrial Human Resource Development Cooperation Initiative',' which will provide assistance for 40,000 people over three years (2015) - Promoting high-level human resource development under "Innovative Asia," in which we will receive 1,000 foreign students in five years and provide them with the opportunity to work at Japanese companies (2016). - Launching the "Japan ASEAN Women Empowerment Fund" of around USD 100 million which will support small-scale businesses run by women through micro finance (2016). (3) Socio-Cultural Community - Supporting human resource development in the health sector under the "ASEAN Japan Health Initiative," which will provide assistance to 8,000 people for five years in order to promote health, prevent illness, and enhance the level of medical care (2014). - Launching JENESYS 2016 to promote people-to-people exchanges, targeting around 3,700 young people to be invited to Japan in one year (2016). Japan hopes to be an essential partner for ASEAN to fully realise its potential by respecting diversity and enhancing connectivity. We are determined to cooperate with ASEAN so that it will continue to be a main player in the region by enhancing integrity and centrality, and developing a transparent and fair society under the rule of law. 4. Direction of Laos Development and Japan Laos Cooperation Laos is granted with abundant land and natural resources, a stable political system, and honest people. Its development potential is very high. Laos is a land-locked country, but you can also say that Laos occupies a very strategic position where it is surrounded by 5 neighboring countries. In this sense, improving connectivity is truly the key to its development. "Strengthening connectivity" is also regarded as the most important issue in the context of ASEAN community building. "Connectivity" doesn't simply mean building infrastructure. It will not be beneficial to local people if the following three elements are not

8 well organized: "physical connectivity" such as transportation, information communication, and energy networks; "institutional connectivity" such as facilitation of trade, investment and services; and "connectivity of people to people" through tourism, education and culture. In this regard, Japan submitted a master plan to strengthen connectivity consisting of these three elements at the 17th ASEAN Summit in October 2010. Based on the idea that "Making ASEAN into a regional cooperation hub, ensuring the stability and prosperity of is vital not only for Japan and ASEAN, but East Asia as a whole, Japan fully supports ASEAN efforts to strengthen its connectivity. In terms of ASEAN's connectivity, Laos is located at a very crucial point where it links with many neighboring countries. Japan has been trying to strengthen Laos' connectivity in order to turn its development potential into reality by providing a wide range of supports for the benefit of local people. In 2006, the second Mekong International Bridge linking Laos and Eastern Thailand was opened with Japan s support. It used to take more than 2 weeks by sea transportation between Bangkok and Hanoi, but it is now shortened to 3 days by land. Last year, Japan pledged support for bridge renovation on Road No. 9 (2.53 billion yen) and construction of the Wattay International Airport expansion has also started. If the ASEAN community building is fully completed and connectivity is strengthened, the flow of goods and services will be encouraged and economic activity will be further revitalized; at the same time, however, domestic companies will be exposed to more intense competition with foreign companies. In this regard, strengthening industrial competitiveness becomes an urgent issue for Laos. For many years, Japan has been providing support for primary and secondary education, especially in science and mathematics, business development through the Laos Japan Center (LJI) at the National University, various scholarships and training programs etc.; all of them for the sake of human resource development and strengthened competitiveness. In addition to the above, Japan has been providing support in various sectors, such as improving the education and health sectors to reduce the gap within ASEAN, upgrading water supply, supporting agricultural development, electric power development, and UXO clearance in both technological and financial aspects. Last year, Japan announced financial support for 4 new projects, with approximately 1 trillion KIP, including expansion of the water supply in Vientiane and the renovation of Road No. 9 bridges as mentioned earlier.

9 And last year, we have made a new significant step forward. Prime Minister Abe and Prime Minister Thongloun announced the "Japan Lao PDR Joint Development Cooperation Plan" after their bilateral summit meeting in September. Laos has set a national goal of graduation from Least Developed Country Status by 2020 through the implementation of the new Five-Year National Socio-Economic Development Plan VIII (2016 2020) (8th NSEDP). Our plan is the first joint attempt by both countries to cooperate in the medium term for achieving the development goal. The joint plan aims at (1) Achieving greater hard and soft connectivity with neighboring countries; (2) Raising competitiveness through industry diversification and training the industrial workforce; and (3) Rectifying disparities through balanced regional and urban development taking environmental and cultural preservation duly into account. In addition, in order to ensure the steady implementation of these three pillars, we will also work together to improve the mechanism to stabilize the macro economy, to support stronger financial planning, to ensure the consistency of development plans and budget formation, to strengthen governance, etc. These efforts will contribute to the 8 areas that Laos prioritized as the Chair of ASEAN 2016, especially for reducing the gap, promoting tourism, strengthening connectivity, facilitating small and medium enterprises, and creating more jobs. In addition to the efforts made by the government sector, the role played by the private sector is becoming increasingly important as the Lao economy develops. The number of Japanese companies operating in Laos has doubled in three years, now counting 135 companies. There are top Japanese brands such as Nikon and Toyota Boshoku. Aderance is another top brand, which produces hair wigs and employs 1500 local people, while JALUX produces high-grade vegetables in the Bolaven Plateau and exports them to Japan. A company called Andou has adapted and expanded traditional Japanese textile technology in Laos and produces Japanese kimonos-related products. Various large and small Japanese companies are leveraging the advantages of Laos and flexing their economic muscles in Laos. These Japanese companies make 'high-quality investments' and contribute to Laos sustainable development through job creation for local citizens and transfer of Japanese technology and know-how. Japan has been also contributing to Laos sustainable development and green growth by taking environmental preservation duly into account.

10 Japan, both public and private sectors together, will contribute to achieve Laos national goal of graduating from LDC status. 5. Japan Mekong Cooperation The Mekong region is located at the center of Asia's transportation routes both by land and sea, bordering with China in the north, connecting to the South China Sea in the east and south, and with the west leading to the Indian Ocean through India. It is a significantly strategic region and Laos is located at its heart. Mekong region consists primarily of newer ASEAN member states. And its development is indispensable in order to reduce the gap within ASEAN and to make the ASEAN community a reality. Meanwhile, the growth rate of this region maintains the highest level in Asia. Development of the region is vital to ensure the prosperity of ASEAN and can be a driving force for the further development of Asia as a whole. For Japanese companies, the Mekong region is a major investment destination. It has also become more important as a destination for Japanese tourists. Our mutual beneficial relationship is getting stronger. The clear recognition of the importance of the region led to the establishment of the Japan Mekong Cooperation Framework in 2009. At the 7th Japan Mekong Summit in 2015, members adopted the "New Tokyo Strategy 2015" and the "Japan Mekong Action Plan". Based upon this strategy, Japan provides 750 billion yen (about 7 billion dollars) in support of the region over the next 3 years. During the first year of this plan, from April to September this year, Japan has already implemented more than one-third of the pledged amount. This shows our firm commitment to the Mekong region, and also indicates that Japan is a country that always keeps its promises. In addition, important initiatives to facilitate ASEAN integration were adopted in this context last year, such as the "Japan Mekong Connectivity Initiative" at the Mekong Foreign Ministers' Meeting and the "Mekong Industrial Development Vision " at the Japan Mekong Economic Ministers Meeting respectively. While promoting industrial development of the region, the "Green Mekong Forum" is held every year aiming at the sustainable development of the region. Participants are actively involved in discussions on issues such as natural disaster prevention, food security, climate change, cooperation in the electric power sector, water shortages, and agricultural development.

11 By making multilevel and multilateral efforts, Japan will support the development of Laos and the Mekong region in order to further strengthen ASEAN connectivity and to reduce the gap within ASEAN. 6. Conclusion This year marks the 50th anniversary of the foundation of ASEAN. To make building the ASEAN Community more fruitful and beneficial, it is necessary to improve people s livelihoods, develop human resources, strengthen connectivity while reducing the gap and deepen economic integration through transformation and advancement of industrial structure. Japan is committed to strongly support these efforts. We will continue to cooperate with member countries for their sustainable growth and economic integration. We will encourage Japan ASEAN cooperation in a form open to external participation. We will consistently aim to benefit all the people in ASEAN. Japan strongly expects that ASEAN will deepen its integration as an indispensable partner who shares the common values such as rule of law and democracy. We expect that ASEAN will cope confidently with various regional and international challenges as the core player of this region, and will lead the way to the enduring stability and prosperity of the region.