How can ASEAN and Japan mutually benefit from ASEAN economic integration?

This paper reviews the evolution of the economic and political relationship between the Association of Southeast Asian Nations (ASEAN) Member States and Japan since the 1970s, from the perspectives of trade in goods and services, foreign direct investment (FDI) and international labour movements. ASEAN economic integration is likely to yield mutual benefits for both ASEAN Member States and Japan. The larger ASEAN market will not only attract new Japanese FDI but also encourage Japanese multinational enterprises to relocate their affiliates, enhancing the agglomeration effect and productivity in the new host economy’s. To fully realize these gains, approrpirate monitoring of the integration process is important. Some extensions of the ASEAN Economic Community deserve consideration to enhance the effect of integration. They include further liberalization in services trade and FDI, arrangements on government procurement and expansion of the scope of international labour movements.