Fifteen Japanese companies, including Isuzu Motors and trading house Sojitz, are set to receive government funding to create supply chains in Southeast Asia. This initiative, with investments estimated at 100 billion yen ($679 million), aims to strengthen Japanese businesses in the region and counter Chinese influence. Here are the key points:

1. Demonstration Projects: Japan’s Ministry of Economy, Trade and Industry will announce 13 demonstration projects, chosen to receive a combined 35 billion yen ($238 million) in assistance from the state. These projects will involve technological development and capital investments.

2. Semiconductors: Semiconductors will play a crucial role in the supply chain project. Tokyo plans to support a chip packaging production line being built by Mitsumi Electric in the Philippines. This line will handle both front-end and back-end processes in Japan and the Philippines.

3. Automotive and Decarbonization: Isuzu and trading house Mitsubishi Corp. are piloting a project in Thailand to introduce electric vehicles with easily swapped batteries and battery exchange stations. This will help establish a battery supply chain in Thailand, where China is rapidly expanding its EV market share.

4. Sustainable Aviation Fuel (SAF): Sojitz and Green Power Development will receive funding for pilot production of SAF in Southeast Asia. The use of SAF can reduce the aviation industry’s carbon output. Tokyo aims to increase SAF usage to around 10% of all aviation fuel by 2030.

5. Green Hydrogen: Toyo Engineering and trading house Itochu will supply green hydrogen to ammonia production facilities in Indonesia. Green hydrogen does not emit carbon during the manufacturing process.

6. Challenges: Japanese automakers face competition from Chinese players in ASEAN, especially in EV manufacturing. China’s control over the Indonesian supply chain for nickel (a key material for EV batteries) poses an economic security risk.

Japan’s proactive approach aims to enhance its presence in Southeast Asia and foster innovation in critical industries. The government’s aid will contribute to building robust supply chains and ensuring Japan’s competitiveness in the region.