Southeast Asia鈥檚 economic growth, proximity to key shipping lanes, and status as a potential geopolitical flashpoint have made it strategically vital to both Japan and the United States. As such, the US, Japan, and the Philippines signed a trilateral agreement to expand investments and maritime security initiatives in April 2024. Future US and Japanese engagement in Southeast Asia should adopt a similar approach to address growing security and economic concerns in the region.
In February 2025, 华体会鈥檚 Japan Chair organized a roundtable to develop policy proposals for greater US-Japan integrated cooperation with Southeast Asia. Participants included policymakers and experts on industry, finance, and policy from the United States, Japan, and several Southeast Asian countries.
The discussions produced the following recommendations for US-Japan policy in the region.
Diplomacy and Security
Give Southeast Asian nations diplomatic options to increase strategic autonomy. Not all Southeast Asian nations are currently viable political or economic partners for Washington and Tokyo. Still, it is important to engage with any willing government to encourage regional strategic autonomy. This will discourage dependency on Beijing, especially as the Chinese economy grows weaker and Beijing becomes more aggressive in the South China Sea. US-led engagement that encourages security and prosperity will improve American and Japanese diplomatic relations in the region and could offer even greater strategic benefits in the future.
Prioritize economic engagement with Southeast Asia. American and Japanese foreign direct investment (FDI) in Southeast Asia fosters business-to-business and people-to-people ties. This builds popular support for the US and its partners鈥攁nd weakens pro-China sentiment. Such goodwill gives local governments the political capital they need to make decisions that will strengthen their relations with Washington and Tokyo, even if such policies may not be locally popular.
Recognize different threat perceptions and time horizons between the US and Japan. The US, Japan, and many Southeast Asian nations are similarly concerned about China. But while the US sees China as a long-term structural competitor, these Asian nations recognize that the China threat is already on their doorstep. Tokyo and its Southeast Asian partners are less concerned with competition and more concerned with denying and dissuading Chinese aggression. The US needs to coordinate closely with its regional partners to ensure these differing perceptions do not harm strategic alignment.
Offer adaptable security procurement and training to lay the groundwork for future operational cooperation. Southeast Asia鈥檚 diverse geography means that security needs differ widely among nations in the region. A US-led coalition that includes Japan and other close partners such as Australia and South Korea can offer a broader range of expertise than China alone. For instance, the Philippines receives coast guard vessels and radars from Japan but hosts and trains with American units.
The US, Japan, and Australia are also deepening their cooperation on uncrewed systems. These platforms are flexible, cost-effective, and possess built-in interoperability due to their multinational joint development, making them ideal for Southeast Asian nations that wish to hedge their security needs away from China. It also opens up opportunities for operational cooperation in potential contingencies in the future.
Energy and Economics
Work together to build new energy ties in Southeast Asia. Southeast Asia鈥檚 energy needs are growing by 4 percent a year, yet many governments in the region have established net-zero carbon targets for 2050 or 2060. America鈥檚 substantial reserves of liquified natural gas (LNG) and Japan鈥檚 leadership in LNG marketing, transportation, importation, and power production make them ideal partners for meeting Southeast Asian energy needs and emissions goals. US and Japanese government and industry should accelerate their efforts to turn Prime Minister Shigeru Ishiba鈥檚 pledge for increased Japanese purchases of American LNG into a reality. This partnership should serve as the basis for increased US energy sales to the greater region.
Mitigate political and financial risks to unleash private investment in LNG projects. Private firms face significant political and financial risks in LNG projects. The US should commit to consistent regulations that support the fossil fuel industry and resolve obstacles that have made the Panama Canal a shipping chokepoint. The Trump administration鈥檚 promise to and deregulate development and American investment firm BlackRock鈥檚 planned from Hong Kong鈥檚 CK Hutchison are positive developments on this front.1
The American and Japanese governments should also provide public loan guarantees to LNG projects. These gas projects in Southeast Asia are capital-intensive, long-term investments. Their size and timeline exceed the mini-term loan structure that private banks utilize, in which loans for large-scale projects need to generate profit within seven years. Joint support from export credit agencies (ECAs) like the Japan Bank for International Cooperation (JBIC) or the US Development Finance Corporation (DFC) is necessary to mitigate risk and allow the private sector to invest in these projects. Past cooperation between JBIC, DFC, and Export Finance Australia (EFA) on like telecommunications projects and undersea cables is a useful precedent.2
Communicate with the private sector on political risk. Relatedly, governments need to engage in more effective dialogue with the private sector to allow businesses to price in political risk. For instance, the proposed natural gas pipeline from the North Slope to Nikiski, Alaska, to export LNG would enhance geopolitical priorities in Washington and Tokyo, but Japanese firms may balk due to economic and engineering uncertainties. Therefore, American and Japanese governments and businesses should more proactively work together to anticipate and mitigate geopolitical challenges.
Support Southeast Asian economic and financial aspirations. Southeast Asian economies are largely dependent on exports because of insufficient domestic demand, and their generally low credit ratings limit their abilities to work with foreign lenders. But these nations have significant economic potential, especially as they try to shift their focus from Chinese-dominated mining and processing operations. As the current US administration seeks to address trade imbalances, it should also develop a long-term trade and economic framework to strengthen Southeast Asian creditworthiness, domestic demand, and control over its resources. By doing so, Washington can create effective partners and strengthen its geopolitical standing in an increasingly vital region.
The author thanks Iku Tsujihiro and Teddy Hoang for their assistance in the preparation of this policy memo.