Japan's economic shadow over Asian business puts it in delicate role

Japan's Mitsubishi cars dominate Manila traffic. . . . Outside Bangkok, Japanese factories line the highways. . . .On Java over 100,000 Indonesians work in Japanese-owned factories using Japanese machines.

The shadow of East Asia's economic giant falls worldwide, but perhaps nowhere is it longer than over the fast-growing noncommunist nations of Southeast Asia.

Japan accounts for 84 percent of all foreign investments made in Asia (outside Japan) since 1972, reports the Pacific-Asia Resource Center -- "a striking revelation of how quickly Japanese firms have invaded Asia."

"The Japanese bloodied people's heads in World War II, but won them back with transistor radios," says one American businessman.

Japan's first postwar investment was development of iron ore in Goa, India. Today, its "resource-securing diplomacy" stretches even into reclusive Burma, where Japan is the largest donor of aid -- and also the most hungry for Burma's still largely untapped oil, minerals, and raw materials.

War reparations paid by Japan went to accelerate its economic expansion by providing for the purchase of Japanese goods and services. "For every pound of flesh Japan puts in, it extracts two," says Asian Development Bank executive.

In 1972 and 1974 anti-Japanese riots broke out in Southeast Asian countries visited by Japanese prime ministers. There have been no such incidents since, but toleration of the Japanese is often shallow. Occasionally, bad feelings break out even in the controlled press. "Respectable Japan makes motherland prosperous. Wise Japan ruins Thailand," said one Thailand headline.

Such under-the-surface tension compels Japan to encourage a US presence in the region. Thus, its leaders are jittery about a diminished American role in the Asian Development Bank (ADB).

A US lag in ADB contributions last year has greatly increased Japan's voting power over bank projects.

"Japan can't afford to be left alone in the bank," says S. Stanley Katz, vice-president of the Asian Development Bank. In the 1960s, Japanese staff filled ADB corridors, picking up valuable training and information, and returned home primed for a regional business expansion. (Following suit today, Indians are making use of ADB's boot-camp economics.)

Some US congressmen wonder whether the ADB is really "a Japanese bank," or even should be. But says Taroichi Yoshida, ADB president and a Japanese himself , "That is not a good impression."

Japan commands 32 percent of ADB's contract business compared with 7.7 percent for the US. Last year, ADB officials went on as 12-city US tour to drum up interest for contract bidding. But the response was "mediocre."

Going in Japan's favor are the desires of Indonesia, Malaysia, Singapore, Thailand, and the Philippines to counteract "socialist Indochina." These poorer countries also have tolerated Japan's economic dominance in hopes of extracting technology in exchange for Japan's extraction of raw materials and cheap labor.

"The Japanese may have finally won the war," com ments an Indonesia official.