As expected, Japan’s combative Prime Minister Shinzo Abe and his Liberal Democratic Party were returned after Sunday’s parliamentary elections with an increased majority, giving him a stronger hand to pass legislation and deliver on promises of long-overdue reforms that will at last drag Japan kicking and screaming into the 20th century. Unfortunately, that’s not a typo.

Abe now holds a two-thirds majority with the LDP’s long-term pacifist coalition partner Komeito, which has been his major stumbling block to ramp up Japan’s defence capabilities.

Not that Japanese voters had much choice, with the opposition still in disarray three years after being tossed out of office due to its handling of the 2011 earthquake and tsunami that triggered the worst nuclear accident since Chernobyl. Tellingly, only 52% of eligible voters turned out — a record level of disinterest.

Japan’s business community was very much behind Abe and his plan to perform CPR on the economy with an unprecedented attempt at structural reform. Abe’s targets include the massively restricted and protective agriculture sector, and he hopes to move women into the workforce in an effort to ameliorate the effects of Japan’s ageing population.

And Abe is very keen to loosen defence force rules that forbid any warfare or arms sale, a stance that has received considerable support — sharpened no doubt by Chinese diplomatic ineptitude and/or bloody-mindedness in its aggressive battles over various clumps of rocks in the East and South China Seas. Frankly, it’s overdue — Japan has spent a lot of time in the naughty corner, self-imposed in recent decades.

Abe will be only the second Japanese leader to have strung together more than four years in office by the time this two-year term is up, a feat last accomplished by Japan’s best prime minister in living memory: Junichiro Koizumi (you should remember the hair). Abe is a strong and aggressive leader at a time when Japan desperately needs one, and it will take someone with that force of will as well as a strong political power base — Abe is also president of the LDP — to pull in stragglers to potentially nation-changing votes.

For the Japanese there is probably no greater cultural touchstone than agriculture — controlled by a frighteningly large and financially powerful institution called Japanese Agriculture — imagine the National Farmers’ Federation on steroids, backed by millions of members. And the city folk in Japan can be just as obsessive about farmers as the farmers themselves, afraid that losing that particular quality-controlling Japanese wagyu breeder, plum farmer or rice farmer would be akin to losing the essence of Japan itself.

This is one of the things that has not been driven  home hard enough with Australia in recent discussion about the Economic Partnership Agreement with Japan (also referred to by the government as a free trade agreement). It’s the first one that has included agriculture, and this is more of a breakthrough than it seems. Trade Minister Andrew Robb will win far more kudos internationally — and eventually with Australian businesses once they realise which country has a better legal system, a much more digestible market and is a pleasure to visit — than the last agreement.

Of course, the opportunity for Australian producers will not be this oversold concept of Australia becoming Asia’s food bowl.

Melanie Brock, chair of the Australian New Zealand Chamber of Commerce in Tokyo, put it like this.“No darling, we will be Asia’s delicatessen.”

Brock managed to encapsulate perfectly a digestible, understandable, relevant and attractive piece of the national branding that Australia has been sorely lacking.  And one that, done effectively, could make a dent on even a highly sophisticated market like Japan.

As Australia’s biggest trade partner and second-biggest export destination, the success of Japan’s economy is vitally important. Just as significantly, Japan is also Australia’s third-largest investor, with over $60 billion being poured into our economy, a figure up a whopping 13% for the year.

Brock explained that Abe’s visit to Australia was something of a turning point.

“Really, it seems like everybody is talking about Australia as good place to invest these days.” she said.

Despite this, there seems to be an alarming tendency in the business and foreign affairs commentariat to be almost fixated on China’s role in Australian investment — to the exclusion of all others. The government too, despite China being a not inconsiderable danger for foreign business people — both financially and healthwise.

The sheer volume of resources in Australia means China will be willing to buy our exports for years to come. But there’s a good reason that there haven’t been more Chinese investments in Australia: it’s hard to find someone you trust.

They find the legal hurdles in Australia too restrictive — an understandable problem for people coming from a country with an entirely politically driven legal system. The other problem is scale: the entire Australian population — these days about 24 million people — would fit into either Shanghai or Beijing alone, something potential investors find off-putting.

Japan is eager to invest more, and Shinzo Abe’s attempts at economic reform only strengthens this.

And it’s not just Japan that wants to invest; Thailand and Singapore are significantly stepping up their investment in Australia, particularly in property.

It’s always nice to have a more balanced relationship. Perhaps China should join the queue and have a look at what real competition looks like.

Peter Fray

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