Japan's Suga seeks tighter and better ties with Vietnam, Indonesia

TOKYO, Oct 16 (Reuters) - Japan's new leader will aim to beef up security ties when he visits Vietnam and Indonesia next week amid concerns about Beijing's growing assertiveness, but is likely to steer clear of the harsh anti-China rhetoric used by US counterparts.

Prime Minister Yoshihide Suga, whose resume is scant on diplomatic experience, will follow in predecessor Shinzo Abe's footsteps by making the two South-East Asian nations the destination for his first overseas trip since taking office in September.

"I think it is important to show... we put more emphasis and importance on that region and we are interested in the security situation, especially in the South China Sea," said former diplomat Kunihiko Miyake, a special advisor to Suga.

Suga is expected to visit Vietnam, chair of the 10-member Asean(Association of South-East Asian Nations), and Indonesia, its biggest economy, on a four-day trip from Sunday.

Japan must balance its deep economic ties with China with security concerns, including Beijing's push to assert claims over disputed East China Sea isles. Abe oversaw an improvement in ties but some ruling party MPs want a tougher stance.

Asean members, many of which have territorial feuds with China in vital South China Sea waterways, are wary of alienating a big economic partner and reluctant to become entrapped in an intense confrontation between the United States and China.

Scott Harold, associate director at the Rand Corporation's Center for Asia-Pacific Policy, said Japan's approach is to be firm, calm and advance its interests without asking countries to explicitly push back against China.

Beefing up defence cooperation will be a "key point" of Suga's trip to Vietnam following last week's port call of three Japanese vessels at the country's Cam Ranh naval base, said Ha Hoang Hop of the Singapore-based ISEAS-Yusof Ishak Institute.

China claims swathes of Vietnam's exclusive economic zone as well as the Paracel and Spratly Islands while Indonesia has been angered by Chinese coast guard intrusions into its exclusive economic zone off its Natuna Islands.

Japan plans to sign an agreement with Vietnam to allow it to export defence equipment and technology to the country, the Nikkei newspaper reported this week. A Japanese official said Japan was talking about enhancing defense cooperation with both Hanoi and Jakarta but could not comment on the outcomes.

Suga's trip follows last week's Tokyo meeting of the "Quad", an informal grouping of India, Australia, Japan and the United States, which Washington sees as a bulwark against China.

Beijing has denounced the Quad as a "mini-NATO" meant to contain China.

Hop said Vietnam could endorse the Quad as the group becomes more inclusive and as Beijing becomes more aggressive in South China Sea. Indonesia, however, is wary.

"Indonesia, which puts a high primacy on Asean’s centrality, is going to be very ambivalent about the Quad because it undermines that whole principle ... They are unlikely to jump on the quad bandwagon," said Euan Graham at the Singapore-based International Institute for Strategic Studies.

Suga's visit also coincides with Japan's efforts to diversify its supply chains and reduce reliance on China by bringing production home or locating more in Southeast Asia.

He will likely announce an expansion of Japan's subsidies for production in South-East Asia on his trip, the Nikkei said.

Vietnam is a popular choice for Japanese firms. Half of the 30 Japanese firms that took advantage of a 23.5 billion yen government scheme to diversify supply chains in Southeast Asia targeted Vietnam, which has aggressively courted Japanese investment.

Only one opted for Indonesia, where Japanese firms complain about a sometimes arbitrary regulatory environment, prompting Tokyo to call for improvements. - Reuters