Indonesia's food and beverage sector, Thai consumer-finance companies as well as shopping malls and Malaysian property are also in Japanese firms' sights, according to Nomura.
Companies from Japan, whose interest in places outside China dimmed during decades of heavy spending there, continue to have ardour for Southeast Asia as they seek to offset anaemic domestic growth. And they are tapping record cash piles to increase investments in it.
For the three years ended 2014, Japan was the second biggest foreign investor in the 10 members of the Association of Southeast Asian Nations (ASEAN), after the European Union, data from the ASEAN Secretariat shows.
In 2014, Japanese firms put three times as much investment into ASEAN as they did into China, according to the Japanese External Trade Organisation (JETRO).
In the first half of this year, interest in Southeast Asia again topped China. Japanese investment in ASEAN was $10 billion, from $8.4 billion a year earlier, and the region accounted for 15.7 percent of Japanese FDI. China drew $4.8 billion, or 7.4 percent of the total.
"ASEAN just fits the best for Japan," said Mixo Das, equity strategist at Nomura in Singapore. "The political relationships are better, growth is there, proximity is there."
Japan is the biggest source of foreign capital for Thailand and Indonesia, and the second largest for the Philippines and Malaysia, according to PricewaterhouseCoopers.
COOLED CHINA INTEREST
Growth is slowing in Southeast Asian countries dependent on commodities, but the Organisation for Economic Co-operation and Development forecasts average annual growth of 5.6 percent between 2015 and 2019. It sees Japanese growth at just 0.75 percent this year and 1.5 percent next year.
Almost 75 percent of respondents in a JETRO survey of about 3,000 firms this year said they plan to expand in ASEAN, versus 56.5 percent for China and 31.3 percent for the United States.
Consumer spending in the region in 2020 is expected to be 45 percent higher than in 2013, consultancy IHS Global Insight says.
Chinese consumer spending will too, of course, but other factors, including rising factory wages and political tension between Beijing and Tokyo, have cooled Japanese inflows.
Tensions with China have "also resulted in a shift in Japanese FDI away from China towards ASEAN," said Rajiv Biswas, Asia-Pacific chief economist at IHS.
In Japan, companies are sitting on a record 243 trillion yen ($2 trillion) of cash and deposits, so they have ample scope for acquisitions to lift their financial performance.
In the biggest Japanese investment in ASEAN so far this year, freight carrier Kintetsu World Express bought Singapore's APL Logistics from its parent, Neptune Orient Lines , for $1.2 billion.
LIFTING THE STAKES
Mitsubishi Corp, in the second biggest deal, paid $1.1 billion for 20 percent of Singapore-listed Olam International, an agri-trader hurt by the global commodities slump.
In the third biggest, Kirin Holdings purchased 55 percent of Myanmar Brewery from Fraser and Neave Ltd. for $560 million.
In some other transactions, looser ownership rules in some ASEAN countries have let Japanese firms "increase their stakes progressively," said Jalil Rasheed, investment director at asset management firm Invesco in Singapore
Separate from direct investments in businesses in ASEAN, Japanese companies are hoping to win contracts to help build infrastructure projects. ASEAN needs to spend about $60 billion a year in infrastructure investment until 2022, KPMG said last year.
In May, the Japanese government said it would provide $110 billion in aid for Asian infrastructure projects, including roads and railways, over five years.
But Tokyo lost out to Beijing in one competition, as Indonesia in September picked China to build its first fast-train rail link because it offered $5 billion in loans without asking for guarantees. ($1 = 120.7 yen) - Reuters