Japan Focus has a couple of good articles this week. For WWII buffs, Herbert Bix has a great article on Hirohito’s role in WWII. But of interest for Taiwan is an article on natural gas exports from Indonesia to Japan and China. The article focuses on Japan’s complex relations with Indonesia in acquiring resources and secondarily, on its weakening position with respect to resource acquisition vis-a-vis China…

As Japanese rules permit individual utilities and natural gas distribution firms to sign LNG supply contracts with overseas suppliers, these firms exert a strong influence on the LNG market. However, these LNG procuring companies face increasing competition for resources. Whilst in 1996 Japan imported 62% of available world supplies, that proportion had fallen to 41% in 2005 and is under continuing assault as other countries respond to the attractiveness of LNG. [6] In particular, China’s imports of LNG, which began in 2006, are expected to increase rapidly. Although China has two LNG receiving terminals at present, it has plans to build as many as seven LNG terminals in six provinces and municipalities. This scenario poses such a strategic security and economic risk that Japan’s Ministry of Economy, Trade and Industry cautioned in May 2006 that: “Japan’s bargaining power (in the international gas market) may be weakened.” [7] Facing the imperative to secure as much LNG as possible for the longest term possible, the JIEPA negotiations opened in 2005.


Like almost all major Indonesian corporations, Sinar Mas is Chinese-Indonesian owned and has substantial holdings in mainland China. Particularly since a 1974 change in the foreign investment law required joint ventures, it has usually been the policy of Japanese investors to partner with local ethnic Chinese businesses in Indonesia. It has been long pondered whether the dominance of the Chinese Diaspora in most Southeast Asian economies would eventually give China an advantage over Japan in terms of economic influence in the region. The deal for the Tangguh gas seems to indicate that this might be becoming a reality.

It seems intuitively obvious that Taiwan’s position with respect to resource acquisition and Chinese competition is weaker than Japan’s. Time to heavily invest in wind and other renewables….