Why Singapore and Japan Matter More in the Indo-Pacific Than Great Powers Think
- Morn Piseth
- May 19
- 4 min read
Singapore and Japan’s decision on March 18 to elevate the bilateral ties to a strategic partnership in conjunction with the 60th anniversary of diplomatic relations is emphasized more than just a diplomatic symbolism. This act signals a critical shift in the Indo-Pacific on how middle countries like the two nations as middle powers increasingly shape regional order through institutions, economic governance, and strategic coordination amid great power rivalry intensification.
Most of the existing debate on the Indo-Pacific lies heavily on strategic competition between the United States and China, often illustrated in terms of bipolar power and emerging bloc politics. This illustration undermines the agency of middle powers in the region, particularly Singapore and Japan. As Evelyn Goh argues, Southeast Asian states are not merely reacting to great power competition but are active actors who strategically shape the regional environment. Singapore's and Japan’s strategic partnership exemplified this argument by demonstrating how middle powers can influence both the structure and trajectory of regional order.
Institutional Leadership as Regional Order-Building
The strategic partnership strengthens Singapore and Japan’s ability to jointly shape regional order by structuring rules to govern trade, production, and digital activity across the region. This new partnership elevation strengthens these rules by aligning how both middle power nations engage in major regional agreements, particularly the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).
CPTPP is known for its ability to enforce rules in the areas of digital trade, including the prohibitions on data localization and guarantees for cross-border data flows. Japan first leveraged its role in CPTPP when the United States withdrew from CPTPP in 2017 by ensuring the retention of binding digital trade rules, specifically including article 14.13, which prohibits data localization. This allows firms such as Japan’s Rakuten to operate regional platforms without duplicating data infrastructure in each market. This provision further structures firm-level behavior by reducing compliance fragmentation and enabling regional-scale digital operations. Additionally, Japan’s subsequent influence over access can be seen through the United Kingdom’s entry into CPTPP in 2023, demonstrating how Japan leverages institutional position to condition membership on adherence to these rules.
Singapore, on another side, operates through a complementary modality of rule diffusion. Through its approach, such as the Singapore-Australia Digital Economy Agreement, it translates CPTTP’s consistent provisions into bilateral and minilateral settings, further embedding interoperable standards on data governance, e-payments, and digital trade beyond the agreement’s formal membership.
The strategic partnership between both nations integrates these modalities and shapes their institutional leaderships. Japan stabilizes rules within a multilateral framework, while Singapore extends their application across overlapping networks. Similarly, both countries' engagements with
the Regional Comprehensive Economic Partnership (RCEP) further anchor production interdependence, particularly enabling Japanese firms to operate multi-country supply chains across ASEAN and China under unified rules of origin. These strategies increase the systematic cost of fragmentation by embedding both regulatory and production structures within shared institutional arrangements.
Hedging through economic security and resilience
At the same time, this strategic partnership reshapes the material structure of the regional economy by coordinating supply chain diversification and technology governance. This reflects a form of hedging where states reduce vulnerability without disengaging from major economic partners.
Japan has institutionalized supply chain diversification in the region through its economic security agenda. Since 2020, the Ministry of Economy, Trade, and Industry (METI) has allocated subsidies exceeding ¥200 billion to incentivize firms to relocate or expand production beyond China. Particularly, companies such as Panasonic and Daikin have shifted portions of their manufacturing to Vietnam and Thailand, while companies like Tokyo Electron have expanded semiconductor-related operations across Southeast Asia. These moves do not constitute decoupling, but rather, they redistribute production across multiple jurisdictions to reduce exposure to single-point disruptions.
Singapore complements this by functioning as a coordination hub for these dispersed networks. The city-state hosts regional headquarters for over 5000 Japanese firms and facilitates capital flows, trade financing, and supply chain management. For instance, Japanese electronics firms expanding into ASEAN frequently anchor treasury and logistics operations in Singapore, allowing production in Vietnam or Malaysia to be integrated into region-wide distribution systems. This creates multi-node supply chains in which production, financing, and coordination are institutionally connected.
The resilience effect is measurable. ASEAN’s share of Japan’s manufacturing outward foreign direct investment has increased steadily in recent years, illustrating a structural shift toward market diversification. By distributing production across ASEAN while maintaining linkages with China, these networks reduce vulnerability to shock without fragmentating the regional economy.
This approach reflects Kuik Cheng Chwee’s concept of hedging demonstrated on engagement without overdependence. What distinguishes the Singapore-Japan strategic partnership is not simply deeper cooperation but a shift in how middle powers exercise influence. Rather than balancing against major powers or relying solely on multilateral institutions, Singapore and Japan are coordinating across rules, production networks, and diversification. This suggests a broader shift in the Indo-Pacific, where order is no longer defined primarily by security alignment but by the ability to organize interdependence across multiple domains.
This article written by Morn Piseth, a Junior Researcher/lecturer at the Center for Southeast Asian Studies/Royal University of Phnom Penh.
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