Japanese PM Takaichi’s Australia visit can shore up energy and economic security

Japanese Prime Minister Sanae Takaichi is scheduled to visit Australia in late April, offering an opportunity to deepen the bilateral relationship and bring stability to regional affairs amid a sea of global uncertainty.

Takaichi’s decisive electoral win in February 2026 brings political stability to one of the world’s largest economies. As Japan’s first female prime minister, Takaichi has smashed the glass ceiling in Japanese politics while reviving the ruling Liberal Democratic Party’s fortunes.

The visit is timely, with Australia and Japan becoming more important to each other and to the rules-based economic order on which they rely. The energy crisis arising from the US–Israeli war against Iran and the closure of the Strait of Hormuz, the rise of a more assertive China, a revisionist United States and US–China great power rivalry all underline the challenges both countries face.

Takaichi will reportedly bring fuel assurances backed by Japan’s more than 200 days of strategic fuel stocks to help calm Australian consumers. That marks a role reversal from a relationship where Australia has typically underwritten Japan’s energy security, supplying around one-third of Japan’s energy needs through natural gas and coal exports. Australia keeps Japan’s lights on for eight hours a day — Japan is now helping make sure Australians can keep calm at the bowser.

Australia and Japan have never been closer politically or strategically. In its first major export of defence equipment, Japan is set to supply its Mogami frigates to Australia. But the external environment is testing both countries as they navigate a fracturing global order. Defence cooperation is deepening at a time when long-held assumptions underpinning their security settings are being challenged.

A major focus must be economic security — the ability to maintain resilience in the face of rising global shocks and risks. These emerge from sources such as climate change, volatile geopolitics and more interventionist governments. A primary goal of the economic security agenda needs to be safeguarding the open and rules-based economic order on which both countries’ prosperity, energy security and stability are built. That’s crucial to the health of the East Asian economy and political stability in the region.

That shared commitment helped build an economic partnership that has long anchored broader political, strategic and regional stability.

This year marks the 50th anniversary of the Basic Treaty of Friendship and Co-operation, sometimes called the NARA Treaty — signed in June 1976 — helped transform a relationship largely defined by the commodities trade into the broader-based and more diverse relationship it is today. The treaty opened up investment, giving Japan equal-best access to investment opportunities in Australia that helped to build a commercially and strategically important economic relationship.

The newly released 2025 Japan-Australia Investment Report shows a record 77 Japanese mergers and acquisitions transactions over the year, adding to the previous year’s stock of AU$159.5 billion (US$112.6 billion) Japanese foreign direct investment in Australia. This makes Japan Australia’s second-largest source of inbound investment. The report tracked 53 new Japan–Australia business partnerships and 17 Japanese companies entering the Australian market for the first time.

Japanese investors are no longer simply seeking resources. They are increasingly building long-term investment platforms in sectors such as financial services, real estate, infrastructure and technology, using Australia as a base for expansion, consolidation and value creation. These platform-based investments are making significant contributions to Australia’s economy while deepening commercial integration between the two countries. Australia’s secure investment profile and alignment with Japan on economic security make it a standout destination in a volatile global landscape.

The fundamentals of this relationship — economic complementarity, proximity and high-quality institutions — remain its main drivers. But there remains significant growth potential. Regulatory complexity, low productivity growth and skill shortages are making Australia less attractive against a backdrop of intensifying global competition for capital. Reform and deeper bilateral cooperation will be vital to securing the long-term pipeline of investment in the countries’ energy and economic links.

This is where the people-to-people ties, the third pillar of the Australia–Japan relationship, matter most. They do not sit apart from economic and strategic ties but reinforce them. The economic relationship has helped build political trust and strategic closeness — and people-to-people ties are central to both. Yet despite the importance of Australia and Japan to each other, they still lack basic knowledge and understanding of one another.

The anniversary of the NARA Treaty offers a timely opportunity to take a comprehensive approach that integrates all three pillars of the relationship — economic, security and people-to-people ties. Australian and Japanese leaders should continue to deepen mutual understanding and provide the trust and ballast crucial to sustaining the expanding defence and strategic partnerships.

The Japan-Australia Investment Report is available to read in English and Japanese.

This article first appeared at East Asia Forum. Read the original article.