MANILA - Japanese Prime Minister Junichiro Koizumi arrived in Manila on Wednesday, starting a week-long tour of Southeast Asia to bolster ties and prove it will not lag rival China in forging closer regional relations.

Speaking to reporters while flying to Manila, Koizumi alluded to a broad -- but fuzzy -- vision of cooperation that could eventually encompass not only Japan and Southeast Asia, but also Australia and New Zealand.

"Cooperation between Japan and ASEAN (Association of Southeast Asian Nations) should not be limited within the region, contained in a bloc. It should expand, for instance, to include Australia and New Zealand," the prime minister said.

Koizumi said on Tuesday that such a cooperative framework should also include China and South Korea.

Looking a little tired but in good spirits, Koizumi shook hands with Vice President Teofisto Guingona and Finance Secretary Jose Camacho at the airport.

The Japanese leader, who turned 60 on January 8, was escorted to a car amid tight security as a handful of protesters from militant groups staged a peaceful rally.

Koizumi is expected to hold an hour-long meeting with Philippine President Gloria Macapagal Arroyo later on Wednesday. Both leaders are scheduled to make a joint statement afterwards.

Koizumi's trip took on added significance after China and ASEAN agreed in November to craft a free trade area in 10 years.

The Japanese prime minister is also under pressure to remedy the impression that he had left Asia in the lurch as he rushed to tighten ties with Washington after taking office last April.

Koizumi will meet leaders of five nations -- the Philippines, Malaysia, Thailand, Indonesia and Singapore -- before making a policy speech in Singapore.

ASEAN and Japan have long been closely knit by trade and investment, but both are now struggling to respond to China's growing economic and political presence in the region.

A decade of economic stagnation and weak leadership at home have compounded the unease felt in Japan over the challenge from China's robust growth.

Those concerns were heightened after Beijing's agreement with ASEAN, reached at a November gathering in Brunei of ASEAN plus Japan, China and South Korea, to work toward a free trade zone.

Koizumi, has played down the prospect of Japan being left out in the regional power game, but said further cooperation between Japan and ASEAN was necessary.

"I hope that the agreement between ASEAN and China will result in the prosperity of both parties. Although free-trade agreements will not be a precondition, Japan needs to discuss increased cooperation with ASEAN," he said.

Koizumi and Singapore's Prime Minister, Goh Chok Tong, are set to sign a free-trade agreement (FTA), a first of its kind for Japan, when they meet on Sunday.

But Koizumi said forging similar deals with other countries could be difficult, given differences in economic conditions.

Koizumi has also acknowledged that calls for protection by farmers in Japan and elsewhere could be an obstacle.

Japanese businesses cut back direct investment in ASEAN when a financial crisis swept Asia in 1997, but remain top investors.

Having invested heavily, Japanese firms' competitiveness will be hurt if they do not benefit from an FTA, said Koichi Ishikawa, a researcher at Japan External Trade Organization (JETRO), a government-affiliated body.

A recent JETRO survey of Japanese firms showed 96 percent of businesses planning to increase foreign direct investment picked China as a target, but 68 percent also named the "ASEAN Four" -- Thailand, Indonesia, Malaysia and the Philippines.

Japanese direct investment in China rose 32.4 percent in the year to March 2001 -- the first jump in five years -- while investment in ASEAN held steady, a JETRO report said.

For ASEAN, closer links with Japan would improve access to the region's biggest economy and help ensure its members do not lose out as Japanese firms shift investment to China.

Southeast Asia is likely to seek assurances that Japan will continue its flow of official development aid (ODA) to the region despite a planned 10 percent cutback in its global assistance budget next fiscal year due to Japan's tight fiscal situation. Nampa-Reuters