The Office of Commercial Affairs, Royal Thai Embassy in Tokyo, Japan
Japan, U.S. Business Leaders Call For Early Free Trade Agreements
TOKYO (Kyodo)--Business leaders from Japan and the United States on Friday called on their governments to take the lead in creating a region-wide free trade zone in the Asia-Pacific and urged Japan to join an existing trans-Pacific free trade agreement involving four nations.
As interim steps to create a so-called Free Trade Area of the Asia-Pacific, or FTAAP, Japan and the United States should join the Trans-Pacific partnership agreement, known as TPP, involving Brunei, Chile, New Zealand and Singapore as well as concluding a bilateral FTA no later than 2015, the leaders said in a joint statement following a two-day meeting in Tokyo.
The leaders ''urge the Japanese and U.S. governments to build support for an FTAAP by focusing on achieving interim steps, or pathways,'' the statement said, citing their participation in the TPP and a bilateral FTA as among the ''most meaningful pathways.''
They ''recommend that Japan join the TPP negotiations on the same terms as other countries as soon as possible and that a building block approach be put in place for the negotiation of a high-standard Japan-U.S. EPA,'' it said. FTAs that cover more than just trade are often named economic partnership agreements.
The United States has already offered to join the Trans-Pacific Strategic Economic Partnership Agreement that took effect in 2006 among the four nations as negotiations are under way to expand it by four countries, including Australia.
Japanese Prime Minister Naoto Kan has said Japan will consider joining the TPP, but the agreement, which basically requires members to eliminate all tariffs to zero, is seen as quite a high bar for Japan, which has been reluctant to open up its agricultural market.
U.S. President Barack Obama ''has strong interest in the Asia-Pacific, and is especially positive about joining in the TPP,'' said Hiromasa Yonekura, chairman of the Japan Business Federation, the largest Japanese business lobby known as Nippon Keidanren, who co-chaired the conference.
''In that sense, Japan should play a bridging role between the United States and Asia by participating in the TPP,'' he said. During the conference, also co-chaired by Jean-Luc Butel, executive vice president of Medtronic Inc. of the United States, participants in addition discussed such issues as energy and the environment and improving business environments in the two countries.
Source : The Nikkei Oct 8,2010
Stimulus Package Includes Home Solar Units In Eco-Program
TOKYO (Nikkei)--The ruling Democratic Party of Japan will broaden a program promoting green homes to include solar power systems as part of its emergency stimulus package. The eco-point program for newly built and renovated residences would also cover high-efficiency boilers and low-flow toilets, under the DPJ plan.
In addition, the stimulus proposal calls for spending roughly 100 billion yen on steps to reduce Japan's reliance on China for rare-earth metals, such as securing alternative sources and developing substitute materials. The government will provide an additional 25 billion yen to Japan Oil, Gas and Metals National Corp.
The special account for foreign exchange funds manages roughly 100 trillion yen. To make more effective use of these assets, the DPJ plan calls for investing several trillion yen in overseas resource development projects through the Japan Bank for International Cooperation. Details will be hammered out with the Ministry of Finance.
A more than 300 billion yen fund for regional revitalization will also be set up, reflecting input from the opposition. Around 500 billion yen in financial support for small businesses will be provided through credit guarantee associations.
The DPJ will consult with junior coalition partner People's New Party on Wednesday before issuing the stimulus proposal. The cabinet is expected to endorse it Friday, clearing the way for the government to submit a supplemental budget to the Diet in late October.
The package totals 4.8 trillion yen, including 1.3 trillion yen in additional local tax grants. Another 200 billion yen will be put aside for setting contracts within the current fiscal year for future public works projects.
Tax revenues are on track to come in 2.2 trillion yen above projections for fiscal 2010, and 1.4 trillion yen remains untapped from the current budget. Such funds will be used to finance the measures. The government does not plan to issue more bonds.
Source: The Nikkei Oct. 6
DPJ Proposes Stimulus Package Worth More Than Y4.8tln
TOKYO (Dow Jones)--Japan's ruling party unveiled the final version of its economic stimulus plan Wednesday, calling for more than Y4.8 trillion in spending in an effort to boost the nation's flagging economic recovery. The Democratic Party of Japan also recommended that Prime Minister Naoto Kan's government set up a national investment fund taking advantage of the country's vast currency reserves, but did not elaborate on what kinds of investments the fund would make.
The DPJ will submit the proposal to the government later in the day, and the government is expected to design its stimulus package based on the party's recommendations in the coming days. Many expect the Kan administration will take on most of the party's proposals given the dominance of DPJ lawmakers in the cabinet, but some observers question whether the government will adopt the proposal for a national investment fund.
The government is expected to officially approve the stimulus package Friday and then submit a supplementary budget to Parliament to secure the funds needed to implement the measures. The DPJ's proposal reflects the stepped-up cooperation between the government and the Bank of Japan to blunt the adverse effects of the rising yen and deflation on the nation's economy. Japan's policy moves also are part of the trend among advanced economies, many of which are boosting spending and easing monetary policy in efforts to rejuvenate their stagnating economies.
Source:The Nikkei, October 6, 2010
Latest Stimulus Package May Not Take Hold Until '11
TOKYO (Nikkei)--The government's latest round of stimulus seeks to kick-start the economy through far-reaching measures, but critics are already questioning how long it will take for the impact to be felt. Many of the measures approved Friday by the cabinet involve extending or expanding programs already in place, thereby raising some doubt about how quickly they can spur an economic turnaround and fight deflation.
The stimulus package itself, which will be included in the fiscal 2010 supplementary budget to be submitted to the current extraordinary Diet session, includes support for jobs, child care and other facets of daily life. It also offers steps to help underpin small and midsize companies and natural resources development.
For instance, the government seeks to ease requirements for an existing subsidy program that helps companies with sinking sales maintain employment. Previously, loss-laden companies whose average production in the past three months had declined 10% compared with two years earlier qualified for the program. The latest plan would also allow companies with volumes that have fallen 15% or more from three years earlier to receive the subsidy.
The measure aims to prevent growing unemployment among workers in the manufacturing sector, which has been hit hard by the strong yen. But the government has eased requirements many times in the past, which some critics believe has deterred firms from taking remedial steps on their own.
Many also believe that the latest step does little to directly address the effects of the yen's appreciation on companies.
Other offerings include additional funding for the government's popular eco-points program for energy-saving appliances, which will be extended through the end of March 2011. A similar program for newly built and remodeled homes will be expanded to cover a wider range of green items such as water-conserving toilets and well-insulated tubs.
But just how quickly the proposed measures may help bolster the economy is uncertain. Even if the supplementary budget bill passes the Diet in November, its implementation will not likely take place until the new year.
"That means the measures will have hardly any impact in the October-December quarter, when the severity of economic conditions is expected to intensify," warns Yasuo Yamamoto at the Mizuho Research Institute.
Economy watchers increasingly believe that a surging yen and the fading effects of past stimulus are likely to result in the economy's contraction in the October-December period. The latest round of stimulus may not bear fruit until well into 2011.
Source:The Nikkei Oct. 9
Autoparts Firms Shrink Offerings To Cut Costs
TOKYO (Nikkei)--To stave off competition from local rivals abroad, Japanese autoparts makers are stepping up efforts to lower costs by slashing their product lineups. The moves come as Japanese automakers shift procurement from domestic suppliers to Asian parts makers, which are steadily improving the quality of their products. "In such places as China, local manufacturers' production technologies are remarkably improving," says an official at a major Japanese parts maker. Amid the stronger yen, the carmakers face growing pressure to adopt cheaper components from local suppliers in order to hold down the prices of vehicles sold in emerging markets.
Ichikoh Industries Ltd. (7244) is reducing its lineup by sharing parts with its top stockholder, France's Valeo SA. Ichikoh plans to cut the number of headlights it offers about 20%, from 110 to 87, by 2013, with halogen lamps being trimmed from 50 to 38 and xenon lamps from 60 to 49. The company will also shrink its lineup of rear combination lamps from 26 to 20 and its light-volume-adjusting parts from 105 to 14.
As for lamp parts, it will start using a single type of bolt and light-source pin instead of 20 types. In addition to cutting development expenses, this will help lower manufacturing costs through economies of scale.
U-shin Ltd. (6985) will slash its 70,000 products by as much as 30% over the next three years, with the cuts coming mainly from switches, latches and air conditioner control panels. The firm is also trying to halve by the end of 2011 the number of suppliers it had as of 2008. As a result, it expects production costs to fall by roughly 20%.
Carmakers are scrambling to develop low-priced vehicles for sale in emerging markets, including China and India. To achieve that goal, they are buying more parts from local manufacturers, breaking the long-standing practice of tapping Japanese suppliers that had followed the carmakers into Asian markets.
Source:The Nikkei Oct. 5
BOJ Gives Economy Its 1st Downgrade Since '09
TOKYO (Nikkei)--The Bank of Japan on Wednesday lowered its assessment of the economy for the first time since January 2009, saying the recovery is slowing as exports dwindle in the face of global anxiety and the strong yen. "Japan's economy still shows signs of a moderate recovery, but the pace of recovery is slowing down," the BOJ said in the October edition of its monthly economic report.
The previous month, the central bank was insisting that the Japanese economy "shows further signs of a moderate recovery."
The BOJ's tankan business sentiment survey for September showed a downturn in the economic outlook, the first worsening in seven quarters. And the bank's policy board recognized a slowdown in the recovery Tuesday when announcing its additional monetary easing. "Growth in exports and production has recently been decelerating," the October report explained. Shipments by nearly all sectors, including automakers, are languishing because of the fallout from the yen's strength.
The central bank maintained its assessment that the economy will continue to pick up, asserting that "Japan's economy is likely to recover at a moderate pace after a temporary slowdown." And consumer spending "is likely to weaken temporarily mainly due to the ending of the boost from the extremely hot weather and the expiration of subsidies for purchasing energy efficient cars, but is expected to pick up again thereafter," according to the report.
At its policy board meeting Tuesday, the BOJ decided to further relax monetary policy. It aims to supply ample funds to the market to buoy shaken business confidence and beat deflation.
Source:The Nikkei Oct. 7
Econ DI Down 2nd Month, Slowdown In Focus: Teikoku Databank
TOKYO (NQN)--Japan's economic confidence worsened for the second straight month in September, with the diffusion index down half a point from August to 32.7, Teikoku Databank Ltd. said Wednesday. The latest reading "highlights that the economy is slowing, and falling into a lull," said a Teikoku Databank official. "Amid the yen's strength and slowing external demand, the economy's self-sustaining recovery momentum is weak. On top of that, confidence fell largely because government stimulus measures wound down."
The retail industry's DI dropped 1.4 points to 31.8. In this, confidence at automakers and auto parts manufacturers logged a record drop of 10.8 points to 31.9. The decline was the largest since the private research firm began compiling the data. This is clearly attributed to the government ending its subsidy on environmentally friendly vehicles earlier last month.
Looking forward, the index is expected to fall 2.7 points to 30.0 in the three months from September, and 2.6 points to 30.1 in the six months from September. Teikoku Databank polled 22,707 companies nationwide late last month, obtaining valid responses from 50.0%. The DI ranges from 0 to 100, with 50 marking the boom-or-bust line.
Source:The Nikkei October 6,2010
Govt To Test-Run New Job Qualifications
TOKYO (Nikkei)--The government will introduce a new professional qualification system in three areas with high growth potential, it has been learned. The system, which aims to assess workers' knowledge and ability, will first be applied to nursing specialists; agricultural, commercial and industrial planners; and consultants on cutting greenhouse gas emissions.
The new qualifications are part of the government's effort to help temporary workers find permanent employment in growth industries. An official decision is expected Thursday evening by a subcommittee of the government's panel on emergency employment measures.
Source:The Nikkei Oct. 7
Frontline Business Confidence Down In Sept
TOKYO (NQN)--Business confidence among store owners, taxi drivers and others in positions sensitive to the economy fell 3.9 points from August to 41.2 in September, marking two straight months of decline, according to the latest Economy Watchers Survey the Cabinet Office released Friday.
Two out of the three sub indexes -- those for household and corporate sentiment -- fell as the government ended subsidies for environmentally friendly cars last month. The end of the program dented sales and production of autos. The stronger yen also threatened exporters' overseas earnings.
Sales of autumn and winter clothing were sluggish, as the summer heat lingered. The forward-looking index of expected conditions two to three months down the road rose 1.4 points to 41.4, up for the first time in five months. In the January-March quarter of next year, the government will further narrow the range of consumer electronics products eligible for the eco-point incentive program. That is likely to cause a spike in sales of those products that are still eligible for the incentives toward the end of the year.
Respondents expressed hope that sales of warmer clothes will pick up as the weather cools off. The government changed its overall economic assessment, saying, "Recently there is weak movement, though the economy has been recovering moderately." Its assessment last month was that "the economy continues to be in a difficult situation, recently slowing down in its movements of picking up."
Source:The Nikkei Oct 8,2010
China Risks Cast Shadow Over Apparel Makers
TOKYO (Nikkei)--The political dispute between Japan and China adds to the headaches facing Japan's clothing industry, which is struggling with its supply chains in China due to rising manufacturing wages and fears the yuan may be revalued.
Despite this, most Japanese apparel makers have been slow to develop production bases outside of China, fueling concerns that they may be unable to keep their supply chains going into next year. An official at a Japanese textile trading company lamented that China's customs inspections for clothing shipped to Japan have tightened unexpectedly since late September. "The share of products that failed to pass through the nation's customs (screening) has risen more 10-fold than since then," he said.
The crackdown coincided with the rapidly escalating spat between the two countries over the disputed Senkaku Islands. "The recent incident reminded us of the fact that we are doing business in a country entailing political risk, though it is unclear whether there is actually an immediate connection between Tokyo-Beijing friction and tightened inspections," the official added.
Structural changes
It is uncertain when the bilateral relationship might improve, but structural changes in the Chinese garment industry are beginning to limit exports of clothing to Japan. An executive with a Japanese apparel retailer was shocked during his recent visit to China when he was warned by a local factory manager that "Japanese firms could be the first to be hit by Chinese firms refusing to take their orders, because local producers find it easy to do so when it comes to transactions with their Japanese counterparts, which usually deal through trading firms."
Local manufacturers' reluctance to supply products to Japan partly reflects a severe labor shortage, as more workers move to heavy industry and services and away from the labor-intensive textile sector. More and more garment makers are being forced out of business because they cannot find enough workers, according to industry sources.
Meanwhile, demand for clothing has been growing at a torrid pace at home and abroad, with big orders for several million pieces coming from U.S. and European apparel retailers and sportswear makers, while Chinese consumers appear to have an insatiable appetite for clothes. Another reason why local producers tend to shy away from making clothing for Japanese customers is that Japanese buyers typically offer less attractive contract terms: smaller orders, shorter delivery times and lower unit prices.
Change coming
These production bottlenecks have had a less serious impact on clothing sales in Japan than they might have, considering that China accounted for roughly 90% of Japan's clothing imports in 2009.
The effect of tighter supplies is partially offset by the nation's retail sales slump and the yen's appreciation.
Sluggish clothing sales at department stores, supermarkets and specialty apparel stores in Japan are prompting domestic firms to slash inventories. That has reduced the pressure on the industry caused by diminishing supplies from China. Nevertheless, because those supplies are uncertain, many Japanese apparel firms are scrambling to develop new supply chains.
Fast Retailing Co. (9983), which is working to reduce its dependence on Chinese-made products, has begun to offer more clothing such as jeans made elsewhere at its Uniqlo stores. It will start making its well-known Heattech line of thermal underwear in Bangladesh after launching similar operations in Vietnam. But the firms efforts to diversify its sources of supply away from China appear slow to get off the ground.
Source:The Nikkei Oct6,2010
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