The Office of Commercial Affairs, Royal Thai Embassy in Tokyo, Japan
Surging Domestic Vegetable Prices Pushing Up Imports
TOKYO (Nikkei)--More supermarkets and other volume users are turning to vegetable imports as the price of domestic products soars due to a poor harvest this year. At the Metropolitan Central Wholesale Market in Tokyo, the total volume of imported vegetables jumped 23% on the year inSeptember, with green onions and regular onions showing 80% and 30% increases, respectively.
With domestic vegetable prices soaring, supermarkets are looking for alternatives.Trade statistics indicate that Japan imported a total of 43,917 tons of fresh and refrigerated vegetables in August, an 18% rise from a year earlier and the 13th consecutive month of year-on-year growth. It is likely that the streak will be extended to 14 months in September.
Wholesale prices of imported green onions and carrots are 30-40% of those of their domestically farmed counterparts. The wholesale price of imported onions is about 30% cheaper. Retail prices, too, are often much lower for imported greens. A supermarket in Tokyo is selling imported broccoli for 130-170 yen per bunch, nearly half the price of domestic varieties.
Shipments from China account for roughly 60% of Japan's vegetable imports. In 2008, vegetable imports from China slumped due to safety concerns, but "the tendency to avoid Chinese vegetables has subsided," an importer in Tokyo said.
During the year-end shopping season, Daiei Inc. (8263) plans to sell imported onions along with domestic ones for a second straight year in anticipation of increased demand.
Surging domestic vegetable prices will likely lead more businesses to use contract farmers.
"We will buy more from contract farmers because it will make us less vulnerable to price fluctuations," an official at a major food processing company said.
Source: The Nikkei October 16,2010
Govt To Promote Joint R&D In Asia
TOKYO (Nikkei)--The government will help Japanese companies carry out joint R&D projects in the medical, water treatment, recycling and other high-tech fields in emerging markets to promote infrastructure exports.
The Ministry of Economy, Trade and Industry will support pilot projects in areas where Japan has a technological edge. The ministry will seek overseas partners and subsidize projects so that even smaller firms with few foreign connections can foray abroad.
The ministry will start by organizing projects in Singapore and Thailand to develop medical instruments tailored to local needs.
Nakashima Medical Co., a midsize medical equipment maker based in Okayama, will work with local medical institutes to develop artificial joints better suited to Asian physiques. Kyushu University and Olympus Corp. (7733) will conduct a pilot project in Thailand to build a remote surgery assistance system to help doctors in rural areas acquire surgical skills.
A joint project is also planned in Saudi Arabia to develop a water treatment system that combines wastewater treatment and desalination technologies. The ministry plans to conduct pilot studies on dustproof water facilities using JGC Corp.'s (1963) water treatment technologies.
Source: The Nikkei October 18,2010
Consumer Sentiment Worsened For 3rd Straight Month In Sept
TOKYO (Nikkei)--Overall consumer confidence slipped 1.2 points on the month to 41.2 in September, its third consecutive fall, according to survey data the Cabinet Office released Tuesday.
The consumer confidence index's three-month decline was its first since October-December 2008, when the financial turmoil sparked by Lehman Brothers Holdings Inc.'s collapse was in full force. A surging yen and sinking stocks, as well as concerns about a global economic slowdown, appear to have hurt consumer sentiment this time around.
The index is calculated based on four indicators: employment conditions, willingness to buy durable goods, living conditions and income growth. All four categories worsened for the first time since November 2009. Employment conditions fell 2.3 points on the month, while consumer willingness to buy durable goods deteriorated 1.5 points after the government's subsidy program for green cars ended in September. Living conditions and income growth dipped 0.6 point and 0.4 point, respectively.
The Cabinet Office downgraded its overall assessment of the economy for a second month in a row by noting that conditions were mostly flat. In August, it said that improvements were beginning to stall.
The data also showed that 13.1% of households expect prices to slide over the next 12 months, marking a third straight month of increases in such responses. This suggests that eroding consumer sentiment is also spilling over into price forecasts.
The latest survey was conducted on Sept. 15 and covered 6,720 households.
Source: The Nikkei October 14,2010
Japan Aug Core Machinery Orders +10.1% On Mo; Expected -4.5%
TOKYO (Dow Jones)--Japanese core machinery orders unexpectedly rose 10.1% in August from the previous month, due to growing demand from the manufacturing sector, the Cabinet Office said Wednesday.
The rise in this leading indicator of corporate capital investment is a positive sign for the broader economy, prompting the government to change its assessment to say orders are "picking up." The result was much better than the median forecast for a 4.5% fall in a poll of economists surveyed by Dow Jones Newswires and the Nikkei. It also extends a rising trend with orders increasing 8.8% in July and 1.6% in June.
While core machinery orders can be volatile, economists closely watch the data for clues on the direction of business investment, which accounts for around 15% of the country's annual economic output. Compared with August last year, core machinery orders were up 24.1%, unadjusted for seasonal factors.
Core orders exclude ships and equipment ordered by electric power companies, which are typically large and can swing from month to month, obscuring the underlying trend.
Source: The Nikkei October 13,2010
Japan, Indonesia To Boost Language Education For Nurses
TOKYO (Kyodo)--Japan and Indonesia agreed Thursday to boost Japanese language education for Indonesian nurses and caregivers coming to Japan under a free trade agreement so more can pass qualification exams.
The two countries reached an accord to enhance the language training in Indonesia before applicants arrive in Japan under the health care program, Foreign Minister Seiji Maehara told reporters following the first bilateral economic ministerial talks held in Tokyo.
''We reached a broad agreement to increase the number of those who successfully pass the Japanese national qualification exams and will implement concrete steps,'' Maehara said. Indonesian Coordinating Minister for the Economy Hatta Rajasa told a joint press conference that Jakarta called for ''special considerations'' for Indonesian nurses and caregivers.
Under the program, Indonesian nurses are required to return home if they fail to pass Japan's nursing qualifying exam within three years. Caregivers have four years to pass the exam. In the 2008 and 2009 fiscal years through March 2010, Japan, a rapidly aging society, accepted 570 applicants from Indonesia -- 277 nurses and 293 caregivers. Only two nurses passed the qualification exam conducted last February, becoming the first successful applicants under the program.
Kanji characters and technical terms used in the exam are thought to pose a considerable hurdle for foreign applicants. Japan also accepts health workers from the Philippines in a similar program under a bilateral FTA.
At present, Indonesian applicants receive six-month language courses funded by Japan under the bilateral FTA. The Foreign Ministry has requested about 500 million yen in the fiscal 2011 budget to boost Japanese language training for Indonesian and Philippine nurses and caregivers, Japanese officials said.
Source: The Nikkei October 14,2010
Japan To Take Bigger Role In Indonesian Infrastructure Projects
TOKYO (Nikkei)--Japan and Indonesia will hold a joint economic forum Thursday in Tokyo to agree on strengthening bilateral cooperation, particularly in the area of road and port infrastructure projects in the Southeast Asian country.
The forum was established in January to promote public-private collaboration, with participants including representatives from industry, such as the Japan Business Federation, or Nippon Keidanren.
Talks will include a ministerial-level meeting. The two sides are expected to affirm efforts to beef up cooperation in the fields of trade, investment and energy. They will focus on crafting plans for constructing six Indonesian economic corridors. Discussions will focus first on the Eastern Sumatra-North West Java corridor and the North Java corridor, which will feature ports, railways and geothermal or fossil fuel-fired power plants. The projects will get under way as soon as funding sources, such as yen loans, are determined.
Participants will include officials from the Ministry of Economy, Trade and Industry and the Japan External Trade Organization, or JETRO, as well as high-ranking Indonesian government officials.
Source: The Nikkei October 13,2010
More Firms Cut Outlooks As Yen, Weak Consumption Hit Earnings
TOKYO (Nikkei)--Japanese companies are facing growing uncertainties over the pace of their earnings recoveries as the yen's sharp appreciation and the prolonged slump in consumption weigh increasingly heavily on their performance.
The combined margin of downward revisions announced by listed firms for their first-half pretax earnings outlooks, which had been far smaller than that of their upward revisions until August, now largely matches that of upgrades for firms that have changed their outlooks since September.
A Nikkei survey of listed companies with March book-closings that have cut their interim earnings forecasts since Sept. 1 shows their downgrades totaling 150.8 billion yen, roughly as much as their upgrades. Financial institutions and firms listed on the stock exchanges for start-ups were excluded from the survey.
In contrast, downgrades announced in August or earlier totaled only 68 billion yen, compared with 1.45 trillion yen in upgrades over the same time frame. Just how heavy a toll the stronger currency is taking on corporate earnings is highlighted by Nintendo Co. (7974).
The firm, which derives more than 80% of its sales from abroad, had initially assumed an exchange rate of 95 yen to the dollar. In addition to a slowdown in sales of handheld game systems and software, the far-stronger-than-expected yen sharply eroded margins. Nintendo cut its April-September pretax forecast from a 115 billion yen profit to a 5 billion yen loss.
Tepid capital investment also contributed to the latest round of earnings downgrades. This factor was apparently the main reason that Shibaura Mechatronics Corp. (6590) and Iwatsu Electric Co. (6704) missed their sales targets, forcing them to lower their profit outlooks.
Yomeishu Seizo Co. (2540) cut its pretax profit forecast Wednesday because its sales undershot a target as consumers grew more frugal. For the same reason, Ohsho Food Service Corp. (9936), whose reasonably priced Chinese-meal offerings have been popular, saw same-store sales level out and revised its pretax profit forecast from a 5% rise to a 4% fall from a year earlier.
Source: The Nikkei October 14,2010
Govt To End Full Credit Guarantees For Small Firms In March
TOKYO (Nikkei)--The government has decided to terminate at the end of March a program that provides 100% guarantees to loans taken out by small and midsize businesses, The Nikkei learned Sunday.
While the business climate surrounding small firms remains bleak amid a strong yen, the government believes taxpayers will end up with a huge bill if a large number of borrowers go bankrupt. After the emergency program ends, credit guarantee associations will back 80% of loans under an existing framework. To blunt the impact, the government will continue to fully guarantee loans of up to 12.5 million yen extended to small firms with 20 employees or less. The government-backed Japan Finance Corp. will also expand direct lending to smaller firms.
The emergency credit guarantee program was introduced in October 2008 in light of the global financial meltdown. Credit associations nationwide fully guarantee loans of up to 280 million yen per company. In the event a borrower defaults on the loan, the association repays 100%. Japan Finance Corp., which has insurance contracts with the credit associations, will reimburse the costs, effectively putting taxpayers on the hook for the bailout.
The program was initially slated to expire at the end of March this year, but was extended for a year. The government had been debating whether or not to extend it again.
The government concluded the acute credit crunch facing smaller businesses in the aftermath of the Lehman crisis has subsided.
Source: The Nikkei October 18,2010
Govt Must Stem Carmaker Exodus
TOKYO (Nikkei)--The Democratic Party of Japan-led government should take immediate steps to slow the exodus of Japanese car production to other countries as the trend bodes ill for Japan's manufacturing sector.
Nissan Motor Co. (7201) recently moved production of its mainstay subcompact cars to Thailand. Similarly, Mitsubishi Motors Corp. (7211) plans to import subcompacts, manufactured at its new Thai factory, into Japan from 2012. Suzuki Motor Corp. (7269) will turn its new Thai factory into the key base of exports to Southeast Asian countries.
Incentives, Disincentives
Thailand is a popular investment destination for Japanese and other carmakers because it offers such attractive inducements as promising corporate-tax exemption for eight years to those producing fuel-efficient models. It has also signed free-trade agreements with other ASEAN members and Australia, making it a strategic location from which to export to these markets.
In contrast, Japan is increasingly portrayed as the country least suited to host factories for a number of reasons. Its domestic market has shrunk amid a falling population while its corporate tax rate is among the highest in the world. Its government has signed few free-trade or economic partnership agreements. In addition, it appears to be toughening labor regulations at a time when the yen's value is rising.
The overseas production of Japan's 11 automakers exceeded their domestic output for the first time three years ago, as an increasing number of Japanese autoparts suppliers relocated production overseas. This has made it easier for Japanese carmakers to assemble vehicles in China and Southeast Asian countries, enabling some of them to procure roughly 90% of their parts locally.
Japanese carmakers used to be less willing than textile and consumer electronics makers to move production to these countries because manufacturing cars requires much larger capital outlays. But they have begun to do so as demand is growing sharply in emerging economies. Their moves overseas are inevitable and cannot be halted given these circumstances.
Nevertheless, the Japanese government must try harder to sign free-trade pacts, reduce corporate taxes and ease labor regulations. Otherwise, production of mid-range and high-end automobiles, which create far more value, will be transferred overseas, eliminating higher-paying jobs in Japan.
Immediate action
Additional auto production, equivalent to an aggregate 2 million units or so annually, is forecast to be moved overseas from Japan over the next two to three years. In light of this, the government must immediately intensify its efforts to sign economic partnership agreements and significantly trim the effective corporate tax rate if it wishes to slow the outflow.
It must give top priority to ensuring that Japanese carmakers are induced to leave their R&D functions at home. Nissan, for example, is moving some of its R&D functions overseas but has yet to reduce the size of its domestic R&D staff because research in many areas can only be conducted in Japan, including ways to meet tougher environmental standards.
Japanese manufacturers typically use pilot factories to test and refine their cutting-edge production technology, developed in Japan. The expertise gained from conducting trial production runs at the factories is then used to develop other new technology. The firms must be induced to retain these pilot factories in Japan by all means, including tax cuts and deregulation.
The Kan government must be alert to Japanese carmakers' moves because the fate of the auto industry -- the largest component of Japan's manufacturing sector -- has far-reaching implications for the sector as a whole.
Source: The Nikkei October 18,2010
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