TOKYO (Nikkei)--Those who are in favor of Japan joining the Trans-Pacific Partnership free trade pact outnumbered opponents in the latest Nikkei opinion poll, with a smaller but significant percentage yet to make up their minds.
The poll, conducted from Friday through Sunday, showed solid support for the cabinet of Prime Minister Yoshihiko Noda, with the approval rating at 58%, unchanged from the previous survey conducted from the end of September through early October.
The percentage of those who disapprove of the cabinet's job performance edged down 2 percentage points to 29%. Of this group, those who cited Noda's lack of leadership surged to 40%, on a par with those who complained about the way the government and the ruling Democratic Party of Japan are being managed.
Respondents who support Japan's participation in the TPP reached 45%, while 32% were against it. Those who were undecided or did not know totaled 23%.
Even among those who back the opposition Liberal Democratic Party, which is cautious about the multilateral trade liberalization treaty, 44% said they support Japan's participation, surpassing the 34% who are opposed. Among DPJ supporters, TPP backers outnumbered naysayers 49% to 34%. The public is receptive to the tax hikes the government is planning to finance post-quake reconstruction, with 58% supporting them, compared with the 31% who are against.
Asked how the hikes should be implemented, 68% said the government should minimize the annual burden by spreading out the hikes over a long period while 28% preferred a short-term approach with bigger annual hikes. The proposed tax hikes cover the income, corporate, local residency and tobacco levies.
Yet the public is evenly divided when it comes to raising the consumption tax to 10% by the mid 2010s to bolster the nation's cash-strapped social security programs, with 47% supporting the move and 45% objecting.
Support for the DPJ inched down 1 point to 34% while the LDP also saw a 1-point drop to 29%. The poll, conducted with TV Tokyo Corp., covered 1,409 households nationwide, excluding Iwate, Miyagi and Fukushima prefectures, with 926, or 65.7%, responding.
(The Nikkei Oct. 31 morning edition)
TOKYO (Nikkei)--While the U.S. and its partners move ahead with Trans-Pacific Partnership negotiations, Japan remains consumed with quelling protests from various groups objecting to the free trade pact, with broader national interests largely ignored in the debate.
The U.S. and eight other nations are working out a trade pact outline, with the goal of reaching an agreement at the Asia-Pacific Economic Cooperation summit to be held in Hawaii Nov. 12-13. Prime Minister Yoshihiko Noda also hopes to decide on Japan's participation early next month, but dissent is rife, even within the ruling coalition.
Various interest groups appear to have hijacked the TPP debate in Japan, with agricultural associations complaining they will be hurt by foreign farm imports if tariffs are scrapped. Backlash fed by false information is also spreading, such as the TPP heralding the demise of Japan's public insurance system.
Meanwhile, a key question is being drowned out by the clamor of individual interests -- how the country as a whole can benefit from trade liberalization.
Once Japan joins the process, there is a possibility of negotiating tariff exemptions. For instance, the U.S. is apparently seeking waivers for sugar, dairy products and other goods to protect its agriculture sector.
But unless Japan comes to the negotiating table, it will not be privy to vital information and will be unable to make its own case. The nation cannot push to have rice and other items free from tariff reductions unless it joins the talks. The longer Japan waits, the greater the likelihood that it will be forced to swallow disadvantageous terms.
Even if Tokyo says it will participate in talks at the APEC meeting next month, it will not be able to immediately start negotiating with other governments. The White House needs to get the green light from Congress before it can launch negotiations with other countries. Because of the time required to obtain approval, Tokyo is unlikely to actually join in negotiations until next spring at the earliest. Time is running out for Japan to announce its participation in order to play a role in formulating trade rules.
(The Nikkei Oct. 28 morning edition)
TOKYO (Nikkei)--Manufacturers are not the only Japanese companies taking a hit from the flooding in Thailand. The restaurant industry is also being affected, with firms expressing concern about their ability to procure food materials from the Southeast Asian country.
Restaurants and foodmakers import some of their processed chicken and other items from Thailand. But if protracted flooding makes it difficult or impossible to procure food from that country, they may have to find suppliers elsewhere.
SY Food Co., the Nagoya-based operator of the "Sekai no Yama-chan" chain of "izakaya" Japanese-style pubs, procures from Thailand all 1.4 million of the chicken wing tips it uses each month. A company official said although its suppliers assured it that the flood had not impacted production and that they have sufficient inventory, "we are worried about future."
OK ... for now
Because the flood has damaged some cornfields and chicken farms, a wholesaler in Tokyo that sells food materials to eateries is considering turning to the U.S. and China to import sweet corn used as topping on ramen and chicken for izakaya pubs. The firm expects its current inventories to last for a while, but, "We will begin to feel the effects of the Thai flooding in mid-November," said an official at the wholesaler.
Among foodmakers, Nippon Flour Mills Co. (2001) has temporarily closed its Thai plant in the Nava Nakom Industrial Estate in Pathum Thani Province for prepared flour mix used for deep-fried chicken and other products. The company is working on countermeasures, such as commissioning production to other local plants.
TableMark Co., a subsidiary of Japan Tobacco Inc. (2914), has halted operations at its Thai plant making commercial-use seasonings for export to Japan.
A majority of the roughly 387,000 tons of processed chicken products imported by Japan in fiscal 2010 came from Thailand, while 20% of imported frozen shrimp came from that country.
It is unlikely that restaurants will be forced to stop offering certain dishes because of the flooding, because inventory levels remain solid and it is relatively easy to find alternative suppliers. Still, analysts say the tighter supply could push up materials prices.
(The Nikkei Oct. 27 morning edition)
TOKYO (Dow Jones)--Japan's top government spokesman said Friday that Japan will allow Thai employees of Japanese businesses to enter Japan temporarily, as the companies move some of their Thai operations to Japan due to severe flooding in the Southeast Asian country.
"The flooding has serious consequences in interrupting supply chains, not just for Japan but for the entire Asian region," Chief Cabinet Secretary Osamu Fujimura said at a press conference, adding that the measure is "urgent and irregular."
Fujimura said that about 30 Japanese companies have asked to relocate thousands of Thai workers to operate manufacturing facilities that will have to be moved to Japan until they can be rebuilt in Thailand.
The government is considering a six-month work permit for workers, Fujimura said.
(The Nikkei Oct.28 edition)
TOKYO (Nikkei)--Consolidated pretax profits at listed companies are expected to slump more than 10% on the year in the fiscal year ending March 2012, dragged down by the surging yen and the flooding in Thailand, according to calculations by Nikkei Inc.
Many firms had pinned their hopes on rebounding from the first-half post-quake doldrums in the October-March period. Despite strong anticipation of growing emerging-market demand and benefiting from increased auto production in the second half, earnings are now clearly losing steam. Full-year results are now on course to slide for the first time since fiscal 2008.
The biggest hit is a yen stuck in the 70s against the dollar. Murata Mfg. Co. (6981) has been hurt by the worsening profitability of exports from the Japanese currency's ascent. On Monday, the electronic parts manufacturer lowered its 89 billion yen pretax profit outlook to 62 billion yen.
A host of other firms have pared back their earnings forecasts, including Komatsu Ltd. (6301), Sumitomo Chemical Co. (4005), Nitto Denko Corp. (6988), Nippon Steel Corp. (5401) and Nippon Yusen KK (9101). They have lopped a total of more than 1 trillion yen off their outlooks since the start of the fiscal year.
The Thai floods are also pushing down profits. Fujifilm Holdings Corp. (4901) had been forecasting pretax profit to rise to 155 billion yen this fiscal year but is now bracing for an 8% drop to 107.5 billion yen.
"The hit from flooding in Thailand will be 5 billion yen at the operating profit level," Executive Vice President Shigehiro Nakajima says.
Meanwhile, Honda Motor Co. (7267) said Monday that it will start adjusting Japanese and U.S. automobile production in the face of the flood-disrupted parts supply. Senior Managing Officer Fumihiko Ike indicated that its inundated Thai auto plant will need about six months to resume operations.
A pair of TDK Corp. (6762) magnetic-head-related plants in Thailand have suffered flooding. The company predicts pretax profit to slump 50% to 30 billion yen, a comedown from its previous forecast of a 65 billion yen profit.
(The Nikkei Nov. 1 morning edition)
TOKYO (Nikkei)--The government will team up with 74 major regional banks to help struggling small construction businesses restructure, in an effort to promote the bloated industry's consolidation. Under the program to be launched as early as this year, government-paid consulting services will be made available to these firms, which face hard choices such as merging with others, agreeing to be acquired, or ceasing or converting their business. Based on the advice, the builders will ask banks to help draw up new strategies and financing.
As public works projects decline, the construction industry -- saddled with too many firms and employees -- is under mounting pressure to improve efficiency. Although construction demand is increasing in areas devastated by the March earthquake, the Ministry of Land, Infrastructure and Transport has determined that slashing the number of players is a must for the sector's revival.
Higashi-Nippon Bank (8536), Hokkaido Bank, Minato Bank (8543) and Nishi-Nippon City Bank (8327) are among the lenders that will team up with the government in such efforts.
The ministry's regional offices will open consulting counters staffed with certified public accountants, bank employees, licensed small-business consultants and other experts. Faltering small construction companies can bring their balance sheets and other information for review.
As of March 31, 498,000 construction firms were operating in Japan. Of these, 60% are companies or individual enterprises with 10 million yen or less in capitalization. The ministry says the total number must be reduced by 30-40% now that construction investment has fallen to half its peak.
(The Nikkei Oct. 28 morning edition)
TOKYO (Kyodo)--The Japanese government began promoting a nationwide "Warm Biz" energy-saving campaign Tuesday to encourage the use of warm clothing and hot food, rather than electric heating, to fend off the autumn and winter cold.
The Environment Ministry said it is encouraging people to limit the use of energy-consuming air conditioners and heaters by setting room temperatures at offices and homes across the country at 20 C.
The ministry hopes that the campaign will filter down into wider society as a power-saving step in light of the halted operations of many nuclear reactors amid heightened public wariness of atomic energy following the quake-induced nuclear crisis at the Fukushima Daiichi power plant.
Public awareness of the campaign is not as high as that of the annual summertime "Cool Biz" campaign and this summer's "Super Cool Biz" campaign under which the ministry encouraged male workers to wear casual clothing such as Hawaiian shirts and polo shirts to limit the use of air conditioners.
For the "Warm Biz" campaign, the ministry said it will encourage people to come up with various energy-saving strategies and innovative ideas for keeping meals, clothing and housing warm, such as eating root vegetables and other body-warming food.
The campaign will continue through March 31, it said.
The ministry has set a national target of increasing the percentage of offices and factories carrying out steps encouraged by the campaign to 70 percent for fiscal 2011 to March 31.
(The Nikkei Nov. 1 edition)
TOKYO (Dow Jones)--Japanese exports and the country's trade surplus have now recovered all their losses since the March earthquake and tsunami, though the yen's record strength, the European debt crisis and slower growth overseas threaten the economy's recovery from the disasters.
Japan posted a Y300.4 billion trade surplus in September, with exports up 2.4%, the Ministry of Finance said Monday. Shipments of autos to Europe and auto parts to the U.S. and China led the rise. The figures were above forecasts for a Y199.5 billion surplus and a 1.0% gain in exports. The export-driven economy has been buoyed as firms bounce back from supply chain disruptions suffered after the March disasters.
"Despite the overseas economic slowdown--especially downside risks in Europe--and the yen's continued strength, the economy is unlikely to lose momentum," so long as recent improvement in employment conditions continues as firms hire to keep pace with greater production, said Mizuho Securities chief market economist Yasunari Ueno. Japan's jobless rate fell to 4.3% in August, down from 4.7% in July and the lowest since before the March disasters.
Exports in September totaled Y5.981 trillion, rebounding for the first time above the level marked in March, the month of the earthquake, to the highest since December 2010. The trade surplus was the biggest since February.
But the strong yen may weigh on exports ahead, analysts said. The dollar fell to a post World War II-low against the yen Friday at Y75.78. September's trade surplus continued to lag year-ago results with the overall surplus 61.2% below last September's figures.
"We want to closely monitor how the overseas economic slowdown and the downside economic risks posed by the strong yen impact the trade figures ahead," a Ministry of Finance official said.
Goldman Sachs economist Chiwoong Lee said in a research note that the house sees "continuing concerns of a slowdown in exports to regions such as Europe and the U.S." Overseas orders for machine tools, which can indicate trends in capital goods exports, continued to slow in September, he noted.
The smaller trade surplus compared with last year also reflected the high price of imported oil and raw materials, which pushed up imports 12.1% from last year's levels, for the 21st straight month of gains.
Crude oil and liquefied natural gas led the rise, as Japan has been relying more on fossil fuels for electricity generation after the Fukushima Daiichi nuclear power plant accident.
For the April-September fiscal half year, exports fell 3.8% on year to Y32.810 trillion. Imports were up 12.1% at Y34.477 trillion, giving the country a trade deficit of Y1.667 trillion, its first since the October-March half in 2008.
(The Nikkei Oct. 24 edition)
TOKYO (NQN)--Japan's trade deficit for the first six months through September reached 1.66 trillion yen, a record high for a first fiscal half, according to preliminary data released Monday by the Finance Ministry.
The deficit was attributable to a sharp decline in exports following the March earthquake. It was the second largest trade deficit since records began in fiscal 1979. The highest ever figure was 2.34 trillion yen posted in the second half of fiscal 1979 -- October 1979 to March 1980 -- when imports surged due to the second oil crisis.
Exports between the April-September period of this fiscal year declined 3.8% to 32.81 trillion yen, down for the first time in four fiscal halfs. Auto exports slid 18.4%, particularly those for the U.S, EU, Asia and other key markets.
Imports grew 12.1% to 34.47 trillion yen, climbing for the third straight fiscal half.
(The Nikkei Oct.24 edition)
Hollowing-out a worry as domestic, foreign money flows elsewhere The yen's record-setting appreciation has given Japanese companies plenty of ammunition to buy up overseas firms, fueling a spree reminiscent of the speculative bubble years through 1990 and the dot-com boom around 2000.
According to Thomson Reuters of the U.S., Japanese companies spent 3.1 trillion yen ($40.25 billion) on overseas acquisitions in the April-September period - up 130% on the year.
Hajime Takata, chief economist at Mizuho Research Institute, sees the M&A wave in the context of the global tide. "The world economy has entered a new era of mercantilism in which major nations are vying for current-account surpluses," he explained. "Firms contribute to the national interest if they boost their wealth by reinvesting profits overseas."
Kirin Holdings Co.'s recent acquisition of a majority stake in major Brazilian brewer Schincariol Participacoes e Representacoes SA is but one deal on a long list.
Brazil is the world's No. 3 beer market, after China and the U.S. Compared with Japan, the Brazilian market is 80% bigger. Add to that expectations of continued annual growth of nearly 10%, and any brewer would jump at the chance to gain a foothold there.
When a U.S. investment bank told Kirin in April that members of Schincariol's founding family were looking to sell, Kirin President Senji Miyake saw the offer as a rare opportunity. So in August, Kirin ponied up 200 billion yen to purchase a holding firm in charge of the Schincariol shares held by the brewer's CEO and some of his relatives, giving itself a 50.45% stake.
Kirin has had to deal with some resistance from Schincariol's other, minority-stake-wielding founding family members. Though a Brazilian court has overturned a provisional injunction that would have blocked the deal, the case continues. Kirin hopes to win over the minority camp and make the Brazilian brewer a wholly owned unit.
Other firms have been busy buying, too. They certainly have the funds: Listed Japanese companies with March book-closings were sitting on a record 62 trillion yen cash pile at the end of June.
Nisshinbo Holdings Inc. President Shizuka Uzawa summed it up when he said that the yen's steep appreciation has Click to enlarge created "golden opportunities" for investments abroad.
Midsize and regional firms have also turned to foreign M&As, concluding a record 318 in the April-September term. Osaka-based Endo Lighting Corp. bought U.S. counterpart Icon International Inc. in September for 850 million yen, aiming for stateside sales of light-emitting diode lighting equipment.
Exit-bound investors
In a parallel phenomenon, the yen's historic strength has been driving foreign investors to take advantage by selling their Japanese holdings.
Leading U.K. retailer Tesco Plc announced in late August that it would unload its Japanese Tesco and Tsurukame-Land supermarkets and withdraw from the country. The firm has been seeking buyers for its 100-plus domestic stores via U.S.-based Goldman Sachs Group Inc. When Tesco entered the Japanese market back in 2003, the pound was worth about 200 yen. Today, it is trading at around 120 yen - which translates to yen appreciation of roughly 40%. Experts predict Tesco will have to sell the outlets for less than what it paid, but the huge exchange rate gains will provide a cushion.
In the banking sector, rumor has it that a foreign investment fund that owns major stakes in Aozora Bank and Tokyo Star Bank is looking to sell shares. Aozora Bank's stock price has tumbled more than 50% since it went public in 2006. But with the yen having since risen against the dollar by some 40%, the fund affiliated with Cerberus Group of the U.S. enjoys a "wealth effect that can offset the negative impact of the stock slide," according to one industry insider.
Figures compiled by the Finance Ministry and Bank of Japan show that overseas companies made 1.51 trillion yen worth of direct investments in Japan in the first six months of 2011, while their investment withdrawals amounted to 1.65 trillion yen - a net fund outflow of 141 billion yen. Will such moves by foreign companies away from Japan, coupled with Japanese firms' aggressive overseas expansion, accelerate the hollowing-out of domestic manufacturing?
One cause for concern is a dearth of M&A deals aimed at the industry consolidation.
According to M&A consultancy Recof Corp., deals between Japanese firms declined 10% on the year in the April-September period, to about 880 billion yen. In volume terms, the number of domestic M&A transactions also dropped, by 6% to 501.
"For Japanese businesses to regain competitiveness, it is vital to eliminate excessive competition caused by too many players operating in the same sector," said Tsutomu Fujita, vice chairman of Citigroup Global Markets Japan Inc.
Eight major electrical machinery makers, for instance, are to spend a total of nearly 5 trillion yen on capital investment and research and development in fiscal 2011. That works out to roughly 600 billion yen each - far below the 2.9 trillion yen lavished by South Korea's Samsung Electronics Co. Still, there are signs of life in the domestic M&A market.
Hitachi Ltd., Toshiba Corp. and Sony Corp. in late August decided to integrate their small and midsize liquid-crystal display panel operations. Hitachi has also been looking at merging some operations with Mitsubishi Heavy Industries Ltd.
As their landmark merger approaches, Nippon Steel Corp. and Sumitomo Metal Industries Ltd. have begun making their global operations more efficient by consolidating resources.
(The Nikkei Oct.24 edition)
TOKYO (Dow Jones)--A day after ordering a massive foreign-exchange market intervention, Japan's finance minister threatened further action Tuesday, saying he will make "appropriate decisions" at the right time if speculators again push the yen sharply higher, hurting Japanese exporters. Jun Azumi also voiced hope that Tokyo's latest effort to weaken the yen to defend its struggling export-led economy will win backing overseas despite market expectations to the contrary. His remarks come as traders watch whether Japan's solo intervention Monday will spark any grumbling from key nations during a planned summit of leaders from the Group of 20 industrialized and developing nations in Cannes, France, from Thursday. A complaint from the U.S. or European nations could deal a blow to Japan, as such a response tends to diminish the effects of Tokyo's intervention and stoke yen-strengthening speculation.
"I will tell (G-20 officials) the facts as they are," Azumi said at a press conference. "The action was taken in our national interest as well as based on a sense of crisis that the yen is too far out of line with our real economy. What will happen to Japanese companies who have been working diligently if the yen is treated as a target of speculation?"
Azumi described as "unhealthy" exchange rates that unduly affected Japanese exporters despite their efforts to counter the impact of the high yen, and added that "I think everyone (in the G-20) has those views." Japan acted Monday to counter "excessive," "disorderly" moves in the yen, which is in line with currency principles spelled out in G-20 statements, he said.
In its third intervention this year, Japan's government on Monday pushed the dollar up by roughly Y4 to Y79.55 to help protect the nation's rebound from the March 11 earthquake and tsunami. Traders estimate the latest intervention involved dumping a single-day record of about Y7 trillion.
The dollar has since slipped back to near Y78.00, prompting Azumi to issue fresh warnings.
"We are being engaged in a war of nerves" with the currency market, Azumi said. "We will closely monitor developments (in the currency market) and make appropriate decisions at appropriate times."
For Japanese exporters, Monday's intervention may be long overdue. But it surprised many in the market, partly because it came ahead of the summit.
U.S. and European policymakers are believed to be concerned that such an action by an ally in the Group of Seven major leading nations could undermine their long-running attempts to persuade China to accept faster rises in the yuan to cut its trade surplus. Washington in fact has been pressing Beijing to commit to stepped-up currency reforms in the coming G-20 growth plan. As of Monday, there had been no convincing signs that Japan had won support for intervention from the U.S. or Europe--despite Azumi's continued diplomatic efforts since he was named as finance chief two months ago.
(The Nikkei Nov.1 edition)
The Office of Commercial Affairs, Royal Thai Embassy in Tokyo, Japan
Source : http://www.depthai.go.th