TOKYO SKY TREE
Weekly News From Tokyo
DITP TOKYO (2013 April13 – April19)
8 Aug. 2014 ~ 15 Aug. 2014
(No.201432)
August 13, 2014 1:00 pm JST
Japan GDP shrinks 6.8% after April sales tax hike
Photo:Economy Minister Akira Amari speaks at a news
conference Wednesday.
TOKYO -- Japan's April sales tax hike has hit the
economy hard last quarter. But the government is
projecting a bounceback after summer.
The Cabinet Office said in a preliminary report
Wednesday that real gross domestic product for
April-June contracted at an annualized rate of 6.8% from the previous quarter. The decline
was steeper than in the same quarter of 1997, after sales tax was raised from 3% to 5%. At
that time, the economy shrank 3.5%.
Economic and Fiscal Policy Minister Akira Amari was unfazed by the big contraction.
"The backlash will ease down the road," he said at a news conference after the GDP results
were announced. He said the economy will return to a mild recovery path after summer.
Personal spending dropped 5.0%. The quarter before, it registered a 2.0% increase as
consumers flocked to stores before the introduction of the new tax rate. The consumption of
home appliances and automobiles was particularly hard hit. Personal spending on durable
goods plunged 18.9%.
In the January-March period of 1997, personal spending rose 2.1%, but fell 3.5% in the
following quarter.
External demand did not grow either. Exports fell 0.4% in April-June, sliding into
negative territory for the first time in three quarters.
Exports grew 4.2% on the year in April-June of 1997, supporting the economy in place
of shrinking consumption. "Production shifts to overseas are well underway," said Amari,
indicating that the export decline this time is a long-term structural trend.
The government and the BANK
of Japan expect mild growth in external demand to lift
the economy in fiscal 2014. But while the U.S. economy is recovering, Japan's sluggish
exports could cast a pall over its economic outlook.
Economists, however, doubt the Japanese economy will slip into a downward spiral.
According to the Japan Center for Economic Research, 42 economists it surveyed forecast
GDP will grow 4.08% in the July-September period.
(Nikkei)
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TOKYO SKY TREE
Weekly News From Tokyo
DITP TOKYO (2013 April13 – April19)
8 Aug. 2014 ~ 15 Aug. 2014
(No.201432)
August 14, 2014 6:20 am JST
Japan's stimulus to target regional economies, housing market
TOKYO -- Japanese Prime Minister Shinzo Abe plans to unleash an array of stimulus
measures to keep the economy humming after a temporary slowdown caused by a sales tax
hike, focusing on regional economies and the housing MARKET .
Taking a big hit from April's consumption tax increase, Japan's gross domestic product
declined by an annualized 6.8% in the April-June quarter in real terms, with consumer
spending falling 5%.
The wage hikes agreed on during spring labor negotiations at top companies exceeded
2% for the first time in 15 years, but pay rises were still not enough to make up for the tax
hike. To spur spending, the government will continue to press business communities for
additional hikes.
Consumption is particularly lackluster outside metropolises. To jump-start regional
economies, the government will set aside a special fund of 4 trillion yen ($38.7 billion) in its
fiscal 2015 budget to fund such projects as road and railway construction.
To prop up the housing MARKET , the government expanded a tax cut program for
mortgages in April and introduced CASH
refunds for low- and middle-income homebuyers.
But housing investment in the April-June quarter plunged 10.3%.
Reducing gift taxes on CASH
assistance children receive from their parents toward
home purchases is one way to sustain housing demand.
The Land and Infrastructure Ministry will request a three-year extension of tax waivers
for such cash gifts. The ministry will also seek to raise the cap from the current 10 million
yen to over 15 million yen.
The biggest miscalculation on the government's part was construction projects. Public
works spending unexpectedly fell 0.5% in the April-June quarter. To blunt the impact of the
tax hike, the government compiled a 5.5 trillion yen extra budget in February, but
administrative delays and manpower shortages hampered the execution of the budget.
Still, the value of public works contracts in April-June jumped 26% from the previous
quarter. These projects will be counted toward GDP once construction begins. The Cabinet
Office therefore projects that brisk public investment will bolster the economy starting with
the current quarter ending in September.
As early as the start of December, Abe will have to make a final decision on whether to
raise the sales tax rate to 10% in October 2015 as planned. His ability to execute a growth
strategy will be put to the test.
(Nikkei)
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TOKYO SKY TREE
Weekly News From Tokyo
DITP TOKYO (2013 April13 – April19)
8 Aug. 2014 ~ 15 Aug. 2014
(No.201432)
August 11, 2014 7:00 pm JST
Expensive Japanese rice finding its way around the world
Photo: Japanese rice exports grew at a record pace in
the first half of this year. Sushi chain operator Genki
Sushi has started using Japanese rice at its shops in
Singapore.
TOKYO -- Japanese rice exports are growing at a
record pace this year. Give CREDIT
to the rising
popularity of Japanese cuisine around the world, the
weakened yen and a narrowing gap between the price of Japanese rice and overseas
strains.
Japan's Ministry of Agriculture, Forestry and Fisheries said Friday that Japan exported
1,880 tons of rice, excluding rice as overseas assistance,
during the first half of this year, up 49% from the same
period a year earlier. The volume is small compared with
Japan's annual consumption of about 8 million tons.
Shinmei Holding, Japan's largest rice wholesaler, will
export 2,000 tons of 2014-harvested rice, double the
amount it exported last year. The Kobe-based company is
the biggest shareholder of sushi chain operator Genki
Sushi, which has started using a Koshihikari strain from
Niigata Prefecture at its Singapore stores. In addition,
Shinmei plans to boost rice exports to Japanese
restaurant chains operating in Hong Kong and other
locations.
Kitoku Shinryo, a big rice wholesaler based in Tokyo,
moves Koshihikari and Akitakomachi rice to overseas supermarkets and restaurants. It
plans to export 900 tons of 2014 rice, up 80% on the year. In addition to Singapore and
Hong Kong, its rice exports to the U.S. have been strong in recent years amid the growing
popularity of Japanese food there.
The National Federation of Agricultural Cooperative Associations has the only certified
rice milling plant that is allowed to export rice to China. It is looking to export at least 600
tons to China this year, a 100% increase from 300 tons in 2013.
The export gains are coming as rice producers are seeking new revenue streams to
offset falling prices and consumption of the grain in Japan. Niigata Yuuki, an agricultural
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TOKYO SKY TREE
Weekly News From Tokyo
DITP TOKYO (2013 April13 – April19)
8 Aug. 2014 ~ 15 Aug. 2014
(No.201432)
products producer based in Niigata, north of Tokyo, will export 130 tons of 2014 Japanese
rice, including Koshiibuki. It exported no rice last year. "As domestic demand shrinks, it is
more promising for us to create an export channel," said Masashi Sato, president of Niigata
Yuuki.
The narrowing gap between Japanese and overseas rice prices also is pushing up
Japan's export numbers. Rice export prices came to 320 yen (about $3.10) per kilogram
during the first half of this year, down 4% on the year, according to official statistics.
In recent years, prices had been four to five times higher than that of California
medium-grain rice. Japanese rice is now 3.3 times more expensive, in part due to
California's severe drought. California rice is often used by overseas sushi shop chains.
As with rice for processed foods and animal feed, Japanese farmers are allowed to grow
export-use rice only if they secure buyers by the end of June. If there are additional export
contracts after that time frame, the farmers have to appropriate some of their more costly
domestic-use rice. Some industry insiders are calling for an overhaul of the system.
(Nikkei)
August 14, 2014 4:38 am JST
Japanese food purveyors rethink Chinese takeout: poll
Photo: A chicken processing line at Shanghai Husi Food's
plant in China. © Kyodo
TOKYO -- In light of a recent food safety scandal in China,
a third of Japanese companies that handle food intend to
lower their intake from that country, according to a Nikkei
survey.
The survey was conducted in late July, after reports surfaced that Shanghai Husi Food
used expired meat. Responses were received from 87 of the 110 restaurants, supermarkets
and other companies polled. Of the respondents, 95% said they use Chinese-made food,
with three-quarters noting that such imports make up less than 10% of their overall supply.
Thirty-five percent indicated they will reduce food procurement from China. Fast-food
chain Lotteria said it has decided to stop buying Chinese food and ingredients, while Royal
Holdings said that it will switch from Chinese to domestic fare at Royal Host family
restaurants.
McDonald's Holdings (Japan), which had transactions with Shanghai Husi Food,
announced July 25 that it will purchase chicken products from Thailand instead. Asked
about alternative sourcing, 19 companies said they will import from Thailand, while 18
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TOKYO SKY TREE
Weekly News From Tokyo
DITP TOKYO (2013 April13 – April19)
8 Aug. 2014 ~ 15 Aug. 2014
(No.201432)
respondents cited a switch to domestic suppliers.
Meanwhile, roughly 60% of the respondents, including Japanese-style pub operator
Daisyo and seafood company Maruha Nichiro Holdings, said they will keep procuring food
from China. Asked why they are standing pat, with multiple responses allowed, 26
companies said they are able to secure the necessary volume. This was followed by 23
respondents citing low prices and 22 businesses saying there are no viable alternatives.
Faced with difficulties in changing how they source food, many companies are trying to
improve safety and consumer confidence by stepping up inspections. Of the respondents,
12.5% said they have decided to revise their inspections, while about 60% are leaning
toward doing so. Italian restaurant chain Saizeriya said it will vary inspection methods so
that factories cannot cover up violations.
(Nikkei)
August 13, 2014 4:15 am JST
More Japanese companies stepping up overseas R&D
TOKYO -- Major Japanese corporations will boost research and development spending 4%
this fiscal year, with those building or expanding R&D facilities abroad reaching about one in
five, a Nikkei survey shows.
Planned R&D investment by 264 companies rose a fifth straight year to an aggregate
11.62 trillion yen ($112 billion). Growth remained strong, though slower than last fiscal year's
5.4%. Toyota Motor, Honda Motor and Nissan Motor remain the top three spenders.
Toyota plans to sink a record 960 billion yen into R&D. With fuel cell cars due out this
fiscal year, the automaker hopes to develop technologies to improve hydrogen tanks and
other parts to bring down production costs. Honda is also increasing R&D in fuel cell cars as
it aims to commercialize them next year.
Manufacturers of automobiles and autoparts, which together ACCOUNT for some 30%
of overall R&D spending, are also moving to carry out such activities abroad. Nearly half of
respondents in this sector, 48.1%, plan to construct or expand overseas R&D facilities this
fiscal year or later. More than 20% of materials companies intend to step up overseas R&D.
So do more than 20% of companies in the electronics and information technology sector.
Southeast Asia and the U.S. were the most popular regions where companies will ramp
up R&D. The businesses are moving to localize R&D while acquiring skilled personnel.
Toshiba is expanding sites in Vietnam and India to develop cloud computing
technologies, with both countries said to be focusing on cultivating IT engineers. Hitachi is
bolstering R&D facilities in Southeast Asia, China, India, and other parts of Asia, mainly for
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TOKYO SKY TREE
Weekly News From Tokyo
DITP TOKYO (2013 April13 – April19)
8 Aug. 2014 ~ 15 Aug. 2014
(No.201432)
its energy, environment and infrastructure businesses.
Some companies are forming tie-ups with leading local universities to bolster
technological development. Mitsubishi Electric plans to increase staff overseeing
partnerships with universities at a regional supervisory unit in China.
Mitsubishi Heavy Industries began stationing personnel in Singapore last October to
promote joint development with local universities and research institutions. In China, it is
outsourcing to Tsinghua University technological development for power-generating gas
turbines and power equipment, including power semiconductors.
Fujitsu is developing basic technologies for e-learning with the Massachusetts Institute
of Technology. NEC, meanwhile, is working with U.S. and European universities to develop
technologies related to big data and software-defined networking.
The online R&D survey was conducted with Nikkei Research, targeting 487 major
corporations. Valid responses were received from 310, or 63.7%. The survey presented total
R&D spending for the 264 companies for which comparisons with the previous fiscal year
were possible. (Nikkei)
August 15, 2014 12:17 am JST
Japan to ease rules to lure foreign shoppers
TOKYO -- Japan plans to loosen regulations to encourage shopping by foreign tourists,
streamlining the tax exemption process and making it easier for merchants to set up stands
catering to cruise ship passengers.
The government in October will extend tax exemptions to cover all goods, including food,
cosmetics, appliances and apparel. It also plans to raise the number of stores offering
tax-free shopping to 10,000 by 2020 from about 5,800 in April.
The planned measures will simplify the process of seeking tax exemptions on purchases.
Currently, because stores are given permission individually to sell goods tax-free, tourists
must complete the exemption process at each shop they visit -- a time-consuming task that
has led to complaints.
The government will allow businesses to set up counters to handle multiple exemption
approval procedures at once, under contract from merchants. The Ministry of Land,
Infrastructure, Transport and Tourism hopes this will lighten the load on stores and
encourage the expansion of shops offering tax-free goods, particularly in outlying areas.
The new measures will also make it easier for local merchants to set up temporary
stands at ports of call for cruise ships. Arrival dates often change depending on the weather,
forcing businesses to reapply for permission.
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TOKYO SKY TREE
Weekly News From Tokyo
DITP TOKYO (2013 April13 – April19)
8 Aug. 2014 ~ 15 Aug. 2014
(No.201432)
A single cruise ship can bring thousands of tourists, offering major opportunities for local
companies. Since many ships dock in such areas as Hokkaido, Kyushu and Okinawa, the
government hopes this measure will help its push to revitalize local economies.
This will also likely make shopping more convenient for tourists, smoothing the way for
them to make big purchases right up until their ship is about to depart.
The ministry will request these measures as part of tax reforms for fiscal 2015. It will
work out the details with the National Tax Agency, aiming for implementation by the fall of
2015. (Nikkei)
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