Newsletter

　       
(JETRO Jakarta　Economic　Review)


December 2003 Vol.1

What's new! Coming Events

JETRO hold a "Japan-ASEAN Investment & Business Alliance Seminar" in Tokyo
JETRO hold a "Japan-ASEAN Investment & Business Alliance Seminar" in Tokyo, Japan on December 10th –11th. This seminar is held in accordance with the "ASEAN-Japan Commemorative Summit" scheduled be held on December 11th –12th on Tokyo, Japan. So in this seminar the Leaders or Economic Ministers from each ASEAN member countries will make a presentation on business strategy and investment climate to Japanese Business Society.
*If you need more information please contact, Foreign Investment Division, JETRO Tokyo
Tel: +81-3-3582-5235 E-mail: FBB@jetro.go.jp

"Panasonic EPSON Reverse Parts Exhibition" on Electronic Parts will be held in cooperation with JETRO Jakarta
JETRO will cooperate the "Panasonic EPSON Reverse Parts Exhibition". This Exhibition will be held as follows.
Date & Time: December 16th & 17th, 2003 (9:00-17:00) Venue: Nikko Hotel Jakarta
If you need more information, please contact JETRO Jakarta
Attn: Mr. Furukawa, Senior Director Tel:021-5200264 E-mail: jkt@jetro.or.id

News Up-Data

Japanese Business Sentiment in East Asia Continues to Improve

A monthly survey of Japanese companies and affiliates operating in 12 countries/regions of East Asia found that current business sentiment for November has improved overall, continuing an upward trend seen in the previous four months. The outlook for the next two to three months is generally the same as in the previous month in the ASEAN countries, but is decreased in China and North Asia, according to the Japan External Trade Organization (JETRO), which conducted the survey earlier this month.

JETRO polls the companies to measure year-on-year changes, expressed as diffusion indices, in their business outlooks for the current month and the next two to three months.

In the ASEAN region, current outlooks have improved in all countries. Current indices for Singapore and the Philippines have risen to levels not seen since August and July 2002, respectively. All current indices are in positive territory, except for Malaysia.

In China and North Asia, current outlooks have improved in all locations except South China and Hong Kong. Republic of Korea (ROK) is in positive territory for the first time in nine months. In fact, all current indices are in positive territory and have value of at least 20 in all locations except Hong Kong and the ROK.

Mixed results are seen in forward indices, which show business sentiment regarding the next two to three months going forward. Forward indices appear to have leveled off in the ASEAN 5 countries. Compared with this month's current indices, forward indices are stronger in Indonesia and Singapore and lower in the Philippines and Thailand. Malaysia remains the same. Forward indices in all ASEAN countries except Malaysia are positive. In China and North Asia, forward indices in all countries have decreased, but remain in positive territory except for the ROK.

A total of 1,018 replies were received in the ASEAN countries (153 in Indonesia, 155 in Malaysia, 238 in the Philippines, 311 in Singapore and 161 in Thailand), 400 in China (108 in the north, 49 in the northeast, 138 in the east and 105 in the south), 170 in Hong Kong, 48 in the ROK and 196 in Taiwan.

JETRO, in cooperation with Japan's Ministry of Economy, Trade and Industry, has been conducting the survey in the first week of every month since June 2001 in the five major ASEAN countries, since June 2002 in South China, Hong Kong and Taiwan, since July 2002 in North and East China, and since October 2002 in the ROK and Northeast China. Results for the ROK are broken down into manufacturing and non-manufacturing only, but not by industry, and no breakdown is given for Northeast China, due to the small numbers of companies surveyed in these areas.

The aim of the survey is to provide up-to-date information on business conditions in the Asian economy to help companies develop more effective business strategies. Firms are asked to compare earnings prospects, supply and demand, inventory, sales prices and accounts receivable with the same period one year earlier. The current month and the following two to three months are evaluated separately in each question. Replies are limited to "better," "same" or "worse" than a year earlier. The diffusion index is the difference between the ratio of positive ("better") and negative ("worse") responses.

*Each survey is posted at www.jetro.go.jp/re/e/asia-di/.


JETRO Releases 2003 White Paper on International Trade and Foreign Direct Investment

The Japan External Trade Organization (JETRO) today released a summary of its white paper on International Trade and Foreign Direct Investment, subtitled "Facilitating the restructuring of Japanese businesses through integration with East Asia".

Global trade bottoms out with gradual recovery in 2002 while investment decreases
According to JETRO estimates, merchandise trade totaled US$6.36 trillion, up 4.1% from the previous year. East Asia (Asian NIEs, ASEAN 4 and China) and the EU contributed greatly to this trend, while the U.S. and Japan changed little. By industry, IT-related products contributed only 0.1 percentage points to global trade growth, while automobiles and steel combined were 0.9 percentage points, indicating that the "old" economy has once again become the driving force behind global trade.
Global FDI (inflow) in 2002 totaled US$653.4 billion, sliding 17.4% from the previous year to a mere 40% of its peak (in 2000).
Global cross-border M&A in 2002 totaled US$401.8 billion - down 37.8% year-on-year - and continued to decline in the first six months of 2003. This trend has been caused by the depressed stock markets in major countries and stagnated international M&A activities due to rising risks in global affairs. However, FDI inflows to China and Central and Eastern Europe marked the highest on record, with US$49.3 billion and US$23.0 billion, respectively.

Japan's rebound strongly influenced by China trade
Japanese exports in 2002 on a customs-clearance basis totaled US$415.9 billion, up 2.6% from the previous year, while imports totaled US$336.8 billion, down 4.1%. In terms of volume, both exports and imports saw positive growth from the previous year for the first time in two years. Trade with East Asia, China in particular, contributed greatly to this growth. Exports to China came in a near second to exports to the U.S. driven by an increase in machinery exports, while imports from China exceeded imports from the U.S. for the first time since World War II, making China the largest import country to Japan.
FDI outflow in 2002 (balance of payments basis) declined 15.7% from the previous year to US$32.3 billion. FDI inflow registered the second highest on record next to 1999, jumping 48.1% year-on-year, totaling US$9.2 billion.

Rising East Asian consumer markets and their potential
East Asian economies have revived steadily following the financial crisis in 1997. Private consumption has expanded sharply, reaching US$1.46 trillion in 2002 on a nominal GDP basis. Compared with other economies, China grew much faster in this area, occupying almost 40% of all East Asian private consumption. With rising income levels amid economic growth, at least 140 million high income consumers have emerged in East Asia. Consumer markets are expanding rapidly and many foreign companies are targeting these potential customers.
Japanese companies, however, may lose their edge in these promising East Asian markets due to intensifying competition from both Asian and non-Asian companies. Japanese companies need to consider strategic measures to put resources into this area.

Stimulating the Japanese economy by globalization of corporate activities and attracting FDI
Japan needs strategic measures to revitalize the domestic economy, by creating new or rejuvenating existing industries. The most desired option is to introduce foreign resources, such as inward investment and human resources. In order to attract more FDI inflow and other vital resources, Japan needs to enhance its investment climate.
On the other hand, companies in Japan, regardless of size, are exploring overseas markets, particularly East Asian markets, to compensate for stagnant domestic markets. To make full use of this trend, more platforms from which to pursue business opportunities with foreign companies need to be created, such as international trade fairs and exhibitions, and these would concurrently be effective in revitalizing Japan's regional economies.
Other measures are also critical, such as strengthening Japan's brand image, making strategic alliance with Asian firms, combating piracy, and restructuring production bases in ASEAN markets. To this end, integrating with East Asia will be an important key to revitalizing and strengthening Japanese businesses. They must adopt corporate strategies focusing on emerging East Asian markets as one broad economic zone to strengthen their competitiveness amid increasingly fierce global competition.

*You can download this white paper's summary from URL at:
https://www.jetro.go.jp/en/stats/white_paper/2003.pdf
Notice: You need Adobe Acrobat Reader to read PDF files.


Disclaimer
Copyright © 2003 JETRO　Jakarta
All rights reserved. No Part of this Report may be reproduced, or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, and micro copying, or by any information storage and retrieval system, without the written permission from the publisher.

Publisher:
JETRO, Jakarta Center
Summitmas I, 6th Floor Jl. Jend. Sudirman Kav.61-62 Jakarta, Indonesia
Telephone: (62-21-520 0264) Facsimile : (62-21-520 0261)
E-mail: jkt@jetro.or.id     URL: https://www.jetro.go.jp/indonesia