Japan’s Economic Recovery Moving Quickly, Says Trade Minister

Japan’s Economy, Trade and Industry Minister Banri Kaieda told fellow ASEAN trade ministers last Saturday that the Japanese economy was recovering from the catastrophic March 11 earthquake and tsunami at a faster rate than initially expected.

Japan’s Economy, Trade and Industry Minister Banri Kaieda told fellow ASEAN trade ministers last Saturday that the Japanese economy was recovering from the catastrophic March 11 earthquake and tsunami at a faster rate than initially expected.

Speaking at a ministerial meeting held in Kuala Lumpur between ASEAN economic ministers and members of the Federation of Japanese Chambers of Commerce and Industry in ASEAN (FJCCIA), Kaieda expressed a positive outlook for Japanese industries, stating his belief that Japanese manufacturers would return to pre-earthquake output levels by the end of July.

Kaieda also gave assurances that the disruption to Japan’s manufacturing supply chain would be fully restored by the end of the month.

[quote]“The supply chain is now in the process of being fully restored with production having resumed over the last two-three months.

Therefore, by the end of this month, the production will more or less be back to the levels that had, before this earthquake.”[/quote]

However, despite the positive news, Kaieda also warned that Japan was still vulnerable to disruptions in its power supply, which may result insome Japanese companies relocating their factories overseas.

[quote]“These companies are looking at Asian countries as well as the United States and Europe. Among the companies are those that consume a lot of electricity and those with considerably high technology.”[/quote]

As such, Kaieda urged ASEAN members to make further efforts in improving the business environment for Japanese companies operating in the region.

“I felt that even when Japan had become inward-looking following the disaster, the world was moving,” Kaieda told reporters after the meeting. “The Japanese economy must be opened up to the outside.”

Indonesia’s Trade Minister, Dr. Mari Elka Pangestu has already expressed interest in expanding its economic co-operation with Japan.

“With Indonesia’s large market size and labour force, it is timely for us to capitalise on the opportunity,” she said. “The move also comes at the right time as we are now rapidly involved in growing our technology capacity skills.”

Japan has been the top source of foreign direct investment for ASEAN, contributing $5.2 billion to the region’s economy in 2009.

Trade between Japan and ASEAN rebounded from $160.9 billion in 2009 to $215 billion last year.

Despite the March 11 quake and tsunami disaster, Japan is hopeful that trade with ASEAN will rebound soon.

“The slowdown in foreign investment by the Japanese between April and June is due to the decision-making process after the disaster in northern Japan,” said Yasuo Hayashi, the CEO and Chairman of the government-linked Japanese External Trade Organisation at the press conference.

“It has always been a trend that Japanese companies are expanding foreign investments, so it would be back to normal,” he added.