JPRS ID: 9294 JAPAN REPORT

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• Content Type: REPORTS

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FOR nt~FIC1:11, 11~N: ON1.1'
JPRS L/9294
10 September ; 980
~
- , Ja an R~ ort
p p
(FOUO 23/80~
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JPRS L/929~4
10 September 1980
JAPAN REPORT
(FOUO 23/80) _
~CONTENTS
POLITICAL AND SOCIOLUGICAL
Fukuda Aiming for Position of ~Genro~
(Takehiko Takahashi; MAINICHI DAILY NEWS,
~ 20 Aug 8~) 1
Miyazawa~s New Image Examined =
(Raisuke Honda; THE DAILY YOMIURI, 23 Aug 80) 3 .
'AKAHATA' on 'Revised' U.S.-Japan Security Treaty
(Editorial; JPS, 3 Sep 80) 4
JCP Official Rebukes Okuno~s Remarks on Japan-U.S.
Security
(JPS, 3 Sep 80) 6
- DSP Discusses Coalition With LDP Officials
(THE JAPAN TIMES, 28 Aug 80) 7
ECONOMIC
Gist of 'White Paper' on Economy
(MAINICHI DAILY N~WS, 19-20 Aug 80) 8
Major Corporations Expand 1980 Investment Plans
(`TEIE JAPAN TIMES, 23 Aug 80) 13 ~
Foreign Exchang2 Reserves Increa'se in August
(JIJI, 1 Sep 80) a.5
Overall Economic Outlook: Fair Skies for Japan
(Hokaji Mino; BUSINESS JAPAN, Aug 80) 16
- a - [III - ASIA - iii FOUO]
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rUtt Urrll.ltiL UJ~ U1VLY
Favorable Trade ftelations Wi[h ~~lideast Couiitries
Reported
(BUSINESS JAPAi3, Aug 80) 1$
Exar.iination of Relations, by Hokaji Mino
_ Promoting Cooperation, by Michiyushi Kataada
Contacts With Iraq, by Keiichi riatsumoto
'Learning From Japan' Dif�icult Medicine for Americans
(Hokaji Mino, BUSINESS JAPAN, Aug 80) ......o..... 28
- Understanding Needed To Solve N1T Procurement Issue
(Hokaji Mino, BUSINESS JAPAN, Aug 80) 31
Briefs
Aid to Indonesia 34
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POLITTCAL AND SOCIOLOGICAL
' FUKtII~A AIMING FOR POSITION OF ~GEr1R0~
Tokyo MAINICHI DAILY NEWS in English 20 Aug 80 p 4
,[NAGATACHO DOINGS column by Takehiko Takahashi: "Fukuda Aiming for
Position of ~Genro~/
LText/ The Suauki Cabinet has been Former Prime Ministe~
referred to as "Tanaka� Ohira disliked Miyazawa. Thi~
shadowed" and ''F~kuda- attitude.of the.deceased is said
shadowed." The fuse that.led to to ha've been retlected~ in the
the establishment of the Suzuki ~inability of iViiyazawa to sac-
Cabinet ~was former p~ime ceed as prime minister. There
il~Iinister Takeo Fukuda. L'pon are: rumors that Ohira's wid~ow
` tcoking at the Suzuki. Cabinet is said to have asserted: "any
following its formation, onebutbiiyazawa."
however, the Tanaka faction ~ Former Prime Minister.
can be seen occupying the posts Tanaka was on very close terms
of important cabinet~ministers. with Ohira. As in Ohira's case,
This has led to siFengthening T a n a k a a 1 s o d i s 1 f k e d
the view that just as in the c~se ~ ~Vliyazawa. It is only natural
of the Ohira Catrinet, the~Suzuki t h a t T a n a k a o p p o s ed
Cabinet . is more under~ "the Miyazawa's appointment to a
shadow of Tanaka" rather th~n post corresponding to thaf of
"the sbadow of Fukuda." "the chief clerk" o[ the cabinet.
~ There is also an opposing ~ Miyazawa was at one time a..
view to this which declares that secretary ot former Prime
the cabinet is more "Fukuda- Minister Hayato Ikeda. Former
shadowed Ehan "Tanaka- ~Prime Minister Eisaku Sato.
shadowed." One reason far this w h o~ h i g h I y ex a 1 u a t e d
is the emergence~ of Kifchi Miyazawa's abiltty, sough~ to
:VIiyazawa as chie: cabinet appoint him as chief. cabinet
secret~ry. It is said that former secretary. Thu was not ceaIized
Prirrre 1~1in~ster Kakuei Tanaka because of opp~sition that arose.
vigorously opposed Miyazawa's within the Satu faction.
appointraent as chief cabinet "Because of their relation-
secretary. In spite of tbis, ship with Satp, former Frime
Prime Minister Suzuki ap- ~tinisters Nobusuke Kishi and
poiiited bliyazawa to that post Fukuda both eualuated
because of Fukuda's strong Miyazawa highiy. During Iast.
recommendation. it is believed. year's 40-day struggle invNving
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r~u,~t ur~lc;lEw u~r: UNLY
the designation of the prime memhers is carried out, if that
minister. Fukuda urged'Ohira party president does not
to withdraw. At that time, autortiatically become the
~Fukuda said. "let '~'[iyazawa primemuttsier, the abuses sean
take care of things." Ohira in the preliminary voting sho~ld -
rejected this. ' disappear. ThQn again, if the
Recommendation selection of the candidates for
the prime ministeF and the
' Because of these cir� party president is carried out
camstances and ~ dPSpite separatefy, theuse of fioney to ~
Tanaka's oppos~tion, th~ view gather votes will naturally
~prevails that ~Iiyazau~~a be~ame : become the crjme of bcibery.
the chieC cabinet secretary on The use o! money in the com-
the strength of the ~ recom- petition should disappear.
mendatlon by both Kishi and
Fukuda. This is denied by StTOng Belief ~ ~
- Fukuda wh~ says "thaCs not ~
true - the chief cabinet This way of thinking seems to
secretary is chosen by the be based on Fukuda's st~ong
primeminister." beli~~f built up througb long
\'evertheless, the reason wh}~ years� .at experience. Be
_ Prime Minister Suzuki setected believes t~at..if .suras totaling
~Iiyazaw-a despite Tanaka's hundreds of million of yen are
strong oppositioa was that there spent in the struggle to become
was an even stronger recom- the parfy president, enhance-
mendatioR~ accarding - to the ment of the ethical standards
common sense observatioa The ot the Liberal-Democratic
opinioa that Enkuda ma~ie this Party can peverbe hoped tor.
Tecommendation dces cwt ~fade. Tf~e greatest ~concem that
Hence the opinion tttat -fhe Fukuda has about the SuzWct~
Suauki Cabinet. is. "Eukuda� Cabinet is the occurrence of a
shadowed." scandal: Even if a stivcture is
Fukuda has a friendly at- built' to cope sufficienily with
titude toward the Suzuki problems in the pol(cy phase, if
Cabinet. According to Fukuda, a scandal occurs. the Suzuki
"Suzuki is now being Charged. Cabinet will disinte~ate. This
just. like .a .battery." Ex- isFukuda'sanxiety. -
- pectatious are.being placed on . Fukuda believes that~ in.order
Suzuki's future activities. to preveat such a scandal frnra
Fukuda. likens himseif tp a~ occurring, it is necessary now
"god ot tlninder." This seems to to establish a system so that
meant that like such a god, he. znoney wdll not -be needed in
generally obseFVes the situatjon ehoosi~g We party president.
quietly but, if the need.ar~ses. Becauseof themood favocing
he will rqar in.a loud voice and - a"$eneration chaage," it has
act positively. ~ become dltflcult ior Fukuda to
Nhat Fukuda is most con� attempt to assume the reicis of
cerned aboui at present is the administration once again.
reform of the Liberal- Thus,~whIle calling.himself a -
Democratic Party. "god of thunder,"~what�Fukucia
He has .two aims conceraing is trying to do is to aid t~e
this: .One is the fr.eezing oE the Suzuki Cabinet and,.at the same
prelimulary voting for the party t i m e, b e c o m e f i r m 1 y
president, The other is a established as the "Genro"
separation of ~he functions of ~elder statesmaat of~ the Lie
party president and ~ prime Ltbera-Democratic Party. ~
minister. ~ (The wrlter is an adviser tQ
- "Even if ar. election of the The ~l?ainichi Newspapers and -
party president by the party former chief editorial writer~.
COPYRIGHT: Mainichi Daily Newa 1980
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POLITICAL AND SOCIOLOGICAL
MIYAZAWA'S NEW IMAGE EXAMINED
Tokyo THE DAILY YOMIURI in English 23 Aug 80 p 2
[POLITICAL BEAT column by Raisuke Honda: "Miyazawa's New Image"]
[Text]
Chief Cabinet 3ecretary Kilchi Nilyazawa as a"cold rationalist" or "political ana-
appears to be getting accustomed to his lyst" Lor the bystander attitude he tended
role as No 1� government spokesman, ap- tv take over controversial problems. FIis
parently gaining self-confldence from pro- aloofness was put doavn to an unsociable
_ spects oi his becoming the successor . to personailty.
Prime Minister Suzak3. Bearing his poor past lmage well in
Right aiter the death oi former. premier mind, Miyazawa now appears to be msk-
Masaywhi Ohira, then I.iberal-Democratic ing efforts to cultivatie iriendships with as
Party's (LDP) executive board chairman many people as possible.
Suzuki nad moved actively to avin the Recer.~ly, he went out together ~avith
premiets~ip ior his relative, Miqazawa. , several joumalists and made ~merry wlth~
- M~yaza~va himseli ~did show at one time them to the extent ot singing st sOng over
his willingness to lead a post-Ohira ad- a drlnk. .
mini.atratloa. 3uch gregarioasness was hardly ~~onceiv- -
Howev?r, ~iqazawa was hard put to ob- able for Miyazawa before, altho~h he !s
taln support even irom his feilow members said to be a secret tippler. �
of the faction headed by the~late premier, Besides, his close aides have disclosed
while Suzuki of the same faction got that Miyazawa went to Karuiaawa, Naga-
"spontaneous" support from all LDP !ac- no-ken, to meet with former prlme 1VIin-
tions W succeed Ohira. ister Kai~uei Tanak3, about a week ago.
The bltter experience might well have MIyaaaxa earlier was rather at odds
made 1~iyazawx aware oi the need to con- with Tanaka, even declining to accept Ta-
trlbute to the settlement oi party affairs, naka's overtnre to be seated side by side
a matte~ he had earlier tended to shun. at the wake for the late Ohira.
As hfn strongest supparter Suauki waa oi he took the trouble to go all the
the same� view. Miyazawa was at Srst ex- ~y .~~,~yawa ior a tete-a-tete wlth
pected to assume the post of LDP poHcy Tanaka indieates his sietersnination to
boesd chalrman under the 3uaukl govern- aeek power in a post-9uzukl governmeat. _
ment. Rumor has it tha~ a tacft agreement al-
- When 3uzi:ki actually start forming his ready iias been reached between 3uzuki
cabinet and party leadership lineups, how- ~d Tanaka to glve joint ~acking to M1ya-
ever, he prelened naming Miyazawa, well- 2awa in his drive to succeed Suzuki as
known ier hfs good knowledge o! .policy p~~e mtnister. '
- matters, as the chiei cabinet spokesman Tanaka has reportedly'told his associates
to give r.tm a chance to handle intraparty that he will help Miyazawa assunie either
8~~rs� oi the executiye posts of the j.DP after -
Miyazawa, for that matter, aiso had sec- serving as ehieY cabinet secretary so as to
ond Lhotrghts, saying he thought himself loster him promptly as a~ strong candldate
better suited for the t~k ~i chie! cabinet ior the top LDP post. ,
secretatq rather ~,han dealing with party 3ince two other power aspirants, Yasu-
aSairs. hiro Nakasone and Toshio Komoto, have
Since he took otYlce as chie2 cabinet sec- . ~o been keen to win Tanaka's snpport
retary, Mtyazawa seems to be going all- !n their race for the top post, the emer-
out to form cloaer relations with as many g~nce of Miyszawa as another cor~tender -
LDP men as possible. may add to public interest in luture de-
Miyatawa's detractors often describe him velopments o! the LDP's power stntggle.
COPYRIGHT: The Daily Yomiuri 1980 -
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POLITICAL AND SOCIOLUGICAL
- 'AKAHATA' ON 'REVISED' U.S.-JAPAN SECURITY TREATY
OW031047 Tokyo 7PS in English 0851 GMT 3 Sep 80
[AKAHATA Editorial: "Arguments Surfacing for a Revised Japan-U.S. Security
Treaty in 1980's"]
[Text] Tokyo, 3 Sep (JPS)--"Recently, under the rule of the liberal-demo-
cratic party government, plans have been worked out one after another to
make Japan a military power worthy of the second largest economic power
fn GNP in capitalist world. They are expressed in the 'Outline of the Se-
cui~~; Policy' published at the end of July by the security policy planning
committee of the Foreign Ministry, the 'Wr,ite Paper on Defense', published
in August, and the 'Blue Paper on Foreign Policy
"Now a blueprint for a security treaty for the 1980's, which has be~n sug-
gested in them, is now being put forward in bolder terms. This is repre-
sented by a concept for the 'reorganization of the Japan-U.S. alliance'
presented by Asao Mihara, chairman of the LDP committee for research on
security affairs, at a Japan-U.S. seminar held recently under the title of
'U.S.-Japan Mutual Security--The Next 20 Years ".',said an AKAHATA editorial
on 3 September.
The poirits of the Mihara concept are: 1) The term "Far East",expressing
the coverage of the Japan-U.S. Security Treaty, which is written in the
present treaty, cannot express such a situation in which Japan shares
"responsibility f~~~ the defense" of large areas including the Persian Gulf -
area; and 2) as Japan's GNP stands at one-half of that of the United States,
the "unilateral character" of the present treaty in which only the United
States carries the duty to defend Japan, should be revised.
The AKAHATA editorial also referred to a proposal presented by Osamu Miyoshi,
president of the "Japan Center for the Study of Security Issue", at the
Japan-U.S. seminar. The proposal substantiates and develops the Mihara
report. Miyoshi proposed to strengthen the self-defense forces in line with
a 6-year plaii, including the SDF's takin~ responsibility for the security
of sea lanes in the West Pacific, ar�.d after that to conclude a"new Japan-
U.S. Security Treaty." In that case, a drastic increase of Japan's mili- _
tary budget, even to 5 p~rcent of the GNP, is supposed as a calculation.
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"This is the way for Japan to become a military power both in name and
reality to share a role of the global strategy, together with the United
. States and the NATO countries. This is a system in which Japan will become
able to send iLS troops to any area in the world without any restriction,
- and in which absolute priority will be given to military, in the fields
of the national budget, economy, politics and s~ciety," said the paper.
- This is also the way through which Japan will inevitably become "involved
in a war between the U.S. and the Soviet Union," promising "danger and
misery" for all of the people, the AKAHATA editorial concluded.
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POLITICAL AND SOCIOLOGICAL
JCP OFFICIAL REBUKES OKUNO'S REMARKS ON JAPAN-U.S. SECURITY
OW031101 Tokyo JPS in English 0903 GMT 3 Sep 80
[~lextJ Tokyo, 3 Sep (JPS)--Zen'mei Matsumoto, chairman of the Diet policy
co~ittee of the Japanese Co~unist Party, announced the following views on
the remarks by Justice Minister Okuno. He says:
. "The statement by Okuno is in concert with a series of dangerous arguments in
the recent Japan-U.S. seminar to make the Japan-II.S. security system into
an alliance of offense and defense. We call the present period the aecond
period of reactionary offensives since the end of the war, and his remarks
indicate that reactionary offensive is now in full swing. His remarks are
one of those campaigns aimed at literal mal-revision of the constitution, _
and clearly show an intention to adversely revise the constitution, so that
it is possible to send the aelf defense forces to overseas countries and put
into effect the conscripti~n. Suzuki cabinet approves his remarks. The
Japanese Communist Party together with the nation seeking peace, will strug-
gle inside and outside of the Diet against these dangerous trends.
~ "Okuno argues that 'arguments for revision of the constitution' belong to -
his freedom of apeech. The justice minister, however, has the duty to exe-
cute the constitution atrictly. It ie the isaue affecting the capacity of
Okuno as the 3ustice minister that the min~.ster himself takes up a part
of the campaign for constitutional changes. This also affects the political
stance of the Suzuki Cabinet. We resolutely question this issue, too. _
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_ POLITICAL AND SOCIOLOGICAL
DSP DISCUSSES COALITION WITH LDP OFFICIALS
OW290246 Tokyo THE JAPAN TIMES in English 28 Au� 80 p 4
[Text] The Democratic Socialist Party (DSP) earlier this month approached
ttiree rising leaders of the ruling liberal-democratic party (LDP) and ad-
vanced a proposal for a coalition between the two parties in a ma3or about-
face of its avowed policy of forming a centrist coalition govei~~ment among
- opposition forces.
This secret offer made by Ikko Kasuga, former DSP chairman who is known for a
his Machiavellian maneuvering, was disclosed Wednesday by one of the three
"new leader~~" International Trade and Industxy Minister Rokusuke Tanaka,
who is known as an outspoken politician.
Tanaka, a close aide of the late prime minister Nasayoshi Ohira and now for
Prime Minister Zenko Suzuki, made the bombshell disclosure in a casual manner
during a press luncheon at the Japan National Press Club in Tokyo. _
The other liberal-democrats present at the meeting were Finance Minister
Michio Watanabe and Ichiro Nakagawa, director general of the science and
technology agency. Several DSP leadera, but not Chairman Ryosaku Sasaki,
were also present, Tanaka said.
Tanalca quoted Kasuga as declaring that the DSP was rc.~:'~ to leave the oppo-
sition camp to ~ oin hands with the LDP. -
The three LDP leaders, however, refrained from committing themselves
to the Kasuga proposal, according to Tanaka. The LDP, which has a con-
trolling ma3ority in the Diet, apparently does not need the DSP's r:elp,,
at least for the time being.
In �n apparent effort to down play the political impact the disclosure of
the secret Kasuga proposal would have on the domestic political scene,
Tanaka added. "Mr Kasuga is popularly known to be an advocate of such a
coalition."
Z'anaka did not elaborate, either, on why DSP Chairman Sasaki was not present
at the secret meeting, Sasaki is known to favor a closer alliance with
Komeito, a centrist opposition party.
COPYRIGHT: THE JAPAN TIMES 1980
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l'Vl\ Vil'L\.J.AL UJI: \/l\L~
ECONOMIC '
GIST OF 'WHITE PAPER' ON ECONOMY
Tokyo MAINICHI DAILY NEWS in English 19-20 Aug 80
- [Ttao part article on national ~conomy]
[19 Aug 80 p 5]
[Text]
o F'oilowing are highlights ot consumer price increases than sustained growth of ihe
the white paper on thc national the pace during the tirst crisis economy since the~ second half
economy for fiscal 1980. and the longer p@riod ot time of fiscal 1978. It must be
� publisheci by the E~onomic taken to testore calm to prlces. stressed as an important point~
Ylanni~g Ag~ncy last Friday. Natibn-to-nation comparisons ' that the upturn in the economy
Part 1: economic upturn, showthatJapanwasresponsive ,has entere~ a medium-range, -
pricestabilizationchallenged to price problems more ef� cyclic expansion phase,
~ C h a p te r 1: J a p a n e s e tectively than many other � reflecting a rise in replacement
Economy ln 1y7~80 nadons. investment and a pickup in
With the second otl crisis � Ch~llenges remain unan- spending oa production ex-
casting. a cloud over.' the swered. The economic unrest pansioa prngrams.
Japanese economy in 197y-8o, caused by the second oil crisis Also noteworthy are in�
its strength and stability was Proved to be minimal and the creased. investments for
- again tested while on the path ~onomic -stabilitv wns main- - energy-saviag as well as _
toward a seit-propelied, full- tained. But the challenges have technologicat renovatton,
scale recovery. nol been (ullX answered. Et- production improvement and
� Economy and prices during oi wholey le price in- labor-savingprograms.
second oil crisis. Shrug~ing ott creases remain et to be felt on Increases in inventory
the impact ~ of ~ nil ~ price in. ~~e ~��Siuner Price level in the investment. Investment has
crcases, the econoinic nptum ' form of higher retail prices and confinued to rise since the
stayed solidly in place. The ~uctions in real spendable secoad half of fisca11978, first to
impact was eased because the ~comes are eroding consumer build up reta~l inventories and
marku was sta ered over confidence. Besides, economic then stockpiles of unsold
p g~ ~ recession is tightening its grip products and raw material~.
several small increases, unlike on many industrial nations. The uptrend followed ihe
- the sadden cunups in prices completion of inventory ad-
during' the first crisis. The Chapter II: Characteristics juslment in the tirst half ot the
latest crisis came, at a time Of Ecbnomfc Recovery year and the upturn in com-
whe p~ the ecdnomy began � Resumption of business modity market and whol~ale
pulling itselt out of lhe fixed investment. A pickup in rfces.
doldrums. � business tixed investment has p gusiness corporations,
Price movements were played a major role in main- however, remained , more
featured by a slower tempo of taining the spontaneous and cautious than before about
8 ~
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i n v e s t m e n t. T h e r e w a s began picking ap. Employment In , the inlernational 6alance -
speculative demand, nev~r- of male workers by major o[ payments position, the
theless, tor oil-related nroclucts business alsu turned higher. current Account su(fered a
between late is78 and 1979 and Tt~e ratio ot etfective job offers recurd deficit due to markups in
tor products related to capital ~ to job applicants moved higher oil prices.
- goods in the tirst quarter of tliis while unemployment declined. . � Yen rnarket underguing
~ year amld proposals for elec- Chapter III: Seconc~ Oil Crlsis substantjal change. 1'he yen's
tricityratehil~esforthecoming Price increase and in- exchangeratecontinuedtodrop
,.q~tarter. They cvuld be called ternational balance of since t9~8 presumably,due to
_ .~changes in im�entories induced payments. such fundamental reasons as
by imported price inflation. � Ptice inerease. In and after deficits in lhe current areount
- � Strong but caulious con- � 19i9, wholesale prices sky- and aggravation of price
~ sumer demand. Consumer re~ketted with cJnsumer situation. Vulnerability of the
confidence stayed strong pcices tnereasiog gradually, Japanese ecohomy to oil price
generally !n fiscal is79. Real bringing new difficulties to the increases also acted as a -
income continued its . steady Japanese.economy. psychological factor.
climb, thbugh at a de- The sIzable markup in Chapter IV: Flnancial And
c~"lerating rate. Although ~olesale prices was ~caused MonetaryPol[cies
consumers turned caulious mainly by overseas factors. � Money policles were
about Cpending amid rising including depreciation of the tightened step by step in Aprll
consumer prices, consumer Yen and upswing in prices of 1979 and later. Charac�~
beha~~ior stayed strong. imported raw materials. teristically, policy changes
� Satutation of housing Likewise, consumer prices K.ere made a little earlier and
demand. Saturation of demand rose after the autumn of 19i9 cansideration was paid to e[-
added to di(ficulties in ob- due to, soariag prices of fe~~s on foreign exchange _
tainin hi h- riced land to ut ~asonal commodities like
g g P P markcts.
vegetables and in re~ction to ~
the brakes on construction of Money rates fdlloti~ed a
new homes and housin unlts. wholesale prlce increases,
~ notably atter the beginning of straight upswing durin~ 19i'~.
� Rising production and Interesl, rates on short-term
profitability. A marked im- 1~� loans exceeded those on long-
provement is evident in gutthepricesremainedcaim termloansatihestartotl9t~l.
as ln West Germany witl~out
business protlt positions. Cost- shvwing an intlationary trend of � Fiscal policies turn to -
r~ductfon etforts trimmed fixed con.rol total dema~d.
the home-made type_ -
cost and improved business ~ Meanwhile, fiscal policies
� De[itits in international.
positions. Such efforts h~ought balance o[ payments position. r=?ade a major shift to neutral
- ab0ut desired effects as they ~apan sUttered record deficits and turther to restrictive ones
carre simultaneously with a ~th in current and overall � trom conventi~nal sttmulative
rise in the rate of capacity accounts in its internalional policies enforced since tiscal
utilization. In addition to these balance oi payments. There ly~~ Anti-intiation measures
tavorable medfum-range also were major changes in ~ Were worked auf at an early
werersbe
etited b c short-term foreign exc~~nge rates, as in Period.
y the yen's decline in value Eitorts should ~ be madc to
taMors such as sales gains, reduce national bond. issues,
profits r~sulting frnm an up~ against the dollar. Expnrts control money supplles at~d lo
ward adjustment of inventory surgeci ahead, mainly In respect
va~luation and the yen's lo autos and eleclrical promote smooth tlotation of
~ depreciation that made export m a c h i n e r y d u e t o t h e ~C h a p t e r V: C u r r e n t
- earNags moreprofitable. depreciation of the yen and the
~ � I m p ro ve m e n t i n e m- firm ~Sorid�economy. Economic Situatiol~
- ploymenk. 'The employment 1n the imporl sector, quan- � The Japanese economy has so
- situation clearly tnrned around titative growth �~as slow but the far tided over the second oil _
for the better. Employment in value increased considerably crisis'and maintained relatively
manutacturing industries due to sizable markups in crude f a~~oWeverethere remain some
- oil prices. ~
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points an which atlention should economic recession ~nd t5)
I~e paid. They include t 1) effect~ instability in the oil supply
o( cising whole~ale prices on sltuation.
consumer prices, t?? slo�~down Under these circumstances,
y in consumers' demand, ~(3) economic policies ace taced _
- stagnation in some econorhfc w�ith the tasks to ensure
acttv~ties in reaclion to stability tor consumer prices -
imaginary demand, (4) the Li.S. first of aU and lhen to maihtain
a continued growth. _
[20 Aug 80 p 5]
[Text]
PART 2: ,new themes for systems have been in turmoil, The Japanese economy may
economic development: ~ resources circumstances have be wlnQrable in respect lo oil _
The Japanese economy has been changiag and the crises. but it can be saidthat its
- almost caught Up with Western Japanese economy has become capability to recover from the ,
industrlalized nations ; and big in scaie and mu~t cope with crtses fs stmng. Among the
Japan must strlve to ~olve its issues independently: reasons are fiexibUity ot wages
problens on itsown. C6apter II: Coping With 1n relation to the employment
Chapter L: Deyelopment Of Limitatians In Oil Supply situation and 'adaptability lo -
The Japanese Economy � C h a n g es i n o i 1 c i r- changes in circumstances due
� Internal and external cumstances. to actlva tompetition among
conditfons which supported the Behind the changes in the oil enterprises.
development. situation in and after 19i3 is the � lncrease in productivity.
The Japanese economy has limit to uil t~esources from the Increase in productivityis the
been improving its in- long-rangepointofview. key to overcome Japan's
ternational positlon both in ~il price hikes stemming vulnerability to oil. in par-
"tlow,"~ su~h as f~eome level, trom this rest~ted in con- ticular, the Japanese economy
and in "stock." such as centration of wealth in oil has been maintaining a high
household economy, hous(ng producing natlons trom oil growth rate in productiv(ty in -
_ conc~itial, overhead capital and consuming nations through manufactur(ng industrfes due
fixed businessequipment. income transter, which greatly to the high capital equipment
Among the internal and ex- affectedtheworldecqnomy. ratio, young average age of
ternal conditions �whicb sup- . ~apanese economy attected capital and theexcellentquality
ported such a development are by oil. of the labor focce. Thts became
a peacetul world situation, ~ ~aPanese economy has the main factor in softening the
development ol Iree in- sutfered relativel~! strong ef� effects in both the fut]atlan and
ternat3onal trade and exchange, fects Irom oil price hikes since deflation aspects in the secvnd
stability ot the resource~ supply ;ts dependence on oil has in� Ph~ of the world oQ crisis.~
situat(on and the dillgence and creased since the 1960s. � Raising of oll productivity.
hi~i~ inteilectual Irvel of the The currerit . account deficit The amount of oil needed in
Japanese people. w(dened due td oil price boosts, output of real GNP has been
T ehengo ditionsitihowever, as crude otl and oil products dect:ning since 1973. It is,
have been undergoing a con- ~W a~count fc: a consider~ble necessary for this country to
ciderable change. (nternatio~nal portionoTJap~n'simports, efficiency in[oil consumphon e
tensions have been mounting, � Capability to recover trom oil productivfty-in the future,
iree international economic oil crlses. through such rr.~ asures as ef- '
tective utilization of the price
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_ mechanism, a further increase � High savings ratio and its Icvel among the world'c a~~
i n o i 1 s t o c k p i l e s a n d uYillzation. vanced countries in the ne~r
technologicai development tor~ Reflectfng high income future. Al the s~~me time,
e(fective u.ge ot oil. 7'his )s lhe growth in past years, the ratto Japanese workers will be more
way to lessen 4he vulnerability of savings to income has so far educAted, aj~d the number 4f.
ot the Japanese economy to oil remained high in Japan. The temale workec~ is increasfn~;
supplyshortages. savings ratio of Japanese fast.
ChaPter Ui: Coptng W(th households will likely decrease Japanese enterprises a~g
1 n t e r n a t i o n a I E c o no m i c. inture but even so is responding (Airly smoolhly Go
~rictions ~ expected to remain at a 61gh the changes in lhe labor market
I n t e r
n a t i o n a l f
r i c t i o n s a r e l e v e l b
y, i n t e
rn a t i
o n a l s
t a
n- in such torms as extension o(
occurrtag over Japan's surging dards. It is important to ef- the compulsory retirement aQe
ekports, clo~ed market for fectively utilize sach savings i~ limit. An increasiag number of
Ir~ports and Japan's respon- business activity, publlc in- Japanese �businesses, mainl,y,
sibility in interha'ional society, vestments and expansion of larger ones, are adopting neW
as Japan is tapidly becoming economic eooperation in the wage structures'and groping'
aneconomkgiant. ~ future. towards new personne~ ~
� Copingwithtradetrlction. ~hapter V: Respoase to management policies. ,The~
In aa.elfort to lessen trade ChangiagEconomicPattern traditional Japanese labo~
(riction.� Japanese export- ~e chan m the aation's p~ctices, such as ' litetime
oriented enterprises are ~ employment and seniority,
starting prodactfon abroad, manpower supply structure i~ ~ystem. seem to be about b~
" caising export prices and trying 0�e of the most remarkable undergo a drastic chAnge. ^
changes noN taking place in the
to hold down exports to some Japanese economic com- � Necessity to enhance the
speciitc. markets. The fi~ ms are ~~ty ~ efticiency of the publk sector of
_ also ogening up new exports . Increases !n the number of the economy.
markets, such as the Middle middle-aged and old and female When ~ompared with th~
East, and ah~ exporting goods, United States and European
lik~e plant equipment, all ot ~e proportion of middle- ~untries, Japan used to have ~
which tend to reduce frlctioq. aged and old people in the ce~atively "~mall government.`'
It is also necessary to act~vely natlon's labor force is expected But since the beginning of the'
_ maRe industNal adjustments ~~cre~se faster than Weir 1970s, the scale oi the Japanese~
and promote impocts of finished p~ion iu the natton's efltire government hals been showtdg
g��ds. ~ population, to reach the highest, sigs~s o( expanding, reflecling
In a bid to, conCribute the neecl to improve thepeople's
positively to international ~Conclusion: Challenges.And. Welfare.Thepublicsectorofthe
society, Japan should strive to ProDlems Facit?g Japan As An ~apanese economy is noW
promote cooperation with in- Industrial Nation ~ required to promote etflciency
temattunal organizations, and 'Phe Eeonomtes of ind~strial by taking lessons trom business.
espand economic cooperatton ~~e 1980s are faced rationalizatfon etforts norvi
and international exchanges. with five problems carried over, being promdted in the privat~~
Chapter IV: Utillaatlon Of frnm tne~ptecedingdecade-t11 ~torottheeconomy. -
VltalityInThePrivateSector maintenance of the global In order to solve these
� Progress in technical in- ecunamic ord'er for free in-
novation. ternational economic ia- P~blems as well as domestic
A new wave of technical in- terchanges, (2) ccexisteace ot d~fficnlEies, Japan is now
novatioa has been mouriting in the need to enhance economic. to look at thing~ from
this ca~untry since 1977. The ~ development and the necessity� ~~ternational viewpoint. The
_ phenomenbn is particularly to prnmote welfare requiring. view that Japan is not rich
conspicuaus in the field of ef- ever-increasiag cost bnrdens;: enough to solve internatIonal
forts to strengthen ties between ~3) the North~South problem,: Pr�blems will~hardly contrtbute
electronic elemeats and ~4)~a~ crises and (5) the ever- even to a solution of domestic
~ computers, between computers ~~?8 infli~ence of politi~s on~ ~ues.
and machines and between internatlonal ecoa~mtc It~ Japan must search for ways
machines and h?~man beinqs. terchanges. . : t o p r o m o t e e c o n o m i c
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development from a new angle.
In this directian, it is required�
to solve three problems-c l>
enhancemenC of ineasures to
cope with limited oIl supplies:
(2) cuntribution to the in-
ternai~onal economic c~om- ~
munIty, and f3) maintenanceof
the vitality of the domesEic
economic society.
The patb to be followed by
Japan for i~s economic survivat _
in the 1980s leads directly itito
the road towards the survival of
the world. Japan, as an in-
dustrial na?ion, musi cooperate
" in construction of the road to
global survival. ~ .
COPYRIGHT: Mainichi Daily News 198~
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- ECONOMIC
MAJOR CORPORATIONS EXPAND 1980 INVESTMENT PLANS
OW250045 Tokyo THE JAPAN TIMES in English 23 Aug 80 p 11
[Text] Japan's major business corporations, notably those in the
processing and assemblying industries, have revised sharply upward
their investment programs for fiscal 1980 ending riarch 31, 1981,
according to a report by the long-term credit Bank of Japan, Ltd.
The major commercial bank compiled the report on the basis of a survey
concerning 1,143 corporations capitalized at 100 million yen or more
on their investment plans as of mid-July for fiscal 1980 and 1981.
Despite growing signs of an economic slowdown, total investments planned
by the corporations for the current fiscal year advanced 22.8 percent
over fiscal 1979, compared with the 8.6 percent annual growth recorded
in fiscal 1979. This was a sharp upwar_d revision from the 15.6 percent
increase projected in a similar survey conducted last Fehruary.
Investments planned by manufacturing companies ~umped 20.5 percent from
8.7 percent in the previous survey, while those planned by non-
manufacturing firms rose 24.1 percent from 19.5 percent.
' Notable among such manufacturers we~e those in the machinery, precision
instrument, shipbuilding and auto industries.
These processing- and assemblying-t}~pe industries will increase invest-
ments 40 percent or more from a year before, the repo.rt said.
In the non-manufactu�ring sector, electric power firms will expand
investments 33 percent. Real estate, shipping and city gas companies
also will increase investments sharply, it said.
On a half-year basis, investments by all the corporations surveyed will
increase 14.2 percent in the first half (April-September) from the
preceding six-month term anci 5.2 percent in the latter half (October-
March 1981).
Investments planned by manufacturers will be 16.3 percent more in the
first half but 0.2 percent less in the second half.
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rvc~ vrrl~,icu. u~r, Vl'IL1
l
e
Ban.k officials said the slowdown in the latter half ineant a mere leveling-
off for manufacturers' investments.
= Mar,ufacturing firms are actively engaged in increasing investments chiefly
foz~ resource-saving, pollution prevention and research and development
projects.
Of the total investments by manufacturers, those for output expansion
accounted for 24.4 percent, down from 27.8 percent in fiscal 1979.
In contrast, investments for resource conservation rose to 7.8 percent
from S percent in fiscal 1979, those for pollution prevention ~c 5.7 per-
cent from 4.5 percent and those for research and development to 6.4 per-
cent from 5.1 percent.
Oil refiners will promote investments for desulfurization equipment,
pushing up the total investments by manufacturers for pollution
prevention pz~o~ ects .
Big business corporations capitalized at 1 billion yen or more will
increase investments by 24.1 percent from fiscal 1979.
Medi~:~m-size firms capitalized at less than 1 billion yen will increase
investments by 11.1 percent.
Meanwhile, all the corporations surveyed planned to expand investments
for fiscal 1981 by 6 percent from fiscal 1980.
COPYRIGHT: The Japan Times 1980
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ECONOM~C
FOREIGN EXCHANGE RESERVES INCREASE IN AUGUST
OW011317 Tokyo JIJI in English 1245 GMT 1 Sep 80
[Text] Tokyo, 1 Sep (JIJI Press)--Ja~an's foreign exchange reserves at the `
end of August grew $255 million over the previous month to $23.048 million,
the Finance Ministry said Monday.
This represented a fifth cons~cutive gain since April, reflecting the yen's
~ appreciation.
The ministry explained that the increase was mostly brought about by profits
accruing from investment in tihe United States' treasury bills.
, The yen's value was slightly lower in the first 10 days of August, but re-
bounded in the middle of the month due to a sharp increase in foreigners'
- investment in Japanese securities and brisk yen buying on overseas markets.
However, since the market's moves contir.ued relatively stable through the
month, tne Bank of Japan apparently made little intervention.
Meanwhile, Japan ranked seventh in foreigA currency holdings as of the end
- of June with $22.642 million after West Germany ($53.863 million), France
($29.536 million), Italy ($23.590 million), Britain ($23.155 million), tY~e
U.S. ($23.014 miilion), and Saudi Arabia ($22.647 million at the end of May).
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FUR UFF1(:lAL U~~ UNLY
r
- ECON~NIIC
OVERALL ECONOMIC OUTLOOK: FAIR SKIES FOR SAPAN -
Tokyo BUSINESS JAPAN i.n English Aug 80 p 66
LArticle by Hokaji Mino, editor in chief of BUSINESS JAPAN/
LText/ - _
T HE Japanese economy faces some ~n~~~ated import costs for oil and
disquieting imponderables, chief other basic commodities on the na-
among them the impact on the na- tion's payments accounts.
tion's now-booming export business '1`his should also help take some of
from deepening recession in the the steam out of the inflationary spurt
United States (Japan's largest single ~~h hr;, bedevilled the economy _
trading paztner), the rising threat of OVeL rhe past 18 months. Wholesale
protectionism there and the outlook Pri~~,~ W}u~h had been rising con-
for escalating energy costs. sistendy since November 1978, fell
The overall outlook, however, is far p,~qo ~ May. Consumer prices, on the
from bleak. While other advanced eca Q~er hand, are sril?, on their waY up
nomies seem to be slowly sinku:g into and now run at an annual rate of 8.4%
- recessian, Japan's economy remains on ~ou~ ~ey are expected to reach
comparatively solid ground. Exports -~eu pe~ ~~e next few months and
have been ticking along nicely (the level out thereafter.
- major factor in business bouyancy At least pazt of the credit for
here) as profiu from overseas sales ~ep~g ~~tionary pressures under
have, until only recently, been boosted ~ntrol r,iust go to the policies of the
bY a sa88~B Yen� late Prime Minister Masayashi Ohira, ,
Private business investments in thrir emphasis on tight money
capital goods � and inventories have and ~ergy conservation to save on oil
been on the upswing for tha past nine ~~rt costs. But perhaps the most
months or so and corporate managers ~f~ant underlying factor in keep-
have kept operating costs down thanks ~g ~e lid on prices u Japan's pro-
to the modest pay rises (slightly less ~~ous level of productivity.
than 7%) they have been able to A study published recently bY the
negotiate with workars c'.uring the an- M~stry of Intemational Trade and
nual shunto, or spring labor offensive. Industry (MITI) shows that in 1960
Japan is piling up sizeable deficits ~e productivity ~f Japan's labor force
in its cunent accounts !U.S. 58.75 (measured by output per working hour
billion in 1979 with a sim~ar or ~~e manufacturing sector) rose at an
, siightly larger amount forocast for this ~ual average rate of 8.2%, compared
yoar). But the fact that the yen has to 3.4% in the U.S., 3.2% in Britain _
appreciated sharpiy since mid-Apn7 and 5.5% in West Germany. The na-
and is likely, a.ccording to ecanomists ~on's cuaent yearly rate of growth in
here, to stay at stronger levels in the productivity, just under 8%, has
foreseeable future should help to mini- ~~ed to keep pace with yearly
- mize the impact of rising do11a~'- across-the-board wage increases
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thanks, in large part, to the amicable their reputation with American con-
relations between management and sumers for tuming out high-quality -
labor hece and the hefty amounts products and providing scrupulous
business continues to spend on stream- after-service will keep sales for finished .
lining and improving production facili- consumer durables such as their fuel-
ties and on technological innovation. efficient vehicles from falling too ab-
_ To be sure, stronger yen tends to tuptly.
cause problems for die competitive- Wlu7e a global economic slowdown
ness of Japanese products in inter� stemming from recession in the U.S. is
` national markets by effectively boost- expected to be manifested here in a
- ing dollar-denominated expoct prices. period of declining export sales and a
But Japanese exporters have faced this fall in company profits for the half-
diff~culty before. When the yen hit its yeaz period ending this September,
highest postwaz level of ~176 to the private economists p-sdict that by the
U.S. dollar in 1978, com~anies here end of the current fiscal year in Mazch
fought back by pouring even greater 1981, business activiry shoutd be hum- _
efforts into rationalizing production to ming along nicely.
avoid falling into the trap of making Barring any unforeseen ~roblems
up for adverse foreign exchange fluctu- such as the outbreak of war in the
- adons simply through marking up ex- Middle East (which would exacerbate
port price�tags. Japan's oil supply problems, with its
A sizeable number of export- neaz totaZ dependence on impocted
dependent companies did fall by the crude), Japan's bout with recessionary
wayside, largely because the Japaneae , conditions should be, according to the
govemment and the banks ha~~e re- cunent thinking of a number of busi-
fused, for the most part, to prop up ness leaders and economists here, rela-
ailing companies unable to pass the tively short-lived.
competitive muster. Managers who Tokyo's official target for overall
have successfully guided their com- economic growth in fiscal 1980 (end-
panies through this weeding-out pro- ing Mazch 1981) remains set at 4.8%,
~~ss, wlule not exactly relishing the but perennially cautious government
prospects of the yen rising too far too forecastets say the actual figure could
fast, feel generaJly confident about well go slightly higher. Private eca
their ability to cope with a more nomists, meanwhile, are more bullish,
muscular yen. pndicting that the nadon's gross na-
While recessionary conditions in the tional product (GNP) will rise 5- 6%,
U.S. are likely to pinch Japanese ex- compared with 6.1% in flscal 1979.
ports, at least to some degree, the (T.D.)
_ Japanese rEmain confident, too, that ~
COPYRIGHT: Nihon Kogyo Shimbun 1980
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_ FOR OFFICIAL USE ONLY
ECIXdOMIC
FAVORABLE TRADE RELATIONS WITH MIDEAST COUNTRIES REPORTED
Examination of Relations
Tokyo BUSINESS JAPAN in English Aug t3u pp 45-51
LArticle by Hokaji Mino, editor in chief of BUSINESS JAPAN7
~,Text/ ~HE Middle East supplies approxi- cooperation agreement (signed b~arch
mately 80�Io of Japan's petroleum 1975, implemented May 18). This was
requirements. Not only does it figure followed by 611T1 Minister Toshio
prominently as an export market but Komoto's visit and the s~~bsequent
it is also an extremely important re- convening of the first Japan-Saudi
gion for the world economy as a Arabia joint committee meeting (Jan.
whole. Events occurring there have 1976), on the basis of which the joint
- immediate global effects and repercus- committee office in Riyadh was estab- -
sions. lished.
It is only recently that relations Also, in the private sector, a Japan-
between Japan and thc Middle East Saudi Arabia cooperation organization
have become active, but they are was set u~ in August 1973, and, later
expected to expand rapidly hereafter. in October, a higher level M6ddle East
The present situation is described Cooperation Center covering the
below, country-by-country, in ex- whole of tl~e Middle East was estab-
tremcly general terms. lished.
Saudi Arabia: Saudi Arabia is an ex- Tl~e economic and technological
tremely important energy supplier for cooperation agreement between tl~e
Japan, accounting ior 30�Io(the largest two countries consists of five articles:
percentage) of its petroleum and 509'o Promotion of economic and techno-
of its LPG imports. Prior to the frsi logicat cooperation (Article 1), estab-
oil crisis, petroleum transactions were lishment of joint ventures and the
conducted principally through the contents of technological cooperation
majors, and Japan had few direct (Article 2), supply of required services -
. dealings or economic cooperative rela- and facilities (A~ ticle 3), encourage-
tiuns with Saudi Arabia. Following the ment of economic and technologicai
outbreak of the oil crisis, however, cooperation between the peoples of ~
economic relations between the two the two nations (Article 4) and en-
countries rapidiy grew stronger over a couragement of ]apanese capital
period of a few years as a resuli of the investments (Article 5).
visits to Saudi Arabia of then Inter- The Saudi Arabian government
national Trade and [ndustry Minister attaches particular importance to joint -
Yasuhiro Nakasone and special envoy ventures and technological transfers
Takeo Miki (Dec. 1973) and the sub- and regards plant exports c~n the basis
sequent conclusion of a Japan-Saudi of tenders as business transactions.
Arabia economic and teclinologi..al T}us attitude differs greatly from that
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of [raq, whi~h regards large-scale plant Way with the project targeted for
construction as a type of economic ~mp~etion in 1984 or 1985. Under _
cooperation, an attitude which is due the plan, 450,000 tons of ethylene and
- probably to the smaller structure of Zpp~ppp tons of high-pressure poly-
the latter's economy. ethylene will be produced at the plant,
Japan-Saudi Arabia joint ventures also to be located in A1 Jubayl, where
already number 25, ihe most notable the methanol plant is to be built. The
' of which are in the fields of inethanol Japanese government will treat the
and petrochemical prodaction. In the project as a national project, utilving
case of inethanol, Mitsubishi Gas- capita! from the Economic Coopera-
Chemical Co., Inc. and C. Iroh have tion Fund.
together invested 50% and tht Saudi In addition, the two countries will
Arabia Basic lndustries Corporation carry out joint research in seawater
(SABIC) 5(~'lo in a joint company distillation. A basic contract was
which will build a plant in A1 Jubayl in signed in September 1979, and details
eastern Saudi Arabia, with completion are now being studied. Technological
targeted for 1982. A contract for the cooperation w~l also be piov~ed with
purpose was signed on November 24, over 150 experts to be dispatched to
1979. Saudi Arabia and more than 100
Under the plan, 600,000 tons people to be trained in Japan.
annually of inethanol obtained from The Saudi Arabian government is
petroleum-gas for cliemical use will be also greatiy interested in research on
prodticed, to be utilized for the manu- the utilization of solar energy as a
facture of horrr~alin for urea resin and post-oil measure. It !s reported that lt
for synthetic textile material. The has already signed a contract with an
Japanese government will invest part American firm for the construction of
of the capital from the Economic a large-scale solar-energy-utilizing com-
Cooperation Fund. For its part, the munity. Since Japan is also engaged in
Saudi Arabian government wdl re- research and development in this field
portedly allocate crude to Japan as under its "Sunshine Project," it should
incentive, but no details have yet been also undertake joint research with
decided. Japan has a methanol produc- Saudi Arabia which has great potential =
tion capacity of 1.4 mitlion tons, so for utilizing solar energy. In addition,
- when this project is completed, adjust� as a private sector project, the develop-
ments will probably have to be made. ment of desert farming is being under-
This petrochemical project is what taken.
might be called a monumental project
_ between the two countries, and its Iraq: Japan's relations with Iraq
econom(c aspects are of utmost im- w~re greatly strengthened following
portance. Along with the rise in the the visits of special envoy Takeo Miki
price of oil, the advantage of using gas, in December f 973 and MITI Minister
reportedly obtainable without extra Yasuhiro Nakasone in January 1974,
cost at the site of the well, has grown and they took concrete shape as a
as compared to the present meth~d of result of the signing of an econumic
producing naptha obtained from crude and technological coc~peration agree-
oil. ment in August 1974 (implemented on
The Saudi Petrocliemical Develop- November 11). Under the agreement,
ment Co. (authorized capital: ~1,000 Japan cooperated in the construction
million; 54 companies of the Mitsu- of six projects by providing USS1,000
bishi group) was established in January million (calculated on the basis of the
1979 for the purpose of conducting a exchange rate at tlie time) in funds,
joint survey. A year ~nd a half was while Iraq promised to supply 90
required k~r the study undertaken in million tons of petroleum products
cooperation with SABIC, the Saudi and LPG to Japan over a period of 10
Arabian company, after which a joint years. It was indeed a landmark
company (a 50 - 50 investment by development that joined the stable
Japan and Saudi Arabia) was estab� supply of energy with economic co-
lished. Construction wil) get under operation.
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Thereafter, on tl~e occasion of MITI At the second joint committee con-
Minister Tosl~io Komoto's visit to [raq ference, it became obvious that Iraq's
in January 1976, Iraq requested an requests were moving into more ad-
additional loan of USS1,000 million, vanced fields, from simple production -
an~ this was agreed to at the first technology to higher levels of produc-
Japan-Iraq joint committee (in Tokyo) tion and conttol technologies as wel] `
in January 1977. as policy decision knowhow. It is
At the second joint committee believed to be due to the fact that ~
meeting heid at the time of MIT[ Iraq's industrial cechnology is quite
Minister Masumi Esaki's visit to Iraq in advanced. Already, over 470 trainees
Ju1y 1979, concrete discussions were have come to Japan, while more than
_ held on project replacement and on 70 experts have been dispatched to
promotion of teclinological coopera- Iraq. Aa electrical indust:y training
tion. center has also been built.
According to d~e agreement, lapan
was to purchase 10 million tohs of Iran: Among the Middle Eastern
crude annually, but an easing off in countries, lran's relations with Japan
global supp)y and demand and a reces- are the oldest. Md since industrializa-
sion in Japan came together, and as a tion was carried out relatively earlier
result Japan purchased oniy half the than in other Mideast nations, an
agreed volume - five million tons. But agreement on economic and tech�
because of the recent stringent supply nological cooperation had already
and demand situation, Japan has now been signed in December 1958. Also
asked Iraq to increase the volume, 99 joint ventures had been approved
which it promised to raise by 4(~Yo. it up to 1978. Japan has accepted as
is a good example of a contract, many as 1,300 Iranian trainees and
despite having been signed, not prov- uispatched up to 400 experts to Iran.
ing useful because purchases are based It is the most industriall~ advanced
on the profitability of private busi- nation in the MiddlP East, and if its .
nesses. wealth of resources are effectively
A similar situation was seen in the utilized, it has extremely great poten-
case of Mexico. In November 1978, on tial for develop~nent.
the occasion of the visit to Japan of It will be interesting to see whac
President Jose Lopez Portillo, Mexico effects the revolution, beginning with
offered to supply oil to Japan, but the exile of the Shah in January 1979,
Japanese companies refused to accept will have on the foregoing economic
deIivery because of a slight price dif- development.
ferential. When supply and demand A monumental pro,ject being caz-
became tight in 1979, however, they ried out by Japan and Iran is the
u competed wildly for contracts. It will construction of a petrochemical com-
be necessary hereafter to reorganize plex. It was begun by five Mitsui
the Japan Petroleum Development companies during the reign of the
- Corporation and establish a rystem Shah, and, when completed, will pro-
that wil] insure stable purchases from duce 300,000 tons of ethylene and
abroad. Without it, there is che risk 1,800,000 tons of LPG annually.
that economic cooperation, achieved In July 19~1 the Japanese govern-
after much effort, will become mean- ment had decided to provide assistance
- ingles~. � in the form of a yen loan (documents
As for project cooperation, Iraq, exchanged in March 1976), but taking
because of its internal circumstances, into consideration the suspension of
sometimes requests changes in the construction due to the recent revolu-
contract from a full turnkey to a tion and the possible canceUation of
separate formula. It woutd appear that government assistance by the revolu-
there is the need to leave the road tionary regime, the Japanese govern-
open for g~eater f7exibility in the ment on October 12, 1979 decided to
application of agreements. treat the project as a national project
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which would include investment of involving the construction of a
money from the Economic Coopera- 500,000 bbls.-per-day capacity refin-
tiop Fund. ery at Bushehr, the products of which
. 5ince then, because of various cir- would be exported to Japan. It was
- cumstances including confusion in requested by the Shah during then-
matters related to personnel within the MITI Minister Yasuhiro Nakasone's
Iranian government, the resumption of visit to Iran in January 1974.
construction has been delayed, but Aaai;~~? the background of the
completion at an early date is andci- then-stringent supply, the oil com-
pated. As in the case of other projects, panies jumped at the prospect, but
there has been a big rise in costs, their interest waned thereafter as the
which in January 1976 rose to situation eased. On the occasion of
~550,000 million as a result of the MITI Minister Toshio Komoto's visit
inflation following the oil crisis. Now to Iran in Januuy 1976, it was de-
the estimate is as high as ~730,000 cided to take up this project as a
million. Taking into account the rise in means of promoting friendly relations
oil prices, however, the project is between Japan and Iran. A committee
expected to pay off over the long run. was established within the Middle East
_ In addition, the construction of a Cooperation Center to consolidate the
refinery for export purposes requested setup on the Japanese side, a high-level '
during the reign of the Shah has been group of experts representing the two
suspended because of the revnludon, countries was set up, and a joint
but the revolutionary government has survey was undertaken with the oo� _
renewed that request for cooperation. operation of the International Co-
It would be a Japan-Iran joint venture operation Agency. 0
Promoting Cooperation
Tokyo BUSINESS JAPAN in English Aug 80 pp 53, SS
LArticle by Michiyoshi Kawada, executive director, Japan Cooperation Center
for the Middle East/
- - _
,~Text/ HE Japan Cooperation Center for Japan depends on Mideast oil for
T the Middle East (JCCME) has 75% of its oil needs. No one can deny
been engaged in a variety of projects the importance of this fact to Japan.
involving~ Japan's intemational cooper- Meantime, Mideast oil-producing coun-
ation programs in relation to cement� tries are very much in need of helping
ing economic and trade ties with hands from overseas in the course of
Mideast countries. It was organized their social and economic development
seven years ago, right after the fourth projects which they are presently un�
Middle East war when oil-producing dertaking. No doubt the high level of
countries in the region restricted their technology Japanese industries can of� _
oil shipments overseas. fer has interested them greatly as a
These restrictions awakened the way of proceeding with their national
world to the fact that there is a limit projects most effectively.
to oil deposits and that mankind must This can be a relationship of mutual
use the limited amount of this im- dependen~e between Japan and the
portant energy source as economically Mideast, and Japan should make every
as possible. Seven years have passed possible effort to meet the area's
since then. Oil producing countries requirements for technologies neces-
and importer nations have be~n gop- sary to facilitate development projects.
ing for the best possible way to reach Outlined below are some of the
agreement, while each side svongly important activities JCCME has com-
- insists on its own views conceming oil pleted so far.
resources.
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Promoting Dialogues With the Mideast In the field of technological trans�
1. Arab-Japan Cooperation Semi� fer, IDCAS and JCCME casponsored
nar and its related meetings: At the the Arab�Japan Conference of Tech�
suggestion of the OAPEC Secretariat, nological Transfer in April 1978.
the Arab-Japan Cooperation Seminar lnstrumental in realizing all these
was held in Tokyo in Nover.~ber 1976. conferences were Dr. A.A. Attiga,
The occasion, the third of its kind OAPEC's Secretary General, Dr. M.
after the first seminar in London in Imady, Secretary of AEESA, A. Azabi,
May 1974 and the second in Paris ~n secretary of IDCAS, and many key
November 1975, was designed to help figures in Middle East countries who
smooth communications between extended friendly assistance to facili-
Arab oil-producing countries and ad� ate communication between Japanese `
vanced industrialized nations. and Arabian sponsors.
With full support of MITI and the 2. Technical Seminars and Survey
Foreign Office, JCCME acted as co- Teams: Prior to the series of interna-
organizer with the Federation of 7apa- tional meetings outlined above,
nese Economic Organizations (Keidan- JCCME held the Mideast-Japan Sea
ren) for the Tokyo seminaz. During Water DesaZinization Cooperation Con-
tl:e seminar, three themes - Energy, ference in coalition with MITI's Indus~
Infrastructure and Transfer of Indus- ~ gcience and Technology Agency
trial Technologies - were agreed upon and the Water Desalinization Proma
by the partiapants for further in- tion Center. An outgrowth of the
depth study, on which the JCCME has conference has been Japan's coopera-
organized a series of international don ptograms with Saudi Arabia and
meetings. other countries in the Mideast, creat�
- On the theme of Energy, views are ~g opportunities for Japanese indus
exchanged every year between oil� tries to participate in desalinization -
producer nations and importer coun- plant construction projects in many of
tries at a meeting sponsored by the Middle East nations.
JCCME to which either Japan or the W~e communications have been
Arab side dispatches lecturers to make facilitated through meetings and semi�
key speeches. nars on varied subjects, groups of
The subject of infraswcture has leading figures from Arab countries
also been studied at three meetings so ~~ted Japan on many occasions.
far. In June 1977, the Arab-Japan time they had opportunities to
Port Facility Conference was held make on-the-spot ob~ervationa of
under the joint auspices of AFESD Japan's highly sophisticated technolo-
_ representing the Mideast side, and a~~~rements, to become ac�
Japan's International Marine Develop~ quainted with Japanese culture and
ment Center and JCCME. 'Y'his was ~,~,ay of life, and to make persottal '
followed by the Arab�Japan Electric contacts with the people. _
Telecommunications Conference in Prominent ~gures in Japan's gow
February 1979. The sponsors of this ernmental and business circles have
mceting were the IDCAS, AT'tJ and made many visits to the Mideast over
ARABSAT from the Mideast, and the last six or seven years to further
Japan's Overseas Telecommunications increase cooperation. At JCCME, sew
and Broadcasting Consulting Coopera� eral survey teams have been sent to -
tion, Federation of Electric Telecom- collect data from many regions in the
munications Industriea and JCCME. Mideast. They were the Port Facility
An.other conference discussing devel� Survey Group dispatched in 1977, the
opment of the Mideast infrastructure Infrastructure Study Team and the
was the Arab-Japan Electric Power and Electric Power Group in 1978, and the
Energy Conference. It was held in Electric Telecommunication Survey
February 1980 by OAPEC, AFESD Team in 1980.
and IDCAS representing Mideast na� According to recent survey reports,
tions, plus the Japan'Plant Associa� many areas of the Mideast have expns-
- tion, Federation of Electric Enter� sed their desire for a greater number of
prises, Electric Power Sources Devel- Japanese specialists on various indus~
opment Company and JCCME. trial technologies. Japan's program of -
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- ttaining technicians and extending triaH~a~ien plan in Iraq immediately
g~eater assistance to local technical following signing of the Iraqi�JaFanese
- training centers have also been highly Economic Caoperation Pact. When -
evaluated. It can be said that giving Japan's prlvate participation in the
techrdeal guidance must come before Iranian petrochemical project was up=
expanding trade transactions. It is alao graded to a national project, tlie
appazent that these countries are fully )CCME committee was given the task
aware that nothing is more impartant of coordinaHng private interests.
to a developing country than educat- Another important activity of
ing human resources. JCCME is to hold an annual forum for
goverrr.~ent officials and businessmen
A Bridge Between the Government to discuss how best to promote _
and Private Sectors Japan's economic cooperation with
JCCME, whose members are all ihe Mideast in practical terms. Invited
private firms, is a semi�governmental to the meeting, held every year since
_ organization since it is partly sub- 1976, are Japanese representatlves of
sidized by tl~e government. All its manufacturers, trading companies and
activities have been carried out financial institutions doing business in -
through the closest possible coordina- many parts of the Mideast, together
tion with MITI. ~with leading figures in businees and
Although it is an advocate of a free financial_ circles. Japanese government
economy, the lapanese government officials including those from MITI
requires services of a coordinator be� and other agencies also participate.
tween ofticial and private interests Usually the first two days are de- _
when � it comes to signiffcant private voted to exchanges of inPormation and
projects wt~ich must be carried out discussions among the participants. On
Gom a long-range or a national point the third day, a joint meeting of
of view. When projects of such spe- governmental and private circles is
cified nature in the Mideast are held under the sponsorship of the
worked out by the private sector, Foreign Offlce. From 1976 to 1978,
JCCME, which represents the interests Istanbul, Turkey, was chosen as the
of both parties, is called in to act as site of' the meeting, while the 1979
coordinator. and 1980 meetings ~erere convened in
In such instancES, JCCME organizes Vienna, Austria. It ia expected that -
a special committee to deal with the each of the participants will make the
matter. The first of these committees most of the results of the meeting ih
was the Saudi Arabia Cooperation carrying out policies. Demonstrating
Organization formed at the time of its val~e, the meeting has seen an ever
1CCME's inauguration. In 1974 the greater number of participants year
Iraq Committee was organized, fol� after year.
lowed by the Iran Committee in 1976 No doubt the scope . of ]CCME
and tlie UAE Committee in 1977. It activities will become more diversiRed
was necessary to have these speciallzed in the future as proj~cts become of
. comittees established in order to or- greater significance and more chelleng- .
ganize a conso~tium of Japanese firms, ing. Yet it is felt that the basics of
which o!herwise might not have been Japan's cooperation programs with
- prepared to undertake the large scale these countries lies mainly in expand-
overseas projects. ing the range of mutual communica-
_ Concerning the petrochemical plant tions in econom ic, cultural, eduea-
construction program in Saudi Arabia, tional and many other fields, by which
the ICCME commiftee acted asorgan- mutual understanding is promoted.
- izer of Japanese contractors, while it The stsff at the JCCME Secretariat has _
served as liaison bou~}� for the supply been dedicating its efforts to help -
_ of major items for a large-scale indus- deepen the mutual understanding be-
tween Japan and Mideast~countries. O
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Contacts With Iraq
Tokyo BUSINESS JAPAN in Engliah Aug 80 pp 57-64 '
1,Article by Keiichi Matsumoto, Middle East Office, Internat~onal Trade
Policy Buresu, Ministry of Interna~ional Trade and Industry/
LText/ TNC relations between Japan and Japan's exports to Iraq stood sec-
~ 1 Iraq in the field of oll supply, ond only to those to Saudi Arabia
trade and economic and technolog~cal ~ong the Middle Eastern countries in
cooperation have become increasingly 1979.
closer in recent years. Iraq, led by lapan's imports from Iraq have
President Saddam Hussein, is now mak- ~creased rapidly from 1974 onwards,
ing successful efforts to modernize the the case of Japan's exports to
nation thruugh slrengthening the eco- ~at country. The imports in 1979
nomy and improving welfare. Iraq now totaled $1,815,670,000, increasitig by
can expect more and tnore from more than two times from
Japan, whici~ has contributed to (raq s $776,870,000 in 1978.
modernization, as the econornic rela- Most of Japan's imports from Iraq
tions between the two countries have ~9q,~qo in 1979) are oil and other
become closer. Tt?e present state of ~eral fuels. Food items such as dates
Japan-Iraq economic relations will be ~d processed goods account for the
- surveyed below. remaining tiny portion of the total,
Japan's trade with Iraq, ll~e Japan's ~ means that the total value of
trade with other countries in the Mid- Japan's imports from Iraq goes largely
dle East, has expanded rapidly since to its oil imports. In 1979, the import
the quadrupling of oll prices toward of mineral fuels in terms of value
the end of 1973. In 1979, Japan's ~creased 2.4 times from the previ-
exports to lraq increased by 69.1~'0 ous year. This was due to the fact that
over the previous year, whereas its ~e volume of crude oil imports in�
imports from Iraq increased 2.3 times creased by about 60`Io from 1978 and,
from the previous year. in addition, the Iranian revolution led
Japan's exports to Iraq increased to reduced oil production and, hence,
steadily througliout the 1970s. The a sudden hike in oil prices.
pace of increase quickened from 1974 Table 1 shows how greatly Japan's
onwards and, in particular, from 1977 oil imports from Iraq i~i terms of
onwards. The big increase in Japan's quantity have increased in racent
exports in 1979 from the previous years. Iraq's oil accounts for an in�
year was due to the active demand for creasing portion of Japan's total oil
materials for import-substitute indus- ~po~
trial projects, as based on the fourth
tivo-year plan (1976-1980, total invest- Table 1. Japen's crude oil imports
ment of $49,000 m~lion), relative to from Iraq
the hydrocarbon industry, agricultural
development and housing construo-
tion. The 69.1 �6 increase in Japan's lmport Import Compared to
Fiscal volume ~re the revious
exports in 1979 is remarkable when year (1,000 yzaz
(100�k)
compared with the overall decrease of kilotiters) _
2.29'o in Japan's exports to the Middle 1973 978 0.3 -
Eastern countries. 74 2.611 0.9 167
- A particularly large growth was 75 6.060 2.3 132
recorded by heary and chemical indus- ~6 g,344 3.0 37.7
try products (67.396 Increase over the ~7 8.696 3.1 4.2
previous year} such as steel (100% 78 10.481 3.9 20.5
increase) and transport machinery ~g 16.953 6.1 61.7 -
(138.8% increase) and also by textile
goods (84.0% 'increase} and other light Source : Energy statistics
lndustry products such as tires and
tubas (80.9% increase).
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Japan's Economic Cooperation with In September 1975, a mixed loan
Iraq of ~87,400 million (~21,800 m~lion
For Japan, Iraq is an important oil of yen credits and ~65,500 mlllion of
, producer. Since the fourth Mid~dle East export credits) was granted for a ferti-
War in 1973, Japan's economic co- lizer plant projact at Khor A1 Zubayr.
operation with Iraq has progressed ~~y~ ~e first project launched
_ rapidly. In August 1974, an econom� under the economic and technological
ic and technical cooperation agree- cooperation agreement. In January
ment was concluded between Japan 1977, a mixed loaa of ~�58,100
and Iraq to bring about closer relations m~lion (~14,500 million in yen
in economic and technical cooperation cr~dits and ~43,600 million in export
between the two nations. The gist of credits) was granted for a thermal
the agreement was that in compensa- oower plant projec~t.
_ tion for Japan's economic and tech� '1'}i~~ ar~ the two projects that ~
nical cooperation m iraq~s econom~c have been undertalcen so far under the
; development projects in the form of lapan�Ira agreement. An additional
mixed loans (uuhatly $1,000 m~lion loan of ~294,000 million (all export
of yen credits and private credits). lraq cradits) was made in response to the
w1ll ensure Japan a su ply of 90 ~~B project cost at the fint Japaa�
ra~lion tons of crude oil ~in 10 yesn) Uaq joint committee held in January+
and 1,200,000 tons per yeaz of IPG 1977
(for 15 years).
Table 2. Japan's trade with Iraq ~
(Exports)
Compared
. 1977 1978 1979 to the pre-
Item Y~r .
(10096)
Total exports 872,159 951,450 1,608,623 169.1~'
Foodstuffs 925 2,137 2,111 98.8
L,ight in indusuial products 140,555 99,214 183,451 184.9
- Textile products 83,926 35,635 65,578 184.0
Non-ferrous metal producu 21,379 14,456 20,685 143.1
Other light industrial products 35,250 49,123 97,188 197.8
Hesvy chemical industrial products 726,223 843,322 1,410,909 167.3
- Chemical producu 19,629 22,223 34,303 154.4
Metal producu 190,900 198,596 483,147 243.3
Machinery and tools 515,694 622,503 893,459 143.5
General mschinery 322,929 299,879 355,493 118.5
Electric machinery 96,389 188,237 218,904 116.3
Transport machinery 85,993 124,8Q5 298A80 238.8
Precision machinery 10,383 9,581 20,982 219.0
Re-exports and special items 2,753 3,945 6,415 162.6
(Imports) _
y~I Compered
1977 1978 1979 tothe pro- `
vious year
Item (1 -
Tota1 imports 935,211 776,874 1,815,670 233.7%
Mineral fuels 731,808 767,686 1,810,330 235.8
Crude oil 731,540 758,113 1,775,383 234.2
Oil products 0 9,572 34,947 365.1
Liqutfied petrolenm gas - - - - �
Re-imporu and special items 668 8,901 4,998 56.2
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rvn ~rr i~.isu, u~r, vi~a.a
Of the total loan of ~592,000 Manufacturing Industries and JICA
- million, about 25% went into the two (Japan International Cooperation
_ projects; no decision has yet been Agency), Japan sends materials and
made on the remaining 7596. In August machinery as well as specialists in
1978, a note was exchanged to extend related fields to Iraq.
the term for concluding contracts Other technical cooperation proj-
from four years to nine yea~. ects have included preliminary studies
for the development or rice fazms in
Technical Cooperation the Qatar district and an agricultura.l
One of the major technical coopera- reconstruction program, both in 1978.
tion projects on a government basis Up to the end of fiscal 1979, Japan
concerns the establishment in Baghdad had sent to Iraq a total of 61 special-
of a training center for electrical tech� ists through JICA in such fields as
nology. This center is to provide train- heavy industries, agricultun, postal
ing relating to elevators, refrigeration, services and administration, and re-
air conditioning and general electronic ceived from Iraq a total of 482 JICA
squipment. ln order to establi~h such a trainees in postal services, tranaport
training center under the cooperation and light industries and 216 other
of the Iraq Ministry of Mirdng and trair~eea in the chemical and auto-
mobile industries.
~ Table 3. Receiving trainers and dispatching specialists
Total up to
Organization Fiscal 1979 the end of Field
(petaons) 1974 -
- (persons) .
JICA 76 482 postel services, tranaport, light
industries
Receiving
trainees Conatruction I
The Training B6 216 ~emistry, automobile, food-
Association stuffs
Diapatching 11CA 10 61 Heary industties,agriculture
specialists and forestry, post l ~ervices
Administration ~
~ . _
Exchange of Important Personnel In July last year, the then Inter-
Japan and Iraq have strengthened national T:ade and Industry Minister
' nlatlons in the area of cultural ex� Masumi Esaki visitod Iraq to attend
ahange as their economic relations the second Japan�Iraq joint committee
hav~e become closer. meeting. This was attended, on the -
'The first Japan-Iraq joint com� by Planning Minister. Esalci
- mittee mating wa1 held in Tokyo in also had talks with Vice-Chairman
January 1977 under tho . Japan�Iraq Haddam Hussein of the Revolution
ecoaomic and technical cooperation Command Couacil and other high-
agreement. This wa~ attended by, on ranking officiaLs of Iraq.
the Iraq side, Vice-President, Fonign Prior to the conclusion of the
Minister, Trade Minister and, on the Japan-Iraq economic and technical _
Japar?ese side, International Trade and cooperation agreement, special envoy
Industry Minister Tatsuo Tanaka, For� Takeo Miki and the then Intemational
eign Minister Iichiro Hatoyama and Trade and Industry Minister Yas~iluro
DIrector-General Kuranari of the Eca Nakasone visited Iraq, in December
nomic Planning Agency. The partici- 1973 and January 1974, respectively, _
~ pants exchanged views on trade and to discuss the agreemeat issue.
economic relations in general between In February this year, special enwy
the two natlons. Sunao Sonoda vislted Iraq to have
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high-level talks with President Hussein, cluded between the two nations.
Trade Minister and Vice-President. In ~ gag~~d, the "Baghdad Inter-
June-July, Councillor Naohiro Amays national Trade Fair" is held every year
of the Ministry of Intemational Trade under the sponsocship of the Iraqi
and Industry went to Iraq to exchange Trade Ministry. JETRO (Japan Extar-
- opinions with the Vice-President and ~ Trade Organization) and many
Trade Minister Ali on the Japan-Iraq lapanese corporations have partici-
Vade and economic relations. In pated in the fair since 1974.
August 1974, Iraq's Economic Minis- Iraq is one of the exhibitors at the
ter Azawi came to 3apan to sign the prab Exhibition currently being held
Japaa-Iraq economic cooperation in Tokyo (July-September) under the
agreement. sponsorship of JETRO.
Cultural Exchanges As we have seen, the relations
Cultural exchanges ~betweezt Japan between Japan and Iraq have become
and Iraq have expanded since the closer than ever in recent years with
autumn of 1977. Instances include an regard to trade and economic and
excavation project in Iraq by a Japa� technical cooperation. Such coopera-
nese university team, judo and karate tive relations will become even strong�
demonstrations, film shows and invita- er in the future now that Iraq looks
tions to students and young leaders. In more and more to Japan for assistance
March 1978, an aviation agreement in promoting its economic ~develop-
and a cultural agreement were con- cnent. ~7
COPYRIGHT : Nihon Kogyo Shimbun I980
CSO: 4~20
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ECONO~IIC
'LEARNING FRO~M JAPAN~ DIFFICULT MEDICIN~ FOR AMERICANS
Tokyo BUSINESS JAPAN in English Aug 80 pp 37-43
- LArtic'ie by Hokaji Mino, editor in chief of BUSINESS JAPAN/ -
LText/ yE enemy of yesterday has be- In the meeting, the joint car produc-
_ A come U?e friend of today. And tion ~lan was proposed by Toyota.
perhaps the friend of today may be- O,. course the Japanese government
come the enemy of tomorrow. `Car welcomed tk~e new age of "Car War"
War' between Japan and U.S. has and hoped lt would contribute to
entered the new age. easing the current Japan-U.S. friction
In July this year Japan's biggest over bilateral trade matters. But it will
automaker Toyota Motor Co., and not eliminate trade problems between
Amedca's second largest maker Ford the two countries; further friction is
Motor Co., have agreed to consider certain to arise and develop into seri-
small car manufacturing in the U.S. ous problems because of Japan's con-
juindy by Toyota, Ford and Toyo tinuing, powerful global economlc ex-
Kogyo Co., which is Ford's Japanese ~~on due mainly to exports. It is
- partner. Some 20,000 units of com- ~nconceivable that resourcA and ener-
pact passenger cars might be produced gy.p~r Japan will reduce exports
a month in 1982 at one of Ford voluntarlly. Every time the problem of
manufacturing facilities solely for sale excessive exports arises~ it is treated
in the U.S. sympts,matically by adopting OMA
Details, including investment ~d voluntary restralnta. Are there no
- shares, the type and number of cars to fundamental measures that could be
be produced and the starting date, are taken to assure an overall solution of
. still in preliminary stages and it will ~e problem?
take time before three companies ln 1970, Hecman Kahn predicted
reach a final agreement on the joint ~e possibility of Japan's GNP catch-
venture. ing up with that of die United States _
A top executive of Toyota dis- ~~e 21st century. In fact, Japan's
closed that tt~e fundamental agreement GNP is said to have recently ovartaken
was reached in June this year when ~e Soviet UnIon's and now ranks
Ford President Donald E. Petersen ~~ond in the world. At the time,
made a secret visit to Japan and held Kahn's prediction was crittcized as
tallcs with President Ichiro Isoda of ~~ng overly optim~stic. ~ut today,
Sumltomo Bank which is Toyo after surmounting two oil crises, the
Kogyo's principal bank, and Toyota po~bility of his farecast becoming
President Eijl Toyoda. Petersen called true is growing.
on Toyoda on June 24 and discussed -
how to help U.S. car industry out of Factors supporting this possibility
its present plight and ways in which az@ 1) the Japanese are still hard .
the Japan's car makers can co�produce. Workers and their productivity is hlgh;
2) Japan's savings rate is high, 3)
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Japan's anti-intlation and interest Tfiere are many scholazs, govern-
policies aze mon successful than the ment or'ficials, journalists, diplomats
U.S: s; 4) Japan's yen exchange rate is and businessmen in the United States -
quite stable; 5) Japan has already who are well versed concerning the
surpassed the U.S. in the steel, motor Japanese economy. But they do not
vehicle, home appliance, shipbu~7ding, constituta a leading force in moulding
machinery and timepiece sectors and U.S. publlc opinion and American -
can slso adequately compete in the policy aimed at establishing basic
Held of electronics, 6) Japan has fewer measures to compete against the Japa-
troubles relating to crime, racial prob- nese economy by properly evaluating
lems and labor disputes; and 7) Japan Japanese economic strength. Even
spends less than 1% of its GNP on economists and political scientists who
defense. receive reseazch grants from Japanese
In fact, with respect to motor corporations, such as Mitsubishi,
vehicles - the major problem between iVlitsui, Toyota and Nissan, do not
Japan and the United States - express positive ideas on such prob-
American manufacturers are no match lems in the American pnss.
for their Japanese counterparts, at I do not know whether Herman
least in the small car ma~ket. For the p~ediction w~71 come true in
present, the U.S. haa lost to Japan. the future, but if U.S. policymakers in
This is re~lected in Japanese cazs hav- the fields of political, foreign and
ing a more than 20% share of the economic affairs, as well as business
American motor vehacle mazket. ~d sooner worked out
Figures are honest. measures to cope with Japan's eco-
The ]arge market share indicates nomic development, at least along the
strong consumer demand which in ~~nes of Kahn's thinking, it Is utilikely
tum mezns nothing less than the fact ~ price ' ation which hit Japan right
that Japanese cars are superior to aftec e oil crisis.
American cars in terms of economy as e amount of total retail sales as
well asperformance. At this rate, the announced by MITI showed a double-
share of Japanese cars on the Ameri- digit ~ain during the first two months
can ' market w~71 rise to 30% or 40%, of this year. February salts were
whieh is why the United Auto Workers 1269'o greater thsn the figusc recorded
is taking the lead in demanding that a in the same month last year. The gain -
stop be put to any further expansion cannot necessarily signify a smooth
of Japanese car imports. The UAW growth in consumer spending. The
is curnndy faced with a massive layof~' sales gain can be attributed partly to =
of 300,000 work~ers. When un- the fact that retaiZers had one ad9i-
employed, and the outlook is bleak, tional business day in February this
peopla become irritated leacling to year because of leap year, and partly
emotiQnal unstab~ity. Signs of t}?is aze to the overall uptrend of inerchandise
evident in the anti�Japanese caz import prices.
demonstrations staaed before the In the future, it is most iikely that
shcwr~oms of Toyota and Nissan consumers wiU attempt to guard their
dealers in the neighborhood of family budget more carefully by
Detroit. tightening their expenditures a~inst
Unfortunately for the peoples of rising prices and failure of real income
the two countries, the OMA and to show a sizable gain.
Japan's voluntary export restraint
about to be adopted are so obviously Economy in Saitama Prefecture
supe~cial - more like a grandstand Industrial production in the prefec-
play - that they only constitute a ture for the January-March period this
symptomatic treatment. They are not year followed a moderate upcurve
suitable measures for dealing with the thanks to good performance of export
growth of the extremely powerful industries which have benefitted from
Japanese economy. it is too simplistic the yen exchange rate. Active -
to react to the problem by wrecking a demands from domestic enterprises
Japanese caz with a hammer. Acts of ~o contributed gready to pushing up
such nature do not even ~Ueviate production.
feelings of frustration. -
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In the manufacturing sector, au- Concerning personal consumption,
tomakers, producers of household spending has been increasingly
clectric appliances and audio equip~ trimmed since the outset of this year,
ment, and precision machinery firtns, due to a series of price rsises for many
all heavily dependent on exports for daity necessities including heating oil
their operation, are enjo~ing growth and gisoline. Public utility firms also -
both in production and shipments increased their rates by as much as
under the recent foreign exchange SU%. Alt3iough sales of depattment
conditions which favor them. stores in Saitama showed a yeaz�ta
Active demands have also been yeaz increase of 8.996 in January and
registered for heary machinery since g,gqo ~ February, a large part of the
many domestic enterprises have increase was a result of discount s~les
started proceeding with their equip- or other special events programmed by
ment investment programs. In addition stores. A high level has been snain-
to labor-saving and energy�saving spe- tained in passenger~car sales, yet it's _
cialiud equipment to streamline hard to expect any big gain in the
production operations, general future.
machines are much in demand from The emplo�~+tnent situation has
makers plarma~g to expand their pro� shown a favorable tum. The rate of
duction capacity. Receipt of orders for operation in manufacturing industrles
machinery parts related to such equip- has been improved ahile in many
ment investment programs has stood sectors overtime work has been ex�
at a high level as well. panded. With the svlt exception of the
In the Kawaguchi region where construction industries, the number of
higt~-quality die-cast products are permanent employees has increaaed.
produced, manufacturers have received This year, not a few enterprises in the
capacity orders, mostly from makers prefacture hired a gretter number of
of industrial mschinery. In the new echool gtaduates for tlu Rrat time
category of small steel bars, demands in several years.
exceeded supply later iast year because Although corporate financing con-
of speculative puachasea within the cerns are tightening their requirements
trade in expectation of a future rise in as a result of repeated increaaes in the
the marlc.t price. The situation has prime rate and iaten:if'ied bank _
been on the way to normalization, lending restrictions amid rising produa ,
however. tion costs, most bssineases have ao far
Textile and ~eadytawear produc- managed the situation.'They, however,
tion in Saitama Prefecturo has re� have come to a point whero they can
mained inactive due to a slowdown in hardly absorb a further rlae in fuel
overall consumption, while reduced costs. A possible raise of thEir product
public investments have affected con- price is the only solution conceivable
structlon and civil engit~eering enter- to them, an action that, in most cases,
Fri~� has been found unacceptable by their
But hardest hit are the food pro- customers because of reduced overall
cessing industry and the ceramic/ consumption. Under the cucumstaac-
cement manufacturers. The former is es, an increasing number of butinesses
highly dependent on imported raw aze ~g pessimistic views on eca
materials whose costs have become nomic developments in the future. It is
higher than ever, while the latter feared that busineas failure may
suffers from high fuel costs. These increase unless proper official mess-
sectors have recorded declining profits. ures are implemented to tide over
these uncertain times. ~
COPYRIGH'!': Nihon Kogyo Shimbun 1980
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J
ECONO~MIC -
UNDERSTANDING NEEDED TO SOLVE NTT PROCUREMENT ISSUE
Tokyo BUSINESS JAPAN in English Aug 80 pp 40-41
LArticle by Hokaji Mino, editor in chief of BUSINESS JAPAN/ -
,LText/ - - . .
FURTHER defaTed neg
a ons be- note indicating that the sharp con-
tween Japan and the United frontation between the two parties
States concerning the right to bld on had not been solved.
Nippon Telephone & Telograph Co.'s 'Y'he firat point on which they are at
_ procurement of equipment and mate- odds is, whereas the U.S. wants N'I"I'
rials is likely~ with the target date for to conduct competitive bidding for its
agreement set at January 1, 1981. procuroments~ the Japan~se side is
From the time the issue erupted ln seeking ta limit the bidding to only
the spring of 1979, both the US., certain items by including the
which was an the offensive, and Japan. American companies among those
on the defensive, found it difficuit to businesses with which NTT concludes
reach a proper unclerstanding of the "private contracis."
issue because of cross-accu~ations and Wrhereas the U.~. side regards the
limited comprehension of the prob- NTT procurement issue as being with-
tem. However, in the coming negotia- in the framework of the ~overnment
tions, unlike in the political negotia- procurement ru3es and ~,~gulations
tions a year bQfore, solid and fruitful agreed to at the Tokyo Ruund of
progress is anticipated. In May this CATT, the Japanese side dces not.
year, United States Special Repre- The latter insists that the telephone
sentative for Trade Negotiations, and telegraph industry is not familiar
Reubin Askew, who visited Japan for with the system of competitive bid-
talks, warned prior to his departure ding. It takes this stand because of its
that unless the problem were resolved fear of the relative superiority of tl~e
- by January 1, 1981, the U.S. would American industries in the fields of
shut out Japanese businesses from ~arious electronic switching equip-
bidding on U.S. government procure- ment, transmission cables (to link
ments. urban and rural stations), transmis-
Quite regrettabty, such an attitude sion/relay equipment, subscriber
on tl~e part of Askew is not construc- cables, data communication com-
tive. The injection of this sort of puters, facsimile machines and on-line
political remark is liable to return the systems. In contrast, tl~ere is a feeling -
negotiations to where they were last of confidence on the American side. lf
= spring; after all, their successful out- the bidding were, therefore, made
come depends on the steady accumula- competitive, the Japanese are deeply -
tion af agreements. concerned that they would be handing
Thc Japan-U,S. talks on the procure- over the Country's brains and nerve
ment issue in May this year ended on a center t4 a foreign country.
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Up tu nuw, NT'f has tullowed the agreement of June 2, 1979. NTT
private cnntract formula with domes- figures that any open competitive pra
_ Nc manufacturers regdrdinS procure- curement bidding system it adopts
ment uf eyuipment and materials should correspond in scope to that of
which total approximately 55,000 AT&T, America's largest telephone
items annually, the endre value of and telegraph company. The U.S.,
which exceeds ~600,000 million. however, feels that govemment pro-
Procurements from foreign sources curements as a whole should be b41-
account for only 0.53'0 of the total anced between the two countries. This
value. Most of the procurement orders is because the U.S. trade deficit vis-a-
are placed with the "NTT family" of vis Japan amounted to $12,000 mil�
approximately 200 companies, the lion in fiscal 1978. The value of Japa-
nucleus of which are Nippon Etectric nese telephone equipment exports is
Co., Fujitsu Ltd., Hitachi Ltd. and Oki also quite large.
Electric Industry Co., Ltd., with According to the Communications
whom private joint development con- Equipment Industry Association, ex-
tracts have been concluded. po rts m fiscal 1977 amounted to
The introduction of competitive ~166,700 million, or approximately
bidding would thus mean the abolition 30% of Japan's entire production. Of
of the private contract system as well this amount, around ~�50,000 million
as the breakup of the NTT famlly and worth was exported to the U.S. How�
a cbmplete change in the procurement ever, most of it went to pdvate
method. NT"f feels that such a change customers; neither the U.S. govern-
is absolutely unacceptable. ment offices nor AT&T have opened
As to be expected, the foregoing their doors to competitive inter-
four companies liave a number of national bidding.
directors on their boards who were Yet, Representative Askew issued a
formerly with the NTT, and if depart- stern warning that unless government _
ment and section heads are included, procurements between the two coun-
the number of ex-NTT employees tries were balanced, the U.S. govern-
number into the hundreds. These ment would put into effect the
people form a solid front. [n other provisions of the U.S. Trade Law and
words, the domestic manufacturers are shut out Japanese products from the
what might be called the manufac- American market.
turing department of NTT. What comes to mind at this point is
The fact that this relationship is a Japanese proverb, "Words to sell and
linked together by private contracts words to buy." Representative
- led Tokuji Akigusa, president of h'TT, Askew's remark falls into this cate-
to declare in February last year: gory. In other words, it lacks reality.
"About the only things we can pur� Admittedly, if Japanese products were ~
chase from the U.S. are rags and shut out from the U.S. market, Japan
buckets," a controversia] remark would encounter difficulty, but so
which nearly brought about his resig- would the U.S. The imbalance in
nation. He wu strongly dissuaded Japan-U.S. trade is not good, but what _
from resigning only because the would happen if the U.S. rashly drove
government felt that it would lead to the trade between the two countries to
more serious problems. the lowest level? Both Japan and the
Looking at the question from the U.S. would enj~~ no profits while their _
other side, the U.S.'s strong insistence losses wauld rise beyond imagination.
on competitive bidding is understand- Consequently, such a remark dces
able; the sharp confrontation arises not help at all in resolving the NTT
from the foregoing situation of close procurement problem. The mutual dis-
government�NTT ties. trust with respect to Japan�U.S. trade
The second point over which the has to da with the other party's
two sides are in disagreement is the intentions and sincerity and is not
difference in interpretation of the limited to the NTT procurement issue;
"principle of reciproc~ty" which sur- if both sides recognue each other's
faced as a result of the Ushiba-Strauss position, the .situation will move rapid-
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ly toward solution. Unless distrust is Also, NTT says it will relax the
removed, the taiks will not make any technological standards approval ot?
progress at all. That is the present items handled in ihe interconnect
- situation. market and use the lower standards as
This is not to say, however, that a means of luring American manufac-
NTT has not so far adopted a receptive turers into this field. At the same time,
position with an eye towards overcom- it will allow them to participate in the
ing the impasse. One is its decision to research and development of the main
purchase pocket bells manufactured components of such communications
by the Motorola Co, of the U.S. and equipment. It will develop a joint
data communication circuit measuring research and development system, and
devices from the Digitek Co.; another if in the process of research and
is a measuro to facilitate the entry of development a certain product is
American manufacturars into the Ja a� deemed to be outstanding, NTT will
nese "interconnect" market. (T~he purchase it from the United States.
interco~ect market includes equip- The U.S., however, is wary about
ment connected to telephone circuits, the idea, anticipating that the state-
which manufacturers sell directly to ment will prove to be more words than
consumers, such as pushbutton action. It is in this area that there -
phones, extension phones, and orna- exists a deep chasm in mutual Japan-
mental phones; office exchange equip- U.S. credibility.
ment; facsimile machines, etc.) In June, specialist-level talks were
In the case of pocket bells, NTT has resumed. Only the steady accumula-
decided to purchase 150 units for tion of results through such talks
testing, while it bought two data com� between experts is likely to persuade
munication measuring devices in Janu- NTT to open its procurement doors.
~ ary. NTT is also studying the possibili- In that sense, Askew's remark will
ty of buying severa; other items. only serve to close the Japanese side's
doors even tighter. ~
COPYRIGHT: Nihon Kogyo Shimbun 1980
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i
- raK a~~r.r. rnr. t?sr. c~c1t.Y
ECONOMIC
BRIEFS
- AID TO INDONESIA--Tokyo, 27 Aug (JIJI Press)--The government Tuesday signed
a contract with Indonesia to extend yen loans totaling 8.216 million yen
[about $32.86 million). The credits will be provided through zhe overseas
economic cooperation fund. Of them,1.795 million yen (about $7.28 million)
will be used for the Asahan hydroelectric power generation and aluminum
smeltery pro~ect. This will carry an annual interest of 3.5 percent with
repayment spread over 30 years, includi.ng an 8-year grace period. The
rPst are a 2.670 million yen (about $I0.68 million) loan for the waterworks
project and a 3.751 million yen (about $15 million) credit for the urban
railroad improvement project, both in Djakarta. Both loans will be repayable
over 30 years, including a 10-year grace, at an annual interest of 2.5 per-
cent. Those loans are based on agreements rQached between the two countries
in September 1976 and November 1979. [Text] [Tokyo JIJI in English 1239 -
GMT 27 Aug 80 OW]
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