Japan still attracted by ASEAN

Japan still attracted by ASEAN

TOKYO (AFP): Access to local markets was the major driving force behind Japanese companies relocating to the ASEAN region, according to the findings of a trade survey released yesterday.

The Japan External Trade Organization (Jetro) said 34.5 percent of Japanese companies replying to its survey, conducted between December and January, found sales in local markets more an incentive than exports from those bases.

The survey covered 977 Japanese-affiliated manufacturers operating in five countries in the Association of Southeast Asian Nations (ASEAN). Those countries were Indonesia, Malaysia, the Philippines, Singapore and Thailand. Not covered were Brunei and Vietnam.

Jetro said that in Malaysia, which has a large number of electronic and electrical equipment parts makers, the second-most common reason -- 24.2 percent of respondents -- for setting up there was to meet the needs of locally-based Japanese assemblers.

The survey also found that makers of electronic and electrical parts represented the largest group of Japanese-affiliated manufacturers, or 24.3 percent. There was a growing number of metal products makers due to the increased presence of small- and medium-sized parts manufacturers in the five ASEAN members.

Indonesia has attracted the largest share, or 31.7 percent, of Japanese-affiliated companies to relocate since the yen's appreciation in 1985.

Profitable operations were enjoyed by an overall 68 percent of affiliated manufacturers, 71 percent for those operating before 1990, Jetro said.

But local shortages of management-class personnel saw salaries of section managers rise by double digits from the previous year in Malaysia, Singapore and Thailand, while factory workers in Thailand and Malaysia saw their salaries rise relatively fast, Jetro said.

Labor problems and rising wages were top of the list of business-related difficulties, except in Indonesia, where the main problems were considered to be complex administrative procedures and tariff and customs procedures.

Firms that planned to shift production bases to third countries rose from 17.6 percent in the previous survey to 31.0 percent. ASEAN scored 49.4 percent as the preferred target, followed by China with 25.3 percent, Indochina and Burma with 9.5 percent, and India 1.3 percent.