Japan's troubled companies miss opportunities in crisis: PERC
Japan's troubled companies miss opportunities in crisis: PERC
SINGAPORE (Reuters): Japan's economic problems are preventing its banks and companies from taking advantage of opportunities arising from Asia's financial crisis, the Hong Kong-based Political & Economic Risk Consultancy (PERC) said.
PERC's fortnightly report on Asian business and politics said Japan's large exposure to the region -- including around US$23 billion in debt owed by Indonesia -- could put it in a strong position to gain from the region's troubles if it converts debt to equity or seizes assets from borrowers.
"Yet the weak state of the Japanese economy, especially its ailing banking system, will make it very difficult for Japanese companies to turn this exposure to their advantage," PERC said at the weekend.
Japanese banks are so squeezed for capital at home they are finding it difficult to write down asset values on their books, it said.
U.S. banks are less exposed in Asian countries than their Japanese counterparts and are being much more aggressive in trying to buy into local banks, the report added.
Meanwhile, Japanese firms are suffering all the pain caused by the crisis without realizing any of the gain their counterparts in the United States and Europe seem to be excited about, PERC said.
"In this respect, U.S., Australian and European companies would seem to have an advantage over Japanese companies in being able to turn the economic difficulties affecting much of East and Southeast Asia to their advantage," the report said.
PERC added that Japan was probably the major economy most vulnerable to an economic collapse in Indonesia because of the Southeast Asian country's importance as a source of raw materials and a destination for overseas investments.
The report said this made cooperation with Singapore vital for Japan because of the city-state's influence in the region and its status as a relative safe haven from the regional upheavals.
Japan may look to the United States but if Tokyo wants to protect its own interests, "it probably has little choice but to play ball with Singapore," it said.