|Ambassador Orita delivers the afternoon session's opening remarks
Sir Stuart, Sir Stephen, Mr Tsukamoto, Ladies and Gentlemen,
It is a great pleasure to be here with you on this splendid occasion, and I would first like to express my gratitude to everyone involved in organising this event. And may I thank all of you for showing interest in attending this event. Today's �ߡ�Welcome Japan �ߡ�forum consists of two parts. In the morning session, which focused on the �ߡ�Visit Japan Campaign, we had some very interesting presentations and a lively discussion on Japan as a tourist destination for British travelers. The second half of this one-day forum is entitled �ߡ�UK-Japan Business Dialogue�ߡ� and it will focus on Japan as an investment destination. Many distinguished speakers from Japan and the UK will speak to you this afternoon about what makes Japan an attractive and suitable place for business, and I hope you will be convinced of your opportunities in Japan by the end of the session.
But before we move on, I should first like to make a few points about the current state of Japan-UK business relations and the situation surrounding the Japanese economy.
Japan and the UK have forged economic and business links that rest on strong, durable foundations. With trade friction a thing of the past, we are both committed to encouraging mutually-beneficial investment and trade.
The UK remains the top European destination for Japanese direct investment. Altogether, more than 1,000 Japanese companies are now operating in the UK, and in the manufacturing sector their activities have led to the creation of over 80,000 jobs. Indeed, last Friday I went to Wrexham, North Wales to celebrate the opening of Sharp ' s new very high technology manufacturing facility for solar products there. It is expected to generate 40 new jobs this year, rising to 90 in 2005. Actually, it symbolizes a new era of Japanese investment in the UK. More high value-added products based on highly developed technology will be manufactured in the UK by the Japanese companies. I can recall other examples such as the Nissan Design Centre in London and Hitachi Institute in Cambridge, which fit into this new era of Japanese investment. In this new era, I believe that the activities of Japanese companies will further benefit the British economy through the exchanges of the technological edges that each country has. By the same token, British companies are benefiting the Japanese economy by investing in Japan. In fact, British companies are becoming increasingly active in Japan. Vodafone, having made a huge investment in Japan, has a well-established operation there which is part of its highly advanced mobile-phone network using Japanese technology. Not only can you talk with your friends using your mobile, but you can immediately send them photos as well.
The Japanese government recognizes that foreign investment into Japan has a valuable role to play in line with the process of restructuring and reform currently under way. Investment from foreign companies can bring the stimulation and fresh ideas that the Japanese economy now needs for future innovation. It is based on this line of thinking that Prime Minister Koizumi announced last year his plan to double the amount of direct investment into Japan within 5 years. He has also appeared in television commercials since March to appeal to the world and to ask foreign companies to invest in Japan. It is a rather extraordinary move on the part of the Prime Minister. But I also believe that Japan has a number of advantages which should attract investors. Japan not only boasts the most sophisticated market for high value-added products in Asia, but also provides the best production base for these products. It is endowed with highly skilled human resources, a reformed legal framework for investment, an efficient infrastructure for dynamic business activities and abundant market opportunities, as many foreign-owned businesses already in Japan, such as Vodafone and Wal-Mart, will testify.
Just to give you some idea as to the investment environment in Japan for foreign investors now, the percentage of the Japanese stock market owned by foreigners by market value has increased from around 5 percent in 1990 to 17.7 percent in 2002. M&A activities in Japan have been steadily increasing, rising from around 260 cases in 1993 to around 1,500 cases in 2002. In addition, foreign acquisitions in Japan have increased from only 19 cases in 1990 to 175 in 2000. Whereas Japanese attitudes towards foreign direct investment into Japan were somewhat ambivalent in the past, I doubt whether anyone would disagree now that it benefits us just as much as the investors, creating an undoubted win-win situation. All in all I can say with confidence, based on the current state of the economy, that it is a very good time to invest in Japan!
In this connection, let me briefly refer to the positive situation surrounding the Japanese economy. It seems to be in the best shape in many years! The economic growth rate for fiscal 2003 was 3.2%, and according to the forecast of the Bank of Japan it is expected to be 3.1% for fiscal 2004. Compared with previous recoveries which were short-lived, this time the recovery seems to have a much more solid base. A strong recovery is evident in terms of business fixed investment, while private consumption is also picking up. Corporate profits have risen for six quarters in a row.
Behind the good economic outlook, you should notice the steady progress in the structural adjustments. (1) Many successful companies have undergone difficult but strong restructuring efforts. The position of corporate debt has much improved. The share of labour cost in the total GDP has declined to the lowest level since early 90s. It means that Japanese companies have become much more technology and knowledge based and value-added ones. (2) As for financial sector, a steady progress is made in reducing non-performing loans. The pace in improvements is better than the target of the government. (3) We should also notice that the present recovery is based upon private business investment, private consumption and exports. Unlike the two recent examples of short-lived recoveries in the last ten years, this time public investment has been a negative factor. This means that the private sector has expanded more than compensated the negative factor of the public sector. This reflects the structural efforts of the government to reduce the public spending in order to improve the government budget and to stimulate vitality of private companies. I believe this is the right direction for Japan to go in. The Japanese government is determined to further accelerate reforms in the areas of finance, the tax system, regulations and expenditure. And of course, we are keen on providing better environment for technological innovation and new business creation for all of you. It is true that we still have challenges to overcome, such as the lingering effects of the bad loan problem, government debt and the long-term demographic problems of our low birth rate and the ageing society. Nevertheless, it is fair to say that the Japanese economy is set on a course of steady recovery.
Moreover, I strongly believe that the mixture of low prices and costs, deregulation and favourable economic prospects makes Japan a ����uy ' for overseas investors. Why not take advantage of these factors?
On a final note, I would like to draw your attention to the 2005 Aichi World Exposition, which will open in Japan from next March. The theme of the Expo is �ߡ�the Earth's Wisdom. �ߡ�It is a forum for pooling the wisdom of the widest possible range of people from around the world to address tasks common to us all, and we are very pleased indeed to have the UK participation in the Expo. Through this world exposition, we shall explore together new ideas about how human beings can coexist with the earth and how we can reduce our dependency upon finite energy resources. I sincerely hope that many of you will visit Japan on this special occasion, when you will be able to witness Japan-UK collaboration in action. This, of course, will also be a great chance for you to see with your own eyes what our nation has to offer as an investment destination. Please do come to Japan, either as an investor or as a tourist, and you can be assured of a warm welcome in a country offering a unique blend of history, culture, tradition and ultra-modern entertainment!
I hope that today's forum will help you understand Japan better, and I trust that it will help strengthen yet further the sound and healthy business links between Japan and the UK. In closing, may I wish you all every success in your endeavours.