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BoJ sees zero inflation in Abenomics setback

Posted by pakin On March - 17 - 2015 ADD COMMENTS

TOKYO – The Bank of Japan on Tuesday said tumbling energy prices could push inflation to zero, marking another setback for Tokyo’s attempts to kickstart the economy by conquering years of falling or stagnant prices.

While the central bank repeated its view that inflation expectations were “rising on the whole” — and it held fire on launching fresh stimulus — the commentary strikes another blow to efforts to reach a sustained two percent inflation level.

Tokyo’s campaign to stimulate spending faltered after the government raised the country’s sales tax last year to help pay down Japan’s enormous national debt.

That hammered consumer spending and led to a brief recession, while falling oil rates have pulled the carpet on energy-led price increases.

“The year-on-year rate of increase in the consumer price index…. excluding the direct effects of the consumption tax hike, is in the range of 0.0-0.5 percent,” the BoJ said in a statement after a two-day policy meeting.

But it added that inflation “is likely to be about 0 percent for the time being, due to the effects of the decline in energy prices”.

Investors will now be following BoJ chief Haruhiko Kuroda’s regular news briefing later Tuesday for clues about the bank’s plans for its massive two-year-old stimulus.

Kuroda has repeatedly said the bank would further loosen monetary policy if necessary. And policymakers shocked markets in October when they expanded the scheme — which pumps cash into the banking system to kickstart the wider economy — to a rate of about 80 trillion yen ($679 billion) annually.

“While the Bank of Japan kept its powder dry today, we still think that policymakers will step up the pace of easing at the end of next month to signal their determination to hit the two percent inflation target,” Marcel Thieliant from Capital Economics said in a commentary.

The BoJ’s inflation target is a cornerstone of Prime Minister Shinzo Abe’s drive to resuscitate Japan’s fortunes, dubbed Abenomics, which also includes big government spending and an overhaul of the country’s highly regulated economy.

Japan limped out of recession in the last quarter of 2014 with tepid 0.4 percent growth.

However, inflation in January was just 0.2 percent, the lowest since a zero rate in May 2013, just after the BoJ unleashed its monetary easing programme.

Prices had been on the rise, largely due to Japan having to import pricey fossil fuels to plug an energy gap left by the shutdown of atomic reactors in the wake of the 2011 Fukushima accident.

But plunging oil prices have dealt another blow to the BoJ’s inflation goals, and doubts are growing over the ambitious target — even among bank policymakers.

Minutes from the central bank’s January meeting showed that three of nine BoJ board members doubted the chances of reaching the price target by next year.

Japan seeks to boost its rice exports

Posted by pakin On March - 17 - 2015 ADD COMMENTS

Singapore: A Japanese rice export association launched an initiative Monday to boost exports to Singapore, taking advantage of the wealthy city-state’s appetite for Japanese cuisine.

The scheme, entitled “This is Japan Quality,” has been developed by the Japan Rice and Rice Industry Export Promotion Association in partnership with Japan’s Agriculture Ministry to expand Japanese culinary culture by highlighting the merits of Japanese rice.

“It aims to ultimately increase the amount of rice and rice products exported globally by first focusing on Singapore,” said the association’s chairman, Ryo Kimura.

In particular it aims to use Singapore as a “strategic springboard” to spread Japanese culinary culture in Southeast Asia and fuel interest in Japanese rice products.

The ministry estimates that Japan exported more than 1,200 tonnes of rice valued at more than 370 million yen ($3 million) to the tiny city state last year — about 10 times the amount exported to China.

The association has designed a new logo for Japanese rice products and a website with information about Japanese rice. The rice will have “QR” codes on the packaging that will enable buyers to have easy access to the website.

Akira Karasawa, director general for crop production at the Ministry of Agriculture, Forestry and Fisheries, said in his speech at the launch event that the Japanese government was trying to promote the export of agriculture and fishery products globally.

However, Japan’s global export value ofrice was still small at only 1.4 billion yen last year. The Japanese government has set the goal of raising the export value of rice and rice products to 60 billion yen by 2020, Karasawa said.

He added that one of the reasons for launching the initiative in Singapore was due to the nation’s high income level.

Japan ODA paper highlights ties with Asean

Posted by pakin On March - 11 - 2015 ADD COMMENTS

TOKYO — A white paper on official development assistance highlights the importance of Japan’s cooperation with the Association of Southeast Asian Nations for the country’s national security, according to a copy of the document obtained Tuesday .

The ODA White Paper for 2014 to be released later this month states that “achieving growth and stability in this region has a great significance” not only to the region but to “Japan’s security as well.”

The white paper apparently emphasises the significance of ties with the 10-member Asean in reference to the growing influence of China on the region.

It comes after the cabinet of Prime Minister Shinzo Abe adopted a foreign aid charter early last month that states that ODA can be used to support foreign armed forces in noncombat operations such as disaster relief, infrastructure building and coast guard activities.

The white paper also calls Asean an “extremely important market and place for investment for Japan” and notes that the distribution network for goods “underpinning the Japanese economy runs through the Asean region.”

Asean, which groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, has a combined population of over 600 million people.

Mr Abe’s government sees the need to provide aid to countries near the sea lane from the Straits of Malacca to South China Sea, given its strategic importance to Japan in terms of the import of natural resources from the Middle East, Japanese officials said.

Noting how the ODA has been successfully utilised for the past 60 years, the document says the ODA is “not only contributing to recipient countries and international community but Japan’s peace, stability and prosperity too.”

Touching on China, the world’s second-largest economy, the document says Japan will disburse ODA in “limited” cases such as technical cooperation on food production in China.

Japan Post flexed its muscles with a $5.07 billion takeover bid for Australia’s Toll Holdings Wednesday in a move set to bolster its appeal ahead of what could be one of the world’s biggest IPOs later this year.

The behemoth, a state-owned global postal and logistics player, unexpectedly offered Aus$9.04 a share for Toll, a 49 percent premium to the company’s closing price on Tuesday, valuing it at Aus$6.49 billion (US$5.07 billion).

Under the proposal, the Melbourne-based transport logistics giant will be run as a division within Japan Post and retain the Toll name, with the company’s chief executive Brian Kruger reporting to his counterpart Toru Takahashi.

Toll has a global network spanning road, air, sea, and rail routes with significant operations in Asia, and Takahashi said it was a perfect fit for Japan Post as it looks to expand its international footprint.

“We believe the combination of Japan Post and Toll will be a transformational transaction for both our companies and we are very pleased we have been able to reach agreement,” he said.

“In partnership with Toll we are starting a new chapter of looking outward and becoming a leading global player.”

Toll chairman Ray Horsburgh recommended that shareholders back the deal.

“Japan Post is one of the world’s leading postal and logistics companies and Toll is the largest independent logistics group in the Asia-Pacific,” he said.

“Together, this will be a very powerful combination and one of the world’s top five logistics companies.”

A shareholder vote will be held in May, with the deal also requiring approval from Australian Treasurer Joe Hockey under the nation’s foreign investment laws.

Kimber Capital head of research Greg Fraser said it was too good an offer to reject.

“I don’t think anyone will say no to it. It’s a huge premium,” he said.

Toll shares rocketed nearly 50 percent when they relisted Wednesday, settling around Aus$8.94 in early afternoon trade, slightly below the offer price.

– A solid move –

The government of former prime minister Junichiro Koizumi split the state-owned Japan Post into four units in 2007 to handle deliveries, savings, insurance and counter services at each of its post offices.

The government retained full ownership of the group at first, with plans for the bank and insurance units to go fully private by 2017.

But the plan was stalled after the long-ruling Liberal Democratic Party lost power to the Democratic Party of Japan between 2009 to 2012.

After returning to power in 2012, the current LDP-led government resumed the privatisation project with Japan Post in December confirming it will list its shares in Tokyo this year.

Bloomberg News reported that Japan Post hopes to raise 1.0 trillion yen (US$8.4 billion) to 2.0 trillion yen by listing units encompassing post, banking and insurance.

IG Markets strategist Stan Shamu said the Toll deal was a win-win.

“Japanese companies hold an enormous amount of cash on their balance sheets and, given the two-way trade between Australia and Japan, this is a solid move,” he said.

Toll, which was founded in 1888 as a horse-and-cart coal haulage business in the Australian port town of Newcastle, said the merger would enhance service to existing and new customers.

“The proposed combination is a reflection of the strategic value of our business and our strong footprint throughout the Asia-Pacific region,” said Kruger.

“The great Toll culture built on safety and operational excellence will work well alongside Japan Post’s established values. I am delighted to have been invited to lead this powerful new division of Japan Post and look forward to working with the rest of the group.”