CII Communique - October, 2010

eportimpact of the nation’s appreciating currency. The gapexpanded 26% from a year earlier to $20 billion.Interest Rate SteadyThe Bank of Japan voted to keep interest rates at 0.1%,holding off on further measures to tackle a strong yenthat is undermining the country's fragile economicrecovery. The Central Bank has not changed theovernight call rate since December 2008. Prime MinisterKan has proposed a $920 billion ($10.9 billion) jobsfocusedstimulus package.FY 2011 BudgetJapan's general account budget for fiscal 2011 ona request basis reached a record-high 96.75 trillionyen due to swelling debt servicing and social securitycosts. The amount eclipsed the previous high of 95.04trillion yen sought for fiscal 2010, giving the governmentthe daunting task of trimming the bloated requests inthe course of drafting the budget under severe fiscalconstraints.Cabinet ReshufflePrime Minister Naoto Kan, after winning the trust vote,reshuffled his 3-month-old Cabinet on 17 September,replacing 10 of the 17 Cabinet ministers.Aging ProblemCurrently, the ratio of retirees to working-age Japanese is35.5%. In just 10 years time, retirees will make up 48%.By 2050, the ratio of retirees to working-age populationwill reach 76.4%.Slow Export GrowthJapanese exports grew at their slowest pace this yearin August as the impact of a strong yen and softeningoverseas demand illustrated the risks threatening afragile recovery. Strong Asian demand for cars, hightechproducts and factory parts have, in recent months,helped offset a weak domestic picture and enabled atentative economic recovery. While demand for steeland automobile related products saw Japan's exportsjump 15.8% to 5.22 trillion yen year-on-year in August,this was below July's 23.5% rise and the slowest pacesince December 2009.Health, Education AidPrime Minister Naoto Kan, at the Summit on the UNMillennium Development Goals on poverty reductionin New York, pledged that Tokyo will offer a total of$8.5 billion over five years from 2011 to help improvethe health of mothers and babies as well as educationservices in poor countries.Interventions in Currency MarketJapan intervened in the currency market on 15 Septemberfor the first time in six years to weaken the yen, whichhad spiked to 15-year highs against the dollar, batteringthe country's vital exporters. The dollar bounced up to84.52 yen from a low of 82.87 yen earlier after Japan'scentral bank stepped into the market to sell yen andbuy dollars.Laos and CambodiaA 44-memberindustry delegationcoordinated byCII, comprisingmembers fromIndia’s leadingindustry chambers,accompanied MrsPratibha DevisinghSandipan Chakravortty, leader of the CIIPatil, President of delegation, and Habib Md Chowdhury,President, Indian Chamber of Commerce,India on her officialin Laosvisit to Laos andCambodia from 12-15 September.The delegation, led by Mr Sandipan Chakravortty,Managing Director, Tata Steel Processing and DistributionLtd, included representatives of major Indian corporateslike TVS, Tata Steel, Jaguar Overseas, Kirloskar, Wapcos,Cosmos, Ruchi Soya, Amira Foods, Lucky Exports,Hallmark Infrastructure, Union Batteries etc.In both countries, the delegation met and interactedwith key miisters and senior mnistry officials. In Laos,the delegation had extensive discussions with DrNam Viyaketh, Minister of Trade and Commerce; DrSilavong Khoutphaythoune, Minister of Planning &Investment and Dr Soulivong Dalavong, Minister ofEnergy & Mines.In Cambodia, Dr Cham Prasidh, Senior Minister andMinister of Commerce, made a presentation to thedelegation on Cambodia’s economic, industrial andcommercial development. The delegation also metMr Sok Chenda Sophea, Minister attached to thePrime Minister, and Secretary General, Council for theDevelopment of Cambodia.The business programme in each location kicked offwith the delegation members meeting the Presidentof India to apprise her of the existing nature andlevel of investments by Indian companies in thecountry, issues faced and opportunities that couldbe explored.58 | October 2010 Communiqué