CII Communique July 2011

eport"The supply chain (of industrial products) is about to berestored while consumer confidence is on a recoverytrack," he said.Wage Cut for Public ServantsThe Japanese government has adopted relevant bills forcivil service reform, featuring an average annual wagecut of 7.8% until March 2014. If implemented in July,the government plans to allocate some 200 billion yenin expected reduction for the current fiscal year for thereconstruction of areas devastated by the earthquakeand tsunami.Increased Iinvestment in East ChinaEast China's Jiangsu Province has become a populardestination for Japanese investors as they areincreasing investment outside the country as part ofJapan's efforts to transfer production capacity afterthe massive earthquake and tsunami. Jiangsu saw theestablishment of 80 Japanese-funded businesses witha total investment of $2.14 billion between mid-Marchand the end of May, a rise of 31.1% over the sameperiod last year.NSK Japan’s China InvestmentJapan's NSK Ltd will invest US$300 million to build aplant in Anhui province, China, in October 2011, thecompany's biggest investment in an overseas plant sofar. NSK, Japan's first bearing producer founded in 1916,produces automotive products, precision machinery andparts, in 40 manufacturing plants in 12 countries.Lending SchemeThe Bank of Japan kept its key interest rate unchangedat zero to 1% and expanded a lending programme tobolster the disaster-hit economy. It will offer commercialbanks 500 billion yen in new credit as part of a measureintroduced last year to fuel economic growth.Economic Growth Forecast RaisedThe IMF raised its forecast of economic growth inJapan for 2012 to 2.9% from an earlier projected 2.1%,expecting a recovery from the March earthquake andtsunami. The IMF also downgraded the forecast for 2011to minus 0.7% in terms of real GDP.Current Account Surplus DownJapan's current account surplus plunged 69.5% from ayear earlier in April. While the drop was much smallerthan the 80% forecast by economists, it was the smallestsurplus for April in 26 years. The surplus in the currentaccount fell to 405.6 billion yen ($5.0 billion) in Aprilfrom 1.33 trillion yen a year earlier.Quake Damage EstimatesDamage to buildings, roads and ports from the largeearthquake and tsunami in March is estimated to be at 16.9trillion yen ($209.8 billion), according to the Cabinet Officeof Japan. Damage to homes and factories is estimatedaround 10.4 trillion yen, while damage to rivers, ports androads is expected to be about 2.2 trillion yen.Republic of South KoreaHyundai Motor's Indian Market ShareThe market share of leading South Korean automakerHyundai Motor Co. in India rose to the year's high inMay on brisk sales of its new passenger car. Accordingto the Korea Automobile Manufacturers Association,Hyundai Motors sold 31,123 cars in India in May, up14.6% from the same period last year.Economy to Expand 4.5%The Korea Institute for Industrial Economics and Trade(KIET), expects South Korea's economic growth toexpand by 4.5% in 2011, compared to 6.2% in 2011,as the steady pace of the global economic recoverycontributes to more exports.Exports UpSouth Korean exports are expected to surpass theUS$500 billion mark for the first time this year, helped bythe steady pace of global economic growth, according toa report of Samsung Economic Research Institute. Thereport expects South Korea to ship out $555.7 billionworth of goods this year, up 19.2% from 2010.Trade SurplusSouth Korea posted a trade surplus for the 16th straightmonth in May, fueled by strong exports of petroleumproducts and wireless communications devices. Thetrade surplus was US$2.2 billion last month.Current Account Surplus with ChinaSouth Korea posted a record current account surplus ofUS$52.8 billion with China in 2010 as exports to Chinahit an all-time high.SingaporeMr Tarun Das, Former Chief Mentor, CII, visited Singaporefrom 13-16 June. During his visit, he had wide-rangingdiscussions with senior ministers of Singapore includingEmeritus Senior Minister Goh Chok Tong, Law andForeign Affairs Minister K Shanmugam, and EducationMinister Heng Swee Keat.Mr Das also met Mr George Yeo, former Foreign AffairsMinister, Dr TCA Raghavan, Indian High Commissioner to62 | July 2011 Communiqué