Japan Feb Executive Summary. Trade. Investment. Tourism

Transcription

1 Japan Feb Executive Summary This country fact sheet provides key trade, investment and tourism related statistics for Japan. Specifically, it shows global trade and investment flows including an analysis of top markets and products for Japan in relation to South Africa and the Western Cape, highlighting the largest and fastest growing products and sub-sectors. It also analyses tourism trends between Japan and South Africa. The key highlights in the Japan fact sheet are provided below: Trade The Asian giant is a net importer of services and has consistently recorded a trade deficit globally for the last few years. Higher fuel prices and weaker global growth weighed on export growth due to the depreciation of the Japanese Yen in 2012 and These have resulted in Japan recording its largest trade deficit in Slow foreign demand also affected exports in 2014, from slowing growth in its main markets China and the rest of emerging Asia, in particular. In 2015 and the drop in oil and gas prices took pressure off the nation s trade balance, but exports struggled with a rise in the yen making it difficult. The top export markets for Japan in were the United States of America (USD130.47bn) followed by China (USD113.91bn) and the Republic of Korea (USD46.26bn) in second and third place, respectively. South Africa is a net exporter to Japan and has been consistently for the past 10 years. The leading export product to Japan from South Africa in was platinum, unwrought, semi-manufactured or powder forms (USD1.67bn). Exports of this good accounted for 49 of all South African exports to Japan in. Since 2009, the Western Cape has recorded a trade surplus with Japan. Fruit, nuts and other edible parts of plants was listed as the top category exported by the Western Cape to Japan in valued at USD18.49m. The export of locust, algae, sugar beet and sugar cane; fruit stones and kernels and other vegetable products from the Western Cape saw the most encouraging export growth (36.01) for the period 2012 to followed by wine (11.31) for the period 2012 to. Investment Between January 2003 and June, there were a total of 2,434 FDI projects recorded in Japan. These projects represented a total of USD97.1bn Between January 2003 and June a total of 3 FDI projects were recorded from South Africa to Japan. These projects represent a total capital investment of USD64.60m. Between January 2003 and June a total of four FDI projects were recorded from Japan into the Western Cape. These projects represent a total capital investment of USD198.5m. A total of 174 jobs were created for this period. The most recent being an investment in March, by Nomura Holdings in the Financial Services sector. Tourism Tourist arrivals to South Africa has shown two successive years of decline. In 2015, the Japanese tourist arrivals decreased by This follows suit with the expectation that less Japanese are travelling abroad in general.

2 Table of Contents 1. General Information Economic Overview Doing Business in Japan Japan s Sovereign Credit Ratings Trade Japan s Trade in Services Japan s Global Trade South Africa s Trade with Japan Western Cape s Trade with Japan Trade regulations, Customs and Standards Trade Agreements Tariffs Port to Port Foreign Direct Investment Global FDI into Japan Global FDI from Japan FDI Relations from Japan Foreign Direct Investment from Japan to South Africa Foreign Direct Investment from South Africa to Japan Foreign Direct Investment between the Western Cape and Japan Tourism Outbound Tourism Tourism Expenditure Japanese Tourist Arrivals into South Africa Japanese Tourist Arrivals into the Western Cape

3 1. General Information Japan, officially known as the State of Japan, is made up of a group of 6,852 islands in East Asia. The island is situated on 377,915km 2 of land. Japan lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia. The four largest islands are Honshu, Hokkaido, Kyushu and Shikoku, which make up 97 of the total land area of the country. Globally, Japan has the world s tenth-largest population, with over 126 million people. The largest metropolitan area is the Honshu Greater Tokyo Area, which includes Tokyo. Japan ranks third in Asia on the Human Development Index, with the Japanese population enjoying the highest life expectancy in the world and the infant mortality rate being the third lowest globally. GENERAL INFORMATION - JAPAN Capital Tokyo Major Cities (Population) Tokyo (capital) million; Osaka-Kobe million; Nagoya (2015) million; Kitakyushu - Fukuoka 5.51 million; Shizuoka- Hamamatsu million; Sapporo million Population (July est.) 126,702,133 Government type Head of Government Life expectancy ( est.) Parliamentary government with a constitutional monarchy Prime Minister Shinzo Abe 85 years Literacy 99 Ethnic groups Japanese 98.5, Koreans 0.5, Chinese 0.4, other 0.6 Religion(s) (2012 est.) Shintoism 79.2, Buddhism 66.8, Christianity 1.5, other 7.1 Languages Japanese Human Development Index Sources: CIA World Factbook, 2017; World Bank Data, ; United Nations Data Economic Overview 3 Japan is the 3rd largest economy in the world. With a GDP 1.5 times the size of the UK and GDP per person about 6 times that of China, Japan remains the high-tech powerhouse economy of Asia - with the 2nd highest spend worldwide on R&D, a keen appetite for developing intellectual property and new trends, and an increasingly globalised outlook. Japan s households hold financial assets of 1645 trillion yen (more than 300 of GDP). Japan s major growth driver is exports, despite external demand accounting for 16 of its GDP. Average annual economic growth since 2012 has been around 1. The OECD expects the economy to grow by 0.8 in and 0.6 in A crucial long term challenge for Japan is its rapidly ageing and declining population, projected to drop from 127 million people to 117 million in 2030 and below 90 million people in To help address these issues, drive growth and combat deflation the Japanese government initiated in 2012 an economic policy known as Abenomics, deploying the three arrows of monetary easing, a flexible fiscal policy, and structural reforms. These were augmented by additional arrows in 2015, which included measures to address population decline. In pursuit of these policies, the central bank has adopted bold and unconventional monetary policy. Japan s public sector debt, the world s largest, currently stands at over 245 of GDP. Japan increased its rate of consumption tax (VAT) from 5 to 8 in April A second proposed rise in VAT (to 10) has been postponed until April Some progress has been made with structural reforms, notably energy market liberalisation, agricultural cooperatives, and corporate governance. The recently agreed Trans-Pacific Partnership (TPP), and the EU-Japan Economic Partnership Agreement (EPA) still under negotiation, should also help raise economic growth. As a country with limited natural resources, Japan is dependent on imports, especially oil and gas, food and raw materials for industrial production. This dependence increased in the aftermath of the 2011 tsunami that resulted in the closure of all nuclear reactors in Japan causing a massive increase in energy imports. Some nuclear reactors resumed operation in 2015.

4 ECONOMIC OUTLOOK SWOT ANALYSIS STRENGTHS WEAKNESSES - Japan is the world's largest creditor nation, with years of current account surpluses resulting in a huge build-up of foreign reserves and other external assets. ' - Japan has well-developed and high-tech manufacturing and services sectors, with strong advantages in key areas such as electronics and heavy engineering. - The economy is hampered by excessive regulation, state interventionism and a desire to protect politically influential special interest groups, all of which increase business costs. - Japan's population is shrinking, and it has one of the highest proportion of citizens aged over 65 among the developed economies, placing a large funding burden on the pension system. OPPORTUNITIES - Japan stands to benefit from rising demand from emerging markets especially China and India which can compensate for its own weak domestic economy. '- Japan's leaders are acutely aware of the economic costs of an ageing population, and policies may be implemented to encourage skilled immigrants into the domestic workforce over the coming years. THREATS - Japan remains dependent on exports as a driver of growth, and this means that its prosperity is dependent on demand from the US and China. - Japan must act quickly to reduce its fiscal deficit and national debt burden, the latter of which is already in the region of 250 of GDP. Debt servicing costs (interest and principal repayments) now constitute 25 of the annual budget, making a fiscal crisis increasingly likely over the medium term. - The Senkaku/Diaoyutai territorial dispute with China highlights the highly dependent nature of the Japanese economy. Japan has also competing claims on several other territories, which could its strain relations with South Korea, Russia and Taiwan. 4 Source: BMI International, 2017 Japan s economy was ranked highly in two recent major global economic studies: Japan was ranked 6th in the World Economic Forum s Global Competitiveness Report. The report gives significant attention to Japan s current economic environment. Japan ranked 34th in the World Bank s Ease of Doing Business report

5 Nominal GDP, JPYbn ECONOMIC INFORMATION Financial Centre Tokyo Currency Japanese Yen GDP (PPP) est. USD4.932 trillion GDP real growth - est. 0.5 GDP per capita - est. USD38,900 Inflation - est Interest rate - 31 Dec 1.5 Unemployment rate - est. 3.2 Total Exports - est. USD641.4 bn Total Imports - est. USD629.8 bn Inward FDI - 31 Dec est. USD204.3 bn Outward FDI - 31 Dec est. USD1.418 tn Source: CIA World Factbook, 2017; The graph below depicts Japanese Gross Domestic Product and its growth. As Japan s population ages and its savings rate continues to fall, private consumptions share of GDP is expected to rise. The expected rise is from 58.6 in 2015 to 61.8 by Government consumption is expected to decline as a share of GDP over the next few years as the Japanese government either takes steps to rein in the fiscal deficit or is forced to do so because of an increase in bond interest rates. Government consumption represented 20.4 of GDP in 2015 but is expected to decline to 18.4 by Fixed investment is not expected to change considerably as a share of GDP in the coming years gross capital formation to remain at levels of Net exports is expected to grow at a much slower pace than imports in the coming years. (BMI, 2017) 5 JAPAN'S GDP AND GROWTH, f Real GDP growth, y-o-y e 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f 2025f 2026f 0 Nominal GDP, JPYbn Real GDP growth, y-o-y Source: BMI, 2017 The increase in Real GDP growth reflected the expectation for yen weakness to provide support to net exports and residential construction in 2015 and. However the expected surge in bond yields poses a significant risk to the Japanese economy given its dependence on low interest rates and therefore a bearish outlook is held for prospective years (BMI, 2017). The diagram below depicts Japan s contribution to Gross Domestic Product in The largest industry contributors are

6 Manufacturing (20) Wholesale and Retail Trade (14) Real Estate (12) Professional, Scientific and Technical Services (7) JAPANESE SECTOR CONTRIBUTION TO GDP, 2015 Finance and insurance 5 Professional, scientific and technical activities 7 Information and communications 5 Construction 6 Human health and social work activities 7 Public administration 5 Transport and postal services 5 Other service activities 4 Education 4 Accommodation and food service activities 3 Electricity, gas and water supply and waste management service 2 Real estate 12 Manufacturing 20 Mining 0 Agriculture, forestry and fishing 1 Wholesale and retail trade 14 6 Source: Real Gross Domestic Product classified by Economic Activities (2011 Chain-linked), Japan Cabinet Office, 2017 The Forbes Global 200 is an annual list of the world s 2000 largest publicly listed corporations. Below is a list of some of the Japanese companies featured on the list in.

7 JAPAN'S LARGEST PUBLICLY LISTED COMPANIES, GLOBAL RANK COMPANY SALES (USDbn) PROFITS (USDbn) ASSETS (USDbn) MARKET VALUE (USDbn) 10 Toyota Motor Japan Post Holdings Mitsubishi UFJ Financial Nippon Telegraph & Tel Softbank Sumitomo Mitsui Financial 74 Honda Motor Nissan Motor Mizuho Financial Mitsubishi Corp KDDI Hitachi Tokio Marine Holdings Sony Itochu Denso Japan Tobacco Dai-ichi Life Insurance Mitsui East Japan Railway Source: Forbes Global 2000, Economy Watch, Doing Business in Japan The World Bank Group in its annual Doing Business report ranked Japan 34 th out of 190 countries monitored in terms of ease of doing business. Japan s relative strengths in terms of ease of doing business include resolving insolvency, with the country ranking 2nd globally in this category, and getting electricity having been ranked 15 th globally. JAPAN'S EASE OF DOING BUSINESS, SELECTED INDICATORS RANKING OUT OF 190 COUNTRIES, Starting a Business 89 Dealing with Construction 60 Permits Getting Electricity 15 Registering Property 49 Getting Credit 82 Protecting Minority Investors 53 Paying Taxes 70

8 JAPAN'S EASE OF DOING BUSINESS, SELECTED INDICATORS RANKING OUT OF 190 COUNTRIES, Trading across Borders 49 Enforcing Contracts 48 Resolving Insolvency 2 DOING BUSINESS RANKING Source: World Bank Group s Doing Business, Report Japan s Sovereign Credit Ratings A sovereign credit rating is the credit rating of a country or sovereign entity. Sovereign credit ratings give investors insight into the level of risk associated with investing in a particular country and also include political risks. At the request of the country, a credit rating agency will evaluate the country s economic and political environment to determine a representative credit rating. Source: Investopedia While a number of credit agencies exist, the three most recognised credit ratings agencies globally are Fitch Ratings, Moody s Investors Services and Standard & Poor s (S&P). Reasons for a country/sovereign to seek a credit rating from one of the these three agencies include not only to access funding in international bond markets via the issuance of bonds in external debt markets, but it is a means to attract foreign direct investment. Obtaining a good sovereign credit rating instils confidence in investors seeking to invest in that country, with the credit rating a means for the country to demonstrate financial transparency and credit standing. Two key rating standards exist, with the highest possible rating category being AAA according to S&P, which indicates that the rated country has extremely strong capacity to meet its financial commitments. A wide range of rating categories exists below this, with the categories ranging all the way down to SD (i.e. defaulted), which means the rated country has failed to pay one or more of its financial obligations when it came due. 8 S&P s affirmed Japan's rating at A+, with the outlook on the long term rating remaining stable. S&P took the view that Japan s strong external position, prosperous and diversified economy, political stability, and stable financial system will balance its very weak public finances. Moody's Investors Service affirmed the Government of Japan's issuer rating at A1. The rating outlook is maintained at stable. The affirmation reflects the slow but continuing progress in developing a policy and reform framework which could ultimately reflate the Japanese economy and reverse the rise in government debt. Also Moody s expectation that funding costs for the government will remain low and stable. Moody's also notes that the recent waning of economic momentum has prompted a pause in fiscal policy tightening, which we expect to lead to a rise in the Japanese government's debt burden. They expect that Japan's credit profile will continue to be consistent with an A1 rating, and the rating outlook stable. Fitch Ratings has affirmed Japan's Long-Term Foreign- and Local-Currency Issuer Default Ratings at 'A' and revised the Outlooks to Negative. The Japanese government announced on the 01 June a delay in the increase in consumption tax, which decreased Fitch s confidence in the Japanese authorities commitment to fiscal consolidation.

9 CREDIT RATING AGENCY JAPAN S SOVEREIGN CREDIT RATINGS STANDARD & POORS MOODY S INVESTOR SERVICES FITCH RATINGS CREDIT RATING A+ A1 A OUTLOOK Stable Stable Negative DATE OF LAST CHANGE Sep-15 Aug-16 Jun-16 Sources: Standard & Poor s; Moody s Investors Services; & Fitch Ratings A number of alternative measures and rating scales exist to assess risks posed to companies and banks, particularly those pertaining to political and commercial risks when undertaking international commercial transactions. One such company which offers these services is Belgium s Delcredereducroire, the country s official export credit agency and public credit insurer. The table below shows Delcredereducroire s current risk assessment of Japan in terms of export transactions and direct investments. Ratings are between 1 and 7, and between A and C, with 7 and C being the maximum risk indicators. JAPAN S RISK ASSESSMENT - DELCREDEREDUCROIRE EXPORT TRANSACTIONS (Scale 1 7)* Short Term 1 Political Risks Medium-Long term 1 Special Transactions 1 9 Commercial Risk B DIRECT INVESTMENTS War risk 2 Risk of expropriation and government action 1 Transfer risk 1 * Where 1 is associated with the least risk and 7 the most. ** Where B is associated with mid risk; A is low risk and C is high risk. Source: Credendo, 2017

10 Value (USDbn) 5. Trade 5.1 Japan s Trade in Services The graph below shows Japanese trade of services from 2008 to Japanese imports of services have been greater than its exports. This makes the Asian giant a net importer of services and it has maintained a trade deficit for the period shown below. In 2015 Japan improved its largest deficit recorded in 2012 by increasing exports by 18 and reducing import growth by JAPAN'S TRADE IN SERVICES, Exports (USDbn) Imports (USDbn) Trade Balance (USDbn) Source: TradeMap, 2017 The table below shows Japan s global trade in services in Charges for the use of intellectual property was the largest services export valued at USD36.08bn followed by transportation and other business services valued at USD35.48bn and USD33.72bn respectively. Other business services were the largest import service into Japan valued at USD60.88bn. Imports of transportation services (USD40.96bn) and charges for the use of intellectual property (USD16.54bn) were the second and third largest imports. TOP 10 SERVICES EXPORTED BY JAPAN, 2015 TOP 10 SERVICES IMPORTED BY JAPAN, 2015 CODE SERVICE VALUE 2015 (USDbn) 8 Charges for the use of intellectual property GROWTH CODE SERVICE VALUE 2015 (USDbn) Other business services GROWTH Transport Transport Other business Charges for the use of services intellectual property 4 Travel Travel Construction Telecommunications, computer, and information services

11 Value (USDbn) TOP 10 SERVICES EXPORTED BY JAPAN, 2015 TOP 10 SERVICES IMPORTED BY JAPAN, 2015 CODE SERVICE VALUE 2015 (USDbn) GROWTH CODE SERVICE VALUE 2015 (USDbn) GROWTH Financial services Construction Government goods and services 9 Telecommunications, computer, and information services 6 Insurance and pension services Financial services Insurance and pension services Manufacturing services on physical inputs owned by others Maintenance and repair services Maintenance and repair services TOTAL EXPORTS TOTAL IMPORTS Source: TradeMap, Japan s Global Trade Until 2010, Japanese trade was characterised by increasing exports and imports and continually recorded trade surpluses. The 2011 earthquake that caused the destruction of Fukushima nuclear power plant played its role in causing the first trade deficit in Japan. High import costs of fuel and weaker global growth weighed in on export growth due to the depreciation of the local currency in 2012 and Since late 2012 the average export growth in Japan has been modest. Foreign demand was also weak in 2014, reflecting the broad weakness in global trade, but Japan suffered particularly from slowing growth in its main export markets (that of China and the rest of emerging Asia). 11 In 2015 and a sharp drop in oil and gas prices took pressure off the nation s trade balance, but exports still struggled to make headway with a sharp rise in the yen weighing on profits among some of Japan s biggest firms. The value of shipments to key markets China and the United States were down in both 2015 and JAPAN'S GLOBAL TRADE IN PRODUCTS Exports (USDbn) Imports (USDbn) Trade Balance (USDbn) Source: TradeMap, The United States is the leading export market for Japan, followed closely by China and the Republic of Korea in third position. The United States export market was valued at USD130.47bn in, the Chinese export market at USD113.91bn, and the

12 Republic of Korea third at a value of at USD46.26bn. For the 5 year period from 2012 to, the United States has grown marginally at below 1. In, South Africa was Japan s 31 st largest export market valued at USD2.56bn TOP 10 DESTINATION MARKETS FOR EXPORTS FROM JAPAN, RANK 1 COUNTRY United States of America VALUE (USDbn) GROWTH SHARE IN China Republic of Korea Taiwan Hong Kong, China Thailand Singapore Germany Australia United Kingdom TOTAL EXPORTS Source: TradeMap, Japan import USD156.62bn worth of goods from China in and it is ranked as the top source market for Japan with a 26 share of Japanese imports. Second with a market share of 11 was the United States, followed by Australia in third position with a 5 share of all products imported into Japan in. South Africa was Japan s 28 th largest import market in valued at USD3.38bn. TOP 10 SOURCE MARKETS FOR IMPORTS BY JAPAN, RANK COUNTRY VALUE (USDbn) GROWTH SHARE IN 1 China United States of America Australia Republic of Korea Taiwan Germany Thailand Saudi Arabia Indonesia United Arab Emirates TOTAL IMPORTS

13 Source: TradeMap, nd largest exporter of Vehicles other than railway, tramway Largest exporter of Photographic or cinematographic goods 2nd largest importer of ores, slag and ash 2nd Largest exporter of Iron and steel Largest importer of tobacco and manufactured tobacco substitutes Largest importer of Meat, fish and seafood food preparations nes Japan's imports represent 3.8 of world imports in, its ranking in world imports is 5 th. Japan's exports represent 3.8 of world exports in, its ranking in world exports is 4. *The above analysis was done on HS: 2 level Japan is one of the largest automotive producers in the world. The country is home to a number of companies that produce cars, construction vehicles, motorcycles, ATVs, and engines. Japanese automotive manufacturers include Toyota, Honda, Daihatsu, Nissan, Suzuki, Mazda, Mitsubishi, Subaru, Isuzu, Kawasaki, Yamaha, and Mitsuoka. It has a well developed and high-tech manufacturing and services sector, with strong advantages in key areas such as electronics and heavy enginerering (BMI, 2017). The top Japanese export products are shown below showing that vehicles were the top export product valued at USD141.88bn in, followed by machinery, mechanical appliances, nuclear reactors etc valued at USD124.04bn. Electrical machinery and equipment was ranked third in and valued at USD98.27bn. 13 Key import products in were mineral fuels and oils which was ranked first at USD110.6bn followed by electrical machinery and equipment at USD Machinery, mechanical appliances, nuclear reactors and boilers ranked third, valued at USD59.43bn. TOP EXPORTS BY JAPAN, TOP IMPORTS BY JAPAN, RANK PRODUCT VALUE (USDbn) Vehicles incl. parts and accessories thereof Machinery, mechanical appliances, nuclear reactors, boilers; parts thereof Electrical machinery and equipment and parts thereof GROWTH Commodities RANK PRODUCT VALUE (USDbn) Mineral fuels, mineral oils and products of their distillation Electrical machinery and equipment and parts thereof Machinery, mechanical appliances, nuclear reactors, boilers Pharmaceutical products GROWTH

14 TOP EXPORTS BY JAPAN, TOP IMPORTS BY JAPAN, RANK PRODUCT VALUE (USDbn) Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments/apparatus (incl. parts and accessories) Iron and steel Plastics and articles thereof Organic chemicals Natural or cultured pearls, precious or semi-precious stones, precious metals etc. Ships, boats and floating structures GROWTH RANK PRODUCT VALUE (USDbn) Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments/apparatus (incl. parts and accessories) Vehicles incl. parts and accessories thereof Ores, slag and ash Organic chemicals Plastics and articles thereof GROWTH Articles of apparel and clothing accessories, not knitted or crocheted TOTAL EXPORTS TOTAL IMPORTS Source: Trademap, South Africa s Trade with Japan Trade between the two nations has been dominated by South Africa for the past ten years with its exports to Japan continually exceeding its imports from the country. South Africa s exports reached their peak in 2008 which resulted in its largest trade surplus for the period. Since then, trade has declined hindered by Japan s slowing economy and overall weaker global demand. In South African exports to and imports from Japan declined but the overall trade balance was similar to 2015.

15 Value (USDbn) Source: Quantec, SOUTH AFRICAN TRADE WITH JAPAN, Exports (USDbn) Imports (USDbn) Trade Balance (USDbn) The leading export product to Japan from South Africa was platinum, unwrought, semi-manufactured or powder forms (USD1.67bn) in. Exports of this good accounted for 49 of all South African exports to Japan. Motor vehicles for the transport of persons was the second largest export (USD0.4bn) followed by iron ores and concentrates including roasted pyrites (USD0.28bn). In the period 2012 to, titanium ores and concentrates experienced the largest export growth at The leading import products into South Africa from Japan were original equipment components valued at USD0.67bn and accounting for 26 of total imports from Japan in. Motor vehicles for transport of persons (except buses) and printing and ancillary machinery were the second and third in valued at USD0.40bn andusd0.12bn. 15

16 THE TOP 10 SOUTH AFRICAN EXPORTS TO JAPAN, RANK PRODUCT (HS4) VALUE (USDbn) Platinum, unwrought or in semi-manufactured forms, or in powder form Motor vehicles for the transport of persons (excluding buses) Iron ores and concentrates, including roasted iron pyrites GROWTH THE TOP 10 SOUTH AFRICAN IMPORTS FROM JAPAN, RANK PRODUCT (HS4) VALUE GROWTH (USDbn) Original equipment components Motor vehicles for the transport of persons (excluding buses) Printing machinery and ancillary machinery Ferro-alloys Motor vehicle parts and accessories Fuel wood, wood in chips or Self-propelled earth moving particles; wood waste machines Unwrought aluminium New pneumatic tyres, of rubber Motor vehicles for the Manganese ores and transport of ten or more concentrates persons Titanium ores and Motor vehicles for the concentrates transport of goods Flat-rolled products of 9 Unwrought nickel iron/non-alloy steel, width > mm or more 10 Citrus fruit Fork-lift trucks; other works trucks fitted with lifting or handling equipment TOTAL EXPORTS TOTAL IMPORTS Source: Quantec;

17 Value (USDm) 5.4. Western Cape s Trade with Japan Since 2009 the Western Cape has recorded a trade surplus with Japan. A considerable increase in both imports and exports was recorded in 2013 but since, both have steadily decreased to levels previously recorded. Maize was the major contributor to the high export levels shown in The value of maize exports decreased to previous levels in There are no recorded exports of maize (corn) in 2015 and. Source: Quantec; 2017 WESTERN CAPE TRADE WITH JAPAN, Exports (USDm) Imports (USDm) Trade Balance (USDm) The table below shows the top 10 traded products between the Western Cape and Japan. Fruit, nuts and other edible was the Western Cape s largest export in accounting for of the province s exports (valued at USD18.49m). In second position were locust beans, algae, sugar beet and sugar cane; fruit stones and kernels and other vegetable products valued at USD14.76m. It also has shown the highest export growth of the top 10 products for the 2012 to period at In third position was citrus fruit valued at USD14.42m in. 17 Artificial filament tow (USD16.39m) was the largest import from Japan in. Ceramic wares (USD15.77m), and instruments and appliances used in medical, surgical, dental or veterinary sciences (USD6.48m) ranked second and third respectively. The top three imports accounted for 51 of total imports from Japan in. THE TOP 10 WESTERN CAPE EXPORTS TO JAPAN, THE TOP 10 WESTERN CAPE IMPORTS FROM JAPAN, RANK 1 2 PRODUCT (HS4) Fruit, nuts and other edible parts of plants Locust beans, algae, sugar beet and sugar cane; fruit stones and kernels and other vegetable products VALUE (USDm) GROWTH RANK 3 Citrus fruit Wine PRODUCT (HS4) VALUE (USDm) GROWTH Artificial filament tow Ceramic wares Instruments and appliances used in medical, surgical, dental or veterinary sciences Lenses, prisms, mirrors and other optical elements

18 THE TOP 10 WESTERN CAPE EXPORTS TO JAPAN, THE TOP 10 WESTERN CAPE IMPORTS FROM JAPAN, RANK PRODUCT (HS4) Fruit juices and vegetable juices Beauty or make-up preparations and preparations for the care of the skin Flours, meals and pellet unfit for human consumption VALUE (USDm) GROWTH RANK PRODUCT (HS4) Halogenated derivatives of hydrocarbons VALUE (USDm) GROWTH Frozen fish Air conditioning machines Crustaceans Printing machinery Seeds, fruit and spores, used for sowing Enzymes Measuring or checking instruments, appliances and machines; profile projectors. Slag wool, rock wool and similar mineral wools and mineral materials TOTAL EXPORTS TOTAL IMPORTS Source: Quantec; Trade regulations, Customs and Standards Import Requirements and Documentation Any person wishing to import goods must declare them to the Director-General of Customs and obtain an import permit after necessary examination of the goods concerned. The formalities start with the lodging of an import declaration and end with issuance of an import permit after the necessary examination and payment of Customs duty and excise tax. Certain items may require a Japanese import license. These include hazardous materials, animals, plants, perishables, and in some cases articles of high value. Import quota items also require an import license, usually valid for four months from the date of issuance. Other necessary documents for may include an import Declaration Form (Customs Form C-5020) and a certificate of origin if the goods are entitled to favourable duty treatment determined by preferential or WTO rates. Any additional documents necessary as proof of compliance with relevant Japanese laws, standards, and regulations at the time of import may also apply. Correct packing, marking, and labelling are critical to smooth customs clearance in Japan. Straw packing materials are prohibited. Documents required for customs clearance in Japan include standard shipping documents such as a commercial invoice, packing list, and an original and signed bill of lading, or, if shipped by air, an air waybill. Air shipments of values greater than 100,000 (about $1000) must also include a commercial invoice. The commercial invoice should be as descriptive as possible for each item in the shipment. The packing list should include the exact contents and measurement of each container, including the gross and net weights of each package. The Japanese Measurement Law requires that all weights and measures on a packing list be reflected in Metric System values.

19 Japan prohibits the importation of certain items including narcotics, firearms, explosives, counterfeit currency, pornography, and products that violate intellectual property laws. Labelling and Marking Requirements The "voluntary" Japan Industrial Standards (JIS) mark, administered by the Ministry of Economy, Trade and Industry (METI), applies to nearly 743 different industrial product categories and consists of over 10,289 standards (as of March, 2013). JIS covers industrial and mineral products with the exception of: 1) medicines; 2) agricultural chemicals; 3) chemical fertilizers; 4) silk yarn; and 5) foodstuffs, agricultural and forest products designated under the Law Concerning Standardization and Proper Labeling of Agricultural and Forestry Products. The Japan Agricultural Standards (JAS) is another "voluntary" but widely used product standard system administered by the Ministry of Agriculture, Forestry and Fisheries (MAFF). The Council for Agricultural and Forestry Standards, a JAS Council consisting of consumers, manufacturers, commercial users, and academic experts, establishes JAS s standards. Existing JAS Standards are reviewed every five years by each JAS Council. JAS certification is a complicated process requiring approval by a Registered (Overseas) Certified Body (ROCB). In order for products to carry JAS marks on their packaging they must be graded by producers, manufacturers, distributors or importers who are certified by third party organisations that are recognised by the Japanese government. These organisations are called RCB or Registered Certifying Bodies. Japanese law requires labels for products in several categories. Generally, labelling for most imported products is not required at the customs clearance stage, but at the point of sale. It is common for a Japanese importer to affix a label to an imported product after it has cleared customs. While importers do not have to affix label to fresh foods such as grapefruit or oranges, the retailer is required to display country of origin near the product. To ensure that a given product meets all applicable requirements and is properly labelled, it is important for an exporter to work with a Japanese agent or importer. The Consumer Affairs Agency was established in September 2009 to protect and enhance consumer benefits. It covers a broad range of jurisdictions related to consumer issues, such as trade, safety and labelling. 19 Prohibited and Restricted Imports Japan strictly prohibits entry of narcotics and related utensils, firearms, firearm parts and ammunition, explosives and gunpowder, precursor materials for chemical weapons, germs which are likely to be used for bio-terrorism, counterfeit goods or imitation coins or currency, obscene materials, or goods that violate intellectual property rights. Other restricted items include but are not limited to certain agricultural and meat products, endangered species and products such as ivory, animal parts and fur where trade is banned by international treaty. In addition, Japan imposes restrictions on the sale or use of certain products including those related to health such as medical products, pharmaceuticals, agricultural products and chemicals. For these products, Japanese Customs reviews and evaluates the product for import suitability before shipment to Japan Trade Agreements In June 2013, the Department of Trade and Industry (DTI) announced a study on economic co-operation between Japan and South Africa, to broaden Japanese involvement in aluminium and steel beneficiation as well as agro-processing. The DTI also signed a cooperation agreement with the Mizuho Corporate Bank Ltd. In terms of trade, South Africa has been offered unilateral preferences under the GSP (Generalised System of Preferences) arrangements of the WTO. These preferential market access provisions apply to specified industrial and agricultural products (DTI, 2017). There are currently no free trade agreements (FTA) nor economic partnership agreement (EPA) between South Africa and Japan.

20 5.7. Tariffs Tariffs imposed by Japan on South African exports are listed below. HS CODE (LEVEL 2) TARIFFS IMPOSED ON JAPAN IMPORTS FROM SOUTH AFRICA, 2015 DESCRIPTION TARIFF H01 Live animals H02 Meat and edible meat offal H03 Fish and crustaceans, molluscs and other aquatic invertebrates 4.59 H04 Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included H05 Products of animal origin, not elsewhere specified or included 0.00 H06 Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage 0.00 H07 Edible vegetables and certain roots and tubers H08 Edible fruit and nuts; peel of citrus fruit or melons 8.94 H09 Coffee, tea, maté and spices 3.73 H10 Cereals H11 Products of the milling industry; malt; starches; inulin; wheat gluten H12 Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder 9.95 H13 Lac; gums, resins and other vegetable saps and extracts 2.12 H14 Vegetable plaiting materials; vegetable products not elsewhere specified or included 0.86 H15 Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes H16 Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates 9.21 H17 Sugars and sugar confectionery H18 Cocoa and cocoa preparations H19 Preparations of cereals, flour, starch or milk; pastrycooks' products H20 Preparations of vegetables, fruit, nuts or other parts of plants H21 Miscellaneous edible preparations H22 Beverages, spirits and vinegar 8.25 H23 Residues and waste from the food industries; prepared animal fodder 0.44 H24 Tobacco and manufactured tobacco substitutes 1.00 H25 Salt; sulphur; earths and stone; plastering materials, lime and cement 0.07 H26 Ores, slag and ash 0.00 H27 Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes 0.40 H28 Inorganic chemicals : organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes 0.05 H29 Organic chemicals 0.05 H30 Pharmaceutical products 0.11 H31 Fertilisers 0.00 H32 Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks 0.00

21 HS CODE (LEVEL 2) TARIFFS IMPOSED ON JAPAN IMPORTS FROM SOUTH AFRICA, 2015 DESCRIPTION TARIFF H33 Essential oils and resinoids; perfumery, cosmetic or toilet preparations 0.00 Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, H34 prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, ædental waxesæ and dental preparations with a basis of plaster 0.00 H35 Albuminoidal substances; modified starches; glues; enzymes 1.12 H36 Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations 0.56 H37 Photographic or cinematographic goods 0.00 H38 Miscellaneous chemical products 0.00 H39 Plastics and articles thereof 0.35 H40 Rubber and articles thereof 0.00 H41 Raw hides and skins (other than furskins) and leather H42 Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut) H43 Furskins and artificial fur; manufactures thereof 6.79 H44 Wood and articles of wood; wood charcoal 1.89 H45 Cork and articles of cork 0.00 H46 Manufactures of straw, of esparto or of other plaiting materials; basketware and wickerwork 1.92 H47 Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard 0.00 H48 Paper and paperboard; articles of paper pulp, of paper or of paperboard 0.00 H49 Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans H50 Silk 8.38 H51 Wool, fine or coarse animal hair; horsehair yarn and woven fabric 2.81 H52 Cotton 2.99 H53 Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn 2.64 H54 Man-made filaments 4.61 H55 Man-made staple fibres 4.70 H56 Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof 0.31 H57 Carpets and other textile floor coverings 3.61 H58 Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery 0.89 H59 Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use 0.00 H60 Knitted or crocheted fabrics 5.76 H61 Articles of apparel and clothing accessories, knitted or crocheted 9.90 H62 Articles of apparel and clothing accessories, not knitted or crocheted 8.89 H63 Other made-up textile articles; sets; worn clothing and worn textile articles; rags 2.99 H64 Footwear, gaiters and the like; parts of such articles H65 Headgear and parts thereof 0.00 H66 Umbrellas, sun umbrellas, walking sticks, seat-sticks, whips, riding-crops and parts thereof 3.22

22 HS CODE (LEVEL 2) H67 TARIFFS IMPOSED ON JAPAN IMPORTS FROM SOUTH AFRICA, 2015 DESCRIPTION Prepared feathers and down and articles made of feathers or of down; artificial flowers; articles of human hair TARIFF 2.17 H68 Articles of stone, plaster, cement, asbestos, mica or similar materials 0.00 H69 Ceramic products 0.00 H70 Glass and glassware 0.34 H71 Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin 0.98 H72 Iron and steel 0.17 H73 Articles of iron or steel 0.00 H74 Copper and articles thereof 0.93 H75 Nickel and articles thereof 0.40 H76 Aluminium and articles thereof 1.16 H78 Lead and articles thereof 0.20 H79 Zinc and articles thereof 0.50 H80 Tin and articles thereof 0.00 H81 Other base metals; cermets; articles thereof 0.65 H82 Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal 0.00 H83 Miscellaneous articles of base metal 0.00 H84 Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof 0.00 H85 Electrical machinery and equipment and parts thereof; sound recordersand reproducers, television image and sound recorders and reproducers, and parts andaccessories of such articles 0.00 H86 Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds H87 Vehicles other than railway or tramway rolling stock, and parts and accessories thereof 0.00 H88 Aircraft, spacecraft, and parts thereof 0.00 H89 Ships, boats and floating structures 0.00 H90 Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof 0.00 H91 Clocks and watches and parts thereof 0.16 H92 Musical instruments; parts and accessories of such articles 0.00 Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps H94 and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings 0.26 H95 Toys, games and sports requisites; parts and accessories thereof 0.00 H96 Miscellaneous manufactured articles 0.44 H97 Works of art, collectors' pieces and antiques 0.00 Source: TradeMap, 2017 NOTE: Exporters should not take the HS2 tariff as conclusive and as the actual tariff that will be applied to the exported product. The tariffs indicated above are average tariffs and for products within the category it may be higher or lower than indicated. Where the tariff is zero it can be assumed that there is zero tariff applicable to all products within that HS code. Tariffs are determined according to the importing country s national tariff line from the HS6 level and upwards. Exporters are advised to visit to determine the exact tariff applicable to the product at HS6

23 Value (USDm) 5.8. Port to Port The table below shows the distance and time it takes goods to travel from Cape Town Port terminal to Japan s main sea ports. Japan has 1,020 ports, which comprises 22 main special purpose ports, 106 main ports and 892 local ports. Most ports are financed by the government and various port-managing organisations. CAPE TOWN PORT TERMINAL TO VARIOUS PORT TERMINALS IN JAPAN MAJOR SEA PORTS DISTANCE TIME AT SEA Chiba km 25 DAYS Kawasaki km 25 DAYS Kobe km 24 DAYS Mizushima km 24 DAYS Moji km 24 DAYS Nagoya km 24 DAYS Osaka km 24 DAYS Tokyo km 25 DAYS Tomakomai km 1 MONTH Yokohama km 25 DAYS Source: Sea-Rates, Foreign Direct Investment 6.1 Global FDI into Japan 23 Between January 2003 and June, there were a total of 2,434 FDI projects recorded in Japan. These projects represented a total of USD97.1bn which is an average investment of USD40.10m per project. During this period a total of 270,992 jobs were created. Japan received the most investment (for this period) in 2013 and 2014 with an increased number of investment projects in the Software and IT Services sector. Investment in the Software and IT services sector increased by in 2013 compared to 2012, and accounted for 23 of all investments. In 2014 foreign direct investment within the software and IT services sector held its position accounting for of investment. INWARD FDI TO JAPAN, JAN JUN Projects Capex Projects Source: FDI Intelligence, 2017

24 The United States was the leading source market for FDI to Japan, in terms of both capex and projects. Second and third position is held by the United Kingdom and Germany respectively as shown in the table below. European countries are the top source markets for investment in Japan of the top 10 countries listed below, 6 countries are European. TOP 10 SOURCE MARKETS FOR FDI INTO JAPAN JAN JUNE RANK COUNTRY PROJECTS 1 United States PROJECTS CAPEX (USDm) CAPEX COMPANIES COMPANIES UK Germany France Italy China Switzerland South Korea Sweden Canada Other countries TOTAL Source: FDi Intelligence, 2017 The two diagrams below depict which sectors in Japan have been invested in from a projects and capex perspective. The highest number of investments (based on projects), has been the software & IT Services sector (20) followed by investments in the textiles sector (10) and the business services sector (8) in second and third place respectively. 24 INWARD FDI INTO JAPAN BY SECTOR (PROJECTS), JAN JUN Other Sectors 28 Software & IT services 20 Electronic Components 4 Industrial Machinery, Equipment & Tools 4 Consumer Products 6 Source: FDi Intelligence, 2017 Real Estate 3 Semiconductors 3 Business Services Financial 8 Services 8 Communications 6 Textiles 10