CII Communique - February, 2010

eport
Bank of Japan holds Interest Rate
The Bank of Japan left its key interest rate unchanged
at 0.1% to overcome deflation. At the same time, it
upgraded its growth forecasts slightly, predicting that the
economy would shrink 2.5% this financial year before
rebounding 1.3% next year.
Wholesale Prices Fall
Japanese wholesale prices in 2009 fell a record 5.3%
from 2008. The prices, gauged by the central bank's
corporate goods price index, stood at 103.0 against the
2005 base of 100.
China – Japan Trade
China has emerged as Japan’s top export market,
surpassing the United States for the first time since
World War II. Although exports to China in 2009 dropped
20.9% to 10.24 trillion yen, China became the largest
purchaser of Japanese products because exports to
the US plunged by a whopping 38.5%, mainly due to
the worldwide economic contraction.
Foreign Trade
Japan's trade surplus rose 36.1% from a year earlier
to 2.81 trillion yen - the first increase in two years.
Total exports in 2009 posted a 33.1% drop from a
year earlier, while imports fell by 34.9%. A huge fall in
shipments of motor vehicles, iron and steel products,
and semiconductors, pushed down overall exports in
2009. Motor vehicle exports fell especially steeply by
51.3%.
Car Output down 30%
Domestic production at Japan's eight major car makers
in 2009 fell by about 30% in 2009, showing the global
slump in the automobile market impacted both exports
and domestic sales in Japan.
South Korea
President Myung-bak Visits India
Mr Lee Myung-bak, the President of South Korea, paid
a four day-visit to India from 24-27 January. He was the
Chief Guest at India’s Republic Day celebration this year.
Prime Minister Manmohan Singh held talks with President
Lee Myung-bak on a wide range of bilateral, regional and
global issues, including the intensification of economic
ties, UN reforms and cooperation in civilian nuclear
energy, defence and civilian space technologies.
The two sides inked four accords after the talks -
related to cooperation in peaceful uses of outer space,
IT, science and technology for the year 2010-12 and
transfer of sentenced persons. India and South Korea
Lee Myung-bak, President of the Republic of Korea, (right) with
Anand Sharma, Minister of Commerce & Industry, India, and
Venu Srinivasan, President, CII
also agreed to set up a fund of $10 million (with each
side contributing $5 million) to promote bilateral research
ventures, increase bilateral trade to $30 billion by 2014
and accelerate cooperation in areas like combating
maritime piracy and joint development of military
hardware.
Addressing captains of Indian industry and trade at
a Business Meeting on 25 January in New Delhi, the
Korean President urged the Indian Government to look at
Korea’s expertise in civil nuclear energy production and
strike mutually beneficial collaborations in developing
India’s nuclear energy capabilities, and make the sector
globally competitive. He urged Korean companies to
invest in India’s growing economy and Indian companies
to turn their attention to Korea.
Mr. Anand Sharma, Minister for Commerce and
Industry, India, pointed out that India has become a
major investment destination with a huge market for
automobiles, consumer electronics, areas that Korean
companies excelled in.
Mr. Venu Srinivasan, President, CII, in his welcome
address, suggested setting up of dedicated trade
and investment promotion agencies in each country
to bridge the information gap regarding procedures
and regulations faced by potential businesses. These
agencies could target Tier 2 and 3 cities in India,
which were thriving centres of entrepreneurship and
a few promising sectors could be short-listed for
targeted intervention, including automobiles, telecom,
electronics and electrical machinery, textiles, leather
and pharmaceuticals, he suggested.
Bank of Korea
The Monetary Policy Committee of the Bank of Korea
decided to maintain the Base Rate at its current level
(2%) for the inter-meeting period. Domestic economic
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