The Competitive Strength of European, Japanese, and U.S. Suppliers on ASEAN Markets by unknow

Author:unknow
Language: eng
Format: epub
Tags: Social Science, Political Science, World, Asian, Regional Studies
ISBN: 9781000315608
Google: DiCeDwAAQBAJ
Goodreads: 53479211
Publisher: Routledge
Published: 2019-06-18T07:35:07+00:00

It would be interesting to compare the relative importance of subsidised loans and capital in FDI of the various home countries, but unfortunately the data for this purpose are not available. Japan is, however, an exception to some extent. It publishes data not on the basis of its actual FDI but according to projects reported to the government at preinvestment stage. Therefore, Japan has information how these projects are planned to be financed from different sources, and these data are published [MITI, a]. If it is assumed that all the loans granted to private foreign investors by the Japanese government are subsidised, and this assumption seems to be quite realistic (1), then it can be said that financial incentives have facilitated Japanese FDI considerably.

As shown in Table 19, the share of government loans in Japanese FDI amounted to 34 per cent in 1974. Since then it has, however, gone down to 11 per cent indicating the growing financial strength of Japanese firms and their increasing self-confidence to establish production facilities in other countries on their own initiative and risk. This is supported also by the fact that Japanese investors have been financing their FDI more and more from their own resources. The share of FDI financed from internal liquidity of the investing firms in total FDI increased from 33 per cent in 1974 to 63 per cent in 1982. However, in agricultural and mining, where investment risks are relatively high and in which the Japanese government is extraordinarily interested in promoting FDI, Japanese firms have continued to take advantage of public funds for their direct investment activities in other countries. In these two sectors government loans account for much higher shares in total FDI (agriculture 48 per cent and mining 39 per cent in 1982) than in manufacturing or all sectors taken together.

Among institutional incentives, guarantees against political or non-commercial risk are most useful for foreign investors. In all the four countries these risks include 1) expropriation of property including nationalisation and confiscation without adequate compensation, 2) war in

Table 19 - Relative Importance of Various Sources for Financing of Japanese FDI, 1974, 1978 and 1982 (per cent) (a)

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