Japanese firms, buoyed by government stimulus and growing profits, will usher in their biggest annual capital expenditure increase since the 2008 global financial crisis, a survey showed yesterday.
The Nikkei Shimbun business daily said investments in plants, equipment and other capital spending by nearly 1,400 surveyed firms would total ￥25.9 trillion (US$250.4 billion) for the current fiscal year to March — up 13.1 percent from a year earlier.
The percentage rise would be the biggest annual gain after a 13.7 percent jump in fiscal 2005 and the best showing since the 2008 collapse of Lehman Brothers triggered a worldwide financial meltdown, the Nikkei said.
Spending on overseas plants and other investments by a subset of the polled group — about 840 firms — were on track to surge 33 percent to ￥4.2 trillion, it said.
The survey is a plus for Japanese Prime Minister Shinzo Abe’s bid to stoke the world’s third-largest economy with a policy blitz dubbed Abenomics.
Abe has been calling on cash-rich firms to boost wages to stoke spending and growth. Bank of Japan Governor Haruhiko Kuroda repeated Tokyo’s salary-hike call in a speech yesterday.
“I am hoping that increases in basic salaries ... will be carried out as corporate earnings grow,” he told business executives.
Meanwhile, China has fallen off the top of a list of Japan Inc’s favored investment destinations for the first time in more than two decades because of higher labor costs and bilateral tensions, a survey showed.
Indonesia took the top spot, up from third place on support from sectors ranging from automobiles to electronics, the Japan Bank for International Cooperation (JBIC) said.
China tumbled to fourth after 21 years of being named as the most promising destination for overseas expansion, the governmental bank said in its annual survey released on Friday.
The bank asked companies already operating overseas to choose up to five promising nations and regions for their business in the next three years.
Of the nearly 500 companies that answered, 44.9 percent said Indonesia was a good place to do business, while China saw its popularity dive to a lowest-ever 37.5 percent from 62.1 percent.
Among companies that dropped China from their list this year, more than four in 10 said rising labor costs and difficulty in hiring enough workers were a concern.
Other concerns cited were a slowdown in the Chinese economy, intensifying competition with rivals and bilateral political relations, with Japan and China embroiled in a bitter territorial dispute over islands in the East China Sea.
The JBIC survey showed India maintained its second slot although it was cited by just 43.6 percent of firms, down from 56.4 percent, due partly to rising labor costs and poor infrastructure. Thailand came third, up from fourth last year.
Nine of the top 20 slots were held by ASEAN members.
“Japanese companies have utilized ASEAN countries as production bases for a very long time. They now recognize these countries are very promising markets as well,” Shinji Ayuha at the JBIC research division told public broadcaster NHK.
“The ranking shows re-evaluation of ASEAN,” Ayuha said.
Others in the top 20 included Brazil, Mexico, Turkey and Russia.