JETRO NEWLETTER

VOL. 7, NO. 5

SEPTEMBER/OCTOBER 2005

Incorporation of companies made easier in Japan: New Company Law comes into effect in April 2006:

Japanese parliament has recently enacted a new corporate law to simplify the incorporation of companies in the country. The new law will come in force from April 2006. Under the new law, ‘‘Limited Liability Companies’’ will be abolished and integrated into ‘‘Stock Companies’’. As a result, forming a corporation with one board member will become possible, and ‘‘Minimum Capital Regulation’’ and “Similar Trade Name Regulation” will be eliminated.

Presently there are four categories of companies: joint-stock companies, limited liability companies, limited partnerships, and general partnership. Most of the companies are limited liability companies (for private and small to medium) and stock companies (for public and large businesses). Though, through a revision in the law in 1996, the differences between the limited liability companies and stock companies were brought to a minimum, as limited liability companies could be incorporated with less capital, they were sometimes considered to be lower in ranking. In recent times, there felt a strong need for simple incorporation laws for economic revitalization as well as a system responding to corporate globalisation.

As per the new law, ‘limited liability companies’ will be integrated into ‘stock companies’. Effectively, from April 2006, only stock companies can be incorporated. Existing limited liability companies can continue their business as ‘special limited liability companies’ according to the transitional measures, however, when they switch to ‘stock companies’, they need to dissolve first, then follow the procedure to incorporate as ‘stock companies’. Such ‘special limited liability companies can enjoy the simpler nature of the ‘limited liability companies’ such as (1) no term limit for the board members (stock companies have a term of maximum 10 years), (2) no requirement for disclosing account statements (account disclosure is required for stock companies), and (3) no obligation for auditing (auditing is in principle required for stock companies).

Under the new law, for ‘stock companies’ the capital amount is not important, and incorporation with a starting capital of even 1 yen becomes possible. Under the existing legislation, joint-stock companies and limited liability companies were required to have capital funds of at least 10 million yen and 3 million yen, respectively.

The elimination of ‘minimum capital regime’ results in a major reduction in the minimum cost of establishing a joint-stock company. Until now, it has taken at least 10.3 million yen or so to set up a joint stock company, but under the new law it will take only about 240,000 yen: initial capital (one yen), notary’s certification fee (50,000 yen), stamp duty on original copy of articles of incorporation kept by notary (40,000 yen) and registration and licence taxes (150,000 yen). The “Similar Trade Name Regulation” will also be abolished in the new law. Under the existing regulation, one cannot register a company if the same trade name with the same sales purpose exists in the same community. However, under the new law, companies can use any trade name for their business. (more information on the new company law is available on JETRO Website with URL as http://www.jetro.go.jp)

Japan’s world trade continues to grow in 2005:

However, growth rates slow both for exports and imports:

Though Japan’s world trade continues to grow in 2005, the rates of growth in exports and imports slowed down during the first half of 2005. Japan’s world trade grew by 10.39% to US$ 540.7 billion during the first six months of 2005, compared to US$ 489.8 billion during the same period in 2004. Export grew by 6.73% year on year to US$ 291.7 billion and imports grew by 14.97% to 248.9 billion. Growth in export value, which had been in double figures since 2003 fell back to single-digit level. Growth rates for export and import volume have been declining since the first half of 2004, and export volume was actually down by 1.5%

Trends in Japanese trade: (value in million dollars, %)

Particulars	2004		2005
	1^st half	2^nd half	1^st half
Exports	273,261	291,778	291,712
Export Growth %	23.3	17.5	6.8
Imports	216,534	238,135	248,935
Import growth %	17.1	21.1	15.0
Balance of trade	56,727	53,643	42,777
Crude oil import price-Dollars/barrel	33.0	39.5	45.1

Import & Export by special classification of commodities (value in US $ billion)

Items	2005 (January – June)
	Export	Import
Total	291.8	248.9
Food & direct consumers	1.2	25.5
Industrial supplies	60.8	114.2
Capital equipment	161.9	65.2
Consumer non-durable goods	1.9	17.3
Consumer durable goods	52.9	20.4
Others	13.1	6.3

Trade with GCC Countries:

Japan’s trade with the GCC countries grew by 35.2% during the 1^st half of 2005, mainly driven by a surge in the value of Japan’s imports from the 6-nation block. The obvious reason for this growth in the value of imports is the hike in the price of crude oil that has reached about US $ 60.0 a barrel during 2^nd quarter of 2005.

Trend in Japan-GCC trade (Value in million US $)

Countries	2004- 1-6	2005 1-6	G.Rate
UAE	10,194.1	12,943.4	27.0
Saudi Arabia	9,683.7	14,222.9	46.9
Qatar	3,838.0	5,251.5	36.8
Kuwait	3,161.4	4,066.3	28.6
Oman	1,209.2	1,654.3	36.8
Bahrain	370.8	348.3	-6.1
Total	28,457.2	38,486.7	35.2

Japan’s exports to the GCC (Value in million US $)

Countries	2004 1-6	2005 1-6	G.Rate
UAE	2,137.5	2,327.3	8.9
Saudi Arabia	1,675.6	1,955.2	16.7
Oman	551.3	622.7	13.0
Kuwait	448.1	521.0	16.3
Qatar	238.6	409.7	71.7
Bahrain	190.7	200.9	5.3
Total	5,241.8	6,036.8	15.2

Japan’s imports from the GCC (Value in million US $)

Countries	2004 1-6	2005 1-6	G.Rate
UAE	8,056.5	10,616.1	31.8
Saudi Arabia	8,008.1	12,267.7	53.2
Oman	657.9	1,031.7	56.8
Kuwait	2,713.3	3,545.3	30.7
Qatar	3,599.4	4,841.8	34.5
Bahrain	180.1	147.4	-18.2
Total	23,215.3	32,450.0	39.8

Recent Trends in Japanese Economy:

According to report published by the Bank of Japan recently, Japan’s economy continues its recovery. Exports have continued to increase moderately, and industrial production has also been on an upward trend, however, with some fluctuations. Business fixed investment has continued to increase against the background of high corporate profits and a modest improvement in business sentiment. Household income has also continued rising moderately, reflecting the improvement in employment and wages. In this situation, private consumption has been steady. Housing investment has recently shown some increases.

Exports are expected to continue rising against the background of the expansion of overseas economies. Domestic private demand is likely to continue increasing against the background of high corporate profits and the moderate rise in household income, while structural adjustment pressure stemming from the excess capacity and debt of firms has almost dissipated. In light of these increases in demand both at home and abroad, production is also expected to follow an increasing trend. Public investment, meanwhile, is projected to remain on a downtrend.

Prices: Domestic corporate goods prices have increased, mainly reflecting the effects of the rise in crude oil prices. Consumer prices (excluding fresh food) have been declining slightly on a year-on-year basis, partly due to the reduction in electricity and telephone charges. Meanwhile, the year-on-year rate of change in consumer prices is projected to be 0.0 percent or a slight increase toward the end of the year.

Corporate finance: The environment for corporate finance is becoming friendlier on the whole. The issuing environment for CP and corporate bonds is favourable. Also, the lending attitude of private banks is becoming more accommodative. The lending attitude of financial institutions as perceived by firms has been improving. The pace of decline in credit demand in the private sector is becoming somewhat moderate. As for developments in financial markets, money market conditions continue to be extremely easy, as the Bank of Japan continues to provide ample liquidity. In the foreign exchange and capital markets, long-term interest rates and stock prices have risen compared with the previous month.

Internal & External demands:

According to a report in the Japan Economic Review for September 2005, external and internal demand had equally contributed to the show of a stronger GDP during the 2^nd quarter of 2005. It said that Japan’s 2^nd quarter GDP data proved to be the sort of figure that undoubtedly supports government’s claim that the economy is coming out of its prolonged lull. Internal demand is continuing to remain favorable, and the recovery base is also strengthening. External demand, at the same time, has returned to the positive territory for the first time in 12 months. The was attributed to the robust performance from exports, which rose by 2.8 percent, the highest growth since the 2^nd quarter of the previous year. It is pointed out that the inventory adjustments in the US, Japan’s largest export partner, have been making good progress, and this has certainly brightened the outlook of Japanese exports in the coming months.

Japan Week in Muscat, Sultanate of Oman

JETRO organizes Japanese Catalogue Exhibition:

The Oman – Japan Friendship Association, in co-operation with the Embassy of Japan in Muscat and JETRO Dubai, will hold a week- long festival in Muscat, Sultanate of Oman, named ‘OMAN-JAPAN WEEK’, between 3^rd and 9^th December 2005. The event, termed as a FESTIVAL OF CULTURE AND COMMERCE, will feature displays of Omani and Japanese products, Omani and Japanese fine arts show, Omani and Japanese photo display, display of traditional Omani and Japanese handicrafts and dresses, Japanese Sumo demonstration, Japanese robot demonstration, live Karate demonstration etc. among many others. A Japanese food festival named, ‘Taste of Japan’ is also part of the event. Japanese language contests, Japanese paper folding (Origami) displays and demonstrations, displays relating to Information Technology etc. will be added features.

Japanese Catalogue exhibition for business opportunities:

Under the umbrella, and in conjunction with the Japan Week in Muscat, and with the cooperation of the Oman Chamber of Commerce & Industry, JETRO - Japan External Trade Organization, Dubai Office will hold a CATALOGUE EXHIBITION of Japanese companies, displaying catalogues of around 100 small to medium companies who are interested in doing business with companies in and around the Sultanate of Oman. Most of the companies participating in the catalogue exhibition are new to this area and so far, have no representation in Oman.

UAE Labour Market getting streamlined:

The UAE has recently implemented a number of changes in her labor and immigration rules in an effort to streamline the market.

Removal of 6-months ban on entry for employment:

Prominent among the changes is the removal of a 6-months ban on switching job from one company to another, upon cancellation of one’s residence visa. This step facilitates easy and fast movement of workforce within the market. However, there had been contradicting reports in the local media about the requirement of an NOC for changing jobs after the removal of the six-months ban. Some reports said that there was no requirement of such NOCs. However, some other reports, quoting high government officials, said that expatriates still needed NOCs to change jobs. It is understood that an NOC is still required to get into another employment within the six months period of canceling a residence visa and work permit. In the past, employees should have to wait six months to one year after canceling a residence visa, before a new employment visa was issued. Even an NOC was not helpful in those days.

According to media reports, a further relaxation has been made in October 2005, concerning employment of wives and daughters under the sponsorship of their husbands/fathers. Wives/daughters wanting to change jobs will be issued a fresh work permit immediately upon cancellation of an existing work permit. This means that NOCs are not mandatory for the issuance of fresh work permits, if they can find new employers. Similarly, ‘investors’ do not have to go through the ‘Labour procedures’ since the Ministry of Interior is the responsible authority to issue them with residence or investors visas. As the Interior Ministry has abolished the stamping of the ‘6-month ban’ on passports upon cancellation of a residence visa, investors can enter the country any time and set up their business, having obtained a residence permit from the Ministry.

Sponsorship transfer made easier:

Another major change brought about is on the sponsorship transfer. In the past, only 13 categories of qualified people were eligible for sponsorship transfer. Now, the new rules allow all employees in the UAE to change sponsorship under certain conditions. The conditions are mainly related to employees’ educational qualifications and fee paid for each sponsorship transfer. In all cases, an NOC from the previous sponsor is a prerequisite for a sponsorship change.

Unskilled workers can transfer their sponsorship once, provided they complete 3 years under the present sponsor. The new employer would be obliged to pay Dh. 5,000/- as fee to the Government. Employees who are university graduates or their equivalent can transfer sponsorship twice, after two years of service with their sponsor. The new sponsor must pay a fee of Dh. 3,000/- Post-graduate employees can transfer sponsorship without limit after at least one year with their sponsor. However, those with open contracts do not have to wait for one year for a change. The fee for this category is Dh. 1,500/- Once an employee exhaust the limit of allowed number of sponsorship transfers, he will have to leave the country and face a six months to one year ban on getting a fresh employment visa. Those who fulfill their obligations under their previous job contracts will receive a six-month ban and those who do not, will receive a one-year ban. As per the new regulation, all expenses related to sponsorship transfer should be borne by the new employer.

Introduction of special visas for professionals:

As per a new law, introduced by the UAE’s Interior Ministry, professionals can obtain a 6 months visa for temporary assignments in the country. The visa will be issued for an initial period of 90 days for a fee of Dh. 600/- and could be extended for another period of 90 days for a fee of Dh. 1,200/-. Introduction of this visa is to help companies meet requirements of professionals on a temporary basis. This is also intended to discourage companies that employ people on visit visas, which is against the law of this country.

It is also understood that the current visit visa system remains unchanged, where one could enter the country on a visit visa issued for an initial period of 60 days, for a nominal fee of Dh. 100/-, and extendable for another period of 30 days for a fee of Dh. 500/- . An urgent visit visa will attract a fee of Dh. 200/-

Work permit for expatriates over 60 years of age:

On special cases, private companies in the country can retain their expatriate employees over 60 years of age, provided proof is given on the essentiality of such persons services for the benefit of the company. The employer then will have to pay the Ministry of Labor and Social Affairs, a fee of Dh. 5000/- per person, plus some administrative charges. The renewal of the work permit will be for one year.

NEW BOOKS IN JETRO DUBAI BUSINESS LIBRARY:

(JETRO Dubai’s Business Library has a good line up of books and periodicals from Japan and the GCC countries. We welcome businesspersons to visit our library and make use of the reference materials. We are open for the public between 9 and 12 hours, Monday through Thursday)

Publications from Japan

1. Institute of Developing Economies – Annual Report 2005

2. An Advertisers Guide to Magazines in Japan 2005-2006

3. Osaka Trade Director 2004-2006

4. Industries in Wakayama, Japan

5. The Japan Journal Sept/Oct. 2005

6. The Japan Economic Review – Sept. 15, 2005

7. Japan Spotlight – Bi-monthly magazine Sept./Oct. 2005

8. Asia-Pacific Perspective, Japan Aug. Sept. & Oct. 2005

9. Creation Core Higashi-Osaka- A Guide of Osaka’s Excellent Companies Display Center

10. Customs Tariff Schedule of Japan 2005, By Japan Tariff Association

11. Japan Statistical Yearbook – 2005, By Japan Statistical Bureau.

12. Emerging Business Opportunities in Japan – composite Edition 2005, published by MIPRO (Manufactured Imports & Investment Promotion Organization)

13. IDE-JETRO Research Activities 2005

Publications from UAE and other GCC countries:

1. OAPEC Monthly Bulletin – Aug./Sept. 2005

2. Central bank of Kuwait Annual Report 2004/5

3. Central Bank of Kuwait – Qtrly Stat. Bulletin – April-June 2005

4. Central bank of Kuwait – Monthly Stat. Bulletin, June & July 2005

5. Central Bank of Oman – Monthly Stat. Bulletin, May/June 2005

6. Central Bank of Oman – Qtrly Stat. Bulletin, June 2005

7. Al-Markazi Magazine, by Central Bank of Oman – June/July 2005

8. Monthly Sta. Bulletin – Ministry of National Economy, Sultanate of Oman – August 2005

9. UAE Central bank Annual Report – 2004

10. Emirates Industrial Bank Journal – Sept. 2005

11. Hilal Associates Newsletter – Aug. 2005

12. Al Ghorfa Magazine, by FCCI, No. 98/15, 2005

13. Al Ghorfa Magazine, by RCCI, Sept. 2005

14. Jebel Ali Free Zone Official directory 2005

15. The Economic Bulletin of DCCI, Sept. 2005

16. Cargo & Trade Magazine, by DCFC, Vo. 2, 2005

17. Al Shindaga Magazine, by Al Habtoor Group- Sept/Oct. 2005

Major Trade Fairs in Japan during Jan – Mar. 2006

(For more details on each exhibition, please surf the following website – http://www.jetro.go.jp/en/matching/j-messe)

· Jan. 7-9, Antique Jamboree – Tokyo

· Jan. 18-20, 23^rd Electrotest Japan 2006 – Tokyo

· Jan. 18-20, 35^th Internepcon Japan – Tokyo

· Jan. 18-20, 7^th Printed Wiring Boards Expo (PWB) – Tokyo

· Jan. 18-20, 7^th Int’l Electronic Components Trade Show – Tokyo

· Jan. 18-20, 7^th IC Packing Technology Expo – Tokyo

· Jan. 18-20, 6^th Fiber Optics Expo – Tokyo

· Jan. 18-20, Int’l Fashion Fair 2006 – Tokyo

· Jan. 19-20, Intermedia Forum 2006 – Osaka

· Jan. 25-27, 2^nd Int’l Hydrogen & Fuel Cell Expo – Tokyo

· Jan. 25-28, 17^th Int’l Jewellery Tokyo 2006 – Tokyo

· Feb. 1-3, NET & COM 2006 – Tokyo

· Feb. 3-5, Fishing Show Osaka 2006 - Osaka

· Feb. 7-9, Casual Apparel Exhibition (Frontier) – Tokyo

· Feb. 7-12, HVAC & R Japan 2006 – Tokyo

· Feb. 8-9, 2006 World Optical Fair – Tokyo

· Feb. 9-12, The 45^th Tokyo Int’l Boat Show – Chiba

· Feb. 10-12, Life Garage Camping & RV Show 2006 – Chiba

· Feb. 14-17, Tokyo Int’l Gift Show (61^st) Spring 2006 – Tokyo

· Feb. 16-27, The Int’l Sea food & Tech. Expo (3^rd) - Osaka

· Feb. 21-23, Nano Tech 2006 – Tokyo

· Feb. 21-23, Nano Bio Expo 2006 – Tokyo

· Feb. 21-23, Neo Functional Material 2006 – Tokyo

· Feb. 21-24, Mekong Exhibition – (General Exh. ) – Tokyo

· Feb. 24-26, 40^th Japan Golf Fair 2006 – Tokyo

· Mar. 1-3, Asian Fair for Consumer Goods – Tokyo

· Mar. 1-3, 2006 Super-Market Trade Show (40^th) – Tokyo

· Mar. 7-10, Japan Shop 2006 (35^th) Tokyo

· Mar. 7-10, Architecture + Const. Materials 2006 – Tokyo

· Mar. 7-10, Retail Tech Japan 2006 (22^nd) – Tokyo

· Mar. 7-10, IC Card World 2006 – Tokyo

· Mar. 7-10, Security Show 2006 – Tokyo

· Mar. 8-10, Franchise Show & Business Expo 2006 – Tokyo

· Mar. 10-12, Int’l Auto Aftermarket Expo (5^th) - Chiba

· Mar. 14-17, HCJ 2006 (Hoteres Japan / Caterex Japan / Food Service Equipment Show – Tokyo

· Mar. 14-17, Foodex Japan 2006 - Chiba

· Mar. 22-24, Tokyo Health Industry Show – Tokyo

· Mar. 23-26, Tokyo Int’l Anime Show – Tokyo

EXPO 2005, Aichi – Japan, ends successfully.

A total of 22 million visitors witnessed the grand exposition:

The WORLD EXPO, an exposition of global harmony, held at Aichi in Japan, ended on 25^th September 2005 with a successful note. The exposition, held every 5 years in different countries, is the world’s foremost exposition brining world nations under one roof. EXPO 2005 AICHI JAPAN, which lasted for 185 days, emphasized the close links binding humanity to nature in the 21^st century through its theme “Nature’s Wisdom”. The EXPO gave its more than 22 million visitors, throughout the EXPO, a chance to experience at first-hand, the leading-edge technologies, new social systems and future lifestyle that may provide solutions to the many serious issues now the entire world is facing. This was also an opportunity for people from all nations to share their varied

insights and unique approaches, and to lay the foundations for working together on a global scale.

In addition to a host of international organization, a total of 125 countries officially participated in the Expo. Volunteers who toiled for the successes of this Expo, day and night, totalled 108,485, including the Kids EXPO Team of 1,874 members. Volunteers included housewives, company employees, university or vocational school students, high-school students, public employees, self-employed people and many others.

Survey results of pattern of foreign visitors:

Survey dates	10 June	5 July	18 July	23 Aug.	7 Sept.
Total visitors	120,620	93,207	116,231	126,162	155,915
Foreign visitors	5,302	5,197	6,059	5,786	5,847
Of which, tourists	3,966	4,462	5,245	4,717	4,962
Residents	1,336	735	814	1,069	885
% of foreign visitors	4.4	5.6	5.2	4.6	3.8

As per the analysis of the above 5 surveys, visitors from Taiwan constituted the most number with a share of 18.8%, while from Korea it was 15.7%. People from USA averaged 13.0%, China 11.0%, Australia 4.1%, Canada 4.0%, France 3.2%, Hong Kong 3.0%, Philippine 2.6% and Germany 2.0%.

Results of survey on foreign visitors on 7^th Sept. 2005:

Country/Territory	No. of foreign visitors	Share %
Total foreign visitors*	5,847	100.0
China	841	14.3
Taiwan	811	13.8
USA	723	12.4
Korea	718	12.3
Australia	342	5.8
South Africa	331	5.7
France	314	5.4
Canada	268	4.6
Hong Kong	155	2.7
Philippines	124	2.1
Others	1,220	20.9

* Total foreign visitors on 7^th September were from 57 countries and territories

Shanghai, China selected to be the venue of EXPO 2010

The WORLD EXPO organizers have selected the City of SHAGHAI in China to be the host City to hold the next WORLD EXPO in 2010.

Published and circulated by JETRO Dubai, P.O. Box 2272, Dubai,

United Arab Emirates. Tel-+971-4-3328264, Fax-+971-4-3328305

Editor :Yoshio Minagi E-mail: jetrouad@emirates.net.ae

Sub Editor : David Thomas E-mail: jetrodt@emirates.net.ae

Editorial Assistant: Ninan E-mail: jetromn@emirates.net.ae

URL: http://www.jetro.go.jp/uae

Circulation is free, on a private basis