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Update on Japan
The Japanese government says the country’s economy is moderately recovering in a new report. It says business investment improved as the coronavirus ebbed, but warned that fluctuations in the yen could pose a risk.
The Cabinet Office’s economic report for October upgraded its assessment of business investment for the first time in eight months.
Officials say companies are putting more money into digitalization and decarbonization. Businesses had postponed these efforts during the height of the pandemic.
The assessment for imports was downgraded to “almost flat” as shipments of personal computers and furniture from China and other countries in Asia fell. The report maintained its view of private consumption, saying it is picking up moderately. It says sales at restaurants and the occupancy rate at accommodation facilities have both improved.
The government remains cautious about the future outlook. Officials say rising prices and the rapid depreciation of the yen are sources of concern.
Electric vehicles are becoming more popular in Japan but finding somewhere to charge them is still a problem. Coming spring, however, that’s going to change when a new sharing service will connect charging stations and EV drivers through a smartphone app.
The service is bringing together three main players. The electronics firm Panasonic is busy developing the app. Mizuho Bank will handle the settlement of the usage fee. And Sompo Japan will cover damage insurance.
With the app, drivers will be able to find a charging site, make a reservation and pay the fee while the station owners will be able to register the facilities they have in parking areas and other locations.
The owners will be able to sign up from late November. A Panasonic official told a news conference that it’s impossible for just one company to enable an EV society. He said the group hopes many drivers will sign up.
The Japanese government is aiming for a five-fold increase in the number of charging stations around the country by 2030 from the current level.
Japan has stepped up its push to catch up on digitization by telling a reluctant public they have to sign up for digital IDs or possibly lose access to their public health insurance.
As the naming implies, the initiative is about assigning numbers to people, similar to Social Security numbers in the U.S. Many Japanese worry the information might be misused or that their personal information might be stolen. Some view the My Number effort as a violation of their right to privacy.
So the system that kicked off in 2016 has never fully caught on. Fax machines are still commonplace, and many Japanese conduct much of their business in person, with cash. Some bureaucratic procedures can be done online, but many Japanese offices still require inkan, or seals for stamping, for identification, and insist on people bringing paper forms to offices.
Now the government is asking people to apply for plastic My Number cards equipped with microchips and photos, to be linked to drivers licenses and the public health insurance plans. Health insurance cards now in use, which lack photos, will be discontinued in late 2024. People will be required to use My Number cards instead.
That has drawn a backlash, with an online petition demanding a continuation of the current health cards drawing more than 100,000 signatures in a few days.
Opponents of the change say the current system has been working for decades and going digital would require extra work at a time when the pandemic is still straining the medical system.
But the reluctance to go digital extends beyond the health care system. After numerous scandals over leaks and other mistakes, many Japanese distrust the government’s handling of data. They’re also wary about government overreach, partly a legacy of authoritarian regimes before and during World War II.
The process of getting an existing My Number digitized is time consuming and very analog, it turns out. One must fill out and mail back forms sent by mail. Last month’s initial deadline was extended, but only about half of the Japanese population have a My Number, according to the government.
On Monday, Prime Minister Kishida Fumio acknowledged concerns about My Number cards. He told lawmakers in the Diet that the old health insurance cards will be phased out but the government will arrange for people to continue to use their public health insurance if they are paying into a health plan.
Japan’s Minister of Digital Affairs, Kono Taro, acknowledged in a recent interview with The Associated Press that more is needed to persuade people of the benefits of going digital.
“To create a digitized society, we need to work on developing new infrastructure. My Number cards could serve as a passport that will open such doors,” Kono said. “We need to win people’s understanding so that My Number cards get used in all kinds of situations.”
A Japanese consortium including Hitachi and Microsoft Japan will use artificial intelligence to help doctors make diagnoses, tapping the cloud for data-sharing to eliminate the need for special terminals.
Smaller hospitals and rural areas with doctor shortages are seen benefiting from the user-friendly service, which will enable quality similar to urban facilities.
The 14-member Healthcare AI Platform Collaborative Innovation Partnership will set up a dedicated company as early as fiscal 2023 and open a website to provide the cloud-based service. Participants include Biprogy, formerly Nihon Unisys, as well as the National Center for Child Health and Development.
A broad menu of AI-driven software will be offered, such as in diagnostic imaging and in speech recognition for medical records. Software from companies outside the consortium will be included as well. Partner hospitals will supply medical data needed for software development.
For example, hospitals using brain aneurysm diagnostic software will upload CT scans and other data to the cloud, with AI calculating the probability of an aneurysm. Physicians will use their own judgment in making the final diagnoses.
While AI-aided software may reduce the risk of overlooking a condition, software malfunctions and other issues are still possible and health practitioners will be ultimately responsible for each diagnosis.
The consortium, which also includes IBM Japan, Mitsui & Co., SoftBank and Roche Diagnostics — a Japanese unit of the Swiss health care company — aims to have the service in place at 150 facilities in the first year.
Physician shortages are a serious issue in rural areas. A few diagnostic radiologists can go through hundreds of images in a peak checkup season. The consortium will encourage Japan Medical Association members to use its service.
The global health care IT market, which includes AI diagnostics, is projected to grow about 50% from 2021 levels to $125.1 billion in 2027, according to Tokyo-based data provider Global Information. Japan lags behind the U.S. and Europe in the digitalization of health care.
A UNESCO advisory body has welcomed a local government proposal for a new railway for Mount Fuji, a World Heritage site in central Japan.
The highest peak in Japan was registered as a World Heritage site in 2013. It straddles the central Japanese prefectures of Shizuoka and Yamanashi. Local officials need to address a range of challenges facing the mountain, including overcrowding and traffic jams.
The Yamanashi prefectural government drew up the concept in February last year to build a railway on an existing road, connecting the foot of Mount Fuji with the fifth station. Visitors start their climb to the peak there.
NHK has learned that International Council on Monuments and Sites, or ICOMOS, an advisory body to UNESCO, welcomed the railway concept in an internal document.
ICOMOS stated that “it could offer an integrated approach to address many of the challenges relating to visitor management and environmental degradation that are facing the property.”
The advisory body also said the concept could present “an opportunity to improve the overall facilities in and around the higher stations.”
But ICOMOS added that the proposal is clearly at an early stage and much work is needed to explore its feasibility and draw in support from the relevant stakeholders.
Some local residents are concerned that the railway construction could damage the environment. The Yamanashi prefectural government hopes to gain the understanding of locals based on the opinions presented by ICOMOS.
Update on the Netherlands
Schiphol becomes co-owner of Maastricht Aachen Airport (MAA). The national airport pays 4.2 million euros for 40% of the shares.
This means that the province of Limburg has the desired partner to further develop the ailing airport in the coming years, writes 1Limburg. Until now, the province of Limburg has been the sole shareholder. But the Provincial Council of Limburg wants the province to share the shares with other parties.
In June, the States of Limburg agreed under certain conditions to keep the airport open, which has been in heavy weather for years. Schiphol was already mentioned as a possible other shareholder. The two airports are now entering into “a strategic partnership”.
In this cooperation, among other things, the handling of freight traffic is examined. MAA is the second largest cargo airport in the Netherlands. The airport also offers space to various maintenance companies.
The two parties also want to focus on making the airport more sustainable and flying electrically. In 2021, almost 13,000 flight movements took place at Limburg airport. Passenger flights depart from MAA to destinations in the Mediterranean.
The first electric devices should leave somewhere between 2025 and 2030, a Schiphol spokesperson told ANP. The destinations to which the aircraft then go depends on the technology at that time. It is not the intention that flights will be taken over from Schiphol itself in Limburg, says the spokesperson.
The Schiphol Group not only invests 4.2 million euros in MAA, but also deposits 800,000 euros in an environmental fund, in which government and the business community also participate.
The Schiphol Group has shares in several Dutch airports, such as Eindhoven Airport. In addition, the group is the parent company of Schiphol, Rotterdam The Hague Airport and Lelystad Airport.
House prices in September were on average 0.7% lower than a month earlier, with a total of 17,631 relocations. In August, there was still a decline of 0.1%. CBS economist Frank Notten notes that the time for price increases is now “really a thing of the past”.
Compared to a year ago, owner-occupied houses are still almost 10% more expensive, but the difference on an annual basis is getting smaller by the month. At the beginning of this year, the statistical office reported the strongest price increase in decades, with a plus of about 21%.
The price decrease measured by Statistics Netherlands (CBS) is not yet as extreme as the decrease recently calculated by the Dutch Association of Real Estate Agents (NVM). According to the real estate agents, house prices fell almost 6% in the third quarter compared to the previous three months.
But CBS only processes house sales when notaries register with the Land Registry. The NVM’s figures are more incomplete, but are based on the moment the purchase contract is signed. That is earlier, which means that trends are often identified earlier.
Anyone who wants to buy a house in the near future should not be deterred by the fall in house prices, said President Klaas Knot of De Nederlandsche Bank (DNB) a week ago. He rather regarded the developments in the housing market as a ‘welcome relief’.
According to Knot, the falling house prices are mainly a result of rising mortgage rates. As a result, people can now borrow less. Ultimately, however, there should be a new equilibrium in the market.
Knot also pointed out that many homes are still being sold above the asking price and that there is still a major shortage of homes in the Netherlands. According to Knot, you should not see a house as an investment, but you buy a house because you want to live in it.
Now that consumers are spending less, warehouses in the Netherlands are overflowing with unsold products such as laptops, clothing, furniture and game equipment. It is a new signal that the economy could take a hit.
‘I see a gigantic recession coming’, says Kees Kuijken, CEO of logistics service provider Moov Logistics. Companies had already built up larger inventories last year. High inflation and expensive energy are now spoiling consumers’ appetite for buying a new television, for example.
Retailers have had to deal with sharply lower demand for products compared to last year in recent weeks. ‘I hear from consumers in consumer electronics that demand has fallen by more than 50%,’ says Kuijken.
‘The warehouses are chock full’, says Cuno Vat, CEO of Neele-Vat Logistics from Rotterdam. ‘I have not seen such a high occupancy rate in the past ten years. We are at around 90% in our warehouses.’ According to CEO Erik Loijen, branch partner KLG Europe from Venlo has even moved to France to find storage space for a customer.
The distribution centers and warehouses of the listed logistics investors and developers Prologis and Warehouses De Pauw (WDP) are also full. At the end of the third quarter, 99% of the space at both companies was let. ‘Historically high’, says Sander Breugelmans, head of Northern Europe at Prologis.
The warehouses were already fuller than usual before consumers decided to buy less stuff. According to logistics service providers, the demand for storage space has risen sharply since the corona crisis. At the time, supply chain delays were a major problem. Companies want to be ahead of that now.
Eurostat data shows that in the first half of 2022, the European Union’s stocks amounted to €171 billion. That is the highest increase in the EU’s statistical office in 25 years.
‘Companies want to build up strategic stocks ‘, says WDP chairman Joost Uwents. ‘That has led to additional demand. Companies no longer want to have to ship something to the Netherlands from China at the very last minute.’
Now that consumers are buying less stuff, there is an extra demand for storage, according to Uwents. He mainly points out more demand from the clothing industry. “People are giving up on buying a pair of Nike shoes,” he says. ‘They are economically sensitive products for which producers now temporarily need extra storage.’
Analyst Albert Jan Swart of ABN Amro speaks of the ‘whiplash effect’. “Companies have started stockpiling more during the strong increase in demand during the corona period. Now there are large stocks, but the demand is falling.’
The bank expects a contraction in consumer spending of around 0.4% for the fourth quarter of this year and the first quarter of next year. “That is a clear break with high demand since the last lockdown,” says economist Jan-Paul van de Kerke. ‘The demand for goods is already shrinking, but the demand for services is still partly compensating for this.’
He assumes economic growth for the Netherlands of 0.7% for the whole of 2023, considerably less than the expected 4.6% for 2022.
The high occupancy rates seem favorable for logistics companies. Still, Vat says he doesn’t earn the most money from storage, but rather from the flow of products. ‘We label goods, transfer them to smaller packaging and provide documents. That is the added value for us.’ Breugelmans of ProLogis: ‘It sounds great to have a 99% occupancy rate, but you often have to say ‘no’ to a customer. That’s the problem.’
Meal deliverer Deliveroo will leave the Netherlands at the end of next month. The company has set up a social plan together with FNV for the nine thousand self-employed deliverers who lose their work as a result. The union speaks of a “reasonable compensation”.
The compensation scheme for the company’s deliverers consists of two parts. First of all, they receive an amount equivalent to 38% of their income in the past year. They also receive an amount based on their income and employment history.
Deliveroo deliverers are not employed by the company. That is why compensation is not self-evident. According to FNV, this is a unique situation.
It was previously announced that Deliveroo wants to leave the Netherlands. The company reported that this should be done before the end of 2022. Deliveroo does not consider itself big enough in the Netherlands to make sufficient profit.
Deliveroo is active in 11 countries and generates the most sales in places where it is number one or two in the market. The meal deliverer only gets 1% of its turnover from the Netherlands. Achieving and maintaining a top position in the Dutch market would “require a disproportionate investment”.
Update on Dujat & Members
After a record year for M&A in 2021, there is now more turbulence in the M&A markets. Successfully navigating the path to signing and completion of deals is still possible, but has become more complex. Allen & Overy LLP, Nomura and Dujat are delighted to organize this M&A seminar on Monday 31 October 2022.
L&A Lawyers, member of Dujat invites you to join their seminar on Thursday 17 November 2022, at Museum JAN in Amstelveen. The seminar will be held in Dutch and focuses on the investigation of misconduct on the workfloor, and how to carefully investigate fraud, bullying and other transgressive behaviour as an employer.
The seminar will take place from 17:15 -19:30 with drinks and a networking opportunity afterwards. Registration is open and free of charge, for more information please click here.
If your company has any news to share in the next biweekly newsletter, let us know by sending an e-mail to vangastel@dujat.nl.
Kind regards,
Jinn van Gastel
Project Manager at Dujat
DUJAT (Dutch and Japanese Trade Federation)
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