A member of MUFG, a global financial group

Road towards new partnership

SEPTEMBER 2014

Japanese companies attitude had turned around

6.000

8.000

10.000

12.000

14.000

16.000

18.000

04/01/2010 04/01/2011 04/01/2012 04/01/2013 04/01/2014

NIKKEI 225

Dec 26, 2012the present

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-15

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Japan Tankan Business Condtions

LargeEnterprises/Manufacturing

Dec 26, 2012the present Cabinet's inauguration

ABENOMIX：Change in business confidence

Japanese companies turned to the aggressive attitude.

Proactive foreign diplomacy for business

3

68 companies / organizations, 259 people accompanied Prime Minister Abe on Latin American economic mission in July-August 2014.

It was a 2nd largest attendants following the Russia and Middle East Mission in April-May 2013.

Japanese companies are showing high interest towards Latin America.

Russia, Saudi Arabia, United Arab Emirates, Turkey

Apr-May 2103

Attendants:118 companies / organizations, 383 people

Myanmar

May 2013

Attendants:43 companies / organizations,

117people

Bahrain, Kuwait, Qatar

Aug 2103

Attendants:92 companies / organizations,

210people

Côte d'Ivoire, Mozambique, Ethiopia

Oct 2013

Attendants:92 companies / organizations,

210people

Mexico, Trinidad and Dobako, Colombia, Chile, Brazil

Jul-Aug 2014

Attendants:68 companies / organizations, 259people

New Zealand, Australia, Papua New Guinea

Jul 2014

Attendants:39 companies / organizations,

43people

India

Jan 2014

Attendants:28 companies / organizations,

77people

3 principles of Prime Minister Abe's diplomacy toward Latin America

4

“JUNTOS”

Especially, a good partnership can be built in the economic field.

Partnership between

Japan and Brazil

Juntos”: 3 principles of Prime Minister Abe's diplomacy

toward Latin America

“Progredir Juntos”

Develop together

① Rich in food and energy

② Attractive domestic market

Brazil

① "Know-how" to improve the

production efficiency

② Long-term funding source

Japan

“Liderar Juntos”

Lead together

“Inspirar Juntos”

Inspire together

Will Foreign Direct Investment to Brazil increase?

5

Transition of Foreign Direct Investment(FDI) from Japan to Brazil is still firm.

Is the Japanese FDI sufficient compared to Brazilian Economy scale?

What is necessary for both Brazil and Japan to grow further?

FDI (From Japan to Brazil)（Unit: US$ Mio）

Brazil① Thailand② ①÷②

GDP US$ 2.2 trillion US$ 0.4 trillion 5.5 times

FDI US$ 4.0 billion US$ 10.1 billion 0.4 times

Source: Banco Central do Brazil /JETRO

Source: Banco Central do Brazil /JETRO

Changes in driving force of Brazil from the demand side

6

2000 2005 2007 2009 2013

The beginning

Export

Mass

Consumption

＋

Export

Infrastructure

＋

Mass

Consumption

＋

Export

Housing

＋Infrastructure

＋

Mass

Consumption

＋

Export

Innovation

＋

Housing＋Infrastructure

＋

Mass

Consumption

＋

Export

Brazil has diversified accumulative drive force

Role which the Japanese has played until now （”Progredir Juntos ”）

7

Maintained a good partnership together with the growth of Brazil.

Export：Against Japan increasedMass consumption: increasing investments

toward various industry

Infrastructure：Japan participation to projects

Automobile Medical Equipment

Food & Beverage Drug

Retail Home Appliances / Air

conditioner

Toiletries IT

Travel Beauty / Cosmetics

【Topics when the Prime Minister Abe came to Brazil】

Agricultural transport related infrastructure

development (Roads, railways, ports)

Shipbuilding cooperation of marine resource

development

Maritime Logistic Hub System

Source: Banco Central do Brazil / JETRO

0

50000

100000

150000

200000

250000

300000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Export form Brazi to Japan（Unit ：US$ Miion）

”Progredir Juntos ” for the future

8

There is still room for Japan to play important role by "Innovation" which drives development of Brazil

Introduction of advanced technology

Training of engineers

Productivity improvement

Sophistication of production

management

Case of the automobile industry

2,000-3,000 of parts

Wide range of Supplier Chain under the finished

manufacturers.

Those that supports productivity and technical capabilities of Japan

9

Supply chain from small and medium-sized enterprises to large companies is supporting the improvement of productivity.

(Production management, R&D cost reduction, flexible response to market needs)

The presence of a variety of companies including small and medium-sized enterprises, opens up the possibility of industrial development.

(Small and medium-sized enterprises are seedbed of new industries and new products)

Innovation in hybrid car

Development of the core

portion of the hybrid car

Battery

Inverter

Motor Engine and others

Specification change for

drive parts and control

parts

Development of primary and secondary parts level

New investment into the automotive industry

Involvement of small

and medium-sized

enterprises

In terms of added value, parts manufactures contribute more than finished manufacturers.

Generator MotorEngine

Battery

Inverter

（2012）Number of

employees

Value added

(Unit:Yens Bio)

Motor vehicles, including motorcycles 165,182 4,759

Motor vehicles bodies and trailers 16,463 173

Motor vehicles parts and accessories 603,223 8,435

Source: Ministry of Economy, Trade and Industry

Currently, the new investment of Japanese corporations in Brazil is

mainly consists of large companies

10

Compared to Thailand which has wide range of Japanese manufacturing companies, the number of Japanese small and medium-sized enterprises operating in Brazil is small.

There is room for Japanese small and medium-sized enterprises to contribute to Brazil by promoting innovation.

Sales of Parente Companynumbers of

Companies％ Sales of Parente Company

numbers of

Companies％

Over 100 billion Yens 178 40.2% Over 100 billion Yens 442 11.3%

Over 10 billion -100billion Yens 148 33.4% Over 10 billion -100billion Yens 1,157 29.6%

Over 1 billion -10billion Yens 71 16.0% Over 1 billion -10billion Yens 1,519 38.8%

Under 1 billion Yens 46 10.4% Under 1 billion Yens 796 20.3%

Total 443 100.0% Total 3,914 100.0%

Data Source：TAIKOKU DATABANK

Japanese Companies advanced to Brazil Japanese Companies advanced to Thailando

Case study （Ota Techno Park）

11

The Techno Park founded a small business set rent factory Thailand-Amanatanakon industrial

park. For the purpose of inviting small and medium-sized enterprises from Ota ( Tokyo / Japan).

The Techno Park also supports implement procedures and the management of the operation.

Ota-City Industrial Promotion Organization AMATA Corporation PCL

Factory implement and

start-up

Procedures necessary to advance corporation such

as governmental registration procedures

Business consultation including planning factory

and export process

Outsourcing of accounting, tax and labor

management

Consultation on establishment of the company and

start-up of the factory

After starting operation Periodical setting of business meeting and

exhibitions

Support of market development and PR in Thailand

Resident staff supports the usage of OTP facility on

a daily basis

Ota-ku, Tokyo

There exists many mid-

sized companies with high

technological force.

Rent set factory

Total site area: 7,800㎡1 Unit: 320㎡(16m × 20m)

Source: HP of Ota-City Industrial Promotion Organization

Promotion of new investment of small and medium-sized companies of Japan

12

Both Japan and Brazil ( public and private) has to consider a new framework to lower the

threshold of new investment to Brazil.

Hurdle of new investment

Information gathering / Company

establishment procedures

Procurement of land for factory

Engineer training

Reduction of administrative burden

Active usage of Investment promotion

agency (Japan：JETRO・JAICA) (Brazil：BNDES・ISP)

Framework to consider

Establishment of industrial park for small

and medium-sized enterprises

Alliance with universities

Establishment of incentive plans

Outsourcing of accounting, tax, general

affairs

Development and selection of partners

(suppliers, sales partners, partners) Market development supportProvide opportunities for business matching

Finance Introduction of institutional finance (Preferential treatment for guarantee, interest rate, etc.)