ProvisionalversionThe 39th ASEAN-Japan Business Meeting(Wednesday, 23 - Friday, 25 October, 2013, City of Kitakyushu / Fukuoka City)

Meeting Summary
1. Opening Ceremony
In opening the 39th AJBM, Yasuchika Hasegawa, the Chairman of Keizai Doyukai, thehost of the meeting, expressed his expectations for the event, which was being held incities other than Tokyo for the first time in 15 years, with new initiatives incorporated
in its agenda. Masayoshi Nuki, Chairman of the Fukuoka Keizai Doyukai, welcomed
the fact that the meeting was being held in Kitakyushu, one of Japan’s leadingindustrial regions. Kenji Kitahashi, Mayor of the City of Kitakyushu, offered greetings
expressing his pleasure that the meeting was being held in the city in the 50th year of
its foundation.

2. Plenary Session (Part 1: Presentations, Part 2: Panel Discussion)
The first part of the plenary session discussed the status of business linkage between
Japan and ASEAN. Discussion focused on the expectations of ASEAN toward theadvancement of small and medium-sized Japanese enterprises into ASEAN nations, andthe business strategies and problems of Japanese companies already active in ASEAN
nations. In the second part, case studies of individual companies were presented, and apanel discussion followed. The main points presented by the speakers are summarized
below.
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Thanong Bidaya, Chairman of the Board of Directors, Thai Tap Water Supply
Public Company Limited, ThailandThe relationship between Japan and ASEAN region has developed through a phase ofexport of Japanese products to ASEAN nations, a phase of industrialization of ASEAN
nations with the transfer of production to the region by Japanese companies, and aphase of direct investment and infrastructure investment by Japan in ASEAN nations.
For ASEAN, the environment is changing significantly with factors such as the rise ofChinese companies and their expansion into the region and the formation of new
economic partnerships across broad areas. At the same time, some of its members arefacing the issue of the middle-income trap. It will be essential for both Japan and theASEAN nations to boost their international competitiveness on this new stage.
In the future, the establishment of the ASEAN Economic Community (AEC) and theadvancement of economic integration are expected to promote the development of an
ASEAN-wide distribution system. Japan will be essential for ASEAN in realizing the
growth and functioning of the AEC as a hub and center of global production. Japan
should make the most of this new opportunity.

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Kusumo A. Martorejo, Chairman, PT. CATUR YASA, Indonesia

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There are significant differences among the 10 ASEAN member nations in terms of1

population, stage of development, and economic environment. Through initiatives suchas the realization of free trade and the abolition of trade barriers, the emerging ASEAN
nations all have the potential to become middle-income countries. ASEAN is a region
that will be a growth engine in the world economy, and Japan should make more active
use of it.


Tadao Mikami, Executive Officer, Yamato Holdings Co., Ltd, Japan

Yamato Holdings’ core business is home delivery, and our particular strength is theprovision of high added-value services that take the customer’s perspective into
consideration. Using the transport network that we have developed as an international
integrator, we are now able to provide the same type of services overseas as we do inJapan. While B-to-C was originally our main business, our expansion to B-to-B
business enabled us to improve our overseas product transportation and delivery
processes, and we now provide support for Japanese companies in their overseas
expansion.
Within ASEAN, violation of trademarks can be indicated as one issue, for example in
the numerous instances of imitation of logos that are encountered. I would also like topoint to regulations on foreign investment, including restrictions on investment in thetransport industry in Thailand, Indonesia, Vietnam, and Laos, and the Bumiputera
regulations in Malaysia, as problems.
Seeking to be Asia’s Number 1 distribution and lifestyle support solutions provider, we are
expanding our business stage by stage, both entering and creating markets in the
procurement of production goods, delivery, mail order, and E-commerce (home delivery
business). This has underlined for us the necessity for conducting activities and advancing
development based on the specific circumstances in individual countries and their differingneeds.

Toshikazu Matsuoka, Chief Executive, Environmental Bureau, City of Kitakyushu,
Japan

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Once afflicted by environmental problems, the City of Kitakyushu was recognized as“Green Growth City” by the OECD in 2011. As the result of a comprehensive“environmentalization of industry” via initiatives that include the reduction ofenvironmental burden through the promotion of recycling, the realization of increased
energy efficiency and energy savings by individual industries, and promotion of thedevelopment of environmental products and services, the City of Kitakyushu has
achieved economic development while at the same time protecting the environment,
providing a demonstration of the fact that it is possible to integrate the economy andthe environment.
The protection and improvement of the environment in postwar Japan is something thathas developed step by step, as the country passed through the stages of industrialization,
the occurrence and resolution of pollution problems, and the fostering of environmental
industries. Many cities in the rapidly modernizing ASEAN nations, however, are forced
to confront all of these issues simultaneously. We want to export the urban green
growth model developed by the City of Kitakyushu as a package, and in this way
support the development of ASEAN.

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Shigeto Yanase, Executive Officer, Yaskawa Electric Corp., Japan

Yaskawa Electric Corp. was founded in 1915 to manufacture motors that would
transport coal produced in Kyushu. Today, we manufacture and market products basedon current control technologies. We have established a holding company in Singapore2and local offices in other ASEAN nations, and we are developing our robotics businessin Indonesia and port crane business (electronic control equipment) in Singapore. In the
future we want to construct factories in ASEAN nations in order to enable local
production and boost our presence in the region.
Fostering human resources, reducing travel time, and integrating and speeding up
various applications and clerical procedures are problems in expanding into the
ASEAN markets. In fostering human resources, Yaskawa is using recruitment programs,
education and internships, with consideration of the differences among the 10 ASEAN
nations. This area could be a particularly large barrier to advancement into the ASEAN
region for small and medium-sized companies.

Eusebio Valdez Tan, Managing Partner, Angara Abello Concepcion Regala &Cruz Law Offices (“ACCRLAW”), PhilippinesForeign direct investment (FDI) and technology transfers from Japan are essential to
growth in the ASEAN region, and we would therefore like to see any Japanesecompanies, irrespective of size, establishing themselves in the region. Among thefactors hindering small and medium-sized companies from advancing into the region
are the difficulty of procuring funding, obtaining legal advice (regarding contracts,
intellectual property, labor, responses to litigation, etc.), and securing local business
partners (to offer advice on local customs, business experience, etc.), in addition toinvestment restrictions and cumbersome procedures.
It is important to consider what type of support large companies can offer to small andmedium-sized companies that do not possess resources, networks, or experience aslarge corporations do. It will be necessary for companies in Japan and the ASEAN
nations to cooperate and offer the benefit of their expertise in relation to advancing into
overseas markets.

Bunluasak Pussarungsri, Consultant, CIMB Thai Bank PCL, Thailand

Taking Thailand as an example, in the first wave major corporations from the advanced
nations expanded into the country. In the second wave, technology transfers from suchnations have become necessary. Even technologies that are no longer novel in Japan orthat are out of patent will be sufficiently usable in ASEAN nations. The sluggish
service industry in the region is also a problem. Up to the present, government
protection policies have hindered the participation of overseas companies into thesector/industry, but moves toward liberalization are currently underway, and in the
future we can expect further development with the promotion of free trade agreements(FTAs).
ASEAN’s greatest advantage is its diversity. Each of the member states has its own
strength, encompassing Singapore’s service industry, Thailand’s and Indonesia’s
automotive industries, Malaysia’s advanced manufacturing industries (electronics, etc.)
and the labor-intensive manufacturing conducted in Cambodia, Laos, Myanmar andVietnam. However, there is no strategy to make the industries and the strengths of eachof the region’s nations into strengths for ASEAN as a whole. Rather than each country
in the region hammering out its own strategy for growth, it is essential that we rebuild
regional networks and unify ASEAN as a whole in order to enhance our industrial
competitiveness.
We hope that Japanese companies will build supply chains making use of thecharacteristics of each of the ASEAN nations, and work toward the liberalization of
trade.

Hayato Morita, President, Shabondama Soap Co., Ltd., Japan

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Shabondama Soap’s main product, additive-free soap, is an environmentally friendly
one. We import palm oil, our raw material, from Malaysia, and manufacture and market
our soaps in Japan. Overseas, our main focus is on Asia, and we export soap to ASEAN
nations (Thailand, Singapore, and Malaysia). The cost of importing our raw material
and manufacturing our products in Japan is high, but in order to offer a high added value “Made-in-Japan” product to the consumers of Asia who seek safe products, we
intend to maintain production in Japan while continuing to actively develop ourbusiness.
As a new business venture, in collaboration with the City of Kitakyushu we havedeveloped an environmentally friendly fire-extinguishing chemical that guarantees
from 100 to 1,000 times the safety of existing competing products. We are studying theapplication of the chemical in producing extinguishants for a variety of types of fire,including large-scale fires, forest fires, and even peat fires. We would like to expand
this business to the ASEAN region, which is seeking to protect the environment at thesame time as pursuing economic growth. Because this is not a product aimed atordinary consumers, we would not insist on production in Japan, but would develop thebusiness with local production in mind.

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Hiroshi Kuramitsu, President, Hohkosha Co., Ltd., Japan

Hohkohsya develops, manufactures and markets printed circuit boards and electronic
products. Originally, we provided the majority of our products to major companies, but
our orders declined as a result of the financial crisis in 2008. We were made keenly
aware of the necessity for overseas marketing of our own products rather than being
content to be a subcontractor for major companies. Since then, we have been successful
in bringing products using cold cathode fluorescent lamp (CCFL) technology, a form of
next-generation energy-saving lighting, to the market.
CCFL is a high added-value made-in-Japan product, and has been well received inmarkets, but without the advertising budget of a major company, as of the present thebrand has not gained a foothold. Despite recognition of the product’s quality, it islosing ground to low-cost Chinese products, and sales are suffering. This has given us arenewed sense of how very important it is to have the collaboration and cooperation of
local companies when entering ASEAN markets.

Ambassador Teng Theng Dar, Singapore (moderator): Comments

Japanese products are recognized as being safe and of high quality, but they are also
expensive. Japanese companies must give serious consideration to reducing their supply
chain costs. In order to do so, it will be necessary for them to establish cooperative
relationships with distributors who possess a detailed understanding of thecharacteristics of markets and products in the specific country in which they seek to dobusiness.
Japanese companies must consider the ASEAN region from the perspective of supply chain
strategies that encompass the region as a whole. A variety of agreements are being brokered inadvance of the liberalization of trade in 2015, and we should seize this opportunity, first seeking
out initiatives towards the creation of supply chains that can be implemented by the Japaneseand ASEAN private sectors, and then promoting intergovernmental consultation. We need tomake the preparations that will enable individual companies to proceed directly to action whenintergovernmental agreements are reached.
I would like Japanese companies to understand that by advancing into ASEAN markets
they will expand their domestic business. Today, we have cast off the image of ASEAN
as exclusively a manufacturing hub, as seen for example in the trend for European and

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U.S. companies to establish R&D bases in the region. Surely there is room for Japanesecompanies to move into ASEAN nations while black-boxing and protecting their coretechnologies.
Toshiyuki Shiga, Chairman, Committee on Asia-Japan Relations (Chairman, The
39th AJBM): Comments



We can see the case of Shabondama Soap as a good suggestion for the future of
ASEAN-Japan business collaboration. Like this company, the Japanese corporations
may need to consider which production processes – or factors – should be maintainedin Japan, so that they can maximize added value and brand power of the products, andwhich else can be effectively transferred to production bases in ASEAN. This way of
thinking will help us design best ways to realize coexistence and mutual growth of
ASEAN and Japan.

3. Luncheon Session
At the Luncheon Session, Morio Matsunaga, the President of the Kyushu Institute ofTechnology, an institution that makes active efforts to promote international
cooperation, offered a presentation on the institute’s initiatives in the area of fostering
human resources.


Morio Matsunag, President, Kyushu Institute of Technology



The Kyushu Institute of Technology was founded by Keiichiro Yasukawa, a key figure
in Kyushu industry, originally in order to develop engineers. Seeking to foster “creative
individuals,” our mission is to conduct research of the world’s highest level, and to
produce superior engineers able to use their skills globally.
We also actively promote cooperation with the ASEAN nations, and we have concluded
partnership agreements with 19 universities and research institutes in 4 ASEAN
countries. We have also opened an educational research center, MSSC, in Universit y
Putra Malaysia, and introduced a dual degree program. Our goal is to send students andteaching staff from Japan to MSSC in order to make them capable of doing things they
can do in Japan even in a different cultural setting in a same way, based on theperspective of the “Global Engineer.” In the future, we are hoping to extend this modelto the other ASEAN nations.
We also actively accept foreign students. Approximately 20% of our foreign students
come from ASEAN nations, and as a result, intercultural human exchange flourishes on
our campus. In addition to using a government sponsorship system for foreign students
in some of our faculties, we also provide financial support for foreign students in their
daily lives.

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4. Visit to Nissan Motor Kyushu / Networking Roundtables
The participants visited Nissan Motor Kyushu Co., Ltd., for:
(1) Presentation on Nissan Motor’s Asian business and cooperation with ASEAN,(2) A study tour of the production area of the Kyushu Plant, the company’s largest
domestic production center and a hub for its activities in other Asian nations,(3) Roundtable discussions among the meeting participants in small groups(1)Presentation by Nissan Motor Co., Ltd.
“Nissan Motor Co., Ltd.’s Asian business strategy”
Toshiyuki Shiga (Chairman, Committee on Asia-Japan Relations)
Yukinobu Kodama (President and Representative Director, Nissan Moto Kyushu Co.,
Ltd.)
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For the automotive industry, the ASEAN region displays a high rate of growth as amarket, and expectations are also high for the region as a center of production andexport. Japanese automakers are creating an increasing number of jobs in ASEAN
nations.
Nissan Motor Company projects ongoing sales and growth in the ASEAN nations, andwe are working to increase our local production capacity and localize R&D functions inorder to consolidate our manufacturing base in ASEAN. We are also proceeding withthe localization of parts production together with domestic suppliers. By importingcost-competitive parts manufactured in the ASEAN region, we are able to increase thecompetitiveness of vehicles produced in Japan.
Nissan Motor Kyushu mainly uses parts imported from ASEAN nations and China.
This is a win-win situation for ASEAN and Japan: Greater cost competitiveness enables
Japan to increase its volume of exports, and ASEAN nations receive local productionand employment opportunities and are able to increase their volume of exports to Japan.
While the ASEAN region has an advantage in parts production from the cost
perspective, there is still room for improvement in quality. In addition, distribution
costs are high, and the lead-time for imports is long. Because of this, Nissan has
introduced “double number” vehicles for Japan and Korea, so that transport vehicles
can move between the two countries without border control. Thi is working to improve
distribution and quality.

(2)Study tour of Nissan Motor Kyushu plantParticipants were offered study tour to Nissan Motor Kyushu’s body production area,
assembly area, and company pier.

(3) Roundtables (Conducted in parallel)Group I: Discussion on the case of automotive industry
A roundtable discussion was held among corporate managers from Tokyo, Kitakyushu,
Fukuoka and the ASEAN region, with Toshiyuki Shiga (Chief Operating Officer,
Nissan Motor Co., Ltd.), Yukinobu Kodama (President and Representative Director,

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Nissan Motor Kyushu Co., Ltd.), and Akihiko Shido (Chairman & CEO, Yorozu Corp.)
as panelists. The main points raised by participants are presented below.


For the automotive industry, there is no potential for business development without
entry to overseas growth markets. The issue is how to efficiently expand overseas.
 Yorozu Corporation (a major automotive parts manufacturer) had a hard time securing
human resources in the countries it sought to advance into. At the same time, one of thecompany’s domestic business partners had excess facilities and personnel, but noexperience of entering foreign markets. Believing that they could mutually complement
each other, the two companies commenced an experiment in a new form of cooperation.
 In the process of technology transfers to the ASEAN region, Japanese technicians arebeing dispatched to ASEAN nations and are working to pass on skills. Because
companies must ensure that their core technologies remain in Japan, it is necessary torealize a balance by changing these technicians over at times.
 Japanese companies are highly regarded in the ASEAN nations. The reasons for thisare, first, that they prioritize the building of relationships predicated on long -termbusiness, second, that they put effort into education and training, conduct technology
transfers and foster human resources, and third, that they are diligent and emphasize
quality.

Group II: Discussion on cases of Kitakyushu companies
The group discussed issues associated with entering Asian markets with managers of
Kitakyushu companies, Hiroshi Kuramitsu (President, Hohkosha Co., Ltd.) andYasushi Matsunaga (General Manager, Shabondama Soap Co., Ltd.) as panelists, andYasuhumi Hirai (President and General Manager, Cisco Systems G.K.) as moderator.
The main points raised by participants are presented below.
What ASEAN is expecting from Japanese companies is that they will create value chainsthat transcend national borders by introducing Japanese technologies to ASEAN raw
materials in order to produce added value, and conducting sales in ASEAN markets
In many cases, the difference of local industrial standards represents a hurdle forJapanese companies seeking to advance overseas. In the future, it will be essential for
ASEAN and Japan to formulate shared rules.
Financial assistance is also necessary in helping small and medium-sized enterprises toenter overseas markets. City of Kitakyushu targets environmental area as a key sector
and provides support for the overseas advancement of local businesses in the field.
Building relationships of trust will be essential to the further promotion of technology
transfers from Japan to ASEAN and the development of human resources. In order todeepen mutual understanding and foster excellent human resources, we must create
systems that will encourage exchanges among young people and provide opportunities
for overseas study.

Group III: Discussion with corporate managers of large companies
The discussion put a focus on inter-company and inter-industry cooperation, with
Tadao Mikami (Executive Officer, Yamato Holdings Co., Ltd.), a panelist for theoverall Meeting, Shigeto Yanase (Executive Officer, Yaskawa Electric Corp.), andTakashi Shiki (Senior Vice President, All Nippon Airways Co., Ltd.) as panelists, andKoichi Kawana (President and Representative Director, JGC Corp.) as moderator. The
main points raised by participants are presented below.

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ANA developed and implemented its initiative of Okinawa cargo transport hub, and has
realized a rapid transportation service that makes use of the convenience of a 24-hour
airport. This makes it possible for packages from Japan to reach the airports of othercountries in Asia the next morning. Yamato Holdings has a customs license, andorganizes customs clearance and cargo collection for its customers in Okinawa using its
own customs system. Using the company’s delivery service and ANA’s hub at Naha
Airport, it is now possible to make emergency deliveries and to deliver fresh items toother countries in Asia.
Companies engaged in distribution are taking an approach focused on high added valueand high-speed transport, but if we consider the matter from the perspective of users of
infrastructure, there are still aspects of the underpinnings of distribution that are
unstable. It will be important to mutually cooperate in the area of infrastructure,
looking toward the creation of a more solid foundation for distribution by means ofinvestment and technological cooperation.

5. Closing Ceremony (Dinner)
At the closing of the 39th AJBM, Chairman Toshiyuki Shiga presented closing remarks
on behalf of the organizers, and Eusebio Valdez Tan and Egmidio Cesar de Silva Jose
offered responses as representatives of the Philippines, the host country for the next
meeting. They affirmed the importance, together with the advance of small andmedium-sized Japanese enterprises into ASEAN nations and their contribution to
growth in the region, of multiplying examples of success in which these initiatives werelinked to an increase in their domestic business in Japan. They also underlined theimportance of continuing discussions toward the resolution of problems at the next andfuture AJBM.
Speaking on behalf of the host city, Seitaro Hattori, Vice Governor of Fukuoka
Prefecture, and Soichiro Takashima, Mayor of Fukuoka City, offered theircongratulations to the success of the meeting, and indicated the commitment of bothprefecture and city to working to pursue its growth strategies into the future.

【Note】
 Positions, etc. referred to in the text are those in effect at the time of the meeting(October 23 – 25, 2013)
 Keizai Doyukai secretariat takes full responsibility for the wording of this text.

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