32nd Meeting of the Japan Business Council for
Trade and Investment Facilitation
Issues and Requests for Improvements on
Trade and Investment Barriers in 2023
Features of the Survey Results
November 1, 2023
Secretariat: Japan Machinery Center for
Trade and Investment (JMC)

This project is subsidized by JKA

Contents
1. Issues and Requests - Survey Methodology
2. Survey Results Overview
3. Northeast Asia
4. Asia Pacific
5. Southwest Asia
6. North America / Central and South America
7. Europe and Russia
8. Middle East and Africa

21. Issues and Requests - Survey Methodology
1. Survey Methodology
The secretariat (Japan Machinery Center for Trade and Investment) sent questionnaires to andcollected responses from Japan Business Council for Trade and Investment Facilitation
member organizations (approx. 130 organizations). Furthermore, each organization collected
responses from its own member companies and organizations.
2. Survey 26 Categories
1 Restrictions on Entry of Foreign Capitals

Grant of a Preferential Tariff Rates based
2 on Increased Home Production, and/or
Local Procurements

5 Regulations on Parts Industrial Policy

69

Restrictive Export/Import Trade, Duty, andCustoms Clearance

13 Finance17

Implementation of Intellectual Property
Rights ("IPRs")

Reduction and Elimination of Preferential
Policies for Foreign Capital

3 Export Requirements
7

Procedures for the operation of the Foreign
Investment Law

4 Restrictions on Withdrawal Of Operations
8 Investment Recipient Organization

Restrictive Measures for Operations in Free
10 Trade Zones ("FTZs") and Special
11 Restriction on Profits Remittance Abroad
Economic Zones ("SEZs")

12 Exchange Controls

14 Taxation Systems

15 Price Controls

16 Employment

18 Demands for Technology Transfer

19

Industrial Standards, Approval of Safety
Standards

20 Monopoly

Environmental Pollution and Waste
Disposal

23

Inefficient Administrative Procedures,
Regimes and Practices

24 Indigested Legislation, Abrupt Changes

21 Restrictions on Land Ownership22

25 Government Procurement

26 Others

3. Questionnaire Timing
Sent: November 2022/collected: End-February 2023
4. Survey Results Overview
Officially published on the website of the Meeting of the Japan Business Council for Trade andInvestment Facilitation (https://www.jmcti.org/mondai/top.html)
3

1. Issues and Requests - Survey Methodology
Japan Business Council for the Facilitation of Trade and Investment Member List
Flat Glass Manufactures Association of Japan

Engineering Advancement Association of Japan

Association for Electric Home Appliances

Camera & Imaging Products Association

Glass Fiber Association of Japan

Japan Association of Kitchen & BathThe Japan Reinforced Plastics Society

Aluminium Products Association

Japan Business Council in Europe

Communications and Information network Association of Japan

Manufacturing Science and Technology Center

Japan Petrochemical Industry Association

Japan Cement Association

Japan musical Instruments Association

Central Federation of Societies of Commerce and Industry, Japan

Japan Foreign Traders Association, Inc.

Japan Steel-rib Fabricators Association

All Japan Vacuum Bottle Association

Advanced Machining Technology & Development Association

All Japan Footwear Federation

All Japan Plastic Manufactures Federation

All Japan Stationary Association

The Materials Process Technology Center

The Japan Refractories Association

Industrial Diamond Association of Japan

Japan Carbon Association

Organization for Small & Medium Enterprises and Regional Innovation

Electric Glass Industry Association

Japan Electronics and Information Technology Industries Association

Special Steel Association of Japan

Japan Apparel Industry Council

Japan Amusement Industry Association

Japan Aluminium Federation

The Japan Federation of Medical Devices Associations

Japan Printing Machinery manufacturers Association

Japan Optoelectro-Mechanics Association

Japan Chemical Industry Association

Japan Chemical Exporters and Importers Association

Japan Chemical Fibers Association

Japan Furniture industry Development Association

Japan Industrial Association of Gas and Kerosene Appliances

Japan Luggage Association

Japan Paper Exporter's Association

Japan Paper Importer's Association

The Glass Manufacturers' Association of Japan

Japan Toy Association

Japan Cutting & Wear-resistant Tool Association

Japan Mechanical Design Industries Association

Japan Industrial Saw and Knife Association

Japan Machinery Center for Trade and Investment

Japan Silk & Synthetic Fabric Industrial Federation

Japan Measuring Instruments Federation

Japan Worsted and Woolen Weavers' Association

Japan Cosmetic Industry Association

Japan Construction Material & Housing Equipment Industries Federation

Japan Construction Equipment Manufacturers Association

Japan Mining Industry Association

Japan Machine Tool Builders' Association

Japan Machine Accessory Association

Japan Rubber Footwear Manufacturers' Association

Japan Golf Goods Association

The Japan Society of Industrial Machinery Manufacturers

Japan Industrial Vehicles Association

Japan Automobile Manufacturers Association, Inc.

Japan Auto Parts Industries Association

Japan Vending Machine Manufacturer's Association

Japan Jewellery Association

The Japan Chamber of Commerce & Industry

The Japan Food Machinery Manufacturers' Association

Japan Vacuum Industry Association

Japan Pearl Exporters' Association

Association of Japan Sporting Goods Industries

Japan Paper Association

Japan Pharmaceutical Manufacturers Association

Japan Textile Machinery Association

The Japan Textile Products Exporters' Association

The Japan Textile Importers Association

Japan Soda Industry Association

Japan Towel Industrial Association

Tanners' Council of Japan

Japan Heating Industrial Association

Japan Foundry Society

Japan Fishing Tackle Manufacturers Association

The Japan Iron and Steel Federation

The Japan Electrical Manufacturers' Association

The Japanese Electric Wire & Cable Makers' Association

Japan Pottery manufacturers' Federation

Japan Clock & Watch Association

Japan Watch Importers' Association

Japan Knitting Industry Association

The Fasteners Institute of Japan

Japan Farm Machinery Manufacturers' Association

Japan Gear Manufacturers Association

Japan Bag Organization

Semiconductor Equipment Association of Japan

Japan Department Stores Association

Japan Fertilizer & Ammonia Preducers Association

Japan Industry Union of Plastic House Wares Manufacturers

Japan Institute of Plant MaintenanceJapan Fluid Power Association

Japan Image and Information Management Association

Japan Analytical Instruments Manufacturers Association

The Association of Powder Process Industry and Engineering, JapanThe Japan Bearing Industrial Association

Japan Foreign Trade Council, Inc.

Japan External Trade Organization

Japan Binocular Manufacturers Association

Japan Sewing Machinery Manufacturers' Association

Japan Spinners' Association

Japan Packaging Machinery Manufacturers' Association

Japan Enamel Association

Hobby Association of Japan

Japan Association of Maintenance and Service Contractors

Japan Wig Association

Japan Woodworking Machinery Association

Japan Umbrella Promotion Association

Japan Wool Industry Association

Japan Refrigeration and Air Conditioning Industry Association

Japan Association of Refrigeration & Air-Conditioning Contractors

Recording Industry Association of Japan

Japan Robot Association

Japan Bioindustry Association

Heat Pump Technology Center of Japan

Japan Business Machine and Information System Industries Association

Fukui Optical Industrial Association

Around Japan sea Economic exchange Conference in Hokuriku

Micromachine Center

Mazak Foundation

Imported House Industrial Organization

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2. Survey Results Overview ①: Issues by Category◆Key Points• The total number of issues identified was 1,617, roughly the same as in 2022 (1,578).
• Overall, the category with the most issues was “Restrictive Export/Import Trade, Duty, and Customs Clearance,” followed by“Taxation Systems,” “Employment,” and “Implementation of Intellectual Property Rights” in the top four categories.
The trend of significant increase in issues concerning “Industrial Standards, Approval of Safety Standards” continued.
• Issues related to the COVID-19 pandemic have calmed down, although there are still issues related to the movement ofpeople, including entry restrictions and delays in visa issuance, as well as delays in customs clearance and logistics
services. Regarding the Ukraine issue, there were concerns about unclear business prospects, including difficulties withremittances and trade insurance.

52. Survey Results Overview ②: Issues by Country◆Key Points• There were no major changes overall, with China, India and Indonesia remaining the top three.
• Vietnam, with an increasing number of issues, ranked fourth, and the United States, with roughly thesame number of issues, ranked fifth in 2023.
• Russia and Ukraine, both in the midst of the Ukraine issue, have a similar number of issues as in 2022,
which did not include the invasion issue.

63. Northeast Asia China ①◆Key Points• As in past years, there was a notably large number of issues (219), covering a wide range of topics.
• The top three categories with the most issues, “Restrictive Export/Import Trade, Duty, and Customs
Clearance,” “Taxation Systems,” and “Implementation of Intellectual Property Rights,” remained unchanged,
while “Import/Export Trade, Duty and Customs Clearance” continued to show a decrease. “Implementation ofIntellectual Property Rights” and “Industrial Standards, Approval of Safety Standards” showed an increase.
• The impact of the COVID-19 pandemic continued. This has led to delays and cumbersomeness in the visa
issuance procedure and a decrease in shipping service and container traffic.

7

3. Northeast Asia China ②① Countermeasures Against Sanctions Imposed by the US on China and the Taiwan Issue• There continued to be concerns about the withdrawal of business due to the U.S.-China trade friction and thedecline in profitability of local subsidiaries as a result of tariff increases imposed as retaliatory measures for
U.S. sanctions against China.
Although the legal basis is unclear, there were many complaints, including that products manufactured in
Taiwan are required to be labeled “Made in Taiwan, China,” etc. on invoices and product labels, which iscontrary to international practice.
② RCEP, Etc.
• There were requests for improvements in the renegotiation of items not subject to tariff elimination or reduction
under RCEP and items with long staging periods.
• There were calls for the JCK EPA to lead to further liberalization in items that were not adequately secured in
the RCEP.
• There were calls for early implementation of electronic data exchange of proofs of place of origin.
③ Foreign Capital Restrictions, Shrinking of Preferential Treatment Policies for Foreign Capital, Favoringof Domestic Products• Investment in the steel industry and distribution industry is restricted. In addition, capital equal to a certain
percentage of the total investment is required.
• While the rules allow for capital to be increased or decreased, the procedures for doing so are extremely
cumbersome making it very difficult in reality.
• Policies that favor domestic products have been implemented, excluding foreign products from tenders anddelaying the approval of pharmaceuticals.
• There are concerns about consistency with the TBT Agreement, the Protocol on the Accession of WHO
Members, RCEP, etc., as it has been announced that national standards regulations will be revised to require
office equipment to be designed and manufactured in China.
• Regarding subsidy policies for investment, there were suspicions of arbitrariness in processes such as
application and determination of subsidy amounts. Decisions are favoring Chinese companies that haveadvantages such as channels to government officials, resulting in a lack of fairness and transparency.
83. Northeast Asia China ③④ Restrictive Export/Import Trade, Duty, and Customs Clearance• High duties were imposed on many items, such as clock products, camera parts, projectors, anddisplay products.
• There was also a continuation of issues concerning the abuse of antidumping measures on items suchas steel products and stainless steel.
• When importing sample and used products, decisions by customs and customs officials regarding
matters such as import licenses are inconsistent.
• The implementation of the Export Control Law introduced in 2020 is unclear.
• It was pointed out that the number of samples required when hazardousness of importing chemicals ishigh, which is costly, and that the tightening of regulations means that previously used customs andwarehouses can no longer be used, etc.
• Although the products may go through unpacking inspection during customs clearance, there havebeen cases of products being damaged due to mishandling.
• There continued to be a lack of consistency regarding customs classifications, including different
decisions being made by different customs officials in charge of customs clearance.
• Respondents still faced issues using FTAs for shipments destined for ASEAN and South Americancountries where they were unable to use or were delayed in using an FTA because the organizations
issuing proofs of place of origin had unique requirements that differed from (or were not mentioned in)
the terms of the FTA.
• Issues related to food import restrictions due to radioactive contamination continue.
• For import declarations, in cases where the invoice price does not match the declared price, it isextremely difficult to amend the declaration unless there is an obvious mistake or proof can besubmitted. A more flexible system is needed.
• Customs documentation for international distribution is in English but a Chinese translation is required.
• The obligation to state brand type and export preference has been added to customs declarations. This
creates a risk of being fined on any mistakes on this section due to its impact on statistics.
93. Northeast Asia China ④⑤ Taxation Systems• The criteria for PE certification regarding the provision of services are unclear and widely interpreted.
(There are regional differences in implementation.)• Although the preferential policy on individual income taxes is scheduled to be abolished at the end of2023, there have been calls to extend it to 2024 and beyond. To receive a refund of personal income
tax, the former expatriate must maintain a bank account and complete the necessary procedures, which
may require a business trip even after returning to their home country.
• There were many issues concerning the refund and levy of value added tax. The situation of“provisional value added tax > value added tax on borrowing” persists, value added tax on sales inbonded areas is not refunded, some items not eligible for refund is damaging competitiveness, steel
products are not eligible for refund, exports to Taiwan are not refunded, and so on. In addition, in somecases, companies in the Shanghai Pilot Free Trade Zone (SHFTZ) are not allowed to issue their own
value added tax invoices and are not allowed to receive export refunds.
• There were many issues concerning transfer pricing taxation system. There continued to be issues
such as the lack of clarity in the law regarding the period for verification by transfer pricing
documentation, requests for clarification in accordance with OECD principles, the time-consuming
advance pricing agreement (APA) (bilateral) between Japan and China, and requirements to provide
excessive information after the introduction of transfer pricing documentation.
• Other issues included the risk of taxation on the reorganization of group companies, the exclusion ofborrowing from affiliated companies in China from the Thin Capitalization Rule, the obstacle to profit
repatriation due to withholding tax on dividends between parent companies and subsidiaries,
cumbersome tax litigation procedures, and the introduction of the Stamp Tax Law in 2022, which will
result in double taxation for foreign companies, etc.

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3. Northeast Asia China ⑤⑥ Implementation of Intellectual Property Rights• There were requests to allow amendments when applying for the Patent Prosecution Highway (PPH).
• Information regarding intellectual property rights (IPR) examination, etc. is provided inadequately and late.
• For patent licenses, the responsibilities required of the licenser are too heavy, and as a result, they are forced
to leave the situation unlicensed.
• It is impossible to oppose third parties without registering a non-exclusive license but considering the current
situation in open innovation, this registration is unrealistic. Also, in cases where the licensing agreement itself
is a secret, it is preferable to avoid it becoming public through registration. The risk of litigation was alreadyapparent, and there were calls to implement a countermeasure system.
• Although punitive damages have been stipulated for willful infringement, if criminal charges are applied it would
be enough.
• A system for awarding damages was established and there were calls for compliance and active
implementation of the system.
• Although a system for protecting new drug application data is being developed, the provisions are weak andvague. In 2021, a system to compensate for the time taken to review new drug applications for marketing
approval was introduced, but the detailed regulations have not yet been established.
• Although patent linkage has been established, the proper operation of the system is in jeopardy, for example,
the average trial period for patent infringement lawsuits is more than one year, while the suspension period forgeneric drug approvals is nine months.
• Although the novelty of utility models is now examined through a rudimentary prior art search, there are cases
where technology that are virtually identical to prior art are registered.
• There is no substantive examination in the examination of design rights, and rights are granted even if there isno substantial novelty.
• The details of hearings of administrative decisions and court rulings related to intellectual property rights are
not fully disclosed to the public. It places a tremendous burden on the organization to respond and prepare.
• The policing of counterfeit goods is inadequate. Penalties are not sufficient to deter re-offending. Unclear
treatment of counterfeit goods after customs seizure, which places a heavy burden on rights holders.
113. Northeast Asia China ⑥⑦ Employment• The issuance of visas to Japanese nationals has been unstable, adversely affecting their postings andbusiness trips to China. The introduction of a points system for foreign workers has created hurdles
such as required academic background that make it hard to acquire visas for expatriate employees. In
some cases, the procedures and documents required vary depending on the city or the official in
charge.
• Overtime restrictions under labor laws are too strict, making it difficult to provide adequate service tocustomers.
⑧ Exchange Controls and Finance-Related Issues• For non-trade remittances to non-Chinese destinations, there are excessive procedures by multiple
relevant authorities and banks, as well as restrictions on the amount of money.
• If the fee is not received within 90 days of export from China, subsequent remittances from overseas
will be extremely complicated. It will be difficult to do business with suppliers whose payment site is 90
days or more away.
• Remittances in Chinese yuan from China to Japan cannot be implemented in a stable manner.
• Due to foreign currency restrictions, only cash received from USD transactions (e.g., sales in USD) is
permitted as a source of repayment of USD borrowings.
⑨ Industrial Standards, Approval of Safety Standards• The law requires that the manufacturer’s name and address be written in Chinese, and the same may
be required for B2B parts and other items.
• There were calls to open the 60 GHz band in China in line with global trends.
• While there are standards that use digital labels, there are also standards that still require physicallabels, so there were calls for more progress to be made on digitization.
123. Northeast Asia China ⑦⑩ Environmental Issues and Waste Regulations• Regarding waste collection, there are contradictions between the PRC Law on the Prevention andControl of Environmental Pollution by Solid Wastes promulgated in 2020 and the China WEEE
regulation, which places excessive requirements on electrical and electronic manufacturers.
• The government can order the suspension of operations in cases of atmospheric pollution, but theconditions for lifting these orders are unclear, making it impossible to plan for the resumption ofoperations.
⑪ Indigested Legislation, Abrupt Changes• China is not a signatory to the Hague Convention, so the apostille is not valid. Therefore, the signatureon the power of attorney, etc., certified by a Japanese notary public must separately visit the China Visa
Application Service Center to obtain consular certification, which is a cumbersome and time-consuming
procedure.
• Unfair price sales are rampant in the parts industry. This is due to the receipt of government subsidies
based on the amount of sales and the supremacy of sales expansion with a view to IPOs.
• The review period is long due to the complexity of regulations such as the National Medical Products
Administration (NMPA) and complexity of the required documents.
• The Data Security Law, the Chinese Cybersecurity Law, and the Personal Information Protection Law
call for the strengthening of information control, but there were concerns that the lack of detailed
regulations would make it difficult to deal with the situation.
⑫ Issues Related to the COVID-19 Pandemic• There were continuing concerns about the adverse effects of the COVID-19 pandemic, including delays
and cumbersome procedures related to visa issuance, container shortages and low sea shipments, andthe suspension of cargo handling that requires strict temperature control.
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3. Northeast Asia Korea ①◆Key Points•
The number of issues identified was 23, a decrease from the previous year (29).
•The top three categories with the most issues were “Implementation of Intellectual Property Rights,”“Employment,” and “Taxation Systems,” with “Restrictive Export/Import Trade, Duty, and Customs
Clearance” decreasing and “Implementation of Intellectual Property Rights” increasing.

143. Northeast Asia Korea ②① Implementation of Intellectual Property Rights• It is impossible to oppose third parties without registering a non-exclusive license, but considering thecurrent situation where non-exclusive licenses are frequently used in open innovation, this registrationis unrealistic.
• Although indirect infringement is provided for by law, there is concern that software-related patents may
not be saved by this provision, since there are cases where the modules that make up the software are
made versatile.
② Restrictive Export/Import Trade, Duty, and Customs Clearance• High duties on clock products and prolonged anti-dumping on stainless steel products have been
pointed out.
③ Employment• The South Korean Labor Standards Act stipulates that in order to amend rules of employment
unfavorable to workers, the employer must obtain the consent of the trade union, which is the biggest
barrier to revising rules of employment.
• There continued to be issues concerning the tightening of overtime regulations (maximum of 52 hours aweek), rigid employment conditions, and strong labor unions.
• It was pointed out that the penalties under the “Serious Accidents Punishment Act” are too severe, thescope of the act is broad, and the provisions are vague.
④ Industrial Standards, Approval of Safety Standards• Packaging regulations require products to be assessed by a specialist organization before they are
sold, and the results of this assessment must be displayed on the packaging. This is continuing tocause issues such as additional costs, delays to new product launches, and leaks of information on
new products.
15

3. Northeast Asia Taiwan ①◆Key Points• The number of issues identified was 30, roughly the same as in the previous year.
• The top four categories with the most issues were “Employment,” “Restrictive Export/Import Trade, Duty
and Customs Clearance,” “Taxation Systems,” and “Industrial Standards, Standards and Safety
Certification.” While “Employment” and “Industrial Standards, Approval of Safety Standards” showed anincrease, “Restrictive Export/Import Trade, Duty and Customs Clearance” showed a decrease.
• The COVID-19 issue affects logistics services and the entry of foreign nationals into the country.

16

3. Northeast Asia Taiwan ②① Taxation Systems• Fees received by foreign companies for providing electronic services within Taiwan are subject to the Taiwanese
withholding tax which is, in principle, 20% withheld at the time of remittance. According to the 2018 interpretation of thistax, it is levied based on deemed profit ratio and not sales price. As international consensus continues to build, taxation
systems should be consistent.
• There continued to be complaints about the cumbersomeness of procedures related to the bilateral tax agreement
concluded between Japan and Taiwan.
• Withholding tax must be withheld when paying a Taiwanese company for technical services from mainland China or
Hong Kong, but if a tax statement is not approved by the exchange contact organization of each country, a tax
exemption cannot be made.
② Restrictive Export/Import Trade, Duty, and Customs Clearance• There were continuing issues with high tariffs on clock products, as well as continuing issues with the submission of
proofs of place of origin for steel products and the import declaration system.
③ Intellectual Property Rights• It is impossible to oppose third parties without registering a non-exclusive license but considering the current situation, in
which non-exclusive licenses are frequently used in open innovation, this registration is unrealistic. Also, in cases where
the licensing agreement itself, let alone its conditions, is a secret, it is preferable to avoid it becoming public throughregistration.
④ Employment• There was a chronic shortage of labor, exacerbated by the COVID-19.

17

4. Asia Pacific Indonesia ①◆Key Points• The number of issues identified was 91, a decrease from the previous year (103).
• The top four categories with the most issues were “Restrictive Export/Import Trade, Duty and Customs
Clearance,” “Employment,” “Implementation of Intellectual Property” and “Taxation Systems,” with
“Employment” showing a decrease.
• There were not many, but there were also issues of “Grant of a Preferential Tariff Rates based on
Increased Home Production,” and “Exchange Controls.”

18

4. Asia Pacific Indonesia ②① Restrictive Export/Import Trade, Duty, and Customs Clearance

•
•
•
•
•
•

While the Commodity Balance System, due to be implemented in January 2023, has been postponed for
one year, the old system has been closed, making it impossible to renew import permits. Although thesituation has gradually improved since mid-February, confusion remains.
When raw materials are brought into a bonded area under the VAT exemption treatment, the tax voucher
must be issued after the product receipt certificate is approved. As a result, despite being FOB, invoices
could not be issued until the shipment arrived at the factory, negatively impacting cash flow.
There were continuing issues of opacity and arbitrariness in customs clearance procedures, such as
arbitrary HS classifications and instructions to pay duties retroactively after tax exemptions granted on an
ongoing basis were declared invalid.
There was also a continuation of issues concerning the abuse of antidumping and safeguard measureson items such as steel and alloy steel and the imposing of import restrictions.
There continued to be issues including the burden of pre-shipment inspections, systems failures affecting
import approval documentation, and the cumbersomeness of the import license system.
Increased preferential treatment for domestic products and stricter regulations on import permits, etc.,
have had a negative impact on factory operations.

② Issues Concerning Preferential Duties Including the Japan-Indonesia EPA••

There continued to be an issue regarding ongoing discussions with the Indonesian government over anorder issued by the Ministry of Industry in January 2018 (levying of general duties on inventory six
months after the deadline for USDFS application has passed) which is in violation of the Japan-Indonesia
EPA.
Due to cases of respondents being unable to use preferential duties during clearing if documents were
not arrived in time, there were calls for retroactive applications to be accepted.

19

4. Asia Pacific Indonesia ③③ Restrictions on Foreign Capital, Excessive Local Production Demands, Etc.
• The Omnibus Law passed in 2020 resulted in stricter regulations and increased the initial investment
amount.
• Excessive local content requirements not only require frequent, time-consuming administrative
processes, but also aggressively impede imports by establishing an import ceiling. Numerical targets
for local procurement are set and penalties are imposed if these are not achieved. Tenders also include
localization conditions that must be adhered to. There were also cases where ODA projects wereunable to move forward for the same reason.
• Television products with a screen of 42 inches or less are required to adhere to local content
requirements. Importing relevant items requires the acquisition of a license, which is an onerous
process. For some items, there was an obligation to apply for an import license online in advance.
④ Exchange Controls and Taxation Systems• Foreign exchange transactions are not freely available, such as transactions between rupiah andforeign currency are limited to actual demand, and cross-border transactions within groups are notpossible.
• Denials of royalties and brand fees, additional collection decisions due to transfer pricing system, andunrealistic denials freeze large sums of money. Even if the company wins the case in court after receiving
the additional tax penalty, no interest is paid during this period.
• 10% of the import price must be paid as prepaid income tax, and if there is an overpayment, it is time
consuming to claim a refund.
⑤ Implementation of Intellectual Property Rights• Patent owners are required to implement their patents in Indonesia. Although it is possible to request adeferment of implementation, it is burdensome, such as having to implement within 36 months.
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4. Asia Pacific Thailand ①◆Key Points• The number of issues identified was 80, roughly the same as in the previous year (84).
• The top three categories with the most issues were “Restrictive Export/Import Trade, Duty and Customs
Clearance,” “Taxation Systems,” and “Employment,” with “Restrictive Export/Import Trade, Duty andCustoms Clearance” showing an increase.
• Other issues such as “Restrictions on Entry of Foreign Capitals” and “Implementation of Intellectual
Property Rights” were also pointed out.

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4. Asia Pacific Thailand ②① Issues Concerning Restrictive Duties and Customs Clearance, the Japan-Thailand EPA, Etc.
• There continued to be complaints about value added tax being added to import prices in cases where
exchange rate fluctuations caused the price of goods being stored in bonded warehouses to exceed
actual sales prices. Although the legal grounds of this measure are unclear, when it was protested,customs clearance was halted in retaliation.
• There continued to be trouble attributed to the customs incentive distribution system for customs
officials. This included cases of excessive penalties being demanded when submitting amendment
declarations due to their being no system for approving transactions prior to import approval, large
amounts of overdue interest being incurred due to unnecessary extensions to examination periods, andhigher duties being levied based on the arbitrary judgement of customs officials.
• There continued to be issues concerning mandatory standards, abuse of antidumping measures onsteel products, etc.
• Customs officials vary in their interpretation of HS codes, and procedures such as appeals are timeconsuming.
• Within the ASEAN region, electronic and paper proofs of place of origin are mixed, and preferential
duties cannot be used if the information on the paper and electronic proofs is different. However, sinceelectronic data can only be viewed by government agencies in each country, there is no way to confirm
this.
• It is difficult to deal with the fact that chemical imports require labeling of all ingredients.
• Some items require a TISI (Thai Industrial Standards Institute) license prior to customs clearance,
which limits the quantity per invoice.
• For products subject to import restrictions, individual approvals must be obtained from each agency
with jurisdiction over the restrictions, which is a cumbersome process with varying lead times and is adifficult task.
• The draft detailed regulations of the Trade Controls of Weapons of Mass Destruction (TCWMD) Act(2019) have been published in 2021, but the detailed operation has not been determined and could be
22hindered if suddenly introduced in the future.

4. Asia Pacific Thailand ③② Foreign Capital Restrictions and Shrinking of Preferential Treatment Policies for Foreign Capital• The Foreign Business Act restricts entry into certain sectors, such as services. Therefore, flexible
support for group companies is not possible.
• Information on foreign business licenses, which are required for foreign companies to operate locally, isunorganized and difficult to understand. In addition, the cost of acquiring a license is high.
• Due to zoning laws, plant expansion plans have been rejected for plants located outside of industrial
parks, even when said expansion is within the plant’s grounds.
• In order to receive Board of Investment of Thailand (BOI) benefits such as corporation tax exemptions,investment projects have conditions regarding debt to equity ratios.
• Under the new investment incentives system introduced in 2015, BOI investment incentives have been
reduced in practice. In addition, the time required to obtain approval for the disposal of parts orequipment, etc. that utilize the BOI incentives is long.
③ Taxation Systems• Foreign currency restrictions (BOI incentives) have been relaxed, but are not harmonized with tax
aspects and there is a risk of taxation.
• Thailand’s tax laws are vague and application can depend on the judgement of the official in charge. In
the case of prior period adjustments, an additional 1.5% interest (surcharge) is required as a latepayment charge.
• There was a request to eliminate VAT/Specific Business Tax levied on foreign exchange and fundtransactions.
• There were complaints that the dividend withholding tax rate under the Tax Treaty between Japan and
Thailand is 15%, which is higher than that under treaties with other countries, resulting in poor
investment efficiency. The royalty withholding tax rate is also high at 15%.
• The tax refund process is taking too long. (Request to expedite the tax process)23

4. Asia Pacific Thailand ④④ Local Employment, Expatriates, and Other Issues• Procedures for acquiring and renewing work permits are cumbersome and time consuming. Companies
are required to employ four Thai nationals for each Japanese employee.
• The minimum wage increases erratically and cannot legally be lowered, making it difficult to control
labor costs.
⑤ Implementation of Intellectual Property Rights• Anti-counterfeiting measures have improved but remain insufficient. Accession to intellectual property
treaties (PCT, Madrid Protocol, etc.) has not progressed.
• The only requirement for novelty is that the invention must not have been publicly known and used in
Thailand prior to filing. Thus, there is a problem that a patent right is granted in Thailand even if theinvention is publicly known outside Thailand.
• There was a call for improvement since the applicant cannot file a voluntary divisional application.
There was also a request for a provision that the application be published promptly after 18 months, as
there is no clear provision as to when the application should be published.
⑥ Others• Laws such as an export control law and the Personal Data Protection Act have been enacted, but
detailed regulations have not been established, making it difficult to put them into practice.
• There were calls for a careful preparation period for the WEEE legislation. Environmental awarenessand education of the public is also necessary.
• The power infrastructure is inadequate, and there are power outages and temporary blackouts.
Electricity base rates have been increased by 60%.
• The area was severely damaged by the 2011 floods, and the flood control measures taken since thenhave been inadequate.
24

4. Asia Pacific Vietnam ①◆Key Points• The number of issues identified was 88, an increase of just over 10% from the previous year (78).
• The category with by far the most issues was “Restrictive Export/Import Trade, Duty, and Customs
Clearance,” followed by “Taxation Systems,” “Employment,” and “Implementation of Intellectual Property
Rights.”• Other issues, although not as numerous, included restrictions on the entry of foreign capital.

25

4. Asia Pacific Vietnam ②① Issues Concerning Restrictive Duties and Customs Clearance, Etc.
• Continuing issues included safeguards and import licensing requirements, on steel products and export
taxes on coal and related products, etc.
• There were cases where customs officials demanded import licenses for medical equipment andrelated products that fundamentally do not require a license, and these were ultimately refused
clearance. There were also cases where the import tax was levied or not, depending on the customs
office or the official in charge.
• The post-clearance investigation process was complex and subject to repeated review by several
different government agencies.
• Companies used the advanced ruling system, but it was not convenient, in addition to taking a longtime to get responses.
• Since the transactions are between the same group of companies, Vietnam Customs, concerned about
the possibility of import prices leading to “transfer pricing,” has refused to use the invoice price as thedeclared import price and has long used the highest price as the declared import price.
• Construction equipment older than 10 years cannot be imported, although it is said that this is due toconcerns about occupational accidents. Also, right-hand-drive machines cannot be imported, but mostpile-driving machines in Japan are right-hand-drive.
• Tri-nation transactions may no longer be allowed. In addition, there is a risk of purchase price leakage
to sales destinations because tri-nation transactions require customs documentation at the time ofcustoms clearance by suppliers.
• There are no FTA application procedures and rules for imports from Export Processing Enterprises(EPEs) through bonded warehouses by non-EPEs in Vietnam.
• Under the July 2022 decree, the customs has ruled that EPE companies that loan jigs and molds todomestic suppliers and receive parts supplies are considered outside the scope of the EPE company’s
activities and must pay customs duties and VAT. However, since the purpose was to supply parts to
support exports, the payment were traditionally exempt.
26

4. Asia Pacific Vietnam ③② Restrictions on Foreign Capital, Lack of Preferential Treatment Policies for Foreign Capital, Etc.
• The entry of foreign capital is restricted in areas such as construction and pharmaceutical wholesale.
• The company has been in business with Vietnamese partners for 30 years to create local jobs, but has
struggled due to competition from cheap foreign products.
③ Other Issues• Although the tax treaty between Japan and Vietnam stipulates that short-term visitors are exempt fromindividual income tax, the treaty provisions do not work effectively because registration procedures are
required to apply, and even if the procedures are completed, the exemption may not be granted.
• Investment projects are limited to a maximum of 70 years and must be terminated upon completion.
• VAT refunds are available if certain conditions are met, but there are often problems with tax audits atthe time of the refund. There have also been cases where refunds are no longer available due to achange in the system in 2016.
• Requirements regarding entry into the social insurance system are strict, and only employees on
secondment from parent companies are exempt from social insurance payments. There were calls forthis issue to be solved through a Japan-Vietnam Social Security Agreement.
• A priority certificate must be filed within three months of filing a patent application. In practice, only
patent applications that are filed in the Vietnamese language are granted. Patents for computer
programs and use inventions are not granted.

27

4. Asia Pacific Malaysia ①◆Key Points•
The number of issues identified was 33, roughly the same as in the previous year (35).
•The top three categories with the most issues were “Restrictive Export/Import Trade, Duty, andCustoms Clearance,” “Employment,” and “Implementation of Intellectual Property Rights.”•
Other issues included “Home Production Requests, Local Procurement Rates and Benefits” (impositionof high excise taxes on substandard products) and “Finance” (exchange rate risk due to new foreignexchange regulations), etc.

28

4. Asia Pacific Malaysia ②① Issues Concerning Restrictive Duties, EPAs, Etc.
• Companies are obligated to acquire proof of conformity assessment for steel products. The number of
items covered by it has decreased, but procedures remain cumbersome and there is an issue with theburden of inspection costs. There were also continuing calls for the abolishment of the import license
system and issues concerning the abuse of antidumping measures.
• The COs in the Japan-Malaysia EPA must be written in accordance with HS2002. On the other hand,
the latest HS code is 2022. Therefore, there are cases where Malaysian Customs may judge it as a
mistake and as a result, preferential duties cannot be used.
• MCMC labels must be affixed to the smallest package unit for export, but quality cannot be guaranteed
if the moisture-proof covers covering multiple units are opened.
② Implementation of Intellectual Property Rights• Although counterfeit goods are being policed, this is not being carried out sufficiently and there aremany cases where penalties had not been decided even several years after the goods werediscovered, as well as malicious cases where the handling of counterfeit goods soon resumed.
• Once a regular substantive examination has been requested, it is not possible to switch to a modified
substantive examination. There were some continuing issues that procedures for divisional applicationand changing the scope of rights were not smooth.
③ Finance• Some of the measures in the new foreign exchange regulations have significant business implications.
• In domestic transactions, only the Malaysian ringgit is accepted and the key currency (USD, etc.)
cannot be used. When purchasing from overseas through a trading company, transactions are made in
USD in the exporting country, but in the domestic market, transactions are made in ringgit, which
requires frequent checking of the exchange rate.
29

4. Asia Pacific Malaysia ③④ Employment• In addition to the employer’s share of the poll tax for foreign workers starting in 2018, the minimum
wage has been increased starting in 2022.
• While Malaysians tend to dislike manufacturing and are forced to hire foreigners, there were concernsthat stricter regulations on hiring foreigners would stall factory operations.
• The issue of the maximum number of visa appointment slots has improved with the availability of e-visa
applications. However, there are currently only five agency quotas per day, and after the visa is issued,
new applications can only be made for the number of cases for which the visa was issued, making theprocess cumbersome. In addition, there have been issues such as unannounced changes in theagency in charge and the large number of documents required.
⑤ Other Issues• Since a high excise tax is levied on products with less than 30% domestic content, the company has no
choice but to use local suppliers, making it less competitive with neighboring countries.
• There were concerns about the fairness and sustainability of the Directive on Waste Electrical andElectronic Equipment (WEEE), which is due to become law by 2024, because the criteria for calculating
and reviewing the recycling fee rate and the treatment of parallel imports were unclear.
• Suddenly, in December 2022, it was announced that electricity prices would go up from January 2023,
mainly for foreign companies, increasing electricity prices for the manufacturing sector by about 40%.
There were concerns about the sudden price increase and the need for adequate preparation time.
• There were issues regarding the maintenance of infrastructure, including the vulnerability of the watersupply and inadequate flood control measures.

30

4. Asia Pacific Philippines ①◆Key Points• The number of issues identified was 37, a decrease of just over 20% from the previous year (46).
• The category with the most issues was “Restrictive Export/Import Trade, Duty, and Customs Clearance,”
followed by “Taxation Systems” and “Implementation of Intellectual Property Rights” with many issues aswell.
• While the end of the COVID-19 pandemic led to more stringent cargo labeling requirements, there weresome reports of a slowdown in pharmaceutical shortages.

31

4. Asia Pacific Philippines ②① Issues Concerning Restrictive Duties and Customs Clearance, Etc.
• In cases where the FOB price was lower than the set unit value specified by customs, requirements
were imposed such as submitting relevant documentation, providing explanations, and revisingdeclared amounts.
• Customs procedures are cumbersome, requiring approval from many departments. In addition, thecustoms clearance system is fragile, with slow processing speeds and frequent system crashes,
resulting in many cases where the time required for clearance procedures prevented parts from being
delivered as scheduled.
• An online customs clearance system has been introduced, but in reality, the official in charge checks
the soft-copied customs documents, which takes half a day to two days, depending on the customs
clearance location.
• After 2021, electronic locks must be installed and removed on export/import cargo, but importcontainers are hindered by the fact that removal services are only available until 20:00.
② Shrinking of Preferential Treatment Policies for Foreign Capital• There were many issues regarding the reduced VAT exemption incentives granted by the Philippine
Economic Zone Authority (PEZA), which made it difficult to continue doing business in the Philippines.
③ Taxation Systems• The imposition of increased withholding tax on sales of goods and services from the top 20,000
taxpayers and high tax payers to domestic businesses had a significant impact on cash flow and tooktime due to extensive documentation requirements and the need to undergo investigations to obtainrefunds. In addition, there were issues with the way tax audits are conducted, such as the large amountof documents required, illogical additional tax collection, and the burden of proof on the taxpayer.
32

4. Asia Pacific Myanmar ①◆Key Points• The number of issues identified was 23, a slight decrease from the previous year (27).
• The category with the most issues was “Restrictive Export/Import Trade, Duty, and Customs Clearance,”
followed by “Exchange Control” and “Others” (insufficient transportation and electrical infrastructure).

33

4. Asia Pacific Myanmar ②① Restrictive Export/Import Trade, Duty, and Customs Clearance• There was a demand for a response to the increase in cargo imports, including the development of abonded warehouse system in line with industrial development.
• There were calls to abolish the import license system, although some improvements were made, suchas reducing the number of target items.
• A government notice circulated that 100% of motorcycle imports should be electric vehicles, andcompanies are under pressure to respond.
② Difficulties in Remitting Foreign Currency• Regulations have been announced for the remittance of dollars from Myanmar to foreign countries.
There are official and market exchange rates, with a 14-86% premium for imports.
③ Others• Policies and regulations have changed frequently since the military government took over.
• There were requests for infrastructure development, such as alleviating traffic congestion in Yangon
City, efficient movement of people and goods to the Thilawa Special Economic Zone, and adequate
power supply.

34

4. Asia Pacific Singapore ①◆Key Points• The number of issues identified was 25, an increase from the previous year (20).
• The category with the most issues was “Employment,” mainly difficulties in acquiring work visas, followedby “Industrial Standards, Approval of Safety Standards” and “Restrictive Export/Import Trade, Duty andCustoms Clearance.”• Regarding COVID-19, there were issues such as even stricter visa issuance and differences in vaccination
requirements for entry into Japan between Japan and Singapore.

35

4. Asia Pacific Singapore ②① Employment• Traditionally, priority recruitment policy for nationals has been applied to citizens, but since the COVID19 pandemic, these policies have become even stricter. On the other hand, young Singaporeans tend
to prefer white-collar jobs, so there is no choice but to hire foreign workers.
• With the introduction of COMPASS, scheduled to begin in September 2023, companies with a highproportion of foreign nationals will find it even more difficult to send expatriates or hire foreign nationals.
• Salaries in Singapore are skyrocketing, and the job-hopping culture makes it difficult to retain talent.
② Restrictive Export/Import Trade, Duty, and Customs Clearance• There were complaints of longer import processing days as a result of the loss of the ability to defer
payment of Goods and Services Tax (GST) at the time of import from 2020.
• Classification criteria for the list of items subject to the Wassenaar Arrangement, etc., differ from othercountries such as Japan, the US, and Europe. Therefore, relevant items need to be transported by aroute that doesn’t include Singapore to avoid unnecessary trouble.
③ Industrial Standards, Approval of Safety Standards• The process for setting pharmaceutical prices is opaque and not appropriate for assessing innovative
pharmaceuticals. It also disregards innovation, and special niche products for cancer treatment are notcommercially viable.

364. Asia Pacific Australia ①◆Key Points• The number of issues identified was 16, a slight decrease from the previous year (20).
• There were many issues concerning “Restrictive Export/Import Trade, Duty, and Customs Clearance” and“Taxation Systems.”• Regarding COVID-19, there were issues of prolonged issuance of work visas and stricter requirements forentry into the state.

37

4. Asia Pacific Australia ②① Restrictive Export/Import Trade, Duty, and Customs Clearance• There were many continuing issues such as the abuse of antidumping measures on steel products andfumigation requirements for imported wood products.
• Proposed changes to the Australian Domestic Gas Security Mechanism (ADGSM) could ban LNG
exports at the discretion of the Minister in the event of a quarterly gas shortfall.
② Taxation Systems• Companies with a turnover of A$100 million or more are required by the authorities to disclose thecompany name, turnover, taxable income and the amount of company tax to prevent inappropriate tax
burdens and tax avoidance by multinational companies. Even unlisted companies are required todisclose as much detailed information as listed companies if their parent company has a global
consolidated turnover of A$1 billion or more.
• The Australian Taxation Office has classified profit margins by industry into three tiers. There were calls
for the elimination of specific target profit rates for transfer pricing investigations and amended
declarations, as they may lead to different results from the functional risk analysis and are notreasonable.
• When a foreigner buys a residential property in Australia, each state imposes a stamp duty surcharge
for foreigners of approximately 7-8% on top of the regular stamp duty. Should be abolished to promoteresidential investment.
③ Others• In December 2022, a cap of A$12 per gigajoule was announced for the wholesale price of gas.
Government intervention may lead to mistrust among foreign investors.
• Especially in the summer, electricity supply and demand are tight, and in some cases aluminum
smelters have been severely impacted. The cost of electricity is also high, undermining international
competitiveness.

38

5. Southwest Asia India ①◆Key Points•
The number of issues identified was 115, second only to China, a slight decrease from the previous
year (122).
•
There were many issues identified in the categories of “Restrictive Export/Import Trade, Duty, andCustoms Clearance,” “Taxation Systems,” “Implementation of Intellectual Property Rights,” and“Industry Standards, Approval of Safety Standards.”•
Regarding COVID-19, there were issues with obtaining PCR-negative certificates and taxation of ATM
or debit card withdrawals and use in Japan, where the company has temporarily taken refuge.

39

5. Southwest Asia India ②① Taxation Systems• In May 2022, the Supreme Court ruled in a case in which a Japanese company provided temporary
staffing services to an Indian company that performed back-office operations for a U.S. company, that
the Japanese company was the employer of the loaned employees and that GST should be paid. In
response, the GST authorities in India are investigating foreign companies to levy GST on secondment
refunds and salaries and benefits of foreign loaned employees retroactive to 2017. Not a few number ofcompanies have already paid their taxes and are being charged interest on arrears at 18% per annum.
There were calls for the issue, such as the cumbersome nature of dealing with investigations, thedeterioration of cash flow, the risk of retrospective penalties, and the unclear guidelines.
• There were continuing issues such as the unclear definition of “provision of technical services” in thebilateral tax agreement between Japan and India leading to inconsistent decisions regarding tariffs andan excessive withholding tax rate of 10%.
• If withholding tax is withheld under the domestic laws of India, the 2020 amendment exempts the filing oftax return as a non-resident. However, if the withholding tax is levied at a rate lower than the withholding
tax under the domestic law in accordance with a tax treaty, the foreign corporation will still be required tofile a return in India. Therefore, there was a request to exempt the taxpayer from all tax filing obligations
and to complete the tax return only by withholding tax.
• A new nexus rule based on Significant Economic Presence (SEP) for non-residents has been introducedin the Indian tax laws from April 2022. There was a view that any transaction, digital or otherwise, could
fall under the SEP category.
• Tax investigations in India are rife with additional taxes that cannot be said to be fair or reasonable at thesole discretion of the tax inspector. In some cases, the taxpayer may win the case in litigation, but ittakes a long time for the case to be concluded.
• There was a request that India's own Equalization Levy (under moratorium) be eliminated after the BEPS
“Pillar One” is implemented.
40

5. Southwest Asia India ③② Issues Caused by CAROTAR 2020
• With regard to CAROTAR 2020, which came into effect in September 2020, there were cases where
excessive demands were made again in 2022. On the other hand, thanks to the efforts of the Japanese
Embassy in India in lobbying the Indian government, the situation has improved significantly, and bankguarantees are no longer required for import customs clearance under the FTA. As a result, althoughsome point out that the lead time for customs clearance has improved, the procedures are still
complicated and burdensome.
③ Restrictive Export/Import Trade, Duty, and Customs Clearance• There continued to be issues concerning the abuse of antidumping and safeguard measures on steel
products and the complicated indirect taxation of clock products.
• There are no duties, but high Social Welfare Surcharge and GST are levied. In addition, the import ofprecision machinery such as semiconductor manufacturing would be subject to basic customs duty as“for the purpose of sale.” Even if the duties on raw materials were zero, these would make it difficult tomanufacture in India.
• There continued to be issues concerning the levying of duties on information and communications
devices that are considered to be ITA specified items.
• The application of HS codes is under the authority of customs officials, and there is no function for athird-party organization, etc., to make decisions. As a result, there were still cases where HSclassification was arbitrarily decided by the customs, resulting in the classification of high tariff items, orcases of litigation, etc.
• Under the Japan-India EPA, there are many items that require VA and CTC requirements to be met atthe same time, making it difficult to acquire COs. In addition, the amount of work required is enormous.

41

5. Southwest Asia India ④④ Issues Concerning Industry Standards and Approval of Safety Standards, Such as BIS
Certification• Although India is a member of the CB Scheme, according to a public notice issued by the Indian
Ministry of Electronics and Information Technology, CB Reports issued by overseas certification bodies
for TVs, smartphones, rechargeable batteries, etc. are no longer acceptable and testing by the Bureau
of Indian Standards (BIS) designated body is required. There were issues identified such as the hugecost of even having to re-approve existing models, the fact that information on new products ispublished on the BIS website as soon as the product registration is completed, the fact that there isinsufficient preparation time when mandatory standards are updated, etc.
• In 2022, the e-waste regulations were revised to expand the scope of items covered. However, theindustry was not given enough time to prepare, and some of the regulations were revised again justbefore they went into effect, placing an undue burden on the industry.
Medical devices were also included in the scope of the regulation, but substances exempted from
RoHS were also included in the scope of the regulation. Solar panels are also subject to the same
restrictions and cannot be marketed because they contain lead, a substance exempted from RoHS.
• The Battery Waste Management Rules, which took effect immediately in August 2022, included
requirements not found in other countries, such as the display of a unique battery recycling mark andthe reporting of weight data for all battery constituents, making it difficult to comply.
• There were complaints about delays in the promulgation of standards for 4K TVs. The same was truefor 2K TVs, which may result in unnecessary costs due to the inability to take adequate time to respond.

42

5. Southwest Asia India ⑤⑤ Environmental and Waste Disposal Issues• There were issues concerning the prohibition of packaging less than 50 µm thick and the prohibition ofmulti-layer packaging, among other unrealistic requirements. In addition, not only domestic packaging
producers, but also users of packaging are subject to the same obligations as producers. Many details
are unclear and information gathering has been a struggle. Many plastic packages are used in common
with other regions, making compliance with India’s unique thickness regulations a major burden.
• Operational issues have been identified in the energy efficiency labeling program, such as small fiscal
year display, lack of reliability due to voluntary reporting, etc.
• There was also a problem with the policy of converting to renewable energy, which is slowing down
investment due to lack of financing.
• There was a request to participate in the bilateral credit program. This would enable the Japanese
government to provide partial support for the initial investment costs.
⑥ Other Issues• No opportunity to bid due to preference given to local companies in government procurement.
• Frequent changes in the content of letter of credit (L/C) transactions in government businessnegotiations cause confusion and increase costs in the field.
• There were continuing issues of delays due to complex administrative procedures and inadequate
infrastructure such as power, communications, ports, roads, and telecommunications.

43

5. Southwest Asia Bangladesh ①◆Key Points• The number of issues identified was 20, roughly the same as in the previous year (23).
• The categories with the most issues were “Restrictive Export/Import Trade, Duty and Customs Clearance”
and “Finance,” while “Others” included instability of logistics infrastructure and gas supply, security
instability, and unjustified demands for money.

44

5. Southwest Asia Bangladesh ②① Finance• There were many cases of delays to settlements by letter of credit (L/C). With the decline in foreignexchange reserves since the second half of 2022, it has taken longer to open import L/C.
• In Bangladeshi banks, there were issues such as the inability to contact the person in charge by phone,etc., and the need to visit the bank in person just to complete the procedures.
• Overseas remittances are strictly restricted, making it difficult to send money abroad from Bangladesh for
payments. There are risks in exporting machinery.
② Restrictive Export/Import Trade, Duty, and Customs Clearance• Import duties levied on machinery products such as automobiles are particularly high, which is a barrier
to investment by Japanese companies.
• There are enterprises importing undervalued used cars, which is having a negative impact on business.
There was a request for authorities to police this and to assess the appropriateness of import prices.
• Customs clearance documents must be sent in advance and original documents must be submitted,
and it takes time to prepare shipping documents. In addition, the requirements vary depending on thecustoms official in charge.
• The export of ODA-related machinery requires import duty to be paid in Bangladesh but the payment ofthese duties by Bangladesh clients is often delayed or prolonged, resulting in clearance delays.
③ Other Issues• There were issues such as the lack of clarity in some of the WEEE regulations, poor infrastructure suchas ports and roads, irregular gas price increases, security concerns, and illegal demands for money.

45

6. North America / Central and South America the United States ①◆Key Points•
The number of issues identified was 87, roughly the same as in the previous year (88).
•
The category with the most issues was “Restrictive Export/Import Trade, Duty, and Customs
Clearance,” followed by “Employment” and “Taxation Systems” with many issues as well.
•
Others, in the category of “Indigested Legislation, Abrupt Changes,” identified issues with rules andregulations (e.g., the National Defense Authorization Act, the Foreign Investment Risk Review
Modernization Act, and the Uyghur Forced Labor Prevention Act) triggered by the U.S.-China trade
friction.

46

6. North America / Central and South America the United States ②① Issues Caused by US-China Trade Friction• Many companies complained about the negative impact on their business activities from various laws
and regulations imposed due to the U.S.-China trade friction (including the National Defense
Authorization Act for Fiscal Year 2019, the Export Control Reform Act, and the Foreign Investment Risk
Review Modernization Act), complicated export control procedures, restrictions on the export ofemerging technologies, restrictions on foreign companies’ investment in the U.S., and increased tariff
rates on Chinese goods, a de facto ban on the export of semiconductor manufacturing equipment andrelated technology to China, and the Uyghur Forced Labor Prevention Act, etc.
② Measures for Steel and Aluminum Based on Section 232 of the Trade Expansion Act• Steel and aluminum products that cannot be procured within the US are subject to the measures,
resulting in a large number of negative effects such as increases in the cost of customs payments andchanges to logistics.
③ Restrictive Export/Import Trade, Duty, and Customs Clearance• Continuing issues included high duties and complex calculation methods for clocks and clock parts,
strict and cumbersome regulations on labeling place of origin, and idiosyncratic labeling requirements,
as well as the abuse and prolongation of antidumping and countervailing duties on steel products.
• In the USMCA, there are still some uncertainties regarding origin determination, such as the labor value
ratio.
• There were calls for the reinstatement of the Generalized System of Preferences which expired at theend of 2020.
• The Biden administration has ruled out continuing Phase 2 of the Japan-U.S. Trade Agreement.
However, there were calls to negotiate tariff reductions on batteries for electric vehicles and otherproducts, and to make the rules of origin difficult to use with only a change in tariff classification.
47

6. North America / Central and South America the United States ③④ Employment• There continued to be issues such as stricter requirements for granting visas, cumbersome visa renewal
procedures, the time period for foreigners to acquire a driver’s license in California being unreasonable, rising
wages, and labor shortages.
⑤ Taxation Systems• Up to 2021, the limit for deductible business interest expense was set at “earnings before interest, taxes,
depreciation and amortization (EBITDA) x 30%,” which was revised to “earnings before interest and taxes(EBIT) x 30%” from 2022 onwards. As this raises borrowing costs, there were calls for a return to the previous
limit.
• There were concerns that the introduction of the Base Erosion and Anti-Abuse Tax (BEAT) would result in theineffectiveness of the application of foreign tax credits in the calculation of BEAT tax amounts, that theminimum tax portion would result in double taxation, and that a new tax burden would be imposed on the
depreciation of assets for leasing purposes.
• There were concerns that the November 2022 “Draft Treasury Regulations,” which were understood to beintended to limit the application of foreign tax credits by U.S. corporations for digital tax and taxes based ongross receipts imposed in foreign countries, could limit or prohibit the deductibility of foreign taxes, which has
long been allowed.
⑥ Environmental and Waste Disposal Issues• There continued to be calls against excessive and unrealistic restrictions on per- and polyfluoroalkyl substances(PFAS).
• There were continuing concerns about regulations and risk assessment methods under the Toxic Substances
Control Act (TSCA) for phenol, isopropylated phosphate (3:1) (PIP (3:1)), a substance that is not regulated inother countries, including in Europe.
• The State of California has banned the display of a recycling symbol that misleads consumers into believing thatsomething is recyclable. Since all Japanese and European symbols also fall into this category, there was asignificant burden to deal with as they had to be designed exclusively for the U.S.
48

6. North America / Central and South America Brazil ①◆Key Points•
The number of issues identified was 84, a slight increase from the previous year (78).
•The categories of “Restrictive Export/Import Trade, Duty and Customs Clearance,” “Taxation Systems,”
and “Employment” had the same number of issues (13) and were the most frequently identified. In“Taxation,” respondents pointed out the complex and multi-layered taxation system unique to Brazil,
while in “Employment,” many pointed out the difficulty in obtaining visas and the overprotection ofworkers in the legal system.
•
Regarding COVID-19, there were concerns about delays in customs clearance procedures.

49

6. North America / Central and South America Brazil ②① Restrictive Export/Import Trade, Duty, and Customs Clearance• Intermediary trade, where the customer is the consignee and payment is made through a subsidiary inBrazil, is not possible.
• Customs regulations are complex and it is difficult to obtain the necessary documents. In addition, there
were many continuing issues such as complicated clearance procedures and the need to write inPortuguese, the long time required to obtain customs clearance, and frequent strikes by customs
officials.
• Illegal imports and smuggling are rampant, and evasion of customs duties and public taxes inhibits
normal sales activities.
• As the EPA between the EU and Mercosur has been agreed and negotiations with South Korea areunderway, there were ongoing calls to conclude an EPA with Japan.
② Domestic Production Preferential Measures, Etc.
• The preferential taxation system for domestic production provides import and industrial tax exemptions
for companies that produce domestically. In addition, companies are required to use at least a certain
percentage of domestically produced goods.
• While set makers receive a benefit for importing parts and materials, parts manufacturers do not.
③ Employment• There continued to be issues with laws and regulations that are overprotective of workers, steep rises
in labor costs, and obligations to employ local workers.
• The process of obtaining a visa is time consuming and the period of validity is short.

50

6. North America / Central and South America Brazil ③④ Taxation Systems• In addition to the complexity of the tax system, such as the many types of taxes, the tax system isfrequently changed, making accounting and tax payment administration cumbersome. Therefore,
specialists and tax consultants must be hired to deal with these issues, which is costly.
• The various tax burdens are heavy, and the selling prices of products are 2-3 times higher than indeveloped countries.
• Brazil has not adopted the transfer pricing methods recognized by OECD countries (CMP, TNMM, PS
method, etc.). As a result, the determination of transfer prices is very difficult, since the price must be
determined in such a way that the Brazilian company receives the appropriate income.
• In addition to withholding taxes, royalty payments are subject to a higher tax burden.
• State taxes imposed on goods imported into one state are difficult to obtain a full refund when the
goods are sold in another state.
⑤ Implementation of Intellectual Property Rights• The customs authorities’ border control measures are limited to stopping products that infringe
trademark rights, and there is no provision for products that infringe patents. Additionally, there is no
registration system for right holders to apply for protection.
• After filing a patent application, the term of the right is shortened due to the time required for
examination. In addition, renewal fees must continue to be paid even though the right has not vested.
• A divisional application can only be filed until the end of the patent examination. Therefore, theopportunity to file a divisional application is lost when a notice of allowance is published in the Official
Gazette.
⑥ Others• There were issues of inadequate infrastructure, such as ports and roads, and security problems, suchas robberies.
516. North America / Central and South America Mexico ①◆Key Points•
The number of issues identified was 38, a slight increase from the previous year (33).
•
The category with the most issues was “Restrictive Export/Import Trade, Duty, and Customs
Clearance,” followed by “Taxation Systems” and “Employment” with many issues as well. This included
some long-standing and ongoing issues, such as the Workers’ Profit Sharing (PTU) system of“Employment.”•
In the “Others” category, there were concerns about the deteriorating security situation.

52

6. North America / Central and South America Mexico ②① Restrictive Export/Import Trade, Duty, and Customs Clearance• The MFN duty rate on steel products was temporarily reduced (from 15% to 10%) starting in 2021, but
15% was reapplied and an extension was announced until the end of May 2023, although the rate wasscheduled to be reduced in mid-2022. In addition, there continued to be complaints about the abuse ofantidumping measures on steel products.
• In customs clearance, there were continuing complaints that each official had different requirements
and that documentation was cumbersome.
• All export/import customs declarations are stored in a database by the customs authorities, but the
database is not correctly constructed and the contents are different from the declarations.
• FTA preferential duties do not apply to imports of products from Asia. Local customs will not accept are-invoice issued by another company located in a third country of the company.
• Following the transition from NAFTA to USMCA, the intra-regional value-added standard, which
increases the percentage of automobile production at the point of origin each year, put pressure on
earnings.
• Official standards have been revised to make the affixing of certification labels mandatory, significantly
increasing man-hours and costs for exporters. There were concerns that price competitiveness would
decline.
② Taxation Systems• Monetary assets and liabilities are adjusted for inflation in the corporate tax calculation. If fixed assets
are financed with debt, the effective tax rate would be higher than 37%.
③ Monopoly• The Mexico’s Electricity Industry Law prevents private companies from providing renewable energy.
They are also forced to buy electricity from high-cost state-owned power companies.
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7. Europe and Russia EU ①
◆Key Points•
The number of issues identified was 55, an increase from the previous year (45).
•There were many issues identified in the categories of “Restrictive Export/Import Trade, Duty, andCustoms Clearance,” “Industry Standards, Approval of Safety Standards,” and “Environmental andWaste Disposal Issues.”•
Other issues included concerns about rising wages and high inflation due to tight demand for labor
post-COVID, and Ukraine-related issues such as the inability to collect accounts receivable from
Russian businesses prior to the invasion.

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7. Europe and Russia EU ②
① Japan EU EPA• Respondents are claiming refunds for duties paid to authorities in Germany, the UK, Italy, Spain, andFrance, but each country interprets the rules differently, resulting in a lack of consistency and slow
responses.
• There were complaints that in Italy and Estonia, although respondents entered the correct corporate
number in the Exporter Reference Number section of proofs of place of origin, they were told bycustoms that it was wrong. The agreement clearly states that a Japanese company’s corporate number
is its reference number, but this seems to be being mixed up with the reference numbers assigned to
EU companies.
• For clock products, it is necessary to obtain proof of place of origin for each model and shipping unit,
including suffixes, which is very labor intensive.
② Restrictive Export/Import Trade, Duty, and Customs Clearance• There continued to be issues raised regarding the negative impact of antidumping and safeguard
measures on steel products. Some users in the EU have also expressed opposition to the proposal,
claiming that it will increase procurement costs.
• When using the advanced ruling system, it takes too long to gain approval (about 120 days).
③ Effects of Brexit• The TCA does not include extended cumulation, which increases the cost of products manufactured incountries such as Japan, South Korea, and Turkey.
• In the TCA, there were calls for mutual recognition of patch testing of pharmaceutical products.
• Previously, it was possible to ship to each European country directly from the UK but now goods haveto go through the Netherlands.
• Additional documentation and duties are required when exporting from the UK to the EU.
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7. Europe and Russia EU ③
④ Industrial Standards, Approval of Safety Standards• In December 2022, the EU Health Commissioner recommended an extension of the deadline for thetransition to the European Medical Devices Regulation (MDR), but the future is uncertain. The MDR
review has been significantly delayed and there is a risk of a medical device shortage in the EU.
• While many enquiries were made to the notified body (NB), there were no responses regarding an
overview of the MDR certification procedure and estimates. The cost of the review is also high.
• With regard to the EU Batteries Regulation, there is no delegated legislation or guidance that defines
specific rules and companies are not yet in a position to comply with the regulation. There was arequest for a sufficient transition period for the implementation of the regulation.
• According to the “proposal to amend the European standardisation regulation” adopted andimplemented by the Parliament on November 30, 2022, third countries, including Japan, are excluded
from the standardization decision-making process. As this may constitute a non-tariff barrier for third
countries, there were calls to allow Japan’s involvement through the regulatory cooperation frameworkof the Japan-EU EPA.
⑤ Issues Concerning Environmental Regulations• With regard to the review of exemptions to the RoHS Directive, the discussions took a long time andlost predictability, resulting in damage due to pre-arrangement and disposal of parts.
• Many respondents stated their unease about the system designs of new regulations that are being
introduced, such as the Carbon Border Adjustment Mechanism, carbon footprint calculation
methodologies, the Corporate Sustainability Reporting Directive, and the Digital Markets Act.
⑥ Issues Arising from Russian Invasion of Ukraine• Unable to collect accounts receivable from business with Russia prior to the invasion.
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7. Europe and Russia Main EU Member Countries ①① France• When exporting crocodile leather watch bands, in addition to acquiring approval under the Washington
Convention in Japan, importers must also acquire an import license, which costs time and effort. Also,
for samples that are covered by an ATA Carnet, an export/import license is needed every time (issues
were raised regarding similar measures in many countries).
• Digital taxation was introduced (under a moratorium) prior to the international agreement, and there
were calls for its abolition.
• There continued to be concerns about the way systems are operated, such as unfairness in the systemfor determining rates by recipients under the private copying levy scheme.
• Mineral oil saturated hydrocarbons (MOSH) and mineral oil aromatic hydrocarbons (MOAH) will bebanned from 2025. Alternative technologies exist, but are inferior in cost and quality and should bedelayed until sufficient technology can be developed.
• On January 1, 2022, a law came into effect requiring the disclosure of information on all chemical
substances in products. This system goes beyond the REACH regulations and may hinder the free
distribution of products within the EU.
• France has imposed its own labeling requirements that are not included in the EU Packaging Waste
Directive, which may hinder the free distribution of products within the EU.
② Germany• Under the EU-Japan EPA, in other countries it is possible to submit documentation once and then use it
for a long time. In Germany, however, there is a continuing issue with the requirement for
documentation to be prepared every time.
• Germany does not have an accelerated examination system and there were calls for the introduction ofsuch a system, although there is a patent highway system between Japan and Germany.
• Some lobbying groups are pushing for changes in patent law to revoke injunctions for complex products
such as automobiles, which could result in lower royalty.
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7. Europe and Russia Main EU Member Countries ②③ Italy• Digital taxation was introduced (under a moratorium) prior to the international agreement, and there
were calls for its abolition.
• The private copying levy for tv is high. It is possible to get an exemption for professional use but theprocedures for this are cumbersome.
• There are many documents required to apply for a visa and it takes time to obtain them. The same
applies to visas for accompanying family members.
• There continued to be calls for social security agreement to be made.
• There were calls for unification of standards and laws and regulations because of the increasing
number and complexity of standards that differ from the European Medical Device Regulation (MDR)
and other regulations, making them difficult to manage.
• Italy has imposed its own labeling requirements that are not included in the EU Packaging andPackaging Waste Directive, which may hinder the free distribution of products within the EU.
④ Spain• Digital taxation was introduced (under a moratorium) prior to the international agreement, and there
were calls for its abolition.
• Wage increases should be tied to price increases. Changes in treatment and layoffs are also difficult.
• Spain has imposed its own labeling requirements that are not included in the EU Packaging Directive,
which may hinder the free distribution of products within the EU.
• Although the conclusion of a social security agreement has eliminated duplicate pension payments, theprocess is cumbersome because identification documents must be renewed each year.
• There were calls for harmonization of service parts retention periods and legally mandated guarantee
periods, which were not in line with EU law.
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7. Europe and Russia UK ①
◆Key Points•
The number of issues identified was 25, an increase from the previous year (19).
•There were many issues identified in the categories of “Restrictive Export/Import Trade, Duty, andCustoms Clearance,” “Employment,” “Industry Standards, Approval of Safety Standards,” as well as anumber of Brexit-related issues.
•
The issues included the fact that it was taking longer than in the past to issue and renew UK visas dueto the impact of the Russian invasion of Ukraine.

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7. Europe and Russia UK ②
① Effects of Brexit• Extended cumulation is not included in the TCA, resulting in an increase in the cost of products
produced in countries such as Japan, South Korea, and Turkey.
• The TCA has resulted in costs such as the preparation of certificate origin, which was not previously
required between the EU and the UK.
• There continued to be calls for the mutual recognition of patch testing of pharmaceutical products
between the EU and the UK.
• There were continuing complaints about the cumbersome handling of the transition from CE marking to
UKCA marking.
• The interpretations of the EU and UK differ regarding matters such as pharmaceutical regulations
governing the provision of pharmaceuticals in Northern Ireland, making it difficult for companies to
respond.
• Securing EU migrant labor has become difficult after Brexit.
② Other Issues• In addition to reporting to a trade information repository under the European Market Infrastructure
Regulation (EMIR), the exemption procedure for intragroup transactions differs between the EU andthe UK and is cumbersome.
• The transactions covered by the Modern Slavery Act and related monitoring standards are unclear.
There are also few tools available to make this clearer.
• Digital taxation was introduced (under a moratorium) prior to the international agreement, and there
were calls for its abolition.
• In order to get a local driver’s license, applicants are required to submit their actual biometric residence
permit (BRP), meaning they are unable to travel outside the UK while the application is processed.
• The minimum wage in the UK, which is set taking into account price levels and other factors, is muchhigher than in other EU countries, putting pressure on businesses.
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7. Europe and Russia Russia ①◆Key Points•
The number of issues identified was 39, a decrease from the previous year (43).
•There were many issues identified in the categories of “Restrictive Export/Import Trade, Duty, andCustoms Clearance,” “Industry Standards, Approval of Safety Standards,” and “Inefficient
Administrative Procedures, Regimes and Practices.”•
Regarding issues related to the invasion of Ukraine, there were concerns about trade and remittance
restrictions in line with sanctions against Russia by major countries, as well as the destabilization of
the business environment due to Russia’s countermeasures.

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7. Europe and Russia Russia ②⑥ Impact of Russian Invasion of Ukraine• Following the invasion in February 2022, the trade environment changed rapidly due to sanctions
against Russia, with some respondents noting that remittances and trade insurance became moredifficult, logistics stagnated, export licenses were denied due to tighter export controls, and even items
not subject to sanctions became more difficult to export.
• There were concerns that the business prospects were becoming less promising, partly due to thecountermeasures taken by Russia.
② Restrictive Export/Import Trade, Duty, and Customs Clearance• There were continuing issues such as arbitrary tariff classifications, cumbersome procedures such as
many required documents and the need for handwritten signatures, high duties on clock products, highexport taxes on timber, additional fines for altering invoice amounts, cumbersome administration ofimporting sample products, and the detrimental effects of stricter regulations on importing spare parts.
③ Exchange Controls• When remitting foreign currency, documents such as the transaction agreement must be submitted inadvance. Furthermore, approval is required for remittances through banks, which puts companies at a
disadvantage when negotiating matters such as fees with banks.
• Borrowings from Group companies and borrowings from local banks that are guaranteed by parent
companies are subject to the thin capitalization tax system. Under current country risk, the number of
local banks that can set borrowing limits without a parent company guarantee is limited, making it
difficult to secure sufficient lines of funding.

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7. Europe and Russia Russia ③④ Government Procurement• The government only procures Russian-made storage equipment (laptop computers, tablets, etc.). The
procedures and standards for acquiring “Russian-made” status have changed and are now more
complicated.
⑤ Industrial Standards, Approval of Safety Standards• As a result of Russia’s own measures to relax the rules of the Eurasian Economic Union (EAEU),
issues such as market disruption and the inability to export from Russia to other EAEU member
countries have arisen.
• Regarding the registration of medical devices, there were continuing issues such as the need for
apostille and other time-consuming and costly procedures, the length of time required for certification,and inconsistencies in the required documentation.
⑥ Inefficient Administrative Procedures, Regimes and Practices, Indigested Legislation, Abrupt
Changes• All companies that collect personal information (of employees, customers, etc.) must store said
information within Russia and are not permitted to move it overseas. Additionally, companies that
supply information through the internet must store specified data (IP addresses, emails, etc.) within
Russia for six months.
• Pharmaceutical regulations concerning contact lenses and associated care products change frequently
and responding to these regulations is causing losses of opportunities.
• For legislation such as laws covering tax, import clearance, and safety standards, the time between
notification and implementation is too short and there have been many cases where implementation is
not possible. There are also frequent cases where the authorities’ staff are not provided with specificresponse measures and directions meaning that said staff are unable to respond even after legislation
has been enacted.
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8. Middle East and Africa Saudi Arabia ①◆Key Points•
The number of issues identified was 23, a decrease from the previous year (28).
•The category with the most issues was “Restrictive Export/Import Trade, Duty, and Customs
Clearance,” followed by “Taxation Systems,” “Implementation of Intellectual Property Rights,” “Industry
Standards, Approval of Safety Standards,” and “Inefficient Administrative Procedures, Regimes andPractices” with many issues as well.
•
There were many issues raised about the standard called SABER from the perspective of obtaining acertificate of conformity and import regulations.

648. Middle East and Africa Saudi Arabia ②① Restrictive Export/Import Trade, Duty, and Customs Clearance• Duty increases and customs inspections based on original Saudi Arabian standards are imposed onsteel products.
• At container yards, containers are opened and subjected to unpacking inspections at a fairly high rate.
This is time consuming and the cost of the inspection is borne by the shipper. Furthermore, cargo isoften damaged during reloading.
• There continued to be issues with SABER, which was introduced in 2019. Obtaining a Certificate ofConformity (COC) takes time, and parts needed for periodic inspections also require a COC, resulting
in shipping delays and extra expenses.
② Taxation Systems• The corporate tax rate for foreign companies is 20%, while domestic and GCC companies are subject
to only 2.5% Zakat, which is unfair.
• Suspected violations of the Japan-Saudi Arabia tax treaty include the application of domestic law tax
rates despite the fact that royalties are involved, and the imposition of withholding tax even on incomethat could be classified as business income.
③ Industrial Standards, Approval of Safety Standards• Issues were raised regarding uncommon requirements, such as CB Test Report of spare parts in
SABER, and the company being registered in the SABER system without prior notice, even though it
was not subject to the law or guidelines, and was effectively regulated, making it difficult to respond to
the request.
④ Inefficient Administrative Procedures, Regimes and Practices• Insufficient information about the regional headquarters company (RHQ) system, scheduled to be
introduced from 2024, has pointed out that companies that do not establish RHQs in Saudi Arabia may
65
be at a disadvantage in government procurement.

8. Middle East and Africa Turkey ①◆Key Points•
The number of issues identified was 28, a slight decrease from the previous year (32).
•There were many issues concerning “Restrictive Export/Import Trade, Duty, and Customs Clearance”
and “Exchange Controls.”•
Many have called for the conclusion of EPAs in response to high tariffs and additional tariff measures.

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8. Middle East and Africa Turkey ②① Issues Concerning Exchange and Finance• Companies located in Turkey can only make foreign exchange forward contracts with Turkish banks.
Companies obtaining cross-border financing are imposed RUSF (Resource Utilization Support Fund)and VAT, etc.
• The frequent issuance and revision of regulations by the Central Bank of the Republic of Turkey
regarding domestic loans and foreign currency purchases, usually implemented on the same day, haveresulted in a sudden inability to obtain loans or conduct foreign exchange transactions, which has had atremendous impact on cash flows.
• As a result of the April 2022 amendment to the Turkish Currency Protection Law, Turkish domestic
companies are now required to collect payments in Turkish lira, which puts them at risk due toexchange rate fluctuations.
② Restrictive Export/Import Trade, Duty, and Customs Clearance• Since April 2020, additional tariffs have been levied on a wide range of items such as clocks andconstruction machinery. This is putting a burden on companies that produce locally and Japanese
products are losing their competitiveness in terms of price.
• Turkey’s competitiveness is subordinate to that of the EU, which has a customs union, and South
Korea, which has an FTA, and Turkey’s exports to Japan are also subordinate to those of countries thathave an EPA, so there are continued calls for an early conclusion of an EPA.
• Clock products that do not have an EU REACH test report are unable to clear customs and responding
to this requirement is a large burden. Therefore, there were demands to be able to use informationacquired from upstream in supply chains as a substitute.
• Import customs clearance for major construction models is only allowed for those manufactured in thecurrent year, which has led to the avoidance of shipments at the end of the year and the concentrationof shipments at the beginning of the new year, placing a burden on dealers.
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8. Middle East and Africa Turkey ③③ Employment• Dispatching equipment and an installation instructor for a construction period of six months or more isconsidered a PE. However, establishing a PE requires the employment of five Turkish nationals forevery foreigner, which is an obstacle to business.
• There is no social security agreement between Japan and Turkey, and social insurance for expatriate
employees must be paid both in Japan and in their country of residence, which is a burden forJapanese companies.
④ Taxation Systems• Turkey introduced a digital services tax in March 2020 (under a moratorium) ahead of an international
consensus, but there were demands for this tax to be abolished if an international consensus can bereached.
• If proof that a payment has been settled cannot be provided during clearance, the Resource Utilization
Support Fund (RUSF) tax is levied in addition to the customs duty. The RUSF is also applied to loans
from non-residents to residents, which reduces the overall capital efficiency of the group.
⑤ Government Procurement• In public tenders for local government, Turkish-produced goods must be given preference. Local
procurement is mandatory for railroad and energy-related projects. Additionally, companies proposing
locally produced goods will receive a 15% price advantage rating in the bidding process.
• If the negotiated contract is tendered, it will be subject to Turkish lira contracts in accordance with thepurchasing law of Turkey.

688. Middle East and Africa South Africa ①◆Key Points•
The number of issues identified was 25, roughly the same as in the previous year (23).
•The category with the most issues was “Employment,” followed by “Restrictive Export/Import Trade,
Duty, and Customs Clearance.”•
Regarding “Employment,” there continued to be issues raised against South Africa’s unique BroadBased Black Economic Empowerment (B-BBEE) policy.

69

8. Middle East and Africa South Africa ②① Issues Concerning the Broad-Based Black Economic Empowerment Program• South Africa is promoting the Broad-Based Black Economic Empowerment (B-BBEE) program.
Because of the nature of foreign capital, achieving “ownership,” one of the B-BBEE indicators, ischallenging. If a supplier has a low B-BBEE level, purchases must be made from companies with high BBBEE indicators, even if it means incurring higher costs, in order to achieve the desired indicator.
② Restrictive Export/Import Trade, Duty, and Customs Clearance• Duties are high overall, including for TVs, refrigerators, and steel products, and the difference between
duties for completed automobiles and automobile parts is not very big, making it difficult to remaincompetitive against local producers in the long term.
• Japanese products are subordinate in the South African market, and there have been calls for theconclusion of an EPA.
③ Employment• Obtaining work permits is a time-consuming and unclear process. The company has lobbied the South
African government locally, but has not found a solution.
• A company’s trade union negotiates through a bargaining council in each industry and when things do
not go smoothly, it can lead to life-threatening danger due to violent actions by union members fromother companies in the same industry.
④ Restrictions on Entry of Foreign Capitals• Local companies are encouraging authorities to levy duties on items in the industrial fields in whichthese local companies are active in the name of protecting South Africa’s industries. Also, South Africa’s
Mining Charter stipulates that a minimum of 70% of mine development equipment must be produced inSouth Africa.
708. Middle East and Africa Other African Countries① Egypt• In some cases, the immediate implementation of tariff rate changes has resulted in material procurement
delays and increased costs.
• Exporting products from non-ISO certified factories to Egypt is not possible. Even if the factories are certified,
the procedures are cumbersome.
• In some cases, L/Cs are not issued for imports of automobiles and machinery, or they take several months to
be issued.
• The fact that brand-name parts are not inspected during customs is being abused, leading to issues such as
the avoidance of duties and influx of inferior products.
• There were calls for Japan to conclude an EPA with Egypt.
② Nigeria• Duties and import volume restrictions coexist to protect domestic industry.
• When importing completed vehicles, the authorities had the discretion to add the declared price to collectcustoms duties from the importer. The discussions were protracted and the vehicles were put up as collateral,
resulting in problems such as not being able to sell them.
• The bank is unable to secure foreign currency due to a shortage. The official rate and the market rate arediverging.
• Tendering has become a breeding ground for corruption. Bribes may also be demanded.
③ Iraq• A liaison office is not stipulated in the Companies Law in Iraq. There were calls for a liaison office to be
stipulated because although it is unavoidably a branch office, if there have been no commercial transactions forthe past four years, there is a possibility of refusal to renew the registration or an order to close the office.
• In regions under the jurisdiction area of the Iraqi central government, vehicles must obtain visas at the Iraqi
embassy when clearing customs, and in some cases, due to poor coordination within the administrative offices,the documents are not received in time, resulting in storage costs.
• The central government of Iraq and the Kurdistan Regional Government have separate laws and regulations
governing specifications for passenger vehicles, trucks, and buses and separate safety standards. There were71
many cases where the details of these changed or they were enforced with extremely short notice.

(Reference) Issues Related to the COVID-19 Pandemic◆Key Points•
The number of issues identified related to the COVID-19 pandemic has decreased significantly to 78 in
2021, 71 in 2022, and 23 in 2023, and the world is beginning to calm down.

72

(Reference) Issues Related to the Russia-Ukraine Conflict

15

19

26

Price Controls

Industrial Standards, Approval of
Safety Standards

OthersCountry
Total

9
Restrictive Export/Import Trade,
Duty, and Customs Clearance◆Key Points• The Russia-Ukraine issue, which began with the invasion in February 2022, was not indicated in thesame year because the questionnaire deadline for FY2022 was in February, but nine issues wereindicated in 2023.

IssuesEU

Significant increase in consumer price index

EU

Steel material price increase

RussiaExport sanctions

RussiaEAC certification system credits

RussiaTrade issues related to sanctions against Russia

RussiaRussian government restrictions on foreigncompanies from unfriendly countries

UkraineEntry and exit restrictions due to the Russia-Ukraine
issue

RussiaUkraineDifficulties with logistics arrangements

Total

BelarusExport sanctions

EU
UkraineBelarus73

Contact
Secretariat: Japan Machinery Center for
Trade and Investment (JMC)
International Trade and Investment Groupwada@jmcti.or.jp
tohshi@jmcti.or.jp+81-3-3431-9348

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