BEING IN THE DRIVING SEAT IS OUR DUTY

The success stories of our members and the interest in cooperation with Japan among local companies are important signs of improved conditions for investing in the Serbian market. Developments in this field are fast-paced, and it is the duty of JBAS to be in the driving seat.

The Japanese Business Alliance in Serbia (JBAS) was founded upon the initiative and following the enthusiasm of a number of representatives of Japanese companies operating in Serbia. It has since gone on to become a strong pillar in maintaining Japanese-Serbian business ties and improving bilateral cooperation between the two countries. It is today recognised by the Japanese Chamber of Commerce and Industry and is also a reliable partner of the Japanese International Cooperation Agency, JICA, and the Japan External Trade Organisation.

Oliver Lepori, the new executive director of JBAS, started his career working in managerial positions for companies operating in the international business environment in the EU, the Balkans and the Republic of Serbia. In this interview, one of his first in his new role, Mr Lepori draws a vision of the further development of the Alliance.

“The vision of further development of the Alliance certainly implies a gradual and smart increase in the number of members of the Alliance, improvement of the set of existing services, securing support for foreign trade and intensifying dialogue with key stakeholders, in order to achieve the maximum results of bilateral cooperation between Japan and Serbia,” says Mr Lepori. “We intend to concentrate on activities that are of particular importance for the business of our members and to help them navigate the regulatory framework and all relevant issues influencing their industries. “Since the experience and support of Japanese companies already operating in Serbia have contributed directly to the arrival of new investors and the creation of new jobs, we will also pay special attention to attracting new investments from Japan,” adds our interlocutor.

In your opinion, what are the main challenges in the development of Japanese-Serbian relations?

- On the one hand, there are numerous obstacles in the form of bylaws applied, the grey economy, customs regulations and other restrictions, which significantly hinder the arrival of powerful companies from Japan and elsewhere in Asia. In this regard, we believe that constructive dialogue and support to the Government of Serbia from our expert industrial groups is very important for improving the business environment. On the other hand, there is still plenty of room for the local community, both the general and business communities, to learn more about the Japanese culture, so in the coming period we plan to further promote it, together with our partners. We believe that the eagerly awaited Olympics in Tokyo, which are directly sponsored by some JBAS members, will certainly bring more of Japan and its brilliant achievements to our society.

The Alliance grew in the previous period. How many members did you enter 2021 with? - We entered 2021 with 45 members. JBAS is proud of each of them individually, for their contribution to strengthening Japanese-Serbian business ties, regardless of whether they are of Japanese or Serbian origin, and regardless of the industry in which they operate. Our community represents a strong, unified voice promoting partnership between Serbia and Japan. We therefore plan to develop closer relations between our members in the future, in order to strengthen the potential of bilateral cooperation.

What kind of support do you expect from the Embassy of Japan in your further work? -The Embassy of Japan, headed by H.E. Ambassador Katsumata Takahiko, is one of the key factors for expanding bilateral cooperation with Japan in the period ahead. Our two institutions are focused on each other in their work and our coordination of JBAS activities with the Embassy is very important. Close connections have been developed over time, and we expect new energy and intensified communication to meet our common goals in the future.

How will you nurture cooperation with other chambers and associations in the coming period? - We highly appreciate and respect the work of all chambers and associations in Serbia. I believe that cooperation with these institutions is necessary, because our members operate together on the Serbian market and we both share its good practises, but we also face the same obstacles to doing business.

Together we can do more to improve capacities for building a competitive economy and improving the regulatory framework, which will have a positive impact on industry and the Serbian economy in general.

Apart from this, continuing to collaborate closely with JICA, Jetro and the Japanese Chamber of Commerce and Industry is also within our priorities. One of the results of this cooperation is that, with JBAS support, Serbian companies can directly offer their products and services to the Japanese market, but also receive direct offers based on any specific requirement they might have.

What activities for members can be organised online? - The coronavirus crisis has taught us that a considerable part of business, even including events with high attendance rates, can be shifted to the virtual world. JBAS organised numerous activities that were held online in 2020. However, although the offer of applications and communication possibilities are very diverse, most of us are now noticeably missing live contacts. We therefore hope that we will soon be able to gather safely again.

In the meantime, we plan to intensify the promotion of Japanese values, the transfer of new technologies and skills, and to promote individual members.

Which of Japan’s positive industrial practices could be applied in Serbia? - Japan made it a priority to increase automation, artificial intelligence and digitisation in a variety of sectors. It has been leading the world in terms of robotics since the 1970s and has continuously maintained its position as the world’s top innovator.

We intend to concentrate on activities that are of particular importance for the business of our members and to help them navigate the regulatory framework and all relevant issues influencing their industries Good practices could be used to accelerate solutions to certain problems faced by our manufacturing or services sectors, depending on the specific local requirements. Top economic development goals set by the EU - such as being climate-neutral, the green economy, fit for the digital age, rural development and highly developed and regulated digital services - have been an everyday reality in Japan for a decade already. Serbia and Serbian companies can benefit significantly from the further improvement of cooperation with Japan. Do you find that the atmosphere today is more favourable for attracting Japanese investors to Serbia? - Due to the joint efforts of the Government of the Republic of Serbia, the Embassy of Japan and our industrial committees, the conditions for investing in the Serbian market are improving every day. The success stories of our members and the interest of local companies in cooperating with Japan are important incentives for new investments and the expansion of cooperation. Developments in this field are fast-paced, and it is the duty of JBAS to be in the driving seat.

TOWARDSOCIETY 5.0

With new state intervention targeting digitisation, Japan will further enhance its position as a leading nation for innovation. The Japanese vision of Society 5.0, in which information technology and artificial intelligence are inspired by the need for both GDP growth and the amelioration of the consequences of an ageing population.

The Japanese economy is slowly but steadily recovering from the challenges posed by the prolonged pandemic. In December 2020, the Japanese government announced a massive economic stimulus package that must provide particular support to environmental measures and digitisation. Japan has the world’s largest electronics goods industry and is often ranked among the world’s most innovative countries, while the new state package may further help the country in retaining that position.

Japan’s budget allocations for innovation activities was 3.8 trillion yen (US$35 billion) in 2018 and 4.2 trillion yen (US$38 billion) in 2019. Spurred by such a political driving force, Japan’s investment in the development and application of digital technologies, as well as in basic research, has consistently received significant boosts.

In the face of increasing competition from China and South Korea, manufacturing in Japan is today focused primarily on high-tech and precision goods, including hybrid vehicles and robotics. Many expect that the post-COVID-19 world will further emphasise the importance of digital transformation, strong R&D and innovation, as major growth drivers.

According to the latest IMF report, global growth is expected to shift back from negative to positive (-4.4 to +5.2%), and Japan is expected to see positive growth (-5.3 to +2.3%), albeit at a slower pace of recovery.

Despite positive outlooks, experts believe that emerging from the crisis will be a tough job even for the most advanced economies. According to a conservative forecast by the Japan Centre for Economic Research, it will take four years for the economy to return to its pre-COVID-19 state.

Credit rating agencies in Japan are maintaining the ratings of companies with rising debt. As a result, there has been no change in

corporate ratings even with the economic downturn. According to workers. In the case of the first (women), increasing the availability economists, this means that banks’ bad debts have been kept in check of childcare services will support women’s participation in the labour without increasing. Obviously, some companies may face huge over force. In the case of the second, abolishing firms’ right to set a mandaindebtedness, while experts warn that some industries - in particular tory retirement age will support older workers. the aviation and similar industries - need public capital injections. Some of the classical economic measures deployed include product

The Japanese government is slightly more optimistic than the and service sector deregulation, reforms of small- and medium-sized private sector. Foreign demand is strong and gives hope that Japan’s enterprises, and corporate governance reforms. Those may in turn lift economy will receive a strong boost, which is good news given that productivity and investment. Reforms to further liberalise trade and domestic demand is low as consumers remain cautious. As noted, promote foreign direct investment will further support investment a growing trade surplus accounted for more than half of Japan’s and growth in Japan. Q3 2020 rebound in real GDP, and helped reverse two consecutive The IMF believes that almost 60 per cent of the predicted demoquarters of declines. There are also expectations that the Regional graphic-driven growth slowdown might be eased by the proposed set Comprehensive Economic Partnership - a free trade deal between ASEAN countries, Japan, China, Australia, New Zealand, and South Korea - will further boost exports as tariff reductions are phased in gradually. Japan is also providing subsidies to companies that will build factories in Japan or Southeast Asia in an effort to diversify production away from China. It could also support Japanese exports.

Still, the Japanese government has a lot to think about when facing some of the long term challenges. Japan’s population is ageing and shrinking fast. With a median age of 48.4, Japan’s population is the world’s oldest. The government of Japan projects that, by 2060, there will be almost one elderly person for each person of working age.

As projections show, over the same 40-year period Japan’s current population of 127 million will shrink by over a quarter, while the accelerated speed of ageing and shrinking of its population will pose economic and other challenges for the country.

As the IMF points out, the ageing and shrinking population will strain Japan’s public finances, as age-related There are expectations that the new Regional spending—such as on healthcare and pensions—rises as the tax base shrinks. Comprehensive Economic Partnership - a free trade deal

As a result of these growing challenges, Japan between ASEAN countries, Japan, China, Australia, New needs to strengthen the mutually-reinforcing policies of “Abenomics”—including monetary easing, flexZealand, and South Korea - will further boost strong export ible fiscal policy and structural reforms (particularly figures for Japan’s economy labour market reforms). The IMF suggests that this comprehensive set of policies is needed to boost potential economic of reforms. Moreover, automation can also help mitigate the challenges growth, lift inflation to meet the inflation target of the Bank of Japan brought by an ageing and shrinking population, particularly automation and stabilise public debt. in healthcare, transportation, infrastructure and fintech.

This requires an accommodative monetary policy stance, including Indeed, as of 2016, Society 5.0 (which stands for a super-smart by maintaining the Bank of Japan’s short- and long-term interest rate society) has represented the big societal transformation plan of targets to support growth and inflation, increased efforts aimed at Japan. While Industry 4.0 envisages the digital transformation of maintaining financial stability, combined with supportive near-term manufacturing, Society 5.0 aims to tackle several challenges by going stimulus and long term structural reforms, particularly in the area far beyond just the digitisation of the economy towards digitisation of labour-market reforms. This is the top priority, as these moves across all levels of Japanese society and the (digital) transformation can deliver the most gains in terms of growth and supporting higher of society itself. inflation. Among them are Increasing training and career opportunities Five key themes are next generation mobility/smart city, smart for workers without lifetime employment, most of whom are women. public services, next-generation infrastructure, FinTech (financial Furthermore, reforms have to encompass older workers and foreign technology)/cashless society and next generation healthcare.