Bond Exchange for Japanese Bondholders, Argenjapan's II
Autor: Pablo Tigani
Introduction:
In this days, we Argentines, are consuming an avalanche of opinions and forecasts about re-structure of sovereign debt. Avalanches of journalistic reports try to explain excessively details of this negotiation. How many citizens could i.e. get to know the notion of present value? – In addition, there’s an expression of economists with fateful status even though without certainties at the time to lay the foundations. Meanwhile, could be, if a general retreat is consolidated as a definitive answer, this situation would lead us to furnish alternative proposals. Creditors and bond market already react with certain annoyance to re-structure proposal performed on September 22nd. Although majority of bondholders didn’t like official offer, I think it was useful to start the negotiation process. Even though in my previous meetings in Washington with board members of multilateral credit organisms and investors, I could notice that nobody expected to be seduced by the argentine initiative, the bondholders didn’t expect something so radical either, as they manifest. Therefore, if offer do not prosper just how it was laid out, better have a contingent provision ready to avoid going back to untrusting and uncertainty. Investors from abroad not only see percentages of discount; they consider important the efforts to search eventual ways out, as a proof of good will. However this principle is proverbial in finance scope, by now, is not known another option available without approaching the same orientation.
ARGENTINA NEEDS TO INSERT VARIOUS IDEAS, IN CASE GENERAL STRATEGY PERFORMED IN DUBAI DON’T WORK:
The barrels that traditional assent raise up has always been a hard obstacle to sort in the practice of a project that profile a new way out. Nevertheless, for critical or apparently terminal situations as Argentine default, economic science has no available consistent manuals with the solution of the problematic. This situation concisely described is as result of an empire of extreme archetypes that invariably refuse to be replaced.
This time will be important not to reduce our view of the global proposal of Dubai, as it was the only one, in case creditors don’t accept it. The international economical structure continuously suffers changes and during last 20 years, it does at a tremendous speed. Mexico, from crisis of debt to NAFTA; China, incorporated MCO; Russia, leaves central planned economy. FMI, five years ago was exalting us, months ago was searching for psychologists for Argentina and days ago, their directory approved an agreement over any preliminary prospect.
Concluding in two points, we cannot wait any longer to elaborate different schemes and we must not have prejudice to plan imaginative solutions for a completely new crisis. Getting stack rigidly to the original project could be risky.
IS POSSIBLE TO PERFORM A PLAN FOR BONDHOLDERS OF JAPAN
The universe of creditors is very wide in New York, Europe and Japan.
Among above mentioned are the Japanese bondholders, whom I’ll treat hereafter, to make a very interesting contribution.
Argentine government obtained in Japan on July 21st, after the exposure of many payment offers of the public debt in default, that Japanese creditors compromise to constitute a committee of bondholders to put forward with the negotiation started. The image screened was to join ideas so an agreement should be more nimble. When unified representations organize as in Japan, in every district, there are possibilities to anchor with good and punctual structures made at the size of each group of bondholders.
ACTUAL CONTEXT IN WHICH ARGENTINA RENEGOTIATES OWN DEBT
Future configuration of global economy and our own actual problems, have reduced possibilities of entering to voluntary market of credit for long time. Like it or not, years will pass till we can return to them with some bond issue. We haven’t credit to lever up growth in media and long term and this is a fact that we can revert.
For necessity or for virtue, we must start a renovating strategy that lead us to a major exploitation of opportunities, using this beginning that have in our hands (30 thousand Japanese holders of sovereign bonds, as Samurai bonds, besides bonds in Eurobond market in yens). We’ll friendly surprise Japanese banks that today are not prepared to offer affected savers by Argentine default to adhere to a bond exchange offer with 75% release. Tokio-Mitshubishi Bank, Shinsei Bank and Nikko Salomon Smith Barney (this last one is who sold them) may convert in sponsors of the solution and partners of growth of future business, offering later financing for their own Japanese enterprises that operate in Argentina. Japanese Banks, more than others, like to finance production and exportations over deficits of emerging countries. For Argentina, to associate to expert enterprises in exportation, abounding in resources, that rescue Argentine debt, contribute investments, industrial technology, know how and generate employment; is from political point of view, a national, popular, progressive and rational advance.
TODAY’S JAPANESE ECONOMY CONTEXT
GDP in Japan grow in the second quarter of 2003 at an annual rate of 3.9%. This is Japan’s sixth consecutive quarter of growth, and drives many observers to think that growth recuperation can remain without making the reforms claimed by IMF. Increment of exportations of capital goods to Asia and especially to China, is and important ignition key of growth in 2003. Japan is very important provider machinery for the Asiatic industrial zone. Another practice sign is that capital investment in the country has increased 6.4 % in the same quarter, which represents the first increment in 3 years. A great part of this investment was destined for production machinery for the manufacture of products destined for exportation. A per orthodox economist judge, the sustainability of Japanese economy recuperation, is based in structural reforms. Same experts believe that labor regulations, finance system restructure and reengineering of huge conglomerates, notable in Japanese industry, still need a down sizing. Americans think that recuperation could stop if structural problems are not solved. Perhaps in a way is true, but Anglo-Saxon occidental culture is not consistent with analysis method nor social focus of this millennial civilization. I.R.C. (Industrial Revitalization Corp.) is a public organism in charge to minimize the problem of bank sector bankrupts, and revitalize enterprises with unpaid loans. For the moment it with scarce results (only three restructure candidates). Deflation is still being a problem in Japan, though is not getting worst. In inter-annual terms, prices to consumers decreased 0.2% in July, what makes 46 consecutive months of fall. Relative weakness of Yen against Dollar continues being important for correction in motion. However, USA claims against Japan’s intervention in the foreign exchange market. Nevertheless, experts say that the Bank of Japan will maintain their currency at the rate of 115 to 125 Yens. It’s clear that neither Japan nor their enterprises subject to traditional prescription and continue trying different solutions.
GENERAL CONTEXT
UNEQUAL INTERNATIONAL GROWTH
USA’s GDP is the most important of great conglomerates and represents 22% of world’s total, Euro Zone represents 20%, China 12% and Japan 7.3%.
I. Growth projections and world commerce
Var & a/a | Avg. 96-00 | 2001 2002 | 2003(p) 2004(p) |
GDP World GDP Developed economies (56.3%) United States (21.4%) Euro Zone (19.9%) Germany (4.5%) France (3.2%) Italy (3.1%) Japan (7.3%) GDP Emergent Asia (22.2%) China (12.1%) India (4.7%) GDP Latin America (8.2%) Brazil (1.4%) Chile (0.2%) | 3.2 3.3 4.0 2.7 1. 1.8 1.9 1.5 6.3 8.3 6.1 3.1 2.3 4.1 |
0.3 2.4 1.5 1.9 0.8 0.2 2.1 1.2 1.8 0.4 0.4 0.2 5.8 6.4 7.5 8.0 4.2 4.7
1.4 1.5 3.1 2.1 |
2.6 3.9 0.5 1.9 0.1 1.5 0.5 2.0 0.4 1.7 2.0 1.4 6.4 6.5 7.5 7.5 5.6 5.9 1.1 3.6 0.0 3.0 3.3 4.5 |
World Wide commerce volume | 8.0 | 0.1 2.9 | 2.9 5.5 |
(p) Based on IMF (World Economic Outlook – September 2003)
In brackets, weighing figures of each country from world GDP
USA’s growth outlook improvements keep certain doubts of its concretion, due their strong current account deficit. An expansive process would aggravate it. Some opinions hold that world financing to the excess of USA home expenditure has limits. Solution, since G7 viewpoint, is a weaker Dollar. This could be the device to heal this world vicissitude (strong deficit of USA’s current account and great surplus en Asia and Europe). Acceptation of flexible exchange regimes, is G7 suggestion for nations with fixed exchange rates or very interventionists (Asian countries are manifestly complained). Bounded the possibility to continue with expansive monetary and fiscal policies as up today, devaluation of Dollar is the only way for United States economy may encourage domestic demand.
Current Account in billions of Dollars, (-) deficit (+) surplus
Avg. 97-99 | 2000 2001 2002 2003 Qtr. 1st | |
United States
Euro zone
Japan
Asia (excluding Japan)
China
Other advances economies | -208.4 (2.3) 63.2 (0.9) 110.1 (2.6) 45.1 (2.3) 29.9 (3.1) 46.6 | -410.3 -393.7 -480.9 -553.3 (4.2) (3.9) (4.6) (5.1) -28.7 11.8 61.2 62.4 (0.5) (0.2) (0.9) (0.8) 119.6 87.8 112.7 121.1 (2.5) (2.1) (2.8) (2.9) 43.5 56.4 58.0 76.0 (2.0) (2.5) (2.4) (2.8) 20.5 17.4 35.4 46.0 (1.9) (1.5) (2.8) (3.3) 84.9 103.3 120.3 124.6 |
Developed countries
Countries in transition | -49.3 (1.0) -19.1 | 67.8 25.9 74.0 65.7 (1.2) (0.5) (1.4) (1.1) 25.1 12.8 9.9 10.0 |
A weak Dollar means a strong Yen that finally affect competition that Japan is temporary enjoying till 2nd quarter 2003, as mentioned above. This growth is ver dependant of net exportations. On the other hand, a strong Dollar would reinforce protectionism in United States, affecting Japan in another way. Furthermore, United States Congress has a project to tariff exportation of Asia up to 27% if these countries don’t agree to let their currency float in a determined period.
PROPOSAL
A FINANCIAL AGREEMENT WITH SAVERS OF JAPAN, PACKED TO ARGENTINE EXPORTATION POTENTIAL WITH COOPERATION OF PRIVATE JAPANESE ENTERPRISES.
In consistent shape with the actual economic policy faced by President Kirchner, Argentina has an exceptional opportunity that conceived the economic ministry with the formation of jurisdictional groups. This excellent tactic gives us the opportunity to rescue the debt of Samurai bonds and other promissory notes, and to impel our exportations. I’m planning the constitution of a commercial and financial overcoming strategy, through a mixed alliance, completely new and original. This is the design of a new profile of commercial slant and nor exclusively financial as it was till now. This strategy will present an extreme oscillation of businesses and the debt. For first time, we will present to the world a project that involves our export trade, with rich and expert enterprises of a country absolutely complementary, that will empower it as never before. This will be the “leading case”, for there are other feasible creditor groups in Italy, rest of Europe and United States that could continue joining.
PREPARING DISTRESS DEBT-FUND (Support and warranty fund to reset debt situation)
Financial Strategy: consists in negotiate the formation of a Distress Debt-Fund, of approximately US$2.800 millions, to rescue all the bonds and promissory notes with funds or guaranties furnished by Japanese Corporations.
Incentive: in exchange enterprises will be granted the hire of a “commerce fund” to promote new argentine exportations.*
Modality: the “distress fund”, compound by investors (Japanese enterprises), will rescue with their contribution the total of US$2.800 millions of debt, in possession of Japanese citizens, at 100% of their value. Afterwards, against interchange of these bonds, Argentina negotiates and grants to the participant enterprises, an annual fiscal quota, to be recovered within 30 years, to develop productive activities focused to exportation. Will also grant to help the installation, a preferential treatment for direct abroad investments, destined to these new activities. In this respect a customs facility procedure will be issued, for capital goods importation, destined for development and exportation of products “Made in Argentina”.
Solving problems of Japanese savers with this transaction, Nippon corporations start a process of simultaneous investments in our country without stopping investment in Japan, to constitute definitively a strategic international alliance without precedent.
Argentina rescues the first eligible bonds, giving stillness to the first creditor group, in change of exportable production and argentine employment. At the time, guarantees Japanese enterprises the completion of the deal, subordinating it, if desired, to the supervision of multilateral credit organisms.
A solid solution for a partner absolutely complementary and without ideological conflicts. We reduce debt; we bring down interest charge and consequently fear of extemporary fiscal insolvency in the future disappears. We brandish this substitution of debt through the “Distress Debt” as an ignition key to exponentially empower our international trade and we can continue reproducing it with the Italian group. We inaugurate the first answer to convert creditor enmities into partners. For our society, to increase exportation volume writing off debt at the same time will mean all an epic in cultural terms. Consistently, an agreement with same characteristics, could be copied with Italian enterprises ** and of countries holders of eligible bonds, as mentioned above.
* ARGENJAPAN’S, Dunken print-house, 3rd edition, (2002), author: Pablo Tigani
** I.e. Italian consumer demands fresh products all year round and knows that because of globalization can consume fruit and vegetables, even though out of season, in Italy. Some of Argentine Fruit attract them are pears, apples, cherries, tangerine, tropical fruits, asparagus and pumpkins. These and other foodstuffs also can be manufactured in many ways, as juices, jams marmalades, before exporting, with Italian technology and Argentine handwork. Actual exchange rate is very favorable for Italians who pay 1,500 Euro per month (around $5,000) salary per operator or equivalent worker.
NIPPON SATISFACTION
Japanese creditors receive 100% in cash, or with new bonds issued by Japanese enterprises, thanks to a clever and strong operation of their corporations and to a country that want to comply with their compromises. Japanese corporations taking part will receive a “management fee” upon increment of actual 30,000-MM new exportations, for the next 10 years. This retribution looks much more reasonable than to pay commissions to the international bank, to continue making successive and questioned exchanges and commissions.
KEY OPPORTUNITY TO RENEW INTERNATIONAL TRUST
In these days we are having the best moment that gives margin to install a strategy that will permit us rescue debt and impel new exportations, assuming long-term foreseeable compromises.
The excess in the application of exclusive and excessively financial criterions has left us paradoxically without working capital. We have run out essential flow to reactivate the stock of investments made in years before. These are those that in the beginning, in a common economy, can fire and incorporate their human resources to the world of production and work. New investments lie in wait where they see a potential of activity and of major growth, compared with other available options. This is out of discuss, perception of high rates of growth potentials, establish necessary trust for big and small investors to start considering entrance. To renegotiate debt conditions successfully, it’s necessary to proof that the real economy is “feasible”. This plan implies the generation of a marginal flow non-existent till now, to consider the beginning of the end of a debt repeatedly and boringly renegotiated. This is possible starting from a “boom of exportations”, something that we know from ever, but we couldn’t concrete yet.
While all finance indicators are spoiled only exportations, without adequate financing and in the middle of a default, will grow this year 16%, supporting the most high level of hostility in the figures of world trading, that clearly are stagnant after many years of growth.
If we use initially our basic substructure, we’ll prove that is prepared to contain major and progressive levels of activity for the necessary time, till new investments arrive. Our natural resources offer a landing strip to Japanese enterprises for their cultural, industrial-export boldness.
We need only to leave traditional prejudices and of “It cannot be done” to face immediately an innovator agreement, obtaining “at once”, the industrial and commercial know how of exporter model by excellency.
If we want to strengthen compromises, complying with a growing fiscal surplus, we can consider this alliance as a decisive card to grow exporting, and at the same time guarantee the progressive rescue of debt with other countries.
Returning to trust, as experience, for local bondholders (AFJP –private pension funds- and Banks), fiscal guaranties sound utopian and they have also verified the results of the compromise of a supposed deficit zero, that didn’t consider the generation of genuine foreign exchange (remember FASE 1). The formula that guarantees compliment is exportations: goods that generate Dollars form real economy.
With the confection of an initial negotiation draft, great part of argentine capitals fled in recent years will also return. Together to additional examination that this implies, Argentina will add more trust in its authorities because of its creativity and quickness of reply before and eventual systemized rejection of Dubai’s proposal.
PRODUCTIVE INSPIRING EXPERIENCE + “INGENUITY”
I have seen constantly in private activity, cases where I find exceptional reproductive investment opportunities. Generally in enterprises partially or totally devoid of management, technology, innovation and know how, who are affected by the application of antiquate methods for actual consuming market.
We can also mention cases where the absence of vocation and fatigue of shareholders make any initiative fail. These enterprises receive a new impulse with the incorporation of agile partners that arrive with only one target: “break through market with great and real sales growth”. This may mean four or five times more invoicing, rapidly. There are strong actions to promote business, based in the new capacity to provide originally absent resources.
As in major corporate cases with financial difficulties, the hire of a store commerce fund widely exceeds patrimonial value of the enterprise. Even in bankrupt enterprises these businesses are made and companies re-float. This way object corporation (of store commerce fund) that don’t have working capital, become able to export the potential that posses and sort both restrictions in only one issue.
There many arguments to think that exportations are the most complete solution to economy problems. However, nobody tried to launch new proposals, because ignorance at first, and from fear to suffer arrogant disqualification from conservative economists, which only possible reply should be traditional and picked up from a classic book. Imagination zero of orthodox economic science, must balance with dreams of politics art. In the past, persevering lack of intuitive vision was highly discouraging.
We have asleep an enormous prosperity because of commodity; ideological resistance; lack of search, courage and faith in our resources. Add to this attitude, lack of promotional support and interest, aimed by the temptation of financial profits of fictional immediacy, with which we have seduced for years.
Our exportations in 2001, reached 10% of our GDP. This is precisely the reason for we cannot underestimate the opportunity we have in our hands. Making aside our potential capacities, we have been exporting under our possibilities during last years.
Repeating like a hypnotic litany, that our exportation only represent 10% GDP, some economists have systematically obviated the compromise to search opportunities. Only because of potential increment, in percentage terms possible to reach in any activity that starts from its lower level, it’s worthwhile to impulse and immediate action plan for growth.
ENTERPRISE REASONING FUNDAMENT APPLIED TO ECONOMY – OUTSOURCING OF NEW EXPORTATIONS
In any private corporation, when signs show that something is being precariously done, is recommendable to start an outsourcing management with a specialist that doubtlessly will do it better than the official is. Outsourcing is a word used to describe a very extended phenomenon in industry, “third party work”. Possibly is part of the widest movement and of the major potential of the global society for the conformation of a more productive world and less resource squander. Means to use others knowledge, experience and creativity to delegate a process that’s not working in full, on whom more knows and that will obtain better results. It’s an “alliance with a distinguished”, that turns into an extension of our own business. This is one of the best practices of private sector, and is the focus, which I expect public sector’s skill will enrich with in nowadays.
STRENGTHENING PROPOSAL’S NUCLEUS:
FUNDAMENTS OF A THOUGHT THAT WILL CONVERT IN TENDENCY FOR THE ANALYSIS OF INTERNATIONAL ECONOMIC PROGRAMS
- Never before there was a more internationalized and economically competitive society as at present.
- Some industries such as electronics, home computer, and cars are in extreme saturation status.
- International business realization could be sensationalist or disastrous for little realistic enterprises, banks, investors or countries.
- To compete in capital markets and in international trade requires corporate strategies applied to nations, due major quantity of variables and interrelations that today exist. (This is the only way to understand why IMF, World Bank and G7 propitiate a tariff increase of privatized enterprises in Argentina)
- The politic, economic, social, technologic and competitive opportunities and THREATENS that a country faces are similar to those that an international corporation faces.
- To identify and evaluate effectively facts and key tendencies of countries requires incorporating concepts absent in the traditional macroeconomic analysis.
- Geographic distances, national culture differences and variation on the way to face business and official affairs, make interrelation of public sector with private sectors of different countries indispensable. These last ones run in many cases with more agility and more power than their governments.
- In this context investments that improve sustainable competitive advantages should receive prior official attention.
- Countries, enterprises and their habitants must help each other; there’s no other serious alternative.
- The notable interdependence between countries, enterprises and citizens present enormous benefits so as economical, social and politic risks too. (I.e.: Interrelation between default of a country – Argentina – on the opposite side of the world affects Japanese in retirement)
- High level of interdependence mentioned above and a new progressive economical protectionism in Europe and United States have an important effect in countries like Argentina and Japan.
- Now, more than ever, governments play an important role in world trade and capital market, helping their own enterprises and finance entities to have e better participation in international competition, as much as restricting foreign competition.
JAPANESE STRENGTHS
- Japan’s Foreign Trade Service currently implements marketing planes of commercial launching.
- Japanese enterprises achieve direct investments in many counties (USA, Southeast Asia and Europe)
- Construct manufacture plants of products for export.
- Develop local industry and create job in addressee countries of their investments.
- Japanese enterprise know to develop scale economies
- Enterprises that are a productive and exporter model of a great, credible and serious country.
- Access to low interest rate to finance exportations.
- Experience in industrial integration process.
JAPANESE OPPORTUNITIES
- Assure cancellation of bonds for US$ 2.800 MM, in Japanese bondholder’s hands
- Japanese Banks may participate of re-negotiation process of Argentine foreign debt.
- Take in “hire a commercialization fund of new Argentine exportations”
- Receive duty preference to impel Japanese investments that point the exportation of products from Argentina.
- Receive benefit as a direct foreign investor (enterprises) a specific for new exportations (primary and by-products)
- Possibility to diversify their product briefcase (launch new foodstuff from Argentina). Export industrialized agricultural foodstuff.
- Join ALCA and MERCOSUR with their enterprises, from Argentina, in an industrious way.
- Use handwork that Japanese enterprises consider as the best in the world.
- Compensate their “excessive focus” in electronics, metal-mechanic and computing.
- Consolidate their commercial leadership, adding products in SEA area (South East Asia).
- Japanese enterprises can manufacture their own foodstuff for Japan and United States, with their security standard and controls (against bio-terrorism)
- Receive a management fee for their exportation management.
- Invest in a strategic commercial alliance rescuing US$2.800 MM in unpaid bonds of Japanese citizens (consistent idea with their national solidarity sense – cultural aspect)
JAPANESE WEAKNESS
- Possibilities for bondholders to go to trial, win, and recover100% are highly improbable.
- Cultivable field of Japan is very small and does not provide enough wheat, Soya or other growing to supply and produce agricultural foodstuff.
- Japan has one of the lowest rates of feeding self-sufficiency of all developed countries.
- A high percentage of their food must be imported.
- Import and consume foreign exchange in foodstuff and energy at high costs.
- Imports from USA that dumps their production.
- Commercial deficit of Japan is chronic
- In 80% of agricultural products, Japan depends invariably of USA
- It’s possible to install an industrial plant in any part of the world but is not possible to extend and fertilize a territory with same facility.
JAPANESE THREATENS
- Their retired savers cannot wait the time that involves a legal process and eventually postponed recover of bonds where they have invested their savings.
- Excessive “focusing” in electronics, metal-mechanics and computing, and deflation of product prices that their enterprises produce, puts Japan to stagnancy.
- Their product briefcase has turned into commodities.
- Japan don't have natural resources to diverse their commercial offer (energy, foodstuff and ground for cultivation)
- A more hostile world will have major unemployment, and will become more competitive.
- Eventual war conflict in the zone (as existing hypothesis). With regard to increasing global deficit of food and potable water, Japan will be one of the more harmed countries.
- Efficiency of agricultural production looks seriously affected by the tenancy structure of agricultural lands, with small size properties.
- Very high cost of their agricultural supplies.
- Japanese farmers look limited in their decisions due official regulations and the action of their corporate system.
ARGENTINE STRENGTHS
- Great territorial extension
- Under-exploited Natural resources
- Foodstuff and energy self-provide
- Great potable water reserves
- Posses all possible climates and climate seasons well differentiated along and abroad the country
- Very suitable lands for all kind of growing and breeding.
- Global deficit in foodstuff production improves every year Argentine’s strategic importance.
- Is highly probable that in future foodstuff and water manifest a price increase due global deficit and due saturation a diminishing of the price of other consuming goods.
- Adequate and competitive exchange rate
- Year to year, placing of their products in non-traditional markets is increasing (i.e. China and India)
- Principal products exported by Argentina to Japan (Period January-December 1999)
- COPPER AND ITS CONCENTRATES
- FISH MEAL
- CORN FOR THE ANIMAL FOOD PREPARATION
- CRUDE ALUMINUM WITHOUT ALLOY
- SORGHUM IN GAIN FOR ANIMAL FOOD PREPARATION
- ALUMINUM ALLOYS
- FROZEN LOBSTER, PRAWN AND SHRIMPS
- GRAPE MUST
- CAT AND DOG FOOD
- WOOD SMALL PLAQUE
- HAKE FILLETS AND FROM OTHER FISH
- FROZEN HORSE MEAT FOR HUMAN CONSUMPTION
- RE-EXPORT GOODS
- WINE, GRAPE MUST IN 150 LITER CONTAINERS
- ALCOHOL
- PETROLEUM CRUDE OIL FOR PRODUCTION
- PETROLEUM VOLATILE OIL FOR PRODUCTION
- FROZEN BLACK HAKE
- CORN IN GRAIN FOR POPCORN
- ALCOHOL GRADE >=90%, IN QUOTA
- GRAPE JUICE WITHOUT SUGAR
- FISH MEAL NOT AVAILABLE FOR HUMAN CONSUMPTION
- LEMON JUICE WITHOUT SUGAR
- TOBACCO PARTIALLY OR TOTALLY RIB FREE
ARGENTINE OPPORTUNITIES
- Rescue of public foreign debt in bonds and promissory notes
- Export argentine products with Japanese technology and support
- Comply with healthy food fanatics with high quality. Access to Japanese consumer that doubts about security, health and quality of imported foodstuff products.
- Agricultural producers are have success elaborating products commercialized in Japan under the heading of “fresh”, “natural” and “organic”.
- Gain Japan as a customer. First net importer of agricultural products in the world. Major world importer of wheat, corn and meat, and second of Soya.
- Argentina “cultural change” – wishes to industrialize and export
- “Pro exportation business” environments introduce all kind of initiatives.
- Argentina agreed the reprogramming of its debt with Multilateral Credit Organisms on September 2003.
- In 2003, Argentine exportations grow 16%
- Sincereing: exportation may exponentially increase
- Actually only 10% of Argentine Exportations go to Asia Pacific Region
- Attract technology talents from Japanese enterprises to industrialize agricultural foodstuff
- Attract exporting talent from Japanese enterprises to gain markets
- Generate genuine foreign exchange from exportations
- Incorporate the best production practice (kaizen, continuos improvement, etc.)
- Obtain operation scale, reduction of production cost
- Better exportation prices / better internal prices
- Reach Japan’s traditional market. Make use of Japan’s “cultural know how” in Asiatic market
- Long term panning
- Receive direct foreign investment
- Form joint ventures and bi-national trading companies
- Improve international perspectives, bring down interest rates, and diminish country risk
- Industrialize primary product foodstuff “adding value” instead of exporting grains, crude oil and meat
- Import technology (know how)
- Capitalize Argentine exporting inheritance in long term
- Products which Argentine exportation has not entered in Japan yet. Information corresponding to January-December 1999:
- FROZEN MEAT AND EDIBLE MEAT OFFAL
- SWEET CORN, PUMPKINS, ETC.
- FRESH MELONS
- COTTON
- FISH GREASE AND OILS AND THEIR SPLIT UP WITHOUT CHEMICAL CHANGES
- CHEWING GUMS, SUGAR COVERED, WITHOUT CACAO
- CHOCOLATES AND CACAO PREPARATIONS, IN BLOCKS, TABLETS OR BARS
- PASTA AS SPAGHETTI, MACARONI, LASAGNA, ETC.
- TOMATO PREPARATIONS OR PRESERVED
- MIXED FRUIT PREPARATION OR PRESERVED
- FROZEN ORANGE JUICE
- NATURAL ORANGE JUICE
- GRAPEFRUIT JUICE
- METHANOL (METHYL ALCOHOL)
- WOOD CHEMICAL PASTE, NON-CONIFEROUS , AT SODA OR AT SULFATES, WHITENED OR SEMI-WHITENED
- FIBER PASTE OBTAINED FROM PAPER OR RECYCLED CARTONS
- WOOL YARN AT 85% IN WEIGH
- COPPER SCRAP
ARGENTINE WEAKNESSES
- Emergent situation (after default and devaluation)
- The size of Argentine enterprises doesn’t show advantages to face efforts in lonely way. There’s no great volume of production.
- It doesn’t exit a great export preparation
- There’s a partial ignorance of exportation markets
- Lack of risk capital
- Lack of finance for exportation
- Strong idle capacity
- Unemployed population and under-employed (high figures)
- Exportation equivalent to 10% GDP (2001), before default and devaluation. Low exportation level
- Budget restrictions for promotion, fairs, pre-financing credit lines, financing.
ARGENTINE THREATENS
- Configuration of the New World financial scene assures that Argentina will not have access to voluntary credit market for some years
- Neither probable to register an important flow of direct foreign investment at short term
- If growth rates are to be low, social unhappiness and its consequences will remain latent.
CLEARING STRENGTHS FROM BOTH SIDES
REPRODUCTION FACILITIES | |||
STRENGTHS | HIGH | LOW | |
HIGH |
|
| |
1 | 2 | ||
LOW |
| ||
3 | 4 | ||
- These are not the principal strengths but characterize a real differentiation
- These are the most defendable structural advantages that multiply development of a joint strategy
- These are strengths that, however, don’t constitute a structural advantage.
CLEARING WEAKNESSES FROM BOTH SIDES
STRENGTHENING FACILITIES | |||
DISADVANTAGES RESPECT OF COMPETITION | HIGH | LOW | |
HIGH |
|
| |
1 | 2 | ||
LOW | |||
3 | 4 | ||
- These weaknesses impel the use of creative solution to strengthen them
- These are structural disadvantages of difficult solution. This situation obliges to trace an adequate strategy, to save this serious inconveniences, as fast as possible.
CLEARING OPPORTUNITIES FROM BOTH SIDES
SUCCESS POSSIBILITIES | |||
POTENTIAL ATTRACTION | HIGH | LOW | |
HIGH |
|
| |
1 | 2 | ||
LOW | |||
3 | 4 | ||
- These opportunities should be unquestionable well used
- Also capitalize all complementary opportunities that their own characteristics offer, doing that for what they have been proved to be good and efficient complementing the rest among them
CLEARING THREATENS FROM BOTH SIDES
OCCURENCE PROBABILITY | |||
POTENTIAL ATTRACTION | HIGH | LOW | |
HIGH |
|
| |
1 | 2 | ||
LOW | |||
3 | 4 | ||
- These are certain risks that should be avoided at all cost, taking actions to stand us better against these events. As can be, increase the concentration taking more business units according to possibilities.
- Financing will come back before decade concludes
FINAL SUMMARY
STRENGTHS | WEAKNESSES | |
OPPORTUNITIES |
|
|
THREATENS |
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OUTSTANDING (STRATEGY EMERGED FROM COMBINATIONS)
- Strategic alliance between two types of complementary countries and enterprises
- Argentina and Japanese enterprises open a conceptual gap in businesses of international economy.
- Joint strategy: Japanese enterprises pay, guarantee or exchange bonds issued in Argentina in Japanese citizen’s hands. In exchange, Japanese enterprises receive advantages to export from Argentina.
- Phenomenal growth potential. (Since 1989 Argentina multiplied its exportations by four, with inadequate exchange rate and “without any exportation promotion”
- Completely new opportunity to develop a bi-national food agricultural trade mark: ARGENJAPAN’S
- Japan is a reference leader that knows Southeast Asia and can introduce argentine, manufactured under Japanese standards. “Japanese enterprise customer countries”, consolidate this new kind of exportations, (new market for Argentina, new products for Japan, one provider offers and economize costs due offer combination)
- Comply with healthy food fanatics through their own enterprises
- Export Argentine products with Japanese technology and support
- Japanese bank can participate in re-negotiation process of Argentine foreign debt
SYNTHESIS
To deal with a formation of a fund of US$2.800 millions that Japanese enterprises deposit to rescue bonds and promissory notes of their compatriots, granting them in change the hire of a “commercial store fund of new Argentine exportations”, is of providential scrupulousness.
Conceding the growth potential of Argentine exportations, an invitation of this kind would be of insuperable attractive due present that Japan and its enterprises* show, attending Japanese proper necessities to generate new business in different parts of the world.
*(Japan government confirmed in September 2003 to his first minister. Today his official growth foresight is uncertain for fiscal year 2003, according to official calculations real product expanded, while nominal product fell. All this occurs after more than a decade of stagnancy)
AN AGREEMENT WHERE ALL PARTIES GAIN:
ARGENTINA RESCUES DEBT AND IMPELS ITS EXPORTATIONS. SAVERS RECOVER THEIR SAVINGS AND JAPANESE ENTERPRISES ENTER A VERY PROMISSORY BUSINESS.
For Japanese enterprises represent the possibility to diversify their product briefcase and join industrially to Argentina, from raw material to the exportation of finished agricultural foodstuff, with many families of new products. It will diversify their business briefcase to compete, i.e. in agricultural foodstuff. Their excessive focus on electronics, metal-mechanic and computing, are activities highly saturated and turned into commodities (this got worse after incidents of September 11th)
Japanese enterprises don't have available natural resources to develop agricultural industry and biotechnology applied on foodstuff. Argentina possesses abundantly petrol oil, gas, natural resources and territorial extension. Japanese enterprises will be able to open a space non-existent till this moment, including the possibility to manufacture and export to their country, their own foodstuff products, keeping them from bio-terrorism. These will action for Argentina the key that Japanese enterprises have in Southeast Asia. For this purpose its proper to mention also, the increasing dynamism that have reached Argentine exportations to countries as Korea, China, India and Japan in last years.
“MADE IN ARGENJAPAN”:
ARGENJAPAN’S 2, is marvelous. Solves Japanese savers’ dilemma, with a solution provided by their own enterprises, and at the same time start to export their exclusive foodstuff to Japan and other countries.
Made in Argenjapan, under security norms that great Japanese corporations are already developing (Anti bio-terrorism law is about to be in force).
On the other hand, seems difficult for Europeans to give in land, for them to look after their agricultural producers is cultural priority. 5th Conference of WCO in Cancun and the law for genetically modified foodstuff ratifies this. Many societies as United States, France, Italy Spain and England focus the matter in this way.- Who can doubt of quality standard, production and health, if Japan stamp their seal? – Who will be extremely concerned about so as to not let bio-terrorism transform in a protectionist tariff tool?
CHANGING FAILURE INTO HOPE
In Argentina current account deficit of payment balance have financed till July 4th 2001 with external savings and finalized with non-measurable and vertiginous crisis. The actual budget restriction, needs increase of fiscal surplus in following years and this is only possible through a strong commercial surplus not because of internal activity fall as it is up to now. Decline of rent in the enterprises in the middle of untrusting, due following stop of local consumption and lack of financing that suffer Argentina during all 2002, increased unemployment rates and produced a huge unhappiness, that I consider unrepeatable. Given the enormous difficulty to continue applying new constructive measures in 2005 and 2006, where goals have not been defined yet, we need to add to re-negotiation of debt a “boom of exportations”. Improved by an outpost strategic alliance, this association that starts solving a punctual finance problem, will lately turn failure and discourage into a new hope of progress and prosperity.
FINAL SUMMARY
- ENTERPRISE FROM JAPAN: constitute a Distress Debt Fund of US$2,800 M, to mortgage, warranty or change Argentine bonds at 100% to their Japanese fellow citizens bondholders and savers.
- In change, Argentina offers to hire a “commercial store fund” of new Argentine exportations.
- In this scheme, will enter to the Distress Debt Fund, Japanese corporations that produce and export from Argentina with fiscal benefits to be recovered within 30 years”, (i.e. Panasonic, Toshiba, Sony, Mitsubishi, Honda, Toyota, Mazda, Kawasaki)
- The Bond rescue – around 2,800 MM – will work as a prime earning to obtain a right of 10 years to export new products from Argentina, then they will receive at the time, a management fee for contributing their industrial and exporter know how
