New export opportunities worth €23million a year by 2020 could emerge for Maltese companies trading with South Korea, according to a report conducted on behalf of the European Commission.
This report points to significant export opportunitiesfor European businesses in these Asian markets
‘The Executive Training Programme’s: EU Trade with Japan & Korea’ report maintains that if Malta sustains its current growth in exports to south Korea, Maltese companies could enjoy significant new export opportunities by 2020. However, the report also warns that any gains could be partly offset by declining exports to Japan.
The report was conducted by economist Ronan Lyons of Oxford University on behalf of the European Commission to launch the new cycle of its Executive Training Programme (ETP). The ETP provides European companies’ executives with the knowledge and skills necessary to overcome business, language and cultural barriers in order to trade successfully in the Japanese and Korean markets.
Commenting on the research, Tung-Lai Margue, director, head of the service for foreign policy instruments of the European Commission, said: “This report points to significant export opportunities for European businesses in these Asian markets. Over the past 30 years the Executive Training Programme has become a key instrument in supporting EU companies’ expansion in Japan and Korea, helping them to understand business practices in those markets and overcome language and cultural barriers to successful trade relations.”
“This report clearly highlights that, as two of the largest economies in the world, these markets offer a wealth of opportunity to European businesses. The ETP is uniquely positioned to enable European businesses to unlock the potential of these complex and idiosyncratic markets.”
According to the IMF’s World Economic Outlook, Japan’s economy is expected to grow by approximately 18 per cent between 2010 and 2020 while Japanese imports of both goods and services is anticipated to grow by 50 per cent between now and 2016.
The share of Maltese exports outside the EU that went to Japan grew from 5.7 per cent in 2000 to 8.4 per cent in 2010. With no change in trend, this could increase further to 12.2 per cent by 2020. In 2010, Japan was Malta’s fourth largest market for exports outside the EU, which is the same rank it had in 2000. While Malta’s exports outside the EU have fallen on average 4.5 per cent per year over the past 10 years, exports to Japan have been largely static falling at an average annual rate of 0.5 per cent in the same period.
The research report highlights opportunities for particular sectors within Japan. Economist Ronan Lyons, author of the report, commented: “Foreign direct investment presents a range of further opportunities for Maltese firms. For example, construction activity in Japan over coming years will be driven by the reconstruction following the earthquake earlier this year - the most expensive natural disaster in history. The reconstruction package announced by the Japanese Government is estimated at €36billion.
“Also, Japan faces particular challenges in relation to health care, with 40 per cent of its population predicted to be over the age of 65 by 2050. The medical devices market in Japan, worth €20billion in 2009, is currently dominated by American rather the EU firms.”
In relation to Korea, the report shows that the proportion of Maltese exports to that market has grown steadily over the past 10 years, from 1.1 per cent in 2000 to 2.9 per cent in 2010. If this trend continues exports from Malta to Korea could reach 7.9 per cent by 2020. With the coming into force of a free-trade agreement between the EU and Korea in July of this year, trade may continue to expand rapidly over coming years. According to the IMF’s World Economic Outlook, Korea’s economy is expected to grow by about 53 per cent between 2010 and 2020 while imports of both goods and services is anticipated to grow by 75 per cent between 2011 and 2016.
As a result of the Korean Government’s ‘Low Carbon, Green Growth’ strategy and a €11.5 billion economic stimulus package, the environment and green tech sector in Korea is booming, with the Ministry for the Environment in Korea predicting that it will double in size to €45 billion by 2013. Also, it is estimated that Korea’s health care sector, which was worth €38 billion in 2007, will grow rapidly in coming years, by an average growth rate of 12-15 per cent per annum.
1,100 executives of European companies have participated in the Executive Training Programme (ETP) since 1979, with 65 per cent going on to become chief executives within their companies.