December 12, 2001	Wednesday	Ramazan 26, 1422

TOKYO, Dec 11: With the value of Japanese assets down as much as 90 per cent from a decade ago, there has never been a better time for foreigners to buy a piece of Japan, US investor Wilbur Ross said on Tuesday.

There is an unparalleled opportunity for foreign companies to benefit here, said Ross, known in Japan for turning around a failed Japanese bank, and nicknamed the “King of Bankruptcy” by Fortune Magazine.

Japan has experienced an awful 10 years where asset values have declined from 75 per cent for stock markets and real estate to as much as 90 percent for golf course memberships, he told a seminar for business executives in Tokyo.

Japan has the most outstanding potential for any major economy, said Ross, who has restructured over $200 billion of failed companies worldwide.

In the United States the average profit margin on sales for businesses is 6.5 per cent, in Europe it is five per cent but in Japan the margin is a mere 0.8 per cent, underlining the nation’s inefficient production base, he said.

If Japan were to improve to just 50 per cent of the EU margin, total company profits would triple. If Japan could achieve 100 per cent of the US profit margin rate, profits would be eight times the present levels.

Last year, a US investment fund led by Ross bought failed regional lender Kofuku Bank Ltd, becoming only the second foreign firm to take over a bank in Japan.

The fund worked hard to turn around operations at the loss-making bank based in the Kansai region, western Japan, Ross said. In the first half year to September the lender renamed Kansai Sawayaka, or Kansai Freshness Bank reported a net profit of 2.2 billion yen.

We put provisions against all non-performing loans, closed all losing branches... all employees were tested and the half who were least qualified were transferred to government companies, Ross said.

The rapid success of (the bank) proves that even in the very severe economic area of the Kansai region, a well executed restructuring plan can have immediate and dramatic results.

Over the next few years we will see multitudes of similar success stories, he predicted.

US corporate profits come to $14,400 for each employee on average and in the EU the figure slips to $13,000. However, in Japan it works out at around $4,200 per worker, Ross said.

Unfortunately a reduction in employees is the most effective way to improve this ratio.

Corporate Japan is begining to understand the need to speed up restructuring as the government urges banks to write off bad loans — cited as a root cause of Japan’s economic malaise — and turn off the credit tap to weak borrowers.

Barriers to mergers and acquisitions in Japan are dissolving amid the economic slump, said analysts.

On Monday Swiss drugs group Roche said it would take a controlling stake in Chugai Pharmaceutical of Japan, to increase its presence in the world’s second largest pharmaceutical market.

Renault recently firmed its grip on Japanese automaker Nissan Motor Co. Ltd. and Vodafone Group plc has taken over Japan Telecom Co. Ltd.

If you are good then it may be a good time to invest (in Japan) but it is a very easy place to lose money, said West LB economist Andrew Shipley.

Investors should move now, provided they have done their homework, he added.

Now is the chance for foreigners to gain a presence here when the domestic competition has been severely weakened. In five years time this won’t be the case.—AFP