TOKYO, Aug 20: Japan’s overall investment in other countries marked its first gain in three years in 2002-03, but its fund flows to Asean members fell sharply due to the drastic shift of production bases to China, officials said on Wednesday.

Direct investment in foreign countries by Japanese companies for the year to March 2003 rose 10.7 per cent from the previous year to 4,417.5 billion yen ($37.3 billion), the finance ministry said.

It was the first gain since the year to March 2000 when flows of Japanese funds to other countries hit 7,470.3 billion yen, the ministry said.

Investment in the United States, Tokyo’s top destination for investment, gained 23.8 per cent to 991.3 billion yen, followed by Britain with 531.4 billion yen, an increase of 7.1 per cent.

Japanese investment in key members of the Association of Southeast Asian Nations (Asean), however, suffered sizable drops for the fiscal year, while that in China posted the third consecutive gain.

“The results clearly proved Japan swiftly shifted investment from Asean members to China,” said Eriko Nakamura, a researcher at Japan External Trade Organization (JETRO).

“But Japanese firms are now concerned about the risk of over-concentration of investment following the Sars outbreak,” Mr Nakamura said.

“They still have strong interest in the Chinese market, though,” she said. “The shift of Japanese investment from ASEAN to China may slow down to some extent, but it’s likely to continue for the time being.”

Investment in Malaysia nosedived 69.5 per cent to 9.8 billion yen, while fund flows to the Philippines plunged 47.4 per cent to 50 billion yen. Japanese investment in Indonesia fell 18.1 per cent to 50.9 billion yen, with that in Thailand down 44.4 per cent at 61.4 billion yen.

Investment by Japanese firms in China jumped 19.1 per cent to 215.2 billion yen following a 62.6-per cent increase the previous year.

Meanwhile, foreign direct investment in Japan for the fiscal year inched up 0.4 per cent to 2,186.3 billion yen for the first time in two years, the finance ministry said.

US direct investment in Japan fell 7.6 per cent to 594.4 billion yen, while direct investment from Germany surged to 119.5 billion yen from 12.2 billion yen.

It was boosted in part by auto giant DaimlerChrysler’s purchase of a 43 per cent stake in Mitsubishi Motor’s truck unit Fuso for $745 million in September.

Gulf states: Japan’s trade with the Gulf states declined a further 5.52 per cent to $43.96 billion in 2002 on the back of a slide in prices and import volumes of crude oil and gas, an official report said on Wednesday.

“Import of crude oil from all the six countries were down in varying degrees during the year 2002. Import prices were also lower in 2002 compared with the prices in 2001,” the Japan External Trade Organization (JETRO) said.

Import of crude oil and other petroleum products constituted 98 per cent of Japan’s total imports, JETRO’s Dubai office noted, with the six nations of the Gulf Cooperation Council (GCC) meeting 74 per cent of Japan’s mineral fuels requirements for 2002.

But imports were down 9.15 per cent to $34.9 billion from $38.42 billion in 2001.

A Gulf-wide rise in demand for passenger cars and machinery, however, drove exports up 11.7 per cent to $9.05 billion in 2002.

Japan’s trade deficit with Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) slumped 14.7 per cent to $25.85 billion over the same period, JETRO said. Although the value of bilateral trade was down 3.8 per cent, Saudi Arabia, which is Japan’s largest crude supplier, retained its position as Japan’s largest trading partner in the region, with a 35-per cent share.—AFP