The recent sales tax increase of 8% in Japan has been brought into effect as of April 1, 2014. Following the tax hike, consumers in Japan are finding it difficult to deal with financial issues. However, Japan is not the only country in Asia to be affected by the latest tax hike. Reports say that exporters in Asia which ship goods to Japan can also experience a setback in customer demand.


Santitarn Sathirathai – the bank economist – said that Malaysia, Hong Kong and Singapore will be the most affected from the very beginning. It has been reported that Hong Kong, Singapore and Malaysia are the ones which export the most to Japan as a share of their economic output on a yearly basis. Sathirathai went on to explain that figures which have been revealed are misleading due to two reasons.

One of the reasons is that not all exports which go to Japan will be purchased by Japanese consumers. Moreover, shipments might not meet final demand in Japan, but are used to manufacture final products which are exported to other countries. So even if the local spending in Japan decreases, then it might not affect demand for these exports.

The second reason is that certain exports which Malaysia – and other countries – sell to Japan are consumer essentials.

Photo Credits: Static Economist


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