APD | Japan records increase in corporate bankruptcies in 11 years

By APD writer Alice

Tokyo Shoko Research said on January 14 that in 2019, the number of businesses that filed for bankruptcy in Japan increased for the first time in 11 years as a result of a consumption tax hike, labor shortages and a series of natural disasters.

Business failures with debts of at least 10 million yen ($90,900) rose 1.8 percent from the previous year to 8,383, the first rise since the 2008 global financial crisis. About 90 percent of the bankrupt companies were small firms with fewer than 10 employees.

Among 10 sectors, agriculture, forestry, fisheries and mining saw the largest increase of 34.37 percent to 86 bankruptcy cases, followed by retail with an 8.65 percent rise to 1,230 and transportation up 6.72 percent at 254.

Consumer spending plunged as the consumption tax hiked to 10 percent from 8 percent from October 1, 2019. Retail sales in October fell 7.1 percent, the sharpest on-year drop in four years.

Labor shortages amid Japan's graying population resulted in 426 corporate failures, the highest number since 2013 and up from 387 in 2018.

Meanwhile, a series of typhoons hit Japan last year, causing many difficulties and losses for enterprises. Notably, typhoon Faxai, which made landfall in eastern Japan in September, caused massive power outages in Chiba prefecture, near Tokyo. In October, typhoon Hagibis struck a wide area of Japan, triggering flooding and disrupting parts shipments.

(ASIA PACIFIC DAILY)