Page 406 - Invited Paper Session (IPS) - Volume 1

IPS173 Yuki U.
Taking into account ease of response so as to reduce the burden on
respondents to the greatest extent possible, the Tankan basically collects
accounting based figures. However, by doing so, there are technical limitations
in its coverage with regards to the treatment of non-controlling interests in
the consolidation process. Consolidated sales and investments do not reflect
the overseas business activities of associates accounted for using the equity
method. If a respondent owns less than 50% of shares in a non-controlling
interest of an overseas subsidiary’s equity, sales and investment amounts of
the subsidiary are not included in the respondent’s overseas sales and
investment amounts in principle. Regardless of these limitations, the
introduction of a new survey category allows the Bank to more accurately
capture the impact of overseas activities on business activities of enterprises
in Japan.
5
“R&D investment ” has been added as a new item in the survey items of
annual projections of the Tankan from the March 2017 Tankan survey. This
reflects the fact that Japanese enterprises, facing intensifying global
competition, have started increasing R&D investment in order to enhance
their competitiveness in the medium to long term, with their domestic offices
taking on an increasingly significant role in R&D. Moreover, the addition of
R&D investment to the Tankan’s survey items makes publishing figures of
software and fixed investment excluding land purchasing expenses more in
line with the national accounts.
The survey of exchange rates will be enhanced in its coverage of sample
enterprises and survey currencies from around 2020. The Tankan currently
conducts a survey of average U.S. dollar-yen exchange rates for actual results
of exports and expected rates on which forecasts of exports are based. The
survey thus only collects exchange rates expected by exporting enterprises.
However, with increasing outward direct investment, direct investment
income, along with increased imports, it has become increasingly important
for the business activities of Japanese enterprises, including mainly
nonmanufacturing non-exporting enterprises. Collecting the survey with
exchange rates for all enterprises becomes increasingly important to
accurately reflect expanding overseas business activities. Currencies other
than the U.S. dollar, particularly the euro, play a greater role over direct
investment income, for instance. In light of these developments, the Bank will
take a survey on euroyen as well as U.S. dollar-yen exchange rates expected
by all sample enterprises excluding financial institutions and thus exchange
rates for overall businesses (not only exports but also imports, outward direct

5 Total of R&D expenses included in general and administrative expenses as well as in
manufacturing expenses for the period.
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