Tuesday, October 15, 2013
DJ: Abe Opens Growth Strategy Parliament; Opposition Zeroes in on Fukushima, Free Trade
TOKYO--Japanese Prime Minister Shinzo Abe opened what he calls the "growth strategy execution parliament" on Tuesday, setting the stage for what may be the most critical and difficult component of his economic program--spurring growth through industrial deregulation and competition.
In his prepared speech, Mr. Abe threw his support behind "bold companies that are up to challenges," and vowed to create a environment friendly for entrepreneurs and new enterprises by promoting deregulation, research and development, and capital investment.
In the next three years the government will "order a full mobilization of tax reform, budgetary, monetary and deregulatory policies," the prime minister said.
In June, Mr. Abe unveiled his program to support growth, which he called the "third arrow" of his economic policies. This follows the first two arrows of easy monetary policy and beefed-up public spending. Aimed at increasing business competitiveness, most of the growth measures have however been on hold since parliament ended its regular session in June, as the policies require legislation to move ahead.
Having won control of both legislative chambers in the July upper house election, Mr. Abe has made passing bills related to the growth package the top priority of his administration.
Japan clocked 3.8% growth in the April-June quarter from the same period a year earlier, the fastest among industrialized countries. And in a bid to offset the impact of the planned rise in the 5% sales tax to 8% from next April, Mr. Abe has told the government to compile a Y5 trillion ($50 billion) stimulus package. But without more structural reforms, economists say sustained growth is unlikely.
The prime minister listed heavily regulated industries like electricity and agriculture as targets for reform, while pointing to cutting-edge regenerative medical science as a potential area of growth. But he gave little detail on how he would address challenges that virtually all his recent predecessors have also vowed to tackle, but have rarely delivered on.
Moreover, absent in Mr. Abe's speech, were any mention of corporate tax cuts or labor reforms to ease Japan's rigid job market. These have long kept foreign companies from opening shop in the world's third-largest economy.
Once approved by parliament, controversial reforms such as relaxing employment terms will be first tested next year in specially deregulated zones.
Opposition parties looking for a weakness in the ruling Liberal Democratic Party's popularity and parliamentary dominance see this 1.5-month session as an opportunity to highlight the government's failures.
They have pledged to grill the government on a myriad of issues, including recent leaks of contaminated water from the Fukushima Dai-ichi nuclear power plant, a partial reversal of the government's commitment to keep certain farm tariffs in trans-Pacific free trade talks, and the prime minister's decision to raise the sales tax.