The nation’s economic policymakers may get some encouragement from a new report by a government think tank in Australia that urges its companies to take another look at potential business opportunities that are emerging with Tokyo’s reform efforts.

The 494-page report, titled “A New Japan? — Change in Asia’s Megamarket,” was released June 11 by the East Asia Analytical Unit of the Department of Foreign Affairs and Trade. It is intended to assess the ongoing social, economic and political changes in Japan and possible implications for Australia.

It encourages Australian firms to look at Japan, which “can be a very rewarding place to do business for those companies prepared to make an effort to understand the market, the business environment and the factors driving change in society and the economy.” Describing Japan as Australia’s “most significant trading partner for three decades,” the report calls Tokyo Canberra’s “strongest and most consistent supporter in the Asian region” in political terms as well.

“The relationship with Japan will continue to be one of Australia’s most important bilateral relationships,” it says, adding that both countries’ growing links with the rest of Asia “offer important opportunities for joint activities, in business, in development assistance and in regional forums.” Amid lingering skepticism at home, the report concludes that Japan’s economic reform efforts will continue over the long term, “driven by underlying pressures such as demographics, fiscal shortfalls, declining savings, low potential growth rates, possible further appreciation of the yen and structural rigidities.”

But it also adds that the pace of change may be “slower than many would like.” Reforms of the nation’s economy are “more likely to be incremental than radical, despite the need for faster, deeper reforms in some areas.” Despite the drive for administrative reform, many bureaucrats are already re-engineering their roles to maintain control in key areas, and some deregulation is really re-regulation in disguise, the report says.

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