Government and industrial leaders agreed Monday to work together to restructure excess capacity, create new businesses and promote labor turnover to improve Japan’s industrial competitiveness.
The agreement was made at the first meeting of the Industrial Competition Council, a panel under the direct supervision of Prime Minister Keizo Obuchi. “I hope the private and public sectors will join hands in hammering out ways to achieve the economic growth of private demand,” Obuchi told its inaugural meeting, held at the Prime Minister’s Official Residence.
The commission brings together 17 top business executives, including Takashi Imai, chairman of the Federation of Economic Organizations (Keidanren), Hiroshi Okuda, president of Toyota Motor Corp., and Nobuyuki Idei, president of Sony Corp.
Commission members wound up their first talks with a consensus that something should be done to cope with the over-staffing and excess capacity faced by Japanese companies at a time when the economy is being pump-primed by the government through a series of stimulus measures. They agreed to discuss taxation measures to promote the disposal of excess facilities that accumulated during the asset-inflated bubble economy at the next meeting, slated for late April.
To this end, they agreed that Obuchi, Imai and Finance Minister Kiichi Miyazawa will seek the cooperation of creditor banks to help companies dispose of excess capacity. They also agreed to take up eight other issues, including the creation of jobs for victims of corporate restructuring, nurturing new industries, stabilizing exchange rates and the formation of a national policy on technological development.
Although the financial sector is not involved in the joint conference, Miyazawa suggested that financial institutions could aid the disposal of excess plants and equipment by, for example, seeking ways to swap potential bad loans with equity. Meanwhile, Imai urged the government to provide industry with a “sound business environment” so companies can play a leading role in restructuring the supply side.
Speaking at a news conference later in the day, Trade Minister Kaoru Yosano acknowledged that Japan’s productivity remains sluggish due to an inadequate allocation of human and industrial resources and poor growth among new businesses.
Thus, he said, it is important for the government and the private sector to work together to reform the supply side while the government’s pump-priming measures are generating a positive influence. The council — the brainchild of bureaucrats who believe supply-side reforms to reduce excess capacity are vital to ensure a return to growth — will hold meetings once a month to work out a set of proposals by the end of this year.