Prime Minister Yoshiro Mori instructed his economic ministers Tuesday to compile by early April a package of emergency economic measures to support Japan’s fragile economy, government officials said.
Taro Aso, state minister in charge of economic and fiscal policy, will be primarily in charge of compiling the package, while other economic ministers, including Finance Minister Kiichi Miyazawa and Economy, Trade and Industry Minister Takeo Hiranuma, will help, the officials said.
The package will focus on revitalizing the stock market, accelerating bad-loan disposal by Japanese banks and improving liquidity in the real estate market, the officials said.
These policy areas were included in an emergency economic package proposed earlier this month by the ruling coalition of the Liberal Democratic Party, the New Komeito party and the New Conservative Party.
The economic ministers will consider the establishment of a private-sector stock-buying body, which has been sought by the ruling coalition to purchase stocks as a way of easing selling pressure while financial institutions unwind their cross-held shares, the officials said.
The ministers will also consider the establishment of a governmental urban development center to boost real estate transactions. Real estate sales have suffered due to falls in land prices and complicated ownership rights, they said.
Miyazawa has agreed to the establishment of the center.
The economic ministers will work on the measures in cooperation with a government-ruling coalition task force set up earlier this month to devise emergency economic measures.
Mori’s order to compile the economic package follows the passage Monday of the 82.65 trillion yen fiscal 2001 state budget through the Diet.
Aso on bad debts
Taro Aso, minister in charge of economic and fiscal policy, said Tuesday that he informed Washington last week that Tokyo wants to make a decision on solving its economic problems, including banks’ bad debts, within six months.
Aso said he made the remarks while attending the March 19 summit between Prime Minister Yoshiro Mori and U.S. President George W. Bush.
“That’s one of the issues (that was) discussed during a luncheon meeting and was not put down in writing. I just told them what we want to do,” Aso told reporters, dismissing views that his comment was a formal pledge by Tokyo.
He also described as out of context a newspaper report that quoted him as saying during the Washington summit that Japan can solve its bad-debt problem within three years.
“What I said is that, if we try many things, including dealing with the bad-loan problem, we can have the economy take off within three years. That’s my personal view, though,” the minister said.
Earlier reports also said Mori had told Bush that Tokyo wants to make a decision on solving the bad-debt problem within six months.
Mori later denied this, saying he was referring to Tokyo’s efforts to deal with government finances rather than the bad-debt problem.
German wage advice
FRANKFURT (Kyodo) Japan should implement an across-the-board wage hike of around 3 percent in nominal terms to stimulate consumer spending and help the nation overcome deflation and other economic problems, a former German vice finance minister said Tuesday.
Heiner Flassbeck, who currently serves as senior economist at the U.N. Conference on Trade and Development, said Japan will be unable to work its way out of its economic crisis if it sticks to conventional monetary and fiscal policy steps, such as those to depress the yen.
To break the vicious circle, in which faltering consumer confidence discourages private consumption, Tokyo should discuss with business leaders ways of raising wages over the next two years, Flassbeck said.
He said it is important to raise wages by around 3 percent, which is the same as the rate of growth for productivity.
Despite improved earnings, companies are deliberately keeping wages low, using the recent decline in Tokyo stock prices as an excuse.
If employers continue to force their workers to effectively accept pay cuts, Japan will be unable to find its way out of the woods, he said.
Flassbeck said that since the Great Depression of 1929, no developed country has experienced wages and bonuses declining in nominal terms.
But in Japan, households’ disposable income has dropped markedly, while consumer spending has fallen in nominal terms over the past three years, he said.
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