The Japan Federation of Economic Organizations (Keidanren) pledged its “full support” Thursday for Prime Minister Junichiro Koizumi’s structural reform initiatives, even if such steps bring a negative impact on the economy.
Keidanren Chairman Takashi Imai conveyed the message to Finance Minister Masajuro Shiokawa at a meeting in which the finance chief explained a reform blueprint being drafted by the government’s key economic panel.
The Council on Economic and Fiscal Policy said last week that the country will have to endure low economic growth over the next two to three years during an “intensive adjustment period” for economic revival.
Members of the panel include Hiroshi Okuda, Toyota Motor Corp. chairman, and Ushio Inc. Chairman Jiro Ushio.
Imai told Shiokawa that the business sector acknowledges the need for mending the nation’s debt-ridden public finances, which have prevented the private sector from having positive business prospects, a Keidanren official told reporters.
“Keidanren fully supports the government’s structural reforms. We are ready for deflationary pressure on business activities stemming from upcoming reforms in the next two to three years,” Imai was quoted as saying.
Some Keidanren officials, however, called on the government to take appropriate measures regarding unemployment.
It is generally acknowledged that reform efforts, such as the disposal of bad loans held by Japanese banks, are likely to increase unemployment.
Shiokawa reiterated the Koizumi Cabinet’s determination to push ahead with reform, a Finance Ministry official said.
Shiokawa told the Keidanren officials that he found Imai’s comments encouraging, adding that the government will promote reforms without exceptions.
He also restated his intention to review the state budget, social welfare spending and relations between the central and local governments.
Shiokawa underscored the need to reduce the ratio of public works spending to gross domestic product in the medium and long terms and asked the private sector to help finance public works projects, according to the official.
The two also discussed tax reforms related to securities investment, social security reforms and reviewing the relationship between the central and local governments.
Shiokawa vowed to carry out securities tax reforms, although he did not go into details.
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