Admitting that the Japanese economy is struggling to find a way out of the recession, Prime Minister Junichiro Koizumi made clear Friday that reviving the economy will be his top priority for this year, declaring he will take “all available policy measures” to fight deflation.
In his annual policy speech before both houses of the Diet, Koizumi only briefly touched on foreign policy at a time when Iraq and North Korea are attracting the world’s attention.
The speech was widely perceived as lacking freshness as his remarks on the state of the economy were identical to pronouncements he has made repeatedly since last year.
One of the new areas that the speech covered — although not an essential topic — was Koizumi’s determination to attract foreign visitors and investment.
Koizumi said he aims to double the number of foreign visitors to Japan in 2010 from the current 5 million a year, while also doubling outstanding foreign investment in Japan within five years. That figure currently stands at around 6 trillion yen.
“Direct investment in Japan from overseas will bring about new technology and innovative management, that will in turn lead to the creation of more jobs,” Koizumi said. “We will take measures to make Japan an attractive market for foreign companies.”
On the question of the economy, Koizumi vowed to continue pushing forward his structural reforms, including accelerating the writeoff of banks’ nonperforming loans and the privatization of public entities.
“The revival of Japan can only be made possible by pushing forward bold structural reforms and creating a system that fits the 21st century,” Koizumi said in his 35-minute speech.
However, he said the reforms are still in progress and that he needs a “a little more time” before they begin to show results, rebuffing critics who say his reforms have produced negligible returns.
To fight deflation, Koizumi is placing most importance on monetary policy, while spelling out other policy measures, such as tax reforms and deregulation.
“The government will work together with the Bank of Japan to conquer deflation,” the prime minister said.
Koizumi’s comments come amid mounting speculation about his selection of a new BOJ governor to replace outgoing Masaru Hayami, whose five-year term expires in March.
With no other effective policy measures in hand, the government and politicians alike are hopeful that the new BOJ head will take further monetary easing steps.
Koizumi reiterated his pledge to wipe out Japan’s bad-loan problem by the end of fiscal 2004 under a financial revitalization program set out late last year.
“I will not let a financial crisis occur,” he said, brushing aside concerns that large-scale bankruptcies may occur in March, when companies close their books for fiscal 2002. Koizumi did not say, however, how he would avert such a crisis.
To further push his reform drive, the prime minister vowed to submit the relevant bills to the current Diet session, including a set of bills on corporate restructuring.
Under the bills, a new government-backed entity, tentatively named the Industrial Revitalization Corp., will be established to purchase nonperforming loans held by banks and rescue ailing firms.
In defiance of his opponents within the Liberal Democratic Party, Koizumi also emphasized that he will “basically respect” the final report by his panel on the privatization of public expressway operators, which has called for applying the brakes on the pork-barrel construction of unprofitable toll roads.
Koizumi’s opponents, who wish to retain control over road construction, have fiercely criticized the panel’s report. Whether Koizumi will actually be able to push the plan through will be one of the decisive factors in the fate of his reform drive.
Other than the economy, Koizumi commented on the passage of pending bills that stipulate how Japan should respond to a military attack by a foreign power and a bill on the protection of personal information as the key elements of his political agenda for this year.
But on the contentious issue of revising the Fundamental Law of Education, Koizumi fell short of saying he would submit a bill during the current Diet session.
His only comment on the matter was: “We will work on (the issue) based on a national debate.”
New Komeito, a coalition partner, is hesitant about the idea of stipulating “patriotism” and “respect for Japanese tradition” in a revised education law because it resembles the ethnocentric education of the prewar period.
Koizumi’s remarks on the Iraqi situation were limited to two sentences: That Iraq’s weapons of mass destruction are a threat to the entire world community and that Japan will make its “own diplomatic efforts” to press Iraq to fully cooperate with U.N. inspections of its weapons program.
On North Korea, he reiterated his resolve for a normalization of diplomatic ties with Pyongyang, while at the same time working closely with the United States, South Korea, China and Russia in applying pressure on the North to abandon its nuclear weapons program.
Deflation is top target
Finance Minister Masajuro Shiokawa said Friday that fighting deflation is the government’s top priority and will work to reverse it in cooperation with the Bank of Japan.
In a fiscal policy speech to the Diet that offered no surprises and skirted a controversial tax issue, Shiokawa also promised to “achieve results” via structural reform efforts.
“I plan to achieve results via structural reform efforts . . . in order to establish a society in which people can live with peace of mind well into the future,” he said.
The government will also help stabilize and develop the world economy, he said.
Shiokawa also called for a swift passage of the 81.79 trillion yen budget for fiscal 2003.