The Nippon Keidanren is working on a set of guidelines aimed at encouraging member companies to donate to political parties and evaluate their policies. I would like to provide some background on the objectives of this ongoing effort.

A recent court ruling in a case involving life insurance firms recognized political donations as one of the tools companies use to contribute to society. Supporting Japan’s parliamentary democracy through political donations is an activity they are required to engage in to fulfill their role as good “corporate citizens.”

Of course, business donations are restricted under the Political Funds Control Law. For example, businesses can only donate to political parties, since donations to individual lawmakers were banned in 2000 following a series of influence-peddling scandals. There is also a limit to the amount of money a company can donate in a year, and that number varies in accordance with each company’s capitalization. While the maximum annual limit is 100 million yen, no Japanese company uses its full quota. And the names of donors whose contributions exceed 50,000 yen are made public.

So why should business support politics?

The last decade has seen several political reform initiatives, including the introduction of single-seat constituencies in the Lower House, and public subsidization of political parties. One of the major objectives was to create a situation in which politics would revolve around policy. However, this hasn’t become anything more than a catchphrase, and Japanese politicians have been putting important reforms on the back burner year after year because they are unable to properly deal with the problems being posed by the nation’s rapid changes in economic environment, such as aging, intensifying competition and the development of information technology.

Japanese firms are making all-out efforts to improve management and revitalize the economy. But the government needs to help them succeed in global competition by implementing structural reforms and building an environment where both companies and individuals can make full use of their creative talent. This is a role that must be played by politicians and political parties, not bureaucrats. The business community needs to actively support political parties so they can accelerate reforms on their own initiative. While making proposals that reflect the opinions of those on the front lines of business is crucial, financial support is another important means of achieving our goals.

In the guidelines for political donations, set to be issued as early as January 2004, the Nippon Keidanren will publish its evaluation of all parties’ policies. Toward this end, a list of priority policies in need of urgent implementation will be drawn up and used as a yardstick for gauging the performance of each party. Member firms will then be encouraged to make political donations on the basis of this evaluation. We believe the donations will promote competition in politics and thereby contribute to establishing a system in which policy holds the key.

Evaluating political performance is a process commonly practiced in the United States, but relatively new in Japan. We hope our latest initiative will prompt other organizations to evaluate political parties according to their own criteria, which would create a system where parties compete on the basis of policy initiatives.

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