Next stage of growth policy

Prime Minister Shinzo Abe on May 17 announced a second set of economic growth policy measures. He aims to restore the private sector’s total capital investment to ¥70 trillion a year (which prevailed before the Lehman Brothers shock of 2008), double farmers’ income and agricultural and fishery exports, and carry out deregulation for particular companies that endeavor to create new technologies.

He must ensure that his plan doesn’t fizzle out. The government must take a well-thought-out approach so that farmers and corporate executives are motivated to step up their activities.

In April, Mr. Abe announced a first set of growth measures centered on medical services and support for child-rearing households. He plans to announce a third set June 5.

The government is expected to finalize growth policy measures by mid-June — as one of the Liberal Democratic Party’s selling points for the coming Upper House election. But it is not clear whether the government will be able to attain necessary revisions to laws and secure sufficient funds.

The government views the next three years as a period for “promoting concentrated investment” to increase total corporate capital investment ¥70 trillion a year through budget and tax measures, financial assistance and regulation reforms. But capital investment in the January-March period dipped 0.7 percent from the previous year — for the fifth straight quarterly drop — compared with a 0.9 percent rise in consumer spending and a 1.9 percent increase in housing investment.

This shows that corporate executives harbor suspicions about Mr. Abe’s economic policy, which so far has focused on allocating a large amount of funds to public works projects and relied on massive monetary easing by the Bank of Japan.

Unless Mr. Abe gains the trust of corporate executives, it will be hard for his economic growth policy to bear fruit.

To strengthen the agricultural and fisheries sectors, the headquarters for the revitalization of agriculture and fisheries, and of the communities based on these industries, will be set up in the prime minister’s office. As one of its goals, the government aims to increase Japan’s rate of food self-sufficiency. But if Japan joins the Trans-Pacific Partnership free trade scheme as Mr. Abe desires, Japan’s food imports will increase greatly, thus decreasing the nation’s food self-sufficiency rate. How will the government will be able to resolve this contradiction?

Japan’s agricultural sector also has structural problems such as aging farmers, a shortage of young people interested in pursuing agricultural careers, an increasing abandonment of farmland and small crop fields compared to those of Japan’s trading partners.

The announced measures include an income compensation system for small farmers to help them protect the historic scenery and natural environment of their areas as well as steps to foster farming on a larger scale. It is important for the government to work out measures that will help farmers work with joy and pride — not just for the sake of receiving subsidies.