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Wednesday, Dec. 31, 1997
Keep reform momentum going, Toyoda urges
BY SAYURI DAIMON
The head of Japan's largest economic organization has a New Year's resolution for the government: to carry out and accelerate the structural reforms and financial stabilization measures that it drafted last year.
"This is the year to implement policies that have been decided on so far and to endure the pain that these measures will bring," said Shoichiro Toyoda, chairman of the Japan Federation of Economic Organizations (Keidanren). "If we can do that, we will nurture new industries and businesses, and bring about an energetic society."
He is also making it his own resolution and a priority for his final six months as head of Keidanren. After serving two two-year terms, Toyoda is expected to hand over the post in May. Possible candidates to succeed him include Takashi Imai, president of Nippon Steel Corp., and Tadahiro Sekimoto, chairman of NEC Corp.
Amid the prolonged economic slump and the collapse of giant firms and major financial institutions, Prime Minister Ryutaro Hashimoto last year directed the country toward six drastic reforms in areas such as the nation's fiscal structure, financial sector, economic structure and administration.
Toyoda, who was also a member of the government's Administrative Reform Council, was an active supporter of Hashimoto's reforms, the process of which, according to Toyoda, has just entered its first stage. "What the government is trying to do will bring one of the most drastic changes since the Meiji Era," Toyoda said. "But so far, it has only drawn up a picture for the reform."
After combating bureaucrats from various ministries who did their best to twist and stretch the original draft, the council hammered out a plan that will reorganize the government's 22 ministries and agencies into a Cabinet Office and 12 ministries and agencies by 2001. "We must realize the plan by Jan. 1, 2001," Toyoda said. "And that will require a lot more effort by many people."
The chairman also stressed the need for public support. "By understanding and cooperating with the reforms," he said, "people must help accelerate the pace of the reforms. Otherwise, Japan will be a loser in global competition."
But this is not the first time Toyoda and Keidanren have stepped aboard the reform bandwagon. In January 1996, Keidanren released a report called "vision for 2020," which tried to present a clear blueprint for an ideal future. It listed priority issues that need to be tackled before 2010, when the accelerated aging of society and the falling birthrate are expected to intensify the nation's problems.
Toyoda said Keidanren's report proposed similar reforms to what Hashimoto is currently trying to implement, including rectifying Japan's high-cost economic structure by abolishing major economic regulations and cutting corporate and income taxes to the level of other major industrialized nations.
"Our aim," he said, "is to make Japan a valuable country that has a strong presence in the world, and to make Japan a place where people around the world would wish to work or live." As far as the government's recent deregulatory efforts, Toyoda lauded what he called certain achievements, especially in the area of telecommunications. "With deregulation, many people came to use mobile phones, and that will boost jobs for electronics firms," he said. "Those technologies can also be applied to other uses, such as computers, and they may make Japan an information society in the future."
He welcomed various deregulation measures that the government has implemented, but added that a lot of work remains. Citing Europe's attempt to form a consensus for a single currency, the Keidanren chairman stressed that political leadership is imperative to bring successful changes to society.
Each nation in Europe struggled to wipe out its people's concerns over the euro, and government leaders devoted themselves to realizing the biggest experiment in the world's history, he said. "With their strong political leadership, what many people once considered impossible is about to be realized," he said. "It is necessary for the top leader to have strong determination to realize his policies."
Welcoming the government's measures to cut corporate taxes and institute other tax reforms to encourage property and securities transactions, he said, "Such efforts should continue throughout this year and next year until a business environment is realized that is equivalent to those in the U.S. and Europe. "Unless the government does that, nobody will be attracted to work in Japan."
Commenting on the failures of some of Japan's major financial institutions and the government's plan to use 30 trillion yen in public money to try to keep more from falling, he said the government needs to immediately begin Diet debate on the scheme and clear it as soon as possible. "When newspapers report on these measures, people tend to feel that they have already been enacted," he said. "But they have not even cleared the Diet."
The business community was not only rocked by several major failures this past year, but also by illegal payoffs to "sokaiya" corporate extortionists. The scandals, which began with Nomura Securities Co. and Dai-Ichi Kangyo Bank, later spread to other leading firms, including Mitsubishi Electric Corp. and Hitachi Ltd., whose presidents currently serve as Keidanren vice chairmen.
"If all the member firms had steadily practiced Keidanren's Charter for Good Corporate Behavior, these scandals would not have happened," Toyoda said. In December 1996, Keidanren revised its Charter for Good Corporate Behavior -- which sets basic principles for companies in dealing with consumers, employees, stockholders, politicians and so on -- by setting stricter penalties, such as possible expulsion for violators.
Alarmed by the scandals, Toyoda in November convened a grand meeting of leaders from its member firms; he urged them to immediately cut all ties with the racketeers. Keidanren also suspended five companies, including Mitsubishi Electric and Hitachi, for three months beginning in December.