Wednesday, Oct. 7, 1998
Staff writerIf you cut your arm and blood was flowing like a river, the first thing you would have to do is stop the bleeding, the head of the world's largest business organization in the United States said.In the same manner, Japan must expeditiously inject public funds into its ailing banking sector to restore its health, Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, said in an interview in Tokyo.Stressing that Japan's financial sector plays a pivotal role in the economic recovery of Asia, he said that if Japan, the largest lender in the world, stops lending, all the economies in Asia will start to dry up. "So you go to the banks with the greatest bleeding and stop the bleeding first," he said. "It's gonna take strong leadership and great courage, and it's gonna take government money."But the money must be spent very thoughtfully, and drastic reform to improve the transparency of banks is indispensable, he said. The chairman of the U.S. Chamber of Commerce, which comprises 3 million companies in the U.S., is currently visiting Asian countries to exchange opinions with government and business leaders in the region on ways to restore economic health. After Japan, Donohue is scheduled to make stops in Hanoi, Singapore, Shanghai and Beijing.The chairman said that he was relieved to hear that Japan's new bank recapitalization scheme is likely to be passed in the current Diet session and that Prime Minister Keizo Obuchi is considering the launch of additional economic stimulus measures, including tax cuts. On Tuesday, Obuchi announced plans to compile a 10 trillion yen second supplementary budget for fiscal 1998 and to offer extra tax cuts, in addition to 7 trillion yen in tax cuts already announced for individuals and corporations."I'm relieved that at least it's moving in the right direction, but I'm somewhat concerned that my gray hair will fall out before it happens," Donohue said. Before coming to Japan, Donohue wrote a personal letter to some of the most prominent business executives in Japan to find out their views on what path Japan should take, and received replies from more than 20."The message was very clear," he said. "The Japanese banking system must be changed, and every one of the CEOs who wrote to us said that they need to reduce taxes," he said.Donohue said that in the market economy, banks around the world are regulated on a series of standards, so that everyone knows what the accounting standards are, how healthy banks are, and what capital level they have to keep.