On Revised Japan Revitalization Strategy

(HARA Eiji, PPPC President)

The Cabinet of Prime Minister Shinzo Abe adopted a set of economic reform strategies to boost mid- to long-term economic growth. The Japan Revitalization Strategy — the “third arrow” of “Abenomics” — includes a pledge to cut corporate tax, welcome more foreign workers, help working women and other challenging reforms.

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Still, detailed plans are to be elaborated in the future. For example, regarding the corporate tax, while the basic plan is to set at below 30 percent “over several years.” it is yet known how many percent it will actually be. Currently, while the average rate in the OECD countries is 25%, Japan’s corporate tax rate is 35%. There are huge gaps with the neighboring countries including Hong Kong (16.5%), Singapore (17%), and South Korea (24%), which explain the reasons that global companies transfer their business bases abroad. While the market and the public at large expect that the government hammers out measures to attract domestic and foreign investors, specific plans to realize the goal are to be considered. Under such circumstances, Fukuoka and Kansai voiced calls for more speedy and drastic corporate tax reduction than the national effort, and such propositions must be taken into consideration in designing detailed plans of the strategies.

With regard to working-hours regulations, while it is acceptable that the standard subject of white-collar exemption was set at employees receiving 10 million yen/year (there was an idea to subject those receiving 70 million yen) so that performance-based wages and diversity in ways of working are finally to going to be realized in this country, detailed institutional designing will be discussed in the Labor Policy Committee.

Also, while there were certain advancements in the agriculture such as agricultural committee, qualification of agricultural production corporation and JA reforms, specific plans have been postponed to the future so we don’t know yet how far the reforms will be advanced in such a challenge as “privatization/corporatization of JA.”

Attentions must be kept on specific and detailed plans in advancing such reforms in such fields.

Another issue that came to light in the process of revising the Strategy is segmentation of the government panels. For example, agricultural reforms were discussed in the agricultural subcommittee of the Industrial Competitiveness Council, Working Group in the Regulatory Reform Council, relevant panels of the National Strategic Special Zones, etc. In addition to these panels, the Council on Economic and Fiscal Policy discussed the issue of foreign workers. These government bodies are not necessarily communicating each other, and there was not even a discussion on “whether trial projects are to be undertaken as national-level regulatory reform or as regional experiments in the special zones,” as it was naturally so.

In order to realize Prime Minister Abe’s international pledge at Davos in January “to break through the solid rock of vested interests…over the next two years,” organizational arrangements must be made to meet such an issue.