Executives' Comments Press Conferences
Chairman Sakakibara's Statements and Comments
at His Press Conference
- Heavy Rains in Northern Kyushu
- Consumption Tax Increase
- Education-Related Issues
- Relations with China and the Republic of Korea (ROK)
- Constitutional Issues
- The Political Situation
Heavy Rains in Northern Kyushu
Allow me first to express my deepest condolences for those who lost their lives in the recent heavy rains in northern Kyushu. I would also like to express my sympathies to those in the affected region who are forced to endure uncomfortable living conditions because their homes were damaged. Problems include roads being cut off and delays in the distribution of goods, but the fire brigade, the police, the Self-Defense Forces, and employees of local companies are working hard to save lives and help the recovery effort. The full extent of the damage is still unknown, and no announcement has yet been made to indicate the scale of the economic damage, but I sincerely hope that the area will manage to recover and resume economic activity as soon as possible. Keidanren has called on its member companies and organizations to contribute donations and financial support via the 1% (One-Percent) Club. We will continue to coordinate with the relevant organizations to take the necessary action.
Consumption Tax Increase
Raising the consumption tax rate to 10% in October 2019 is something the government has pledged to the Japanese public and promised to the international community. It has already postponed this rate rise twice, so postponing it for a third time is not an option. We in the business community will continue to assert that the consumption tax rate should be raised as planned one way or another. As Chair of the Fiscal System Council, as well as of Keidanren, I believe that raising the consumption tax rate to 10% in October 2019 is absolutely essential to ensure our fiscal discipline as a nation, and in particular to achieve a budget surplus in the primary balance by fiscal 2020.
Of course nobody is happy to see the tax rate go up and it is probably human nature to think a lower rate is better. But if the government properly explained the country's financial situation and the reality of our declining birthrate and aging society, I think the Japanese public would understand. It is not acceptable to put off the consumption tax increase due to concerns about public opposition. If the government takes the trouble to explain to the Japanese people that raising consumption tax is indispensable for a sustainable social security system, I think they will be convinced, and will eventually be supportive of the government.
To address the issue of making higher education free of charge, if free education is offered to everybody who wants to go on to university, it could end up lowering the quality of our universities. Instead, grant-type scholarships and income-linked repayable scholarships should be provided for people who want to go to university, but are unable to do so for financial reasons. Given the limited fiscal resources available, moreover, efforts should focus on support for children and childrearing. Such support should, furthermore, be funded by taxes.
I would like to commend the fact that in the recent G20 summit, as in the earlier G7 summit, the Leaders' Declaration clearly stated the intention to fight protectionism. Specifically, it incorporated the wording "continue to fight protectionism including all unfair trade practices," which I take to mean that G7's underlying tone of promoting free trade has been maintained.
Relations with China and the Republic of Korea (ROK)
During the G20 summit, Prime Minister Abe and President Moon Jae-in held top-level bilateral talks for the first time. I believe the talks were extremely significant, achieving progress toward building a forward-looking relationship between Japan and the ROK, including agreement on the resumption of shuttle diplomacy.
Top-level talks also took place between Japan and China. The atmosphere appears to have been amicable, and the relationship between the two countries is moving in a positive direction. I had the opportunity to hold talks with China's President Xi Jinping in May and Vice Premier Wang Yang in June, and I had a strong sense that relations between Japan and China are definitely improving. During his talks with the Chinese premier, Prime Minister Abe declared that Japan would cooperate with the "One Belt, One Road" initiative. I take this to indicate that he expects the initiative will contribute to peace and prosperity in the region and throughout the world and, amidst concerns about the rise of protectionism and nationalism, that it will help to provide free and unimpeded trade and investment, and better infrastructure connectivity. We in the Japanese business community also want to cooperate with "One Belt, One Road"; Japanese corporations are particularly interested in improving infrastructure connectivity. Furthermore, the potential for corporations in both countries to cooperate with "One Belt, One Road" was discussed at the Japan-China CEOs and former senior officials meeting (the Japan-China CEO Summit), which Keidanren has been hosting since the year before last. However, many aspects of "One Belt, One Road" remain unclear; we will need to take advantage of every opportunity to try to gain a more detailed picture of what is entailed.
Since the Abe administration came to power it has put the economy first and foremost, achieving solid success. I would like the economy to remain the priority in the government, which should achieve its original aim of economic recovery. While I do sense a need to debate the issue of constitutional reform, the economy should always come first when implementing policies, and any discussion about revising the Japanese Constitution must be subject to the support and understanding of the public. As the administration continues to make solid progress in implementing its economic policies, conditions are likely to become more conducive to constitutional reform.
The Political Situation
It appears that a Cabinet reshuffle and appointment of new Liberal Democratic Party (LDP) executives are planned for early August. Matters relating to appointments are of course Prime Minister Abe's sole prerogative. Some observers have pointed out that complacency and arrogance in the administration may have led to the LDP's poor showing in the recent Tokyo Assembly elections, as well as the administration's lower approval ratings and higher disapproval ratings in public opinion polls. We in the business community are apprehensive about distrust of political parties and of politics taking hold among the public, and we therefore want the government and the ruling party to take this situation seriously.
When governing it is extremely important to secure the support and trust of the public, and the Japanese people are very interested in this Cabinet reshuffle. The current economic situation is such that GDP has grown for five consecutive quarters, but the trend remains gradual and consumption has still not regained its former vigor. I would like the ruling party to put the economy first and foremost, whilst at the same time not forgetting the initial resolutions to revitalize the economy and end deflation made at the start of the second Abe administration. If the government takes this approach to driving its policies forward, I expect that it will earn greater trust from the Japanese public.