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Executives' Comments  Press Conferences Chairman Nakanishi's Statements and Comments
at His Press Conference

October 7, 2019

Gift Scandal at Kansai Electric

Judged by any reasonable standards, the payments accepted by Kansai Electric executives and the methods by which they were received are inappropriate. The very fact that huge sums of money changed hands suggests unsound business practices. An independent panel will be established to investigate, and I hope that its findings will clarify the details of the matter.

Nuclear power generation business depends on the understanding of local communities and ties with those communities. Even if a nuclear plant passes Nuclear Regulation Authority safety inspections, it cannot actually re-start without local government approval. Community relations are crucial, and I would like electricity suppliers and manufacturers to promote sound dialogue on all aspects of nuclear power generation, including regional development, and to build win-win relationships.

Impact of Consumption Tax Rise

Although I have heard reports of a slight spike in demand immediately before the increase, the government has taken various measures, and at present it appears that the rise has had no major impact on the Japanese economy. It is now vital to ride out any recoil from the pre-tax rush in demand and induce economic growth from next year onwards.

Inaugural "Keidanren Innovation Crossing" (KIX) Networking Event

Start-ups are a new entrepreneurial group that cannot be lumped together with the established companies that have long powered our economy, and Japan finally seems to be fostering such businesses. The economic role and impact of start-ups is substantial. They encourage changes in industrial structures and innovative business models. By partnering with start-ups, companies are likely to develop a broad range of initiatives that differ from conventional models of mass production and volume sales. Keidanren is committed to promoting such alliances, since start-ups are a phenomenon associated with industrial digitalization.

Although large Japanese companies have plenty of talented staff, at times they are unable to maximize the capabilities of these personnel because they are bound by principles of self-sufficiency. Breaking out of this mind-set and shifting further towards open innovation will enable them to broaden their horizons and devise new approaches. Keidanren intends to maintain intensive KIX activities and will take the lead in promoting partnerships between large companies and start-ups.

Indexes of Business Conditions (August Preliminary Figures)

As many external factors including uncertainties such as US-China trade friction and Brexit cloud the global outlook and hamper growth, the Japanese economy remains robust. Based on the latest assessment of business conditions, I do not perceive that our economy is in dire straits.

However, it may be necessary to devise multi-faceted and effective stimulatory measures, depending on economic trends. If so, rather than relying entirely on conventional monetary easing and fiscal stimulus, it will be vital to swiftly implement measures under discussion in forums such as the Council on Economic and Fiscal Policy, including policies on data protection and use, e-government, and social security reform.

Digital Transformation

Broadly speaking, digital transformation is significant in two ways. One is digitalization of domestic industry. I would like to remove the sense of resistance to reform of industrial structures. In today's world it is as if barriers between industries did not exist, and Japanese companies cannot compete globally if they consider things solely within the silos of their industries. We will promote structural reform of domestic industries, even if it involves some pain. This is the vision encapsulated in the Society 5.0 concept. The other significant aspect of digital transformation is resolution of social issues through digitalization. Expectations for Society 5.0 are high in the international community. Many start-ups targeting digital consumers are appearing throughout Asia and rapidly boosting the aggregate value of their countries' stock markets. Under the Society 5.0 banner, there is tremendous scope for Japanese companies to partner with such emerging enterprises in the hope that they will transform into businesses that develop economic platforms and social infrastructure, and resolve social issues. Keidanren will share this fundamental awareness in the Council on Investments for the Future.

Digital Tax

The digital tax debate taking place at the OECD is very pertinent. The current situation, where companies pay no tax in certain markets despite doing business there, requires some form of remedy. However, difficulties including regulatory challenges will emerge, depending on the approach adopted. Discussions will enter a decisive phase in the next year or so, and Keidanren will actively contribute to development of a concrete system.

Executives' Comments